Slides from the Q2 2011 presentation at Swedbank, Stockholm, Sweden.

1. Swedbank’s second quarter 2011 results
Michael Wolf, CEO
Wolf
Erkki Raasuke, CFO
Göran Bronner, CRO

2. Continued underlying trends
y g
• Net profit of SEK 3 452m
• Core Tier 1 capital ratio of 14.8 per cent after buy-backs
• Return on equity of 14 4 per cent in Q2
14.4
Profit performance
Profit before impairments
Lehman contribution
Profit for the period
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
2

3. Business area highlights
g g
SEKm Retail
Retail
2 500
2 000
1 500
- Improved result driven by higher NII 1 000
500
- Cost/income ratio 0.49 0
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
Large Corporates & Institutions SEKm
2 000
Large Corporate & Institutions
1 500
- Good development in corporate
1 000
lending 500
0
- Slow trading quarter Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
SEKm Baltic Banking
Baltic Banking 1 500
1 000
500
- Solid operating profit
0
- Lower lending volumes -500
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
Prof it bef ore impairments Prof it f or the period
3

4. Delivering on our 2011 priorities
g p
• Quality and efficiency
• Robust and low-risk balance sheet
• Customer focus
• Growth in selected segments
4

5. Net interest income
Positive NII trend
• Higher Stibor and Euribor rates, increased margins
• Trading result recorded mostly in NII
• Maturing government guaranteed funding
LC&I Baltic Russia, Treasury,
Retail Banking 4 740
Ukraine Other
4 527 101 34 20 118 128
4 527
-60 1 017
3 799 3 980
884
3 026
(SEKm)
)
-315
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
5

6. Net commission income
Underlying commissions stable
y g
• Increased payment commissions
• Changed accruals in LC&I decreased l di and guarantees b SEK 136
Ch d l i d d lending d t by 136m
SEKm
1 200
1 000
800
600
400
200
0
Payment Asset Life insurance Brokerage and Corporate finance Lending and Deposits Other commission
p
processing
g management
g other securities g
guarantees income
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
6

7. Net gains/losses on financial items, fair value
Valuation effects turnaround in Q2
• Positive valuation effects in Group Treasury
– Basis swaps
– Fair valued lending & funding
– Benchmark effect
• Low NGL f
L from t di
trading
822
574
511
Treasury &
357 Other
Russia &
255 Ukraine
Baltic Banking
(SEKm)
LC&I
Retail
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
7

8. Expenses
On target with flat costs
g
• Lower number of employees
• Bank
B k accounting principles i Ekt
ti i i l in Ektornet i
t increase expenses
0.57 0.58
0.55
0.52 0.52
4 423 4 590
4 238 4 384 4 345 Total expenses
Cost-income ratio
(SEKm)
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
8

9. Second quarter 2011 results
Volume development
p
• YTD stable lending and deposit volumes
• Lending in
L di i LC&I t i t growth
turning to th
• Continued de-leveraging in Baltic Banking
Lending Deposits
SEKbn Q2 Q/Q Δ YTD Δ Q2 Q/Q Δ YTD Δ
Retail private 584 4 6
347 9 0
Retail corporate 297 0 2
LC&I 126 5 -4 57 -11 -17
Baltic Banking
B lti B ki 125 -1
1 -5
5 95 6 2
Group 1 147 6 1 519 17 2
9

10. Liquidity & Funding
Term funding issuance according to plan
• Majority of issuance in the domestic Issuance H1 2011 & maturities FY 2011
(nominal SEKbn)
covered bond market
60
• Average maturity of wholesale funding, 40
including short-term funding, 34 months 20
(42 months for covered bonds) 0
-20
• H2 maturities of nominal SEK 80bn, -40
of which government guaranteed debt
-60
SEK 46bn
-80
• Liquidity reserves further increased -100
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
y g
10

11. Second quarter 2011 results
Income statement
SEKm Q2 11 Q1 11 Δ Q2 10
Net interest income 4 740 4 527 213 3 799
Net commission income 2 244 2 301 -57 2 395
Net gains/losses 511 255 154 822
Other 860 1 369 -509
509 756
Total income 8 355 8 452 -97 7 772
Total expenses 4 345 4 384 -39 4 423
Profit before impairments 4 010 4 068 -58 3 349
Total impairments - 309 - 970 661 1 091
Operating profit 4 319 5 038 -719 2 258
Tax expense 863 1 182 -319 672
Profit attributable to shareholders 3 452 3 852 - 400 1 567
Return on equity, % 14.4 16.1 7.0
11

12. Risk highlights
Asset quality improvement – increased macro risk
q y p
• Asset quality
– Decreasing impaired loans
– Continued recoveries
– Positive rating migration
• Macro economic uncertainty
– European debt crisis
– World economy slowing
• S db k’ resilience strong
Swedbank’s ili t
– Capitalisation
– Stress tests
– Strong funding position
12

