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Debt Investor Presentation - Q1-update May 2011
Jonas Erikson, Head of Group TreasuryPeter Stenborn, Debt Investor Relations
2
Table of contents 1. This is Swedbank 3
2. The Swedish economy 7
3. Swedish housing and mortgage market 14
4. Financial performance 21
5. Liquidity and funding 32
6. Swedbank´s lending process in Sweden 43
7. Swedish covered bond legislation 47
8. Swedbank´s cover pool 50
9. Appendix 54
1. This is Swedbank
3
The Bank for the many people, households and businesses
4
LatviaPopulation 2.2mEmployees 1 666Private customers 1.0mCorporate customers 66 000Branches 59ATMs 375Cards 0.9m
LithuaniaPopulation 3.3mEmployees 2 161Private customers 3.2mCorporate customers 99 000Branches 96ATMs 448Cards 1.7m
EstoniaPopulation 1.3mEmployees 2 511Private customers 1.2mCorporate customers 108 000Branches 64ATMs 546Cards 1.1m
SwedenPopulation 9.3mEmployees 8 408Private customers 4.0mCorporate customers 309 000Organisations 111 000Branches 334ATMs 731Cards 3.7m
This is Swedbank
Source: Swedbank Fact book Q1, 2011
Market leading retail franchise in all home markets
5
% %
Source: Source Sweden: Statistics Sweden (SCB) Source Estonia: Estonian Central Bank Sources Latvia: Association of Commercial Banks of Latvia (ACBL) & The Financial and Capital Market Commission (FCMC) Source Lithuania: Association of Lithuanian Banks (LBA)
This is Swedbank
Market shares, LendingFebruary 2011
Market shares, DepositsFebruary 2011
• Largest retail bank and fund manager in Sweden
0
10
20
30
40
50
60
Sweden Estonia Latvia Lithuania
Deposits Private
Deposits Corporate
0
10
20
30
40
50
60
Sweden Estonia Latvia Lithuania
Mortgage lendingCorporate lending
Sweden – the dominating home market • Total lending amounts to SEK 1,373bn (as per Q1 2011), out of which 88% is originated in Sweden
• Estonia makes up 44% of total lending in the Baltics
6
Source: Swedbank Fact book Q1 2011
This is Swedbank
* Mainly Russia, Ukraine, Denmark, Finland, USA and Luxemburg
Total lending distributed by country (Q1 2011)
0 200 400 600 800 1000 1200
Other* 2%
Norway 1%
Lithuania 2%
Latvia 3%
Estonia 4%
Sweden 88%
Mortgage loans (private+corp)
Other corporate
Credit institutions
Other
SEK 1 203bn
2. The Swedish economy
7
A balance sheet in favourable condition • Sweden’s financial assets continue to exceed its liabilities
8
General government net financial liabilities % of nominal GDP
-40 %
-20 %
0 %
20 %
40 %
60 %
80 %
100 %
120 %
2009 2010F 2011FSource: OECD Economic outlook 87 database
The Swedish economy
• Kingdom of Sweden rated Aaa/AAA/AAA• GDP growth 5.5% in 2010 • Balanced budget FY 2010
9
Strong fiscal position
Source: Eurostat, euroindicators, Nov 15, 2010
Swedish government debt
The Swedish economy
SEKbn Government debt to GDP, %
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
Source: Swedish National Debt Office, Feb 2, 2011 and Statistics Sweden
20%
30%
40%
50%
60%
70%
80%
2006 2007 2008 2009
France
Germany
EU27
UK
Sweden
Denmark
Source: Swedish National Debt Office, Dec 31, 2010 and Swedish Government budget statement, Oct 12, 2010
Solid macro recovery
10
The Swedish economy
Source: Eurostat, Mar 8, 2011
Real GDP growth rate
-8,0%
-6,0%
-4,0%
-2,0%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011F 2012F
European Union (27 countries) Sweden United States
Solid macro recovery
11
The Swedish economy
Unemployment rate 2001 - 2010, %
Source: Statistics Sweden, Mar 31, 2011
Export and import trend per month, SEKm
Source: Statistics Sweden, March 28, 2011
0
20 000
40 000
60 000
80 000
100 000
120 000
2004 2005 2006 2007 2008 2009 2010
Import
Export
Data up until February 2011
0
1
2
3
4
5
6
7
8
9
10
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
as per Q1 each year
Continuing recovery of foreign trade
12
The Swedish economy
Top 10 export countries 2010
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2005 2006 2007 2008 2009 2010F 2011F
SwedenGermanyDenmarkFinlandCanadaUKFranceItalyUS
Current account balance as % of GDP
Source: OECD – Economic outlook 87, Jun 16, 2010
0%
2%
4%
6%
8%
10%
12%
45%
13%
12%
11%
11%
8%EngineeringChemistryOther goodsForestryMineralsEnergy
