swedbank debt investor presentation q1 2012

Swedbank Debt Investor Presentation Q1 2012 May 2012

2

Table of contents 1. This is Swedbank 3

2. The Swedish economy 7

3. Swedish housing and mortgage market 14

4. Financial performance 24

5. Liquidity and funding 34

6. Swedbank’s cover pool 45

7. Appendix 53

1. This is Swedbank

3

The Bank for the many people, households and businesses

4

Latvia Population 2.2m Private customers 0.9m Corporate customers 74 000 Branches 59 ATMs 394 Cards 1.1m Employees 1 759

Lithuania Population 3.3m Private customers 1.9m Corporate customers 81 000 Branches 84 ATMs 488 Cards 1.9m Employees 1 992

Estonia Population 1.3m Private customers 1.0m Corporate customers 113 000 Branches 60 ATMs 503 Cards 1.1m Employees 2 446

Sweden Population 9.3m Private customers 4.0m Corporate customers 263 000 Organisations 67 000 Branches 315 ATMs 658 Cards 3.8m Employees 8 201

This is Swedbank

Source: Swedbank Fact book Q1, 2012

0

10

20

30

40

50

60

Sweden Estonia Latvia Lithuania

Mortgage lendingCorporate lending

0

10

20

30

40

50

60

Sweden Estonia Latvia Lithuania

Deposits Private

Deposits Corporate

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, Deposits Feb 2012

• Largest retail bank and fund manager in Sweden

Market shares, Lending Feb 2012

0 200 400 600 800 1000 1200

Other* 3.4%

Lithuania 2.8%

Latvia 2.7%

Estonia 4.4%

Sweden 86.7%

Sweden – the dominating home market • Total lending to the public amounts to SEK 1,169bn (as per Q1 2012), out of which

around 87% is originated in Sweden

• Estonia makes up 45% of total lending in the Baltics

6

Source: Swedbank Fact book Q1 2012, page 37

This is Swedbank

* Russia & Ukraine, Norway, Finland and NY Branch

Lending distributed by countries (Q1 2012)

SEK 1 013bn

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

The Swedish economy

Source: OECD Economic outlook 90 (table 33), Dec 15, 2011

-40

-20

0

20

40

60

80

100

120

2010 2011F 2012F

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2005 2006 2007 2008 2009 2010 2011 Q112

• Kingdom of Sweden rated Aaa/AAA/AAA • GDP growth 3.9% in 2011 • CPI/CPIF 1.3% / 1.0% (Apr 12 Y/Y)

9

Continued strong fiscal position

Source: OECD Economic outlook 90, Dec 15, 2011

Swedish government debt

The Swedish economy

SEKbn

Maastricht definition* of general government gross public debt as a percentage of nominal GDP

Source: Statistics Sweden and National Debt Office

Source: Swedish National Debt Office, Mar 2012

*General government gross debt according to the convergence criteria set out in the Maastricht Treaty comprises currency, bills and short- term bonds, other short- term loans and other medium- and long- term loans and bonds, defined according to ESA 95.

0

20

40

60

80

100

120

Sweden

Denmark

United Kingdom

Germany

France

Euro area

• Unemployment 7.7% (Mar12 Y/Y) • Debt to GDP 31.0% (Dec 11)

