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Transcript of BofA Merrill Lynch - Banking & Insurance CEO Conference

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    an ng & nsurance on erence29 September 2010

    Michael Wolf, CEO

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    Progress continued throughout Q2

    Net profit of SEK 1.6bn

    Improved credit quality

    Strengthened capitalisation to 12.7 per cent Core Tier 1

    approva to uy ac er on s

    2

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    Recent business achievements

    Higher mortgage new sales market shares in Sweden

    Increased corporate activity

    Retails tailored service concept well received

    New in-principle framework agreement with Savings Banks

    Association

    3

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    Result by business area

    Q2 update Profit before impairments

    RetailSolid credit quality, higher customer activity

    1 000

    2 000

    Q1 10

    Q2 10

    Large Corporates & InstitutionsGood credit quality, repricing continues, slowertrading

    -1 000

    0

    Baltic BankingImproving asset quality, stabilised NII, Estoniaback to rofit

    -2 000

    Retail LargeCorporates &

    BalticBanking

    Russia &Ukraine

    AssetManagement

    Ektornet

    Russia & UkraineStabilising credit quality, continued restructuring

    2 000

    SEKm Operating result

    Q1 10

    n uss a

    Asset ManagementStable earnin s

    0

    1 000Q2 10

    EktornetRepossessed properties valued at SEK 1 010m, -2 000

    -1 000

    4

    e a argeCorporates &

    Institutions

    a cBanking

    uss aUkraine

    sseManagement

    orne

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    Pressure decreasing

    Net interest income

    5 000

    SEKm

    4 0233 7994 000

    4 500Retail LCI Baltic Banking Russia

    & UkraineGroup Treasury

    and Other

    -34 41-

    -2043 500

    2 500

    1 500

    2 000

    500

    1 000

    5

    0

    NII Q1 10 NII Q2 10

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    Commissions back to re-crisis levels

    Net commission income

    Positive trend from Q1 2009

    Market leader in cards and payments

    Growth driven by Asset Management

    Net commission income*

    2 500

    3 000

    m

    1 500

    2 000

    500

    1 000

    Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10

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    * Excl non-recurring items

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    Term funding ahead of lan

    Liquidity & Capital management

    YTD, SEK 150bn in term funding ofwhich around SEK 50bn during the

    -

    Outstanding wholesale funding(nom SEKbn )

    secon quarter

    SEK 60bn in remaining term funding

    397

    459

    173Total long-

    -term, non-guaranteed

    YTD around SEK 95bn of central bankrepos and guaranteed funding has been

    180

    174

    89Central bank

    term,guaranteed*

    redeemed Average maturity of wholesale funding

    116

    87

    112Total short-term, non-

    repos

    (38 months for covered bonds)

    97

    28

    0Total short-

    term,***

    guaranteed**

    Q2 2010

    * Issued with more than 12 months maturity, government fee of 83bp

    ** Including interbank deposits

    ***

    Q1 2010

    Q4 2009

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    ssue w ess an mon s ma ur y, governmen ee o p

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    Asset ualit develo ment

    Asset quality

    No impact of European sovereign debt crises

    Further stabilisation/improvement in the Baltic countries

    and liability side

    we an s res ence vast y mprove ICAAP

    n erna s ress es s

    Stress test of the Committee of European Banking Supervisors

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    Asset quality

    Credit im airments significantl reduced

    Sweden very low levels8 000

    SEKm

    ma recover es n uss a anUkraine

    6 672

    6 121

    6 000

    7 000

    Few new problems

    Property prices stabilising/increasing

    5 003

    4 000

    5 000

    Insolvency and debt restructuring laws Positive trend likely to continue 2 210

    3 000

    963

    1 000

    -1 000

    Q2 09 Q3 09 Q4 09 Q1 10 Q2 10

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    Retail LCI Baltic Banking Russia & Ukraine Other

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    Significant rogress made still work to be done

    5Y CDS spreads

    400

    300

    350

    200

    250

    150

    50

    100

    0

    30/12/2005 30/06/2006 31/12/2006 30/06/2007 31/12/2007 30/06/2008 31/12/2008 30/06/2009 31/12/2009 30/06/2010

    10

    Source: Datastream and Reuters

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    Will lending margin ressure decrease?

    Swedbank has re-priced a larger part of liabilities compared to

    Source: SEB Enskilda Equity Research

    Nordic banks long term funding broken down by time of issuance (based on ~3,000 bonds)

    Portion of pre-, post and mid-crisis funding matters

    The two extremes: Swedbank has only 30%

    pre-crisis funding and

    50% mid crisis funding80%

    100%

    120%

    Handelsbanken has 60%

    pre-crisis funding and ony

    around 20% mid-crisis

    funding20%

    40%

    60%

    Swedbank DnB NOR Nordea SEB Danske BankHandelsbanken

    Pre-crisis Mid-crisis Post-crisis

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    EQUITY RESEARCH 10

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    Basel 3 im act on Swedbank ost Jul amendments*

    NSFR is more or less in-line with proposed future minimum requirements,

    Core Tier 1 capital expected to decrease less than 4%, and RWA expected

    Swedbank has a leverage ratio with a substantial margin to the proposed

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    *Preliminary calculations

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    Summar

    NII pressure decreasing

    Improved risk profiles on both the asset and liability side

    Resilience vastly improved

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    New insolvenc law in Latvia

    Legal protection proceedings Insolvency proceedingsof legal entities

    Insolvency proceedingsof private persons

    NOVELTIESNOVELTIES

    LPP plan = business plan

    Diminished possibility to use LPP in bad

    faith, to delay time

    Debtor should be able to make factually

    Debtors property should be

    enforced in 6 months

    Simplified procedure to cancel

    appointment of administrator, also

    Debtors property should be enforced in 6 months

    Simplified procedure to cancel appointment of administrator,

    also with participation of secured creditors

    Possibility to restructure obligations of our clients by reaching

    a paymen s un er agreemen s

    concluded with bank

    Additional requirement to quality of the

    LPP plan money flow, substantiation of

    incomes etc.

    w par c pa on o secure

    creditors

    Administrator by agreement with

    bank is entitled to sell property

    without auction, also the company

    an agreemen a e c en w ma e concre e paymen s o e

    bank. Other creditors will not be entitled to ask enforcement of

    this pledge

    Possibility to check agreements concluded by debtors 3 years

    before proclamation of insolvency

    SWEDBANKS VIEWSWEDBANKS VIEW

    Positive

    Improvement of speed and efficiency of

    Positive

    Improvement of speed and

    Negative

    Efficiency of proceedings depends on the court practice.

    procee ngs e c ency o procee ngs men men s, w c are cruc a or we an :

    If total liabilities exceed LVL 100th (EUR 142th), insolvency

    procedure lasts 3.5 years

    If total liabilities do not exceed LVL 100th (EUR 142th),

    insolvency procedure lasts 2 years. Client has to repay theunsecure part o t e oan t at as rema ne a ter t e sa e o

    collateral covering 30% of his/her official income, but not less

    than LVL 60 (EUR 85) per month (i.e. 1/3 of min salary)

    Neutral(in total)

    e new aw prov es many pos t ve nove t es to t e ex st ng regu at on o nso vency procee ngs, ut ts e c ency w epen on mec an sm o

    implementation. In total the law changes are not expected to change the trend in credit impairments.

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