Export – distribution by important commodity groups
Source: Statistics Sweden, Feb 28, 2011
Sweden has shown resilience through turbulent times
13
5 year Sovereign CDS
The Swedish economy
Source: Bloomberg, May 3, 2011
0
50
100
150
200
250
300
Italy
France
United Kingdom
Germany
Sweden
3. Swedish housing and mortgage market
14
15
Swedish household financial assets and liabilities
Healthy household balance sheetsSwedish housing and mortgage market
SEKbn
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Total household debt Total financial assets
Source: Statistics Sweden “Hushållens ställning och transaktioner“ Feb 17, 2011 as per Dec 31, 2010
Structural interest rate decline key to affordability
16
Household debt and interest expenses after tax as percentage of disposable income
Source: Riksbanken, Financial Stability Report, Dec 2, 2010
Debt ratio (left scale) Interest ratio (right scale)
Swedish housing and mortgage market
0
2
4
6
8
10
12
14
16
18
20
22
0
20
40
60
80
100
120
140
160
180
200
220% %
17
Housing investments at a conservative level• New household formations have between 1995 and 2008 exceeded the actual new dwellings
produced by 80,000 units
Housing completions, apartments in Multi-family dwellings and Single-family houses in Sweden
Housing investments as a percentage of GDP
Swedish housing and mortgage market
Number of apartments
Source: Statistics Sweden, Dec 31, 2010
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Apartment buildings Single-family dwellings
Source: Reuters Ecowin, Mar 7, 2011
Source: Statistics Sweden, Mar 3, 2011
0
1
2
3
4
5
6
7
8
9
10
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
SpainEurozoneSwedenUKUSADenmark
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
0
5 000
10 000
15 000
20 000
25 000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Average production cost per sqm for a single family house, SEK (LHS)Average price for a single family house, SEKth (RHS)
Housing prices are moving in tandem with production costs
18
Average house production cost & average house price development 1980-2008
Source: “Bostads- och byggnadsstatistisk årsbok 2010”, published Feb 15, 2010 by Statistics Sweden; page 128 and 156
SEK SEK, thousands
Swedish housing and mortgage market
0%
20%
40%
60%
80%
100%
120%
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Sweden
Norway
Ireland
Denmark
UK
Germany
Development of housing prices and mortgage debt
19
Residential mortgage debt to GDP Ratio, %
Source: European Mortgage Federation
0
50
100
150
200
250
300
350
400
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
House prices (Index 1995=100)
Source: Riksbanken, Reuters EcoWin
Swedish housing and mortgage market
Swedish mortgage market• No securitization (on balance sheet)
• No sub-prime market
• No 3rd party origination
• No buy-to-let market
• 60% home ownership1
• Rental market is regulated – First hand contracts difficult to obtain– Rents need to be negotiated with the Swedish Union of Tenants
• Transparent credit information (credit information agency, www.uc.se) – Publicly available information regarding income, debt, payment track record etc
• Consumer credit legislation requires affordability calculations including stress test of higher interest rate
• Very limited debt forgiveness possibilities (full recourse)
• Strong social security and generous unemployment benefit system
20
Swedish housing and mortgage market
1 Source: Statistics Sweden, Dec 22, 2009
4. Financial performance
21
Strong start to the year• Net profit of SEK 3.9bn for Q1
• Core Tier 1 capital ratio of 14.9 per cent
• Return on equity of 16.1 per cent in Q1
22
Financial performance
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Net profit performance
Lehman contribution
NII supported by higher interest rates• One-offs and higher stability fee shadowing underlying NII growth
• Improving deposit margins in Retail
• Government guarantee cost kept within Treasury
23
Financial performance
4 023 3 799 3 980
4 527
Retail LC&I Baltic Banking
Russia, Ukraine
Treasury, Other
173
2 925
117
850
-171 997
29 188
-148
-433
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
(SE
Km
)
4 527