10

A budget in balance The Swedish economy

Source: Eurostat, Nov 10, 2011

Budget balance as a percentage of GDP

-12

-10

-8

-6

-4

-2

0

2

2009

2010

2011F

2012F

2013F

0%

2%

4%

6%

8%

10%

12%

43%

11%12%

11%

13%

10%EngineeringChemistryOther goodsForestryMineralsEnergy

0

20 000

40 000

60 000

80 000

100 000

120 000Import Export

Exports – key factor for growth

11

The Swedish economy

Exports and imports trend per month, SEKm

Source: Statistics Sweden, Apr, 2012

Data up to and including March 2012

Export – distribution by important commodity groups

Top 10 export countries Feb 2012

0

10

20

30

40

50

60

70

80

Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411

Current account balance at stable level

12

The Swedish economy

Current account balance as % of GDP

Source: OECD – Economic outlook 90, Dec 15, 2011

Current account net, Sweden

Source: Statistics Sweden , Mar 30 2012

-6

-4

-2

0

2

4

6

8

10

12

2007 2008 2009 2010 2011F 2012F 2013F

Sweden

Germany

Denmark

Finland

Canada

UK

France

Italy

US

SEKbn

Sweden has shown resilience through turbulent times

13

5 year Sovereign CDS

The Swedish economy

Source: Bloomberg, Apr 20, 2012

0

50

100

150

200

250

300

350

400

450

500

550

600A

pr-0

9M

ay-0

9Ju

n-09

Jul-0

9A

ug-0

9S

ep-0

9O

ct-0

9N

ov-0

9D

ec-0

9Ja

n-10

Feb-

10M

ar-1

0A

pr-1

0M

ay-1

0Ju

n-10

Jul-1

0A

ug-1

0S

ep-1

0O

ct-1

0N

ov-1

0D

ec-1

0Ja

n-11

Feb-

11M

ar-1

1A

pr-1

1M

ay-1

1Ju

n-11

Jul-1

1A

ug-1

1S

ep-1

1O

ct-1

1N

ov-1

1D

ec-1

1Ja

n-12

Feb-

12M

ar-1

2A

pr-1

2

Italy

France

United Kingdom

Germany

Sweden

3. Swedish housing and mortgage market

14

Swedish mortgage market • No securitization (on balance sheet), no sub-prime market, no 3rd party origination, no buy-to-let

market

• 70% 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

15

Swedish housing and mortgage market

1 Source: Boverket, 2011

Pace of household borrowing declines

16


Source: Riksbanken stability report 2011:2, Nov 29, and Sweden statistics 27 Mar, 2012, chart 2.4

Data up to and including February 2012

0

2

4

6

8

10

12

14

03 04 05 06 07 08 09 10 11 12

Annual percentage change

Real estate prices – Sweden 12 months development

17


Single-family homes1 Tenant owner rights2 Combined3

12M Δ

12M Δ

12M Δ

Apr/11 1% 6% 3%

May/11 0% 6% 2%

Jun/11 0% 5% 2%

Jul/11 0% 6% 2%

Aug/11 -2% 3% -1%

Sep/11 -3% 1% -2%

Oct/11 -4% -1% -3%

Nov/11 -5% -4% -5%

Dec/11 -7% -4% -6%

Jan/12 -4% -2% -4%

Feb/12 -4% -1% -3%

Mar/12 -4% 1% -3%

Source: Valuegard www.valuegard.se (Based on data from Mäklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE, 3 HOXSWE

http://www.valuegard.se/�

Price development

18


Source: SCB and Swedbank

Real estate price to disposable income, index 1993= 100

0

50

100

150

200

250

19

Swedish household financial assets and liabilities

Healthy household balance sheets Swedish housing and mortgage market

Source: Statistics Sweden “Hushållens ställning“ Q4 11, Feb 17, 2012

SE

Kbn

0

1 000

2 000

3 000

4 000

5 000

6 000

Total household debt Total financial assets excl property assets

0

2

4

6

8

10

12

14

16

18

20

22

0

20

40

60

80

100

120

140

160

180

200

220

87 90 93 96 99 02 05 08 11 14

Debt ratio (left scale) Interest ratio (right axis)

Structural interest rate decline key to affordability

20

Household debt and interest expenses after tax as percentage of disposable income

Source: Riksbanken, Financial Stability Report 2011:2, Nov 29, 2011, chart 2.7


% %

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

2011

Apartment buildings Single-family dwellings

21

Housing investments at a conservative level

Housing completions, apartments in Multi-family dwellings and Single-family houses in Sweden

Housing investments as a percentage of GDP (4Q moving average)


Number of apartments

Source: Statistics Sweden, May 9, 2012 (data as per FY 2011) Source: Reuters Ecowin, Apr 3, 2012 (data as per FY 2011)

0

2

4

6

8

10

12

14

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

SpainEurozoneDenmarkUKUSASweden

• New population growth have between 2000 and 2011 exceeded the actual new dwellings produced by more than 250,000 units

• Number of households increase as population grow

• Development tilted towards households with fewer members

Population growth far exceeds housing unit growth

22

Source: Statistics Sweden April 2012


Number of units Population growth and housing starts

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Population increase New housing starts, number of f lats

0

500

1 000

1 500

2 000

2 500

3 000

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 2010

Average building costs for dwellings in collectively built one or two-dwelling buildings, per sqm (LHS)Average purchase prices and assessed values for sold one- and two-dwelling buildings (conventional dwellings) (RHS)

House prices are moving in tandem with production costs

23

Average total house building cost & average house price development 1980-2010

Source: “Bostads- och byggnadsstatistisk årsbok 2012”, published Mar 16, 2012 by Statistics Sweden; page 109 (5.2.1) and 134 (7.1.1)

SEK/Sqm SEK, thousands


SEK

SEK th

4. Financial performance

24

Strong first quarter but uncertain macro • Net profit SEK 3.4bn

• Core Tier 1 capital ratio 15.9 per cent

• Return on equity 14.0 per cent

25

Financial performance - summary

0

2 000

4 000

6 000

Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12

SEKm Profit before impairments

Source: Swedbank interim reports and Fact books, Mar 31, 2012

Solid development

26

Financial performance - Group

SEKm Q1 11 Q4 11 Q1 12 Q/Q Y/Y

Net interest income 4 501 4 967 5 208 +241 +707

Net commissions 2 456 2 291 2 405 +114 -51

Net gains and losses 255 559 759 +200 +504

Other income 1 369 839 809 - 30 -560

Total income 8 581 8 656 9 181 +525 +600

Total expenses 4 513 4 947 4 413 -534 - 100 Profit before impairments 4 068 3 709 4 768 +1 059 +700