13. Asset quality
Net recoveries of SEK 324m in Q2
Credit impairments, SEKm
• Stable CEE development
963
– One-offs Estonia
One offs
– Adjustment in Latvia
• Solid Swedish performance
120
324
-324
-483
-972
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
Retail LC&I Baltic Banking Russia & Ukraine Other
13

14. Funding risk
Well positioned
p
• Board of Directors risk tolerance limit
– Liquidity survival horizon
– Liquidity portfolio
– Over-collateralisation requirement
Over collateralisation
• Liquidity reserve increased to SEK 203bn
• Covered bond availability increasing
• USD f di d
funding dependence l
d low
14

15. Capital management
Strong capitalisation
g p
• As of 30 June the excess
capital amounted to SEK 9bn
14.8%
Excess capital
(SEK 9.2bn)
• 2.86 per cent of total shares
Extra buffer
13.0% repurchased i Q2
h d in
due to prevailing
circumstances
(SEK 15.3bn) • Stress tests
10.0%
Risk appetite
– ICAAP 2011
(ICAAP buffer,
SEK 15.3bn) – EBA
7.0%
• Continued focus on capital
Minimum
efficiency
requirement
(SEK 35.7bn)
15

16. Appendix
16

17. ICAAP 2011 – adverse scenario
Scenario: “Eastern slowdown – Western standstill”
Triggers Outcome
Sweden
S d
• Chinese housing market collapses
• Negative GDP for three consecutive years, 2012-
• The export led recovery in the US halts as
2014 (a drop of 7% relative 2011)
Asian demand dries up
• Unemployment rate rises from 8 4% in 2010 to
8.4%
• US protectionism and US economic
16.9% in 2014
pessimism turns world growth negative
• Residential real estate price drop of 33% until 2014
• US enters into a “Japanese” scenario
• Swedish krona strengthens 31% against the USD
g g
• A weak EU is severely hit by falling
demand in China and the US • Interest rates remain low (treasury bill rate of 0.3%)
Adverse scenario 2011 - GDP development
Baltic countries
120
• 30% devaluation in Latvia and Lithuania early 2012,
2010=100)
115
110 Sweden, base case Estonia affected by contraction of external demand
Sweden, adverse
105 • Negative GDP growth in all three countries during
US, base case
,
GDP index (2
100
US, adverse 2011-2014 (drops of 9%-11% relative 2010)
95
EU-27, base case
90 • Unemployment rates peak in 2013-2014: EE 19.5%,
EU-27, adverse
85 LV 21.5%, LT 20.0%
80
• Residential real estate price drops Trough in 2014
drops.
2010 2011 2012 2013 2014 2015 2016
EE -24%, LV -15%, LT -21%
17

18. ICAAP 2011 – adverse scenario
Scenario model results
Total
Income statement (SEKm) 2010F 2011F 2012F 2013F 2014F 2015F 2016F 2011-2016
Profit before impairments
p 12 485 13 233 13 766 7 666 7 287 7 150 7 610 56 712
Credit impairments 3 005 5 972 19 318 15 359 10 231 6 734 4 290 61 904
Profit for the year 7 084 5 033 -5 696 -7 694 -2 944 146 1 971 -9 184
(SEKm) 2010F 2011F 2012F 2013F 2014F 2015F 2016F
Risk-weighted assets,
541 327 519 839 524 279 464 569 434 894 413 542 399 855
full Basel 2
Core Tier 1 capital 75 470 77 815 69 084 55 936 52 981 53 069 54 043
Core Tier 1 capital ratio, % 13.94 14.97 13.18 12.04 12.18 12.83 13.52
• Core Tier 1 capital ratio troughs in 2013
• Low interest rates combined with lending volume decline during the
scenario period decrease NII and risk-weighted assets
NB: Not adjusted for the buy-back programme or any additional regulatory changes.
18

19. ICAAP 2011 – base scenario and adverse scenario
Macroeconomic assumptions
p
Sweden Baltic countries
GDP growth GDP growth
120 140
130
110
120
100 110
100
90
90
80 80
2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016
Unemployment Unemployment
20%
20%
15%
15%
10%
5% 10%
0% 5%
2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016
Real estate price index Real estate price index
110 150
100 140
130
90 120
80 110
100
70 90
60 80
70
2010 2011 2012 2013 2014 2015 2016
2010 2011 2012 2013 2014 2015 2016
Sweden, base case Sweden, adverse Estonia, base case Estonia, adverse
Latvia, base case Latvia, adverse
Lithuania, base case Lithuania, adverse
19

20. Impaired loans decreasing
p g
• Excl. FX effect down SEK 1.6bn in Q2
• Underlying decreases in all business areas in Q2
SEKm
45 000 42 719
40 132 40 328
40 000 -4 088
4 362 196 2 391
35 770 -3 853 Impaired loans as %
38 631
35 000 of gross lending
6 113 34 778 -3 031
29 657 -1 078
30 000 Ukraine 66%
31 747
6 240
30 669
25 000 Russia 21%
1 407
Lithuania 17%
20 000 6 383
Latvia 24%
15 000 29 657 9 802
10 000
5 000 Estonia 8.3%
4 836
446 LC&I 0.17%
1 555 Retail 0 17%
0.17%
0
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q2 11
20

21. -50
0
100
150
200
250
-150
-100
50
EURm
Q
Q2 10
Q
Q3 10
Q
Q4 10
p
Q
Q1 11
Estonia
Q
Q2 11
Q
Q2 10
Q
Q3 10
Q
Q4 10
Q
Q1 11
Latvia
Q
Q2 11
y p
Q
Q2 10
Q
Q3 10
Q
Q4 10
Q
Q1 11
Lithuania
Q
Q2 11
Q
Q2 10
Q
Q3 10
Q
Q4 10
Loans past due 60 days – performance Q/Q
Ukraine
Q
Q1 11
Q
Q2 11
Q
Q2 10
Q
Q3 10
Q
Q4 10
Russia
Q
Q1 11
Q
Q2 11
21

22. Asset quality
Provisions – well provided for
p
• Individual provisioning rates maintained
• Work-out portfolios slowly declining
• Positive rating migrations
SEKm
30 000
63.5% Provision ratios, % Q2 11
63.9%
25 000 4 104 Retail 92
62.7%
3 606
LC&I 125
61.0%
20 000 3 297 60.0%
Baltic Banking 55
2 769
2 436
Russia 65
15 000
Ukraine 64
23 028
10 000 21 068
16 598
15 952 Group 60
18 494
6 306
5 204
5 000 4 373
1 449 2 099
0
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
Individual provisions Portf olio provisions Write-of f s, gross, cum f rom 2010 Provision ratio
22

23. Asset quality
Repossessed assets
p
SEKm
6 000
5 000
4 000
3 000
2 000
1 000
0
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other
23

24. Credit impairments by category
p y g y
SEKm
2 000
963
1 500
1 000
120
500
0
- 500
- 324
-1 000
- 483 - 972
-1 500
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
Portfolio provisions Individual provisions Recoveries Write-offs net
24

25. Real estate prices
p
Tallinn Riga
1 800 2 000
1 616 1 762
1 600 1 800
1 400 1 600
1 200 1 400
915 1 200
1 000
1 000
800 601
800
600 600
400 400
200 200
0 0
May-05
May-06
May-07
May-08
May-09
May-10
May-11
Mar-06
May-07
Feb-09
Apr-10
Jan-05
Sep-05
Jan-06
Sep-06
Jan-07
Sep-07
Jan-08
Sep-08
Jan-09
Sep-09
Jan-10
Sep-10
Jan-11
Jan-05
Aug-05
Dec-07
Jul-08
Sep-09
Nov-10
Jun-11
Oct-06
Nr.of deals EUR/m2 Nr.of deals EUR/m2
Source: Swedbank, Estonian Land Board Source: Swedbank
Vilnius
2 000
1 800 1 731
1 600
1 400
1 200 1 074
1 000
800
600
400
200
0
Mar-06
May-07
Feb-09
Apr-10
Jan-05
Aug-05
Dec-07
Jul-08
Sep-09
Nov-10
Oct-06
Nr.of deals EUR/m2
Source: Swedbank, State Enterprise Centre of Registers
25

26. Liquidity & Funding
Long-term funding
g g
• Continued focus on covered bonds with Q2 issuance of SEK 43bn
• SEK 6bn in senior unsecured issuance during Q2
• Term funding issuance in the first half of 2011 totalled SEK 153bn, with maturities of
SEK 79bn during the same period
• Maturities for the remainder of 2011 amount to nominal SEK 80bn
Long-term funding maturity profile, SEKbn
200 200
150 Covered bonds 150 Senior unsecured
Guaranteed bonds
100 100
50 50
0 0
2011 2012 2013 2014 2015 2016
2016- 2011 2012 2013 2014 2015 2016-
26

27. Liquidity & Funding
Remaining government guaranteed debt
gg g
• Exited the programme on 30 April 2010
• No issuance under the programme since summer 2009
p g
• SEK 33bn of government guaranteed debt matured during the first six months of 2011
• Maturities of SEK 46bn for the remainder of 2011
Maturity p
y profile as p Q2 2011, SEKbn
per ,
60
40 USD
SEK
EUR
CHF
20 HKD
JPY
0
2011 2012 2013 2014
27

28. Liquidity & Funding
Limited unsecured funding need
g
Lending to the public, less deposits, covered bond
pool and retail bonds
SEKbn
200
150
100
50
0
-50
-100
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011
28

29. Liquidity reserve*
q y SEKm
SEK
Cash and holdings in central banks and deposits in other banks available overnight 90 723
Securities issued or guaranteed by sovereigns central banks or multilateral development banks
sovereigns, 57 327
Securities issued or guaranteed by municipalities or Public sector entities
Covered bonds 53 711
- Issued by other institutions 53 711
- Own issued
Securities issued by non-financial corporates
Securities issued by financial corporates (excl. covered bonds) 1 089
Other
Total 202 850
* As defined by the Swedish FSA
Liquid assets outside Group Treasury organisation 65 000
Total 267 850
29