NGL affected by funding effects• Strong trading result in LC&I, but higher portion of income reported as NII
• Russia & Ukraine returning to normalised levels
• Basis swap gains of 2010 partly reversed, benefits euro funding cost
24
647
809
574
315
Retail LC&IBaltic
BankingRussia, Ukraine
Treasury, Other
-34
40
-70369
-22
55 105
9
-39
-218
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
(SE
Km
)
255
Financial performance
25
Financial performance
Income statementSEKm Q1 11 Q4 10 Δ Q1 10Net interest income 4 527 4 527 0 4 023
Net commission income 2 301 2 538 -237 2 282
Net gains/losses 255 315 -60 647
Other 1 369 578 791 715
Total income 8 452 7 958 494 7 667
Total expenses 4 384 4 590 -206 4 391
Profit before impairments 4 068 3 368 700 3 276
Total impairments - 970 - 77 -893 2 260
Operating profit 5 038 3 445 1 593 1 016
Tax expense 1 182 693 489 469
Profit attributable to shareholders 3 852 2 750 1 102 536
Total income distribution Q1 2011
26
Financial performance
Lending and deposits
60%
Treasury, Trading and
Capital Markets
2%
Asset Management
12%
Payment, Cards
9%Insurance
2%Share of P&L of associates
2%
Other13%
Non-recurring
items0%
Source: Swedbank Facts, Mar 31, 2011
27
Financial performance
Key ratios
Volumes, SEKbn Q1 11 Q4 10 Δ Q1 10Lending to the public 1 141 1 146 -5 1 168
Deposits from the public 502 517 -15 496
Covered bonds 477 410 66 389
Key ratios Q1 11 Q4 10 Q1 10Return on equity, % 16.1 11.7 2.4
Cost-income ratio 0.52 0.58 0.57
Core funding ratio, %* 114 121 127
Core Tier 1 capital ratio, %** 14.9 13.9 12.3
* Lending/(deposits+covered bonds+retail bonds), ** Basel 2
Continued asset quality improvements • Asset quality
– Decreasing impaired loans– FR&R/Ektornet according to plan
• Substantial recoveries – all countries
• Lehman income
• RWA decreased by SEK 22.3bn in Q1– SEK 11.0bn lower credit risk– SEK 8.7bn lower market risk
• Strong funding position
28
Financial performance
Net recoveries of SEK 972m in Q1• Net recoveries in all CEE countries
• Sweden – also recoveries
• Collateral revaluations, repayments and rating migration
29
Financial performance
2 210
963
120
-483-972
-1 500
-1 000
-500
0
500
1 000
1 500
2 000
2 500
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
SEKmCredit impairments
Retail LC&I Baltic Banking Russia & Ukraine Other
Core Tier I ratio target
• Core Tier I ratio to stay above 13% until 2013
• Long-term Core Tier I ratio of at least 10%
• Share buy-back program to be executed gradually during four quarters
30
Financial performance
13.0%
Risk appetite(ICAAP buffer,SEK 15.6bn)
Regulatory requirement(SEK 36.3bn)
Excess capital (SEK 9.9bn)
10.0%
7.0%
Extra buffer due to prevailing circumstances(SEK 15.6bn)
14.9%
Impaired loans decreasing• Excl. FX effect down SEK 2.5bn in Q1
• Underlying decreases in all business areas in Q1
Financial performance
31
Ukraine 61%
Russia 23%Lithuania 17%
Latvia 25%
Estonia 7.7%LC&I 0.21%Retail 0.18%
Impaired loans as % of gross lending
29 657
6 113
4 362 196 2 391-4 088
-3 853
-3 03129 657
35 770
40 132 40 32842 719
38 631
34 77831 747
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
SEKm
1 581586
4 505
10 468
6 3571 555
6 695
Q1 11
5. Liquidity and funding
32
0
200
400
600
800
1 000
1 200
1 400
FY 2008 Q1 2011 FY 201X
Significantly reduced risk level
33
Liabilities*
Source: Swedbank, Dec 31, 2008 and Mar 31, 2011 * Simplified balance sheet assets and liabilities
Liquidity and funding
0
200
400
600
800
1 000
1 200
1 400
FY 2008 Q1 2011
Assets*
-114
-8
+78
-66
CEE lendingEstonia
Other corporatelending, Sweden & other Nordic
Other private,Sweden
Swedish mortgage loans
Central bank + Government guaranteed
+16
207
-49
-212
+13
Senior
Coveredbonds
Deposits
Core T1Suppl. cap
Covered bond strategy
34
*e.g. Registered covered bonds
Source: Swedbank, Mar 31, 2011, Nominal amounts excluding intra group items
Liquidity and funding
Maturity, years
< 5Y 3-7Y > 7Y
Today: SEK ~299bn
Sweden: SEK 300-375bn
Today: SEK ~156bn
Today: SEK ~19bn
EUR/USDSEK 150-200bn
Other*SEK 50-85bn
SwedenSEK 300-375bn
Positive trend in deposits as overall savings increase