Credit impairments -972 -174 172 +346 +1 144

Profit for the period 3 852 965 3 425 +2 460 - 427

ROE 16.1 3.9 14.0

C/I 0.53 0.57 0.48

CT1-ratio 14.9 15.7 15.9

• Strong NII – Repricing lending – Lower cost government

guaranteed funding – Shrinking deposit margins

• Cost management on track

• Higher client activity – Corporate finance – FX/Fixed income – Bond origination


Cost reductions running according to plan • Target to reduce underlying costs by SEK 1bn 2012

• Year on year underlying cost decrease of SEK 185m

• Biggest reductions in staff (SEK 90m) and consultancy costs (SEK 75m)

• Further cost effects to be seen

27

Cost development

Cost Trend (SEKm) Q1 2011 Q1 2012 Y/Y

Total expenses 4 513 4 413 - 100 Variable staff costs 146 208 + 62

Compensation to savings banks 129 152 + 23

Underlying cost 4 238 4 053 - 185


15.9%

-1,0%- 0,4%

14.5%

Q1 2012 Basel 3* IAS 19** Q1 2012 including Basel 3 and IAS 19

Retail mortgage risk-weights

Internal measures (IRB Advanced, SME)

Core

Tie

r 1 ra

tio

Increase Decrease

Strong capitalisation • Capital management - dividend policy 50%, share buy-backs on hold, AGM approval for CoCos

• Capitalisation target withdrawn

• Management expectation: CT1 ratio of 13.5-14.5% (full Basel 3)

• Average Swedish mortgage RWA of 10-15% would impact CT1 ratio negatively with 1.0-1.9 percentage points

• Return target of 15%

28

Capital management – Core Tier 1 ratio

Source Swedbank , Mar 31 2012

14.5%

13.5%

Swedbank regulatory compliant – transition completed • Transformation of:

– Maturity structure liabilities – Liquidity reserve – Capital buffer

• Significantly reduced risk in balance sheet

• Cost for regulatory compliance taken

29

Capital management

Ratio Swedbank Expected requirements CT1-ratio, Basel 3 14.9% 10% (2013) 12% (2015) Liquidity coverage ratio 116% 100% (2015) EUR/USD Net stable funding ratio 96% 100% (2018)


Strong income growth

30

Financial performance - Retail

SEKm Q1 11 Q4 11 Q1 12 Q/Q

Net interest income 2 918 3 244 3 407 +163

Net commissions 1 314 1 259 1 261 +2

Total income 4 613 4 904 5 123 +219

Total expenses 2 415 2 486 2 342 -142 Profit before impairments 2 198 2 418 2 781 +363

Credit Impairments 5 216 24 -192

• Repricing moving ahead

• Cost trend according to plan

• Good credit quality

ROE 28.5 25.7 26.5

C/I ratio 0.52 0.51 0.46


Strong result and activity • Favourable market conditions

• Good activity in corporate finance and in bond issues

• Repricing trend, continued stable growth in Large Corporates NII

• Cost improvement visible

31

Financial performance - Large Corporates & Institutions

SEKm Q1 11* Q4 11* Q1 12 Q/Q

Net interest income 823 845 887 +42

- of which LC/FI** 433 563 652 +89

Net commissions 420 269 434 +165

Net gains and losses 366 224 648 +424

Total income 1 621 1 328 1 980 +652 Expenses excl variable staff cost 656 818 607 -211