• Market leader in deposits in all of the home markets• Market shares have remained stable in all markets throughout the crisis • Share of private deposits as per Q1 2011, 60%
35
Deposits from the public excluding repos Savings and investments, Swedbank Group, SEKbn
Source: Swedbank Fact book, Mar 31, 2011
Liquidity and funding
0
50
100
150
200
250
300
350
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Private Corporate
590
466
30
699
496
29
753
502
240
100
200
300
400
500
600
700
800
Asset mgmt Deposits f rom the public, excl. repos
Retail bonds
Q1 2009
Q1 2010
Q1 2011
SEKbn SEKbn
SEK 91bn term funding issued in Q1 2011
36
Liquidity and funding
• Of which SEK 85bn in covered bonds– 2 EUR-denominated covered bond benchmark deals, in the size of EUR 1bn and EUR 1.5bn – 2 USD-denominated covered bond benchmark deals, of USD 1bn each
• Average maturity of wholesale funding, including all short- and long-term funding programs, 30 months (39 months for covered bonds)
Issued & matured as per Q1 2011 (nominal SEKbn)
Source: Swedbank, Mar 31, 2011 interim report and Fact book
-80
-60
-40
-20
0
20
40
60
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Funding plan
37
Covered bonds, nominal SEKbn1 Senior unsecured, nominal SEKbn
• Nominal SEK 121bn in maturities for the remainder of 2011
Source: Swedbank Fact book, Mar 31, 2011
1 Excl. intra-group items
Liquidity and funding
0
50
100
150
200
2011 2012 2013 2014 2015 2016
Covered bonds
0
50
100
150
200
2011 2012 2013 2014 2015 2016
Senior unsecuredGuaranteed bonds
Liquidity reserve*
38
Liquidity and funding
Cash and holdings in central banks and deposits in other banks available o/n 63 437Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 29 214Securities issued or guaranteed by municipalities or PSEs 0Covered bonds 53 366 - Issued by other institutions 53 272 - Own issued 93Securities issued by non-financial corporates 0Securities issued by financial corporates (excl. covered bonds) 1 869Other 0Total 147 886* As defined by the Swedish FSA
Liquid assets outside Treasury organisation 103 737
Total 251 623
SEKm
Source: Swedbank Fact book, Mar 31, 2011
Structure of the Swedish domestic covered bond market• Benchmark system established in early 1990s
• Tap issuance enhances liquidity and reduces execution risk– Continuous daily issuance– Buy-backs against issuance of longer tenors – Total issue size often peak at SEK 40-60bn
• Market making at pre-set bid/offer spreads
39
Source: Swedbank
Liquidity and funding
40
Natural domestic wholesale funding market Liquidity and funding
Swedish households’ financial assets
Source: Statistics Sweden “Hushållens ställning och transaktioner“ Nov 17, 2011 as per Dec 31, 2010
0%10%20%30%40%50%60%70%80%90%
100%
1980 1990 2000 2005 2010
Deposits and retail bonds Equities
Pension savings and mutual funds Other f inancial assets
Swedbank’s domestic covered bonds
41
Source: Swedbank, Mar 31, 2011
Liquidity and funding
0
10
20
30
40
50
60
70
SPI 175 SPI 181 SPI 176 SPI 177 SPI 166 SPI 182 SPI 183 SPI 184 SPI 185 SPI 180
2009-12-31 2010-12-31 2011-03-31SEKbn
The Swedish covered bond market
42
Swedish Domestic Covered Bonds, in SEKbn Public debt projections 2010-2014, in SEKbn
Source: Government budget statement, Sep 23, 2010
• Domestic covered bonds represent approximately 1/3 of GDP and 1/2 of the total Swedish bond market
1168 11191189 1,139 1,119 1,071
970834
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
200
400
600
800
1,000
1,200
1,400
2007 2008 2009 2010F 2011F 2012F 2013F 2014F
Government Debt 2007-2014F % of GDP
Source: www.ascb.se
Liquidity and funding
0
200
400
600
800
1 000
1 200
1 400
1 600
Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111
Total SEK denominated outstandings
6. Swedbank’s lending process in Sweden
43
Credit originating process – mortgage loan application
52
Customer
START of process
Application
Initial Risk analysis with
recommendation
Product incl. prel. pricing
Detailed evaluation of cost of living,
risk analysis etc
Detailed collateralpreparation
Collateral, property valuation,
recommendation
Final risk-adjusted pricing negotiation
Credit decision
Printout, order collateral, payment, compiling credit
file etc
Signing
Printout, order collateral, payment, compiling credit file
etc
Branch officer
"Credit System"
Decision making body
Back office
11
Price negotiation
Credit origination process - TIME
12
10
8
7
65
4
3
2
1
9
13
Scoring and assessment of internal and external
payment records, income. social data, credit
behaviour etc.
Credit portfolio
Origination practices – summary • Income is always verified
– Direct access to tax authority filings
• UC AB (Upplysningscentralen) – Sweden’s largest credit information agency– Owned by the major Swedish banks. Supports more than 10 million credit- and commercial decisions
annually – The credit information agency also contains track record of delinquencies and defaults– Direct access to full tax authority filings
• Credit scoring – Is used on all customers with specific score cards for private individuals, SME’s large corporate etc.
• Affordability analysis carried out on all private individuals– 5Y fixed mortgage interest rate +300 bps, in addition 100bps in amortization of mortgage is applied– Minimum level of remaining cash-flow when all costs are included
• Valuations of single-family houses and cooperative apartments are based on market values. Value of a property is collected by an independent data provider and then affirmed by an internal or external appraiser
45
Swedbank’s lending process in Sweden
Source: Swedbank
46
Source: Swedbank
• Accumulated losses since 1982 of SEK 7.3bn
• Main part incurred during the years of 1991 and 1992
• Less than 10% in the private segment
Insignificant historical loan losses in Swedbank MortgageSwedbank’s lending process in Sweden
7. Swedish covered bond legislation
47
The Covered Bond Act entered into force on July 1, 2004 and is over-sighted by the Swedish FSA. Its main characteristics are: Dual recourse to the issuer and cover pool Dynamic, regulated pool of assets – frequently monitored by the Swedish FSA via
appointment of an independent inspector Regulated valuation of cover pool assets
The cover pool may consist of certain mortgage credits, public credits and supplemental assets
Maximum LTVs: Residential 75%, Agricultural 70%, Commercial 60%
Maximum 10% commercial loans and 20% supplemental assets in cover pool
Regular monitoring of the property values (reviewed on a monthly basis by Swedbank)
The cover pool value shall always exceed the aggregate value of claims (including derivatives)
A sound balance in terms of FX, interest rates and maturities must be achieved. It is deemed to exist when the present value of the cover pool at all times exceed the present value of liabilities (including derivatives), even on a stressed basis
Non-performing assets in the cover pool which are more than 60 days overdue must be disregarded for the purposes of the matching tests
Holders of covered bonds and relevant derivative counterparties benefit from a priority claim over the cover pool should the institution be declared bankrupt
Holders of covered bonds and relevant derivative counterparties rank pari passu ahead of unsecured creditors and all other creditors of the Institution in respect of assets in the cover pool
The assets in the cover pool, the covered bonds and any relevant derivative contracts that have been entered into the Register are required to be maintained as a unit and kept segregated from other assets and liabilities of the bankruptcy estate of the Institution
The administrators-in-bankruptcy are then required to procure the continued timely service of payments due under the covered bonds and any relevant derivative contracts
Overview of the Swedish covered bond legislation
48
Swedish covered bond legislation
Loan-to-value Ratios and Other Limitations
Matching Requirements
Benefit of a priority right over the cover pool
Administration in event of bankruptcy
The Covered Bond Act
Source: www.ascb.se
Administration of the cover pool in the event of bankruptcy• Should an Institution be declared bankrupt, at least one administrator-in-bankruptcy would be appointed by the bankruptcy court and
one administrator-in-bankruptcy would be appointed by the Swedish FSA. The administrators-in-bankruptcy would take over the administration of the bankruptcy estate, including the Cover Pool.