Variable staff costs 83 13 106 +93 Profit before Impairments 882 497 1 267 +770

Credit Impairments -105 4 14 +10

* Excluding Lehman one-off ** Large Corporates/Financial Institutions

ROE 22.3 9.4 19.1

C/I ratio 0.46 0.63 0.36


NII pressure • Underlying NII under pressure

– Deposits from falling Euribor – Further deleveraging

• Net recoveries in all three countries

• Good business pipeline but weak consumer confidence

32

Financial performance - Baltic Banking

SEKm Q1 11 Q4 11 Q1 12 Q/Q

Net interest income 997 901 912 +11

Net commissions 317 380 371 -9

Total income 1 471 1 521 1 452 -69

Total expenses 651 719 620 -99 Profit before impairments 820 802 832 +30

Credit Impairments -382 -117 - 134 -17

ROE 13.9 -18.9 14.5

C/I 0.44 0.47 0.43


Stable asset quality

33

Risk highlights

• Impaired loans decreasing

• Continued resilience in Sweden

• Further improvements in the Baltic portfolio

• Ukraine remains risk area – SEK 200m additional provisions

Credit impairments (SEKm) Q1 12

Retail 24

LC&I 14

Baltic Banking -134

Estonia -78

Latvia -21

Lithuania -35

Group Functions & Other 268

Russia -65

Ukraine 333

Swedbank Group 172


5. Liquidity and funding

34

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

Q1 2012

Core balance sheet structure

35

Liquidity and funding

CEE lending Estonia Other corporate lending, Sweden & other Nordic

Other private, Sweden

Swedish mortgage loans

Other assets*

Interbank loans and repos

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

Q1 2012

Senior

Covered bonds

Deposits

Core T1 Suppl. cap

Government guaranteed debt

Amounts owed to credit institutions

Other liabilities**

Source: Swedbank, Mar 31, 2012

Assets Liabilities SEKbn SEKbn

*Other assets: derivatives, C-bank holdings interest bearing securities and other financial assets

**Other liabilities: derivatives, short-term funding and other financial liabilities

Funding strategy

• Main internal liquidity measure is survival horizon (accumulated cash-flows)

• Covered bonds less volatile than senior unsecured debt

• Secure presence in senior unsecured debt markets – OC level – Liquidity reserve – Structural subordination

36


Covered bond strategy

37

Source: Swedbank, Q1 2012


*e.g. Registered covered bonds

Maturity, years

< 5Y 3-7Y > 7Y

EUR/USD SEK 150-200bn

Other* SEK 50-85bn

Sweden SEK 300-375bn

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

OC

0

20 000

40 000

60 000

80 000

100 000

2012 2013 2014 2015 2016 2017

Senior unsecured debt

Senior unsecured debt strategy

38

Source: Swedbank, Mar 31, 2012, Nominal amounts

• Limited need given Swedbank’s balance sheet structure

• Secure OC

• Fund liquidity reserves

• Structural subordination?

Senior unsecured debt maturity profile

SEKbn

Ove

r-co

llate

ralis

atio

n

House price drop

House price sensitivity of the cover pool


Structural subordination • What is “right” level of asset encumbrance?

– Different quality of encumbrance: asset-liability matched vs. mismatched

• Balance between PD and LGD

• Risks – Bail in legislation swing factor? – Regulation – Market practice

39

Swedbank’s asset encumbrance


Source: Swedbank Facts Q1 2012

Current asset encumbrance 31 Mar 31 DecSEKbn 2012 2011

678 670 of w hich overcollateralisation 151 149

12 24Other encumbered assets 4) 12 12Total 702 705

Possible asset encumbrance 5) 31 Mar 31 Dec2012 2011

Other assets eligible for encumbrance 134 120 of w hich Cover pool 15 15 of w hich Central bank eligible assets 119 105Total 134 120

1) In relation to capital markets activities 2) Nominal amount excluding accrued interest3) Pledged or repoed securities on balance sheet 4) Collateral posted under CSA agreements5) Assets not currently encumbered but available for pledging in central banks

Cover pool assets 2)

Assets pledged or used in repo transactions 3)

0

5 000

10 000

15 000

20 000

25 000

30 000

Domestic CB

Euro CB USD CB (144A)

Other CB Senior unsecured

SEKm

Q1 12

Continued conservative stance

40

Long-term debt issued in Q1

• Continued high issuance of long-term debt, SEK 56bn during Q1

• Estimated issuance SEK 100-120bn for full year

• Higher degree of senior unsecured funding

• Awaiting new regulatory landscape of capital and funding


0

10 000

20 000

30 000

40 000

50 000

60 000

Domestic CP

ECP/CD USCP Yankee CD

Finnish CD

French CD

SEKm

Q4 11Q1 12

Q1 12


Outstanding short-term debt

29%19%

35%

10%

34%

67%

2% 5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 Q1 2012

5 years +

1-5 years

3-12 months

0-3 months

0

5

10

15

20

25

30

35

40

45

50

Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12

Total capital market funding Covered bond funding

Fundamental change of maturity profile

41

Average maturity profile of outstanding market funding


Months

SEK 673bn

SEK 785bn

• 2007 – 64% of wholesale funding < 12 months, SEK 13.2bn in central bank deposits

• Q1 2012 – 29% of wholesale funding < 12 months, SEK 165.6bn in central bank deposits


0

25

50

75

100

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Significantly lower issuance volumes going forward

42

Term funding issuance

Average term funding issuance

Maturities 2012

Average term funding need


SEKbn


Low need for USD-funding

43

SEKbn

• USD-funding need covered for more than 12 months • Issued USD 1.5bn of covered bonds (144a) YTD 2012

Source: Swedbank, Mar 31, 2012, (Fact book page 70)


0

50

100

150

200

250

Assets Liabilities

Other assets & liabilities, incl positions in derivatives (off-balance)Interest-bearing securities

Lending to the public

Loans to credit institutions

Cash and balances with central banks

Deposits and borrowings from the public

Amounts owed to credit institutions

Debt securities in issue

Liquidity reserve

44

1 94% of the securities in the liquidity reserve per Q1 2012 are rated AAA

According to the template defined by the Swedish Bankers' Association1

2 86% of the additional liquid assets fulfill the Liquidity Reserve definition by the Swedish bankers’ association except from that they are held outside the Treasury department.


SEKmCash and holdings in central banks 169 795Deposits in other banks available overnight 134Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 22 983Securities issued or guaranteed by municipalities or Public sector entitiesCovered bonds 57 905 - Issued by other institutions 57 905 - Own issuedSecurities issued by non-financial corporatesSecurities issued by financial corporates (excl. covered bonds) 2 713Other

Total 253 531

Additional liquid assets, Group 67 7952

6. Swedbank’s cover pool

45

46

Rating, S&P / Moody’s AAA / Aaa Total pool size SEK 678.4bn Geographic distribution Sweden 100% Current OC-level 28.5%

Weighted average seasoning 2 60 months Average LTV 3, 4 – WA LTV on property level (Max LTV) 59% Non-performing loans 5 None

Fixed /Floating interest loans 6

– Fixed 40% – Floating 60%

Repayment structure 7 – Amortising 44% – Interest only 56%

Average loan size SEK 434 925 Number of loans outstanding 1 559 777 Number of borrowers 1 145 570 Number of properties 750 458 Dynamic pool Yes

1 As per Mar 31, 2012

2 Public sector loans not included

3 Index valuation as per Mar 31, 2012 4 Maximum LTV: Residential 75%, Commercial 60%, Forest and Agriculture 70% 5 Past due loans > 60 days are not eligible for the cover pool 6 Floating interest loans < 365 days 7 Property level of cover pool

Cover pool data1

Source: Swedbank Fact book, Mar 31, 2012

Swedbank’s cover pool

Cover pool data

47


Source: Swedbank, Facts Dec 31, 2011

Geographical distribution - Sweden 100% 31 Mar2012

North 6,8%Norrbotten county (BD) 1,6%Västerbotten county (AC) 2,4%Västernorrland county (Y) 1,6%Jämtland county (Z) 1,2%Middle (including Stockholm) 44,5%Dalarna county (W) 2,4%Gävleborg county (X) 2,3%Värmland county (S) 2,3%Örebro county (T) 2,7%Västmanland county (U) 2,7%Uppsala county ( C) 4,1%Södermanland county (D) 2,6%Stockholm county (including Stockholm) (AB) 25,4%South (including Göteborg and Malmö) 48,7%Västra götaland county (Including Göteborg) (O) 16,9%Östergötland county (E) 4,1%Jönköping county (F) 3,7%Halland county (N) 3,5%Kronoberg county (G) 2,3%Kalmar county (H) 3,4%Skåne county (including Malmö) (M) 12,4%Blekinge county (K) 1,8%Gotland county (I) 0,6%

100,0%

Type of loans

Residentials 91,3% of which Single-family housing 60,6% of which Tenant owner rights 15,8% of which Tenant owner association 10,0% of which Multi-family housing 4,9%Public 1,4%Commercial 0,2%Forest & Agricultural 7,1%

100,0%

0%

5%

10%

15%

20%

25%

00-10 10-20 20-30 30-40 40-50 50-60 60-70 70-750%

5%

10%

15%

20%

25%

30%

35%

40%

00-10 10-20 20-30 30-40 40-50 50-60 60-70 70-75

Cover pool loan-to-value distribution

48


Source: Swedbank, Dec 31, 2011

• Weighted average LTV 59%

LTV distribution per property1 LTV distribution by volume1, 2

1 Public loans of 1.8% of the cover pool are excluded as they are either guaranteed by a Swedish municipality or the government and have therefore no LTV assigned to them. 2 LTV distribution as defined by the Association of Swedish Covered Bond Issuers (www.ascb.se)

Cover pool loan-to-value distribution

49


Source: Swedbank, Mar 31, 2012 (1excluding public sector loans)

WA LTV per property type1

1 0%

10%

20%

30%

40%

50%

60%

70%

Single-family homes

Tenant owner rights

Tenant owner associations

Multi-family housing

Commercial Forestry & Agricultural

Total all types

0

200

400

600

800

1 000

Q411 Q112 Q411 Q112 Q411 Q112 Q411 Q112 Q411 Q112 Q411 Q112 Q411 Q112 Q411 Q112

Single-family housing

Tenant owner rights

Tenant owner ass.