• Provided that (and as long as) the Cover Pool meets the requirements of the Covered Bond Act (including the matching requirements), the assets in the Cover Pool, the covered bonds and any relevant derivative contracts that have been entered intothe Register are required to be maintained as a unit and kept segregated from other assets and liabilities of the bankruptcy estate of the Institution. The administrators-in-bankruptcy are then required to procure the continued timely service of payments due under the covered bonds and any relevant derivative contracts. Consequently, the bankruptcy would not as such result in early repayment or suspension of payments to holders of covered bonds or to counterparties to derivative contracts, so long as the Cover Poolcontinues to meet the requirements of the Covered Bond Act.
• If, however, the Cover Pool ceases to meet the requirements of the Covered Bond Act, and the deviations are not just temporary and minor, the Cover Pool may no longer be maintained as a unit and the continuous payment under the terms and conditions of thecovered bonds and derivative contracts will cease. The holders of covered bonds and counterparties to derivative contracts would in such case instead benefit from a priority claim over the proceeds of a sale of the assets in the Cover Pool in accordance with general bankruptcy rules. This could result in the holders of covered bonds receiving payment according to a schedule that isdifferent from that contemplated by the terms and conditions of the covered bonds (with accelerations as well as delays) or that the holders of covered bonds are not paid in full. However, the holders of covered bonds and derivative counterparties would retain the benefit of the right of priority to the assets comprised in the Cover Pool. Any residual claims of the holders of covered bonds and derivative counterparties remain valid claims against the Institution, but will rank pari passu with other unsecured and unsubordinated claims.
49
Swedish covered bond legislation
Source: www.ascb.se
8. Swedbank’s cover pool
50
51
Rating AAA/Aaa by S&P and Moody’sTotal pool size SEK 642.9bnGeographic distribution Sweden 100%Current OC-level 27%
Weighted average seasoning 2 57 monthsAverage LTV 3, 4
– WA LTV on property level (Max LTV) 56%Non-performing loans 5 None
Fixed /Floating interest loans 6
– Fixed 36%– Floating 64%
Repayment structure 7
– Amortising 54%– Interest only 46%
Average loan size SEK 418 774Number of loans outstanding 1 535 061Dynamic pool Yes1 As per Mar 31, 20102 Public sector loans not included3 Index valuation as per Dec 31, 20104 Maximum LTV: Residential 75%, Commercial 60%, Forest and Agriculture 70%5 Past due loans > 60 days are not eligible for the cover pool6 Floating interest loans < 365 days7 Property level of cover pool
Cover pool data1
Source: Swedbank, Mar 31, 2011
Swedbank’s cover pool
Residentals91%
Public sector2%
Commercial0%
Forest & Agriculture
7%
Cover pool data
52
Source: Swedbank, Mar 31, 2011
Swedbank’s cover pool
Type of loans
North7%
Middle (incl. Stockholm)
32%
East17%
West (incl. Gothenburg
20%
South (incl. Malmoe)
24%
* Excluding public sector loans
Geographical distribution*
Loan size distribution by volume
14%
33%
20%9%
3% 2% 18%
0%5%
10%15%20%25%30%35%
SEK Thousands
Cover pool loan-to-value distribution
53
Swedbank’s cover pool
LTV distribution by volume*
Source: Swedbank, Mar 31, 2011
*LTV distribution as defined by the Association of Swedish Covered Bond Issuers (www.ascb.se)
21% 19%17%
14%12%
9%6% 1%
0%
5%
10%
15%
20%
25%
30%
00-10% 10-20% 20-30% 30-40% 40-50% 50-60% 60-70% 70-75%
9. Appendix
54
One-off income through sale of Lehman claim • One-off pre-tax income of SEK 716m in Q1 after agreement with Lehman and sale of
claim (US commercial real estate assets)