Multi family Forest & Agricultural

Commercial Public sector Total all types

31-60 days

0-30 days

Cover pool past due loans distribution • In total, past due loans represent approx. 0.13% of the assets in the cover pool

• 75% of total past due loans are past due 30 days or less

• Past due loans > 60 days are not eligible for the cover pool

50


Past due loans distribution by property type


SEKm

51

Source: Swedbank Mar 31 2012

• Total accumulated losses since 1982 of SEK 7.4bn

• Main part incurred during the years of 1992 and 1993

• Less than 20% in the private segment

Insignificant historical loan losses in Swedbank Mortgage Swedbank’s Mortgage AB

-0,10%

0,00%

0,10%

0,20%

0,30%

0,40%

0,50%

Residential Forest & Agriculture

• Total mortgage loan book of SEK 723bn

Turnover of Swedbank Mortgage AB’s total loan book

52

Swedbank’s Mortgage AB

SEKbn


Gross – Net changes in the total loan book

-100

-50

0

50

100

150

200

2007 2008 2009 2010 2011 Q1 12

New lendingPrepayment/RedemptionAmortisationExtra amortisationProvisions accNet change

7. Appendix

53

Rating

54

This is Swedbank

• Moody’s: 15 February 2012 Swedbank’s and Swedbank Mortgage’s long- and short term credit rating on review for possible downgrade (Moody’s rating review for European banks)

• S&P: 1 December 2011 Upgrade Swedbank’s and Swedbank Mortgage’s credit rating from A to A+

• Moody’s: 8 June 2011 Upgrade Swedbank’s standalone BFSR from D+ to C-

• S&P: 2 March 2011 Upgrade Swedbank’s standalone credit profile (SACP) from BBB+ to a-

Source: Swedbank Dec 31, 2011

31 December 2011 Short Long Short Long BFSR* Short Long

Swedbank A-1 A+ P-1 A2 C- F1 A

Swedbank Mortgage A-1 A+ P-1 A2

Covered bonds AAA Aaa

* Bank Financial Strength Rating

S&P FitchMoody's

55

Savings The Swedish economy

Source: OECD Economic Outlook 90, Dec 15 2011

Household net saving rates % of disposable income

-10

-5

0

5

10

15

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

F

Sweden

United States

Germany

Denmark

Finland

Norway

Impaired loans decreasing • Excluding FX effect, down SEK 2.4bn in Q1

• Improvements for corporates in all areas

56

Asset quality

Share of impaired loans, gross

Ukraine 61%

Russia 12%

Lithuania 12%

Latvia 19%

Estonia 6% LCI 0.12% Retail 0.18% 1 678

2943 353

6 798

4 349702

4 965

Q1 12

2 391

- 4 088 - 3 853- 3 031 - 1 078

-1 926

-3 938-2 666

40 328

22 139

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12

SEKm

Loans past due 60 days – performance Q/Q

57

Asset quality

-100

-80

-60

-40

-20

0

20

Q1

11

Q2

11

Q3

11

Q4

11

Q1

12

Q1

11

Q2

11

Q3

11

Q4

11

Q1

12

Q1

11

Q2

11

Q3

11

Q4

11

Q1

12

Q1

11

Q2

11

Q3

11

Q4

11

Q1

12

Q1

11

Q2

11

Q3

11

Q4

11

Q1

12

EURm

Estonia Latvia Lithuania RussiaUkraine

Provisions – well provided for • Increased individual provisioning rates

• Additional provisioning private portfolio Ukraine

• Positive rating migrations in home markets

58

Asset quality

Provision ratios, % Q1 12

Retail 90

LC&I 135

Baltic Banking 54

Russia 64

Ukraine 79

Group 65 16 598 15 952

14 78212 821 11 915

2 769 2 4362 409

2 435 2 478

5 2046 306

8 2069 255 10 801

61.0%

60.0%59.8% 61.5% 65.0%

0

5 000

10 000

15 000

20 000

25 000

30 000

Q1 11 Q2 11 Q3 11 Q4 11 Q1 12

SEKm

Individual provisions Portfolio provisions Write-of fs, gross, cum f rom 2010 Provision ratio

Credit impairments by business area, SEKm

59

Asset quality

-972

-324

-441

-174

172

Q1 11 Q2 11 Q3 11 Q4 11 Q1 12

Retail LC&I Baltic Banking Other (Russia/Ukraine)

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Proposed 2013 Proposed 2015

Supplemental capital (Equity, AT1 and/or T2), 1.5% + 2.0%

Countercyclical buf fer (Equity), 0-2.5%

Capital conservation buf fer (Equity can be used in stressed scenario), 2.5%

Swedish SiFi buf fer (Equity), 3% (2013), 5% (2015)

Min. requirement (Equity), 4.5%

Swedish capital requirement proposal • Regulatory minimum CT1 ratio (full Basel 3) for Swedish major banks of

10% as per January 2013 and 12% as per January 2015

60

Capital management – new regulatory requirements

Source: The Ministry of Finance, the Riksbank and the Swedish FSA

13.5-16%

12%

10%

15.5-18%

Proposal 2013 Proposal 2015

61

The gross margin should cover: Cost of liquidity ~0,3% Administrative costs ~0,3% Cost of capital ~ 0,13% Credit impairments ~ 0,03%

Net margin

0

1

2

3

4

5

6

Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12

%

Gross margin Swedbank's funding cost Stibor 3 months Swedish Riksbanks reporate

Mortgage loans gross margin (3 months) Swedish mortgage market

62

Long-term funding maturity profile • FY 2012 maturities amount to nominal SEK 86bn

− Of which SEK 46bn for the remainder of 2012

62

Long-term funding maturity profile, SEKbn

Source: Swedbank Mar 31, 2012

0

50

100

150

200

2012 2013 2014 2015 2016 2017 2018-

Government guaranteed debt

Senior unsecured debt

Covered bonds


63

Remaining government guaranteed debt • Exited the programme on 30 April 2010

• No issuance under the programme since summer 2009

• Maturities of SEK 9bn in government guaranteed debt for the remainder of 2012

63

Maturity profile as per Q1 2012, SEKbn

Source: Swedbank March 31, 2012

0

20

40

2012 2013 2014

JPY

CHF

USD

SEK

EUR


0

50

100

150

200

250

300

350

Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12

Demand deposits Savings account

0

50

100

150

200

250

300

350

Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12

Private Corporate

Deposits

64

Deposits from the public excluding repos

Source: Swedbank Fact book, Mar 31, 2012

SEKbn SEKbn

Deposits from the public excluding repos


1Corporate: From 1 January 2011 consolidated money market operations deposits are reported in Group Treasury

1

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

65

Source: Swedbank


66

Natural domestic wholesale funding market

Swedish households’ financial assets

Source: Statistics Sweden “Hushållens ställning“ Q4 11, Feb 17, 2012

0%10%20%30%40%50%60%70%80%90%

100%

1980 1990 2000 2005 2010 2011

Deposits and retail bonds Equities

Pension savings and mutual funds Other f inancial assets

Swedish covered bond market

0

10

20

30

40

50

60

70

80

Jun 12 Jun 13 May 14 Mar 15 Sep 15 Jun 16 Mar 17 Dec 17 May 20

SPI 176 SPI 177 SPI 166 SPI 182 SPI 183 SPI 184 SPI 185 SPI 186 SPI 180

2009-12-31 2010-12-31 2011-12-31 2011-03-31

Swedbank’s domestic covered bonds

67



SEKbn

New

0

200

400

600

800

1 000

1 200

1 400

1 600

2007 2008 2009 2010 2011

SE

Kbn

Swedbank MortgageTotal SEK-denominated covered bond outstandings

The Swedish covered bond market

68

Swedish Domestic Covered Bonds, in SEKbn Public debt projections 2012-2015, in SEKbn

Source: Actual and forecast from government budget statement, Sep 20, 2011

• Domestic covered bonds represent approximately 1/3 of GDP and 1/2 of the total Swedish bond market

Source: www.ascb.se , Dec 31, 2011

Swedish covered bond market

1 115 1 062 1 149 1 113 1 108 1 049 1 012920

790

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

200

400

600

800

1 000

1 200

1 400

2007 2008 2009 2010 2011 F2012 F2013 F2014 F2015

Government debt % of GDP

http://www.ascb.se/�

Funding sources

69

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


Program LimitLong Term

Domestic Benchmark CB Unlimited*EMTN CB EUR 25bnUSD Covered bonds (144a) USD 15bnDomestic MTN CB SEK 150bnNorwegian Benchmark CB Unlimited*

Registered CB (stand alone doc.)

Short Term

Domestic CP SEK 50bn

* Limited by cover pool size


0%

5%

10%

15%

20%

25%

00-10 10-20 20-30 30-40 40-50 50-60 60-70 70-80 80-90 >90

Swedbank Mortgage AB loan-to-value distribution

70

Swedbank’s Mortgage AB


LTV distribution per property LTV distribution by volume

• Weighted average LTV 62%

Public loans of SEK 10bn are excluded as they are either guaranteed by a Swedish municipality or the government and have therefore no LTV assigned to them

0%

5%

10%

15%

20%

25%

00-10 10-20 20-30 30-40 40-50 50-60 60-70 70-80 80-90 >90

Origination process – mortgage loan application

1

Swedbank’s lending process in Sweden

Source: Swedbank

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.

Origination practices – summary • Assessment of customer

– 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

• Assessment of collateral – 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

72


Source: Swedbank

• Customer contacts bank: Various channels

• Assessment of customer: See origination practices

• Application of loan promise: Written form, 6 month validity, size limit based on customer assessment

• Open tender offer process on property: Broker obliged to track offer process and provide list to property purchaser

• Purchase: Purchase agreement signed with bank, buyer, seller and broker; Confirmation of customer assessment and complete property valuation by bank; Down payment on property purchase by customer

• Effective date, access to property: i) Complete financing of purchase; ii) Mortgage deed, release and registration (lantmäteriet.se for houses and denotation to the tenant owner associations for tenant owner rights); iii) Signing of loan agreement with bank 1 loan agreement per interest rate fixing period, includes amount, borrower, mortgage deed owner, property details, appendix on mortgage deed describing collateral rights backing the loan and loan conditions; iv) Information of total loan size sent to UC

• Loan seasoning, contract renewal: Interest re-fixing: automatically renewed to same interval for variable rate mortgagees (3M); customer informed prior to reset date of fixed rate mortgages

• Loan pre payment: interest settlement on difference

73

Home loan purchase process – summary Swedbank’s lending process in Sweden

Day 0 •Credit overdraft or payment overdue

Reminder mail 1 (Day 10) •Automatic reminder mail to customer.

Reminder mail 2 (Day 20) •Automatic reminder mail to customer + collection unit mail to customer responsible.

Case selection •Decision on further customer contact.

Follow up •Follow up from collection unit to customer responsible for current status of customer contact.

Loan in arrears (Day 60) • (removed from

cover pool)

Loan is defaulted (Day 60) •Risk memo with recommendation for provisioning.

Provisioning booking •Portfolio provision at portfolio level, not individually assessed

Customer Credit law threshold •Once aggregate overdue amount > 5% of current loan balance the following steps against the customer may commence:

Debt demand (Day 30 after default) •Formal letter sent : If claim not paid within 30 days loan will be terminated

Loan is terminated (Day 60 after default) •Credit can not revert to performing unless decision is taken by credit committee.

Order to pay by enforcement authority (Day 60) •Voluntary or forced sale of property

Foreclosure process •approximately 6 months

Realized loss •Approx 3-6 months after completed foreclosure process

NPL process – performing to realized loss Swedbank’s lending process in Sweden

74


• Eligible: Minimum 480 hours of work in last 6 months

• Compensation: Income related compensation or base compensation: – Member of unemployment benefit fund > 12 months income related compensation, – Not a member of benefit fund or less than 12 months base compensation

• Details of compensation: – Monthly compensation for 5 day income week. – Maximum payout time: Unlimited – Income related compensation: 80% of previous income for first 200 days; 70% of income for

100 days; beyond 300 days at 65% of unemployment benefit income under first 300 days – Family considerations: Parent to child under 18: 200 days at 80% of income, 250 days at 70%

of income; beyond 450 days at 65% of unemployment benefit income under first 450 days – Maximum compensation is SEK 680 per day = income related compensation – Minimum compensation is SEK 320 per day = Base compensation – Grace period until first compensation payment: 7 business days after filing for unemployment,

45 business days if a voluntary resignation.

75

Social security – unemployment compensation Swedbank’s lending process in Sweden

Swedbank’s property related lending in Sweden primarily in LTV < 75% brackets

76



1%

7%

13%

19%

25%

31%

37%

43%

49%

55%

61%

67%

73%

79%

85%

91%

97%

103%

109%

115%

121%

127%

133%

139%

145%

>150

%

LTV

SEK 815 billion

3.1% of portfolio above 75% LTV 96.9% of portfolio below 75% LTV

0.3% of portfolio above 100% LTV

Swedbank’s private mortgage loan portfolio exhibits resilience even under extreme stress scenario

77

• A reverse stress-test was conducted with the aim to create an Exposure-At-Risk of SEK 15.0bn − 21% unemployment rate, house price drop of 40% and funding spreads increasing by

375bps • Potential losses even lower in the cover pool, as only loans with the highest quality are

included • During the Swedish mortgage portfolio’s worst ever 4-year period, 1992-1995, the loss level

was less than SEK 1bn

Source: Swedbank internal stress tests, Sep 30, 2011 based on data as per Dec 31, 2010

Swedbank’s asset quality in Sweden

Key macro driversReverse

stressComparison

scenario

Unemployment 21% 16%

Funding spread +375bps +125bps

House price drop -40% -30%EAR level SEK 15.0bn SEK 4.5bn

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

78

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 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. 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 Pool continues 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 the covered 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 is different 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.

79

Swedish covered bond legislation

Source: www.ascb.se


80

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


Ulf Jakobsson, Head of Funding


Kimmy Samuelsson, Head of Long-Term Funding


Ingela Saarinen-Kindbom, Money Markets and Short-Term Funding


Q2 Interim report 18 July 2012

Q3 Interim report 23 October 2012

Q4 Interim report 30 January 2013

AGM 2012 20 March 2013

Q1 Interim report 17 April 2013

[email protected]

www.swedbank.com/investor-relations/debt-investor

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

80

mailto:[email protected]�







http://www.swedbank.com/investor-relations/debt-investor�





81

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 differ materially 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, officers or 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 in connection 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.

swedbank debt investor presentation q1 2012

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