• Remaining gross exposure was USD 1.1bn as of 31 March 2011, consisting of 35 assets
• No. of repossessed assets are expected to increase (2 as of today)
• Over-collateralisation still intact
55
Financial performance
SEK 356bn term funding issued in 15 months…
56
• …with around SEK 181bn of maturities during the same period
• Issued SEK 323bn in covered bonds– 6 EUR-denominated covered bond benchmark deals, EUR 6.5bn
– 2 USD-denominated covered bond benchmark deals, USD 2bn
– 7 CHF-denominated covered bond benchmark deals, CHF 1.6bn
– Increased domestic SEK covered bond out standings, SEK 50bn
– 1 EUR-denominated senior unsecured benchmark deal, EUR 1bn
Issued & matured as per Q1 2011
-80
-60
-40
-20
0
20
40
60
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
20112010
(nom
inal
SEK
bn)
Liquidity and funding
Source: Swedbank, Mar 31, 2011 interim report and Fact book
57
Remaining government guaranteed debt • Exited the programme on 30 April 2010
• No issuance under the programme since summer 2009
• SEK 25bn of government guaranteed debt matured during Q1 2011
• Maturities of SEK 53bn for the remainder of 2011
57
Liquidity and funding
Maturity profile as per Q1 2011, SEKbn
0
20
40
60
2011 2012 2013 2014
USDSEKEURCHFHKDJPY
Funding sources
58
Swedbank AB Swedbank Mortgage AB*
*100% guaranteed from parent company- Irrevocable- Unconditional- Timely
100% owned
Program LimitLong Term
Global MTN USD 40bnDomestic MTN SEK 60bn
Short TermDomestic CP SEK 80bnEuropean CP/CD EUR 6bnUS CP USD 15bnYankee CD USD 10bnFrench CD EUR 4bnFinnish CD EUR 4bn
Source: Swedbank
Program LimitLong Term
Domestic Benchmark CB Unlimited*EMTN CB EUR 25bn144a US Covered bonds USD 15bnDomestic MTN CB SEK 150bnNorwegian Benchmark CB Unlimited*
Registered CB (stand alone doc.)
Short Term
Domestic CP SEK 50bnEuropean CP EUR 6bn
* Limited by cover pool size
Liquidity and funding
59
Swedbank – contacts and financial calendar
Jonas Erikson, Head of Group Treasury
[email protected] +46 767 6550 88
Gregori Karamouzis, Head of Debt Investor Relations
[email protected] +46 8 585 930 31
Peter Stenborn, Debt Investor Relations
[email protected] +46 8 585 909 30
Cecilia Mattsson, Debt Investor Relations
[email protected] +46 8 585 907 43
Ulf Jakobsson, Head of Funding
[email protected] +46 8 700 90 61
Martin Rydin, Head of Long-Term Funding
[email protected] +46 8 700 90 62
Ingela Saarinen-Kindbom, Money Markets and Short-Term Funding
[email protected] +46 8 700 98 10
Q2 Interim report, 21 July 2011
Q3 Interim report 25 October 2011
Q4 Interim report 14 February 2012
www.swedbank.com/investor-relations
Swedbank Group Treasury Regeringsgatan 13
SE-105 34 Stockholm, Sweden
Contact debt investor relations:
For further information, please contact: Financial calendar
Postal address: Visitors:
Appendix
59
60
Disclaimer
• Certain statements made in this presentation are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results and performance to differmaterially from any expected future results or performance, express or implied, by the forward looking statements. Factors that might cause forward looking statements to differ materially from actual results include, among other things, regulatory and economic factors. Swedbank AB assumes no responsibility to update any of the forward looking statements contained herein.
• No representation or warranty, express or implied, is made or given by or on behalf of Swedbank AB or its directors, officersor employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation. None of Swedbank AB or any of its directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising inconnection therewith.
• This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Swedbank AB, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision.