February 2016 - Swedbank

Swedbank investor presentation February 2016

2

Table of contents Executive summary 3

1. Quarterly financial update 5

2. Capital considerations 13

3. Liquidity and funding 19

4. Cover pool data 27

5. Swedish economy 35

6. Swedish housing and mortgage market 39

7. Appendix 46

■ Sweden’s largest retail bank with a leading position in our three Baltic home markets

■ Stable earnings – RoE of 13.5%

■ Strong asset quality – low share of impaired loans ratio, gross (40bps) and credit impairments ratio (4bps)

■ Solid liquidity and funding position – survival horizon more than 12 months

■ One of the best capitalised banks in Europe* with significant buffers to both MDA and Loss absorption trigger levels – CET1 capital ratio of 24.1%

Executive summary

3

*According to EBA stress test, Swedish FSA’s financial stability report, Dec 2014 and Swedish central bank, Nov 2015

Swedbank Q4 2015 – Stable result in a low interest rate environment

Swedbank FY 2015 – Improved market position

■ ROE: 12.6%

■ Cost/income ratio: 0.45

■ CET1 capital ratio: 24.1% (fully loaded CRD IV) – with requirements of 19.9%

■ Leverage ratio: 5.0%

■ Credit impairment ratio: 0.11%

■ Share of impaired loans: 0.40%

■ Total provision ratio for impaired loans: 56%

■ Liquidity and funding: LCR: 159%, NSFR: 107%

■ Credit ratings: AA-(N)/A+(P)/Aa3(S) from S&P/Fitch/Moody’s

Source: Swedbank FY 2015 interim report and Fact book Q4 2015

Source: Swedbank Q4 2015 Fact book

1. Quarterly financial update

5

Strong income in negative interest rate environment

6

Quarterly update - Swedish Banking

Ratios Q4 15 Q3 15

ROE, % 18.2 19.0

C/I ratio 0.44 0.43

• Higher mortgage margins

• Mortgage loan volume growth

• Deposit volume growth

Volumes, SEKbn Q4 15 Q3 15 ▲ QoQ

Loans 1 064 1 059 5

Deposits 453 431 22

SEKm Q4 15 Q3 15 ▲ QoQ

Net interest income 3 560 3 404 156

Net commission income 1 762 1 717 45

Other income 113 100 13

Total income 5 781 5 573 208

Total expenses 2 520 2 412 108

Profit before impairments 3 261 3 161 100

Credit impairments 347 35 312

Solid performance

• Flat loan volumes in local currencies

• Mixed margin development

• Lower deposit guarantee fee in Lithuania

• Solid asset quality

7

Quarterly update - Baltic Banking

Ratios Q4 15 Q3 15

ROE, % 19.3 16.2

C/I ratio 0.39 0.39


Loans 124 129 -5

Deposits 145 144 1


Net interest income 962 900 62

Net commission income 548 511 37


Total income 1 687 1 566 121

Total expenses 654 605 49

Profit before impairments 1 033 961 72

Credit impairments -112 -2 -110

Volatile market

• Higher activity in FX and equity trading

• Low corporate finance activity

8

Quarterly update - Large Corporates & Institutions

Ratios Q4 15 Q3 15

ROE, % 12.9 13.3

C/I ratio 0.47 0.44


Loans 182 182 0

Deposits 121 103 18


Net interest income 839 865 -26

Net commission income 529 509 20

Net gains and losses 413 315 98


Total income 1 817 1 722 95

Total expenses 861 766 95

Profit before impairments 956 956 0


Stable result

9

Quarterly update - Group results

SEKm Q4 15 Q3 15 ▲QoQ

Net interest income 5 759 5 811 -52

Net commission income 2 877 2 736 141

Net gains and losses 165 4 161

Other income 656 683 -27

Total income 9 457 9 234 223

Total expenses 4 239 3 879 360

Profit before impairments 5 218 5 355 -137


Other impairments 19 270 -251

Tax 974 1 012 -38

Net profit 3 813 3 928 -115

• Stable NII despite lower market rates

− Mortgage and deposit volume growth

− Mixed margins

• Seasonally higher expenses

− Total expenses in line with ambition to reach SEK 16bn in 2016


Ratios Q4 15 Q3 15

ROE, % 12.6 13.5

Cost/income ratio 0.45 0.42

CET1 capital ratio, % 24.1 23.0

Reduced REA

• Lower corporate credit exposures

• Increased collateral values

• Decreased interest rate positions

• Positive FX effects

Quarterly update - Capital

10

SEKbn Risk exposure amount

389.1-5.3

-3.1-3.8

-2.9

404.2

360

365

370

375

380

385

390

395

400

405

410

Q3 2015 Exposurechange

LGD changes Market risk Other risk Q4 2015

Increase Decrease

20.5%22.4% 23.0%

24.1%

19.9%

Q1 2015 Q2 2015 Q3 2015 Q4 2015 CET1 capitalratio

requirement*

Strong capitalisation – no excess capital Quarterly update - Capital

11

• CET1 capital ratio improved

− CET1 capital increase

− REA decrease

• Continued regulatory uncertainty

CET1 capital ratio, %

* Swedbank’s estimate based on SFSA’s announced capital requirements, including fully implemented buffers and Pillar 2 requirements

Solid asset quality

12

Quarterly update - Asset quality

Credit impairments, SEKm Q4 15 Q3 15 ▲QoQ

Swedish Banking 347 35 312

Baltic Banking -112 -2 -110

Large Corporates & Institutions 164 97 67

Swedbank Group 399 130 269

Ratios Q4 15 Q3 15

Credit impairment ratio, % 0.11 0.04 Share of impaired loans, gross % 0.40 0.35

Total provision ratio for impaired loans, % 56 58

• FY 2015 credit impairments ratio of 4bps (FY2014, 3bps)

2. Capital considerations

13

14.5%

15.8%

4.5%

3.5%

3.0%

1.0%

2.5%

1.3%

7.6%

2.0%

Systemic Risk inPillar 2

25% REA MortgageFloor

Individual Pillar 2charge

Capital ConservationBuffer

CountercyclicalBuffer (1.5%)

Systemic Risk Buffer

Min additional T1and T2 capital

Minimum CET1Requirement

11.0%

13.1%

4.5%

3.0%

1.0%

2.5%

0.9%

6.0%

2.0%

Systemic Risk inPillar 2

25% REAMortgage Floor

Individual Pillar 2charge

CapitalConservationBufferCountercyclicalBuffer (1.5%)

Systemic RiskBuffer

Minimum CET1Requirement

14

Capital position

19.9%

Swedbank CET1 Requirements

30.3%

24.1%

25.3%

Swedbank Total Capital ratio

Source: Swedbank 31 Dec, 2015 – estimated CET1 and Total capital requirement based upon the Swedish FSA’s memorandum (08/09/2014)

Swedbank CET1 Capital ratio Swedbank Total Capital Requirements

Res

tric

tive

Mea

sure

s

Cor

rect

ive

Mea

sure

s

MDA Restrictions

Composition of Swedbank’s CET1 and total capital ratio requirements – fully loaded CRDIV

-

50

100

150

200

250

2x Tot CapitalRequirement

2x Basel1floor

18% of REAincl P1 reg.

buffers

6.75%Leverage ratio

Swedbank Q42015

Requirement Total Capital Senior > 1Year

Relevance:

Timing:

Amount:

What qualifies:

Applies to Swedbank:

Regulatory uncertainty remains Capital regulation

Source: Swedbank, 31 Dec 2015

15

■ G-SIBs initially via Basel recommendations

■ Jan 2019 at the earliest - transition to be specified

■ Minimum of 18% of REA + P1 buffers or 6.75% leverage ratio

■ Capital + “Designated senior” >1Year

■ No, not a G-SIB

■ EU banks under BRRD

■ Q1 2016 at the earliest - transition to be specified

■ Set individually by Riksgälden (National Debt Office) BRRD proposal: 2 x Total capital requirements or 2 x Basel 1 floor

■ Capital + Senior >1Year

■ Yes

MREL TLAC

SEKbn Swedbank’s capital position

MR

EL

MR

EL

TLAC

TLAC

Swedish household loans(90% mortgages)

Shipping and offshore, TransportationManufacturing

Other corporate lending

Latvian lending

Other property management

Residential properties

Agriculture and forestry

Hotels and restaurants, Retail

64%

14%

4%

3%

7%

Lithuanian lending2%

6%

Estonian lending

Tenant owner associations

Asset portfolios – low risk

16

Source: Swedbank, 31 Dec, 2015 * Loans to the public excl. Credit institutions and SNDO

Asset quality

Group loan book* Q4 2015, total SEK 1 371bn Sweden

Baltic Banking

64%

36% PrivateCorporate

53%47% PrivateCorporate

02468

1012141618202224

SvenskaHandelsbanken

Nordea SEB Swedbank

Q315

2016

2017

2018

0

2

4

6

8

10

12

14

16

18

20


Nordea SEB Swedbank

2013

2014

2015

2016

02468

10121416182022


Nordea SEB Swedbank

2014

2015

2016

2017

17

Asset quality – stress tests

CET1 - The Riksbank stress test (%)

Source: EBA stress test Oct 2014

CET1 - The EBA stress test (%)

Swedbank’s strong relative risk position confirmed

Source: The Riksbank’s Financial Stability Report 2015:2, Nov 2015 chart: A74 Note: Capital ratios according to Basel III, initially and in the stress test.

CET1 - The Swedish FSA stress test (%)

• SFSA stress test: SEK 45bn

• Riksbank stress test: SEK 50bn

• EBA stress test: SEK 25bn

• ICAAP stress test: SEK 17bn

Total Swedbank loan losses in the different stress tests

Source: SFSA’s risk report Dec 2014

Source: The SFSA Dec 2014, Riksbank Nov 2015, EBA Oct 2014 and Swedbank Apr 2015

3. Liquidity and funding

19

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

Q4 20150

200

400

600

800

1 000

1 200

1 400

1 600

1 800

Q4 2015

Source: Swedbank 31 Dec, 2015

Core balance sheet* structure Liquidity and funding

Lithuania Latvia

Other corporate lending, Sweden & other Nordic countries

Other private, Sweden

Swedish mortgage loans

Senior unsecured debt

Covered bonds

Deposits

CET1 Suppl. capital

Assets Liabilities SEKbn SEKbn

* Simplified balance sheet

Estonia

20

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1980 1990 2000 2005 2010 2012 2013 2014

Other financial assets (LHS) Pension savings and mutual funds (LHS)

Equities (LHS) Deposits and retail bonds (LHS)

Total financial assets (RHS)

21

Covered bond strategy

Source: Swedbank 30 Sep, 2015

Liquidity and funding

Maturity, years

EUR/USD SEK 150-200bn

Other* SEK 50-85bn

Sweden SEK 300-375bn

<5Y 3-7Y >7Y

Swedish households’ financial assets SEKbn

Covered bond strategy

0

20

40

60

2016 2017 2018 2019 2020 2021 2022-


Senior unsecured debt strategy

Source: Swedbank 31 Dec 2015, *nominal amounts

Senior unsecured debt maturity profile

SEKbn*


22

0

10

20

30

40

50

60

70

80

90

100

Covered bonds Senior unsecured debt

0

50

100

150

200

250

300

350

0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 365

Conservative funding position • LCR 159% (Swedish FSA definition FFFS 2012:6)

• NSFR 107% (Basel committee)

• Issued SEK 229bn of term funding FY 2015

• Plan to issue around SEK 180bn in 2016

23


Term funding issuance – completed and planned SEKbn

Source: Swedbank 31 Dec 2015

SEKbn

Prefunded for more than 12 months

Survival horizon nominal amounts

Days forward

Private placements – active in both covered bonds and senior unsecured debt • All major currencies

• Bullet format, FRN or Fixed

• EUR 10m equivalent minimum size

• Sweet spots: – Senior: 2.5-5Y – Covered: 3-8Y – Longer tenors also possible

• Open to larger placements with smaller investor groups

• Open to tap existing bonds

• Listing is optional

• FRN’s (SEK and EUR) – issued with a “strike adjustment spread”*

• Program formats available: – Senior unsecured debt: MTN, NSV and

potentially USD 144a format – Covered bonds: MTN, RCB and

Norwegian CB program

24


*Spread added to the coupon to avoid negative coupon fixings. Bond issued above par to compensate for this. The above par value reflects the NPV of the adjusted spread

Liquidity reserve According to the template defined by the Swedish Bankers' Association



25

SEKmCash and holdings in central banks 186 313Deposits in other banks available overnight 249Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 77 731Securities issued or guaranteed by municipalities or public sector entities 4 146Covered bonds 44 830 - Issued by other institutions 44 830 - Own issuedSecurities issued by non-financial corporatesSecurities issued by financial corporates (excl. covered bonds) 735Other

Total1 314 004

Additional liquid assets, Group2, 3 50 499

1) 95% of the securities in the liquidity reserve per Q4 2015 are rated AAA. The rating requirement is AA-.

2) 89% of the additional assets fulf ill the Liquidity Reserve definition by the Sw edish Bankers’ Association except for that they are held outside the Treasury department.

3) 85 % of the additional assets are rated AAA.

Rating

26


Liquidity and funding - Credit ratings

• December 3, 2015, S&P raised Swedbank AB to AA-/A-1+ to reflect their view of Sweden's ongoing support of its systemically important banks. As such, S&P removed the negative adjustment notch in place since July, which reflected an expected negative transition due to the potential removal of government support. The outlook on the rating is negative, reflecting S&P’s view of heightened economic risk for the Swedish economy

• June 25, 2015, S&P raised Swedbank’s standalone rating to A+. The outlook was changed to stable, from negative. The main drivers are a stable management, strong key ratios in efficiency, and earnings stability

• June 17, 2015, Moody’s upgraded Swedbank to Aa3 with a stable outlook. The upgrade reflects Moody’s estimation that Swedbank’s strong asset quality and stable earnings generation, underpinned by focused management and established franchise in Sweden and the Baltic countries, position the bank well to manage challenges coming from the low interest-rate environment, developments in mobile banking, and competition in historically more profitable activities

• June 09, 2015, Fitch affirmed the rating, with a positive outlook. Fitch restated they expect to upgrade the rating to AA- provided Swedbank continue to build on the current track record

Short Long SACP¹ Short Long BCA¹ Short Long VR¹

Swedbank A-1+ AA- a+ P-1 Aa3 a3 F1 A+ a+

Swedbank Mortgage A-1+ AA- - P-1 Aa3 - - - -

Covered bonds - AAA² - - Aaa - - - -

¹ Standalone Rating² Stable outlook

S&P (Negative) Moody's (Stable) Fitch (Positive)

4. Cover pool data

27

Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation (www.coveredbondlabel.com )

http://www.coveredbondlabel.com/

28

Rating, S&P / Moody’s AAA / Aaa Total pool size SEK 817.9bn Geographic distribution Sweden 100% Current OC-level 57.9%

Weighted average seasoning 2 65 months Average LTV 3, 4 – WA LTV on property level (Max LTV) 53% Non-performing loans 5 None

Fixed /Floating interest loans 6

– Fixed 29% – Floating 71%

Repayment structure 7 – Amortising 58% – Interest only 42%

Average loan size SEK 517 196 Number of loans outstanding 1 581 490 Number of borrowers 1 115 334 Number of properties 744 300 Dynamic pool Yes

1 As per 30 Dec, 2015

2 Public sector loans not included

3 Index valuation as per 30 Dec, 2015 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 30 Sep 2015

Swedbank’s cover pool



Cover pool data

29




Geographical distribution, Sweden, per cent 30 Dec2015

North 6.5Norrbotten county (BD) 1.4Västerbotten county (AC) 2.4Västernorrland county (Y) 1.5Jämtland county (Z) 1.2Middle (including Stockholm) 44.9Dalarna county (W) 2.1Gävleborg county (X) 2.1Värmland county (S) 2.2Örebro county (T) 2.5Västmanland county (U) 2.5Uppsala county ( C) 4.0Södermanland county (D) 2.4Stockholm county (including Stockholm) (AB) 27.1South (including Göteborg and Malmö) 48.6Västra götaland county (Including Göteborg) (O) 17.5Östergötland county (E) 4.1Jönköping county (F) 3.6Halland county (N) 3.8Kronoberg county (G) 2.1Kalmar county (H) 3.0Skåne county (including Malmö) (M) 12.4Blekinge county (K) 1.5Gotland county (I) 0.6

100.0

Type of loans

Residentials 91.3% of w hich Single-family housing 57.4% of w hich Tenant ow ner rights 18.8% of w hich Tenant ow ner association 10.4% of w hich Multi-family housing 4.7%Public 0.9%Commercial 0.6%Forest & Agricultural 7.2%

100.0%


Cover pool loan-to-value distribution

30



• Weighted average LTV 53%

LTV distribution per property1 LTV distribution by volume1, 2

1 Public loans of 0.9% 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)


0%

5%

10%

15%

20%

25%

30%

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

5%

10%

15%

20%

25%

30%

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


Cover pool loan type and loan-to-value distribution

31



1excluding public sector loans of 0.9%

WA LTV per property type1

1


0%

20%

40%

60%

80%

100%

120%

0%

20%

40%

60%

80%

100%

120%

Single-familyhomes

Tenant ownerrights

(apartments)

Tenant ownerassociations

Multi-familyhousing

Commercial Forestry &Agricultural

Total alltypes

Percentage of the pool Average LTV per loan type


Strong resilience to house prices changes

• Current OC-level of 57.9%

• Can withstand a severe house price drop and still be able to issue AAA-rated covered bonds

32

Swedbank’s cover pool O

ver-

colla

tera

lisat

ion

House price drop

House price sensitivity of the cover pool



0%

10%

20%

30%

40%

50%

60%

70%

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

OC, Q415


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 which remain on the balance sheet

The cover pool may consist of certain mortgage credits, public credits and supplemental assets. There is no requirement to segregate mortgage and public credits.

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, revaluation of property prices in case of significant drop (generally interpreted as 15% drop)

No mandatory over-collateralisation (OC)

Regional constraint on collateral assets (Mortgage - EEA, Public - OECD)

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. Present value cover must hold even after 1% upward and downward shift in the yield curve and a 10% change in the currency

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 and rank pari passu ahead of unsecured creditors and all other creditors of the institution in respect of assets in the cover pool

The registered assets in the cover pool, the covered bonds and any relevant derivative contracts 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

33

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

http://www.ascb.se/

5. Swedish economy

35

-5

-4

-3

-2

-1

0

1

2

3

4

04 05 06 07 08 09 10 11 12 13 14 15

Continued strong fiscal position • Kingdom of Sweden rated Aaa/AAA/AAA • GDP growth 3.9%1 (Q315 Y/Y), 0.8%2 (Q315 Q/Q) • CPI/CPIF 0.1% / 0.9% (Dec 15 Y/Y) • Unemployment ratio3 6.7% / 7.1%2 (Dec 15 Y/Y) • Debt to GDP 44% (Maastricht debt Dec 2014)

36

Swedish economy

Key Economic Indicators, 2014-2017

Source: Swedbank Economic Outlook Jan 2016 Source: Statistics Sweden and National Debt Office 3 Calculated for the population between 16-74 years old

Source: Statistics Sweden Dec 2015

GDP, growth Q/Q, %2

Data up to and including Q3 2015

1Calendar adjusted, 2Seasonally adjusted

+0.8%

0

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

Resources Expenditures

Import

GDP

Gross investments

Public consumption

Private consumption

Export

The output of the Swedish economy

Source: Statistics Sweden Dec, 2015

2014 2015F 2016F 2017FReal GDP (Calendar adjusted) 2.4 3.5 3.1 3.1CPI index, average -0.2 0 0.9 2.1CPIF, average 0.5 0.9 1.4 1.9Unempl. Rate (15-74), % of labor force 7.9 7.4 6.5 6.4Savings ratio (households),% 15.3 16.2 17 17.1Real disposable income (households) 2.2 3.6 4 2.9

0

20 000

40 000

60 000

80 000

100 000

120 000

-04 -05 -06 -07 -08 -09 -10 -11 -12 -13 -14 -15

ImportExport

0%

2%

4%

6%

8%

10%

12%

-6

-4

-2

0

2

4

6

8

10

08 09 10 11 12 13 14 15F 16F 17F

Germany

Denmark

Sweden

France

Finland

United States

Canada

United Kingdom

Italy

Exports – key factor for growth

37

Swedish economy

Source: Statistics Sweden, Dec 2015

Current account balance as % of GDP

Source: OECD – Economic outlook 98, table 51, Nov 2015

Exports by important commodity groups, %

Exports and imports trend per month, SEKm Current prices

Top 10 export countries, %

Source: Statistics Sweden, Dec 2015

Source: Statistics Sweden Dec 2015

14%

45%

14%

11%

10%

7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Energy

Minerals

Forest

Chemical

Engineering

Other

6. Swedish housing and mortgage market

39

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

to-let market

• 70% home ownership1

• Rental market is regulated

• 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 and conservative cost of living

• Very limited debt forgiveness possibilities (full recourse)

• Strong social security and generous unemployment benefit system

40

Swedish housing and mortgage market

1 Source: Boverket, 2011

0

2

4

6

8

10

12

14

16

18

05 06 07 08 09 10 11 12 13 14 15

Annual percentage change, total Mortgage lending

Household borrowing growth

41

Lack of residential housing drives household lending growth

Source: Swedbank, Statistics Sweden, data as per December 2015

%


• LTV cap of 85% – Mandatory since 2010 (SFSA) – (Min 15% own equity)

• Amortisation (FSA proposal) – 2% annual amortisation >70% LTV – 1% annual amortisation >50% LTV

• Risk-weight floor of 25% on mortgage loans

Data up to and including Dec 2015

40%

50%

60%

70%

80%

90%

100%

0-50% 50-70% >70% Total

Swedbank - tightened mortgage standards

• Average LTV in back book is 57%. Average LTV in new lending is 69%

• Tightened amortisation standards (e.g. gross Debt-to-Income cap of 500%)

• 95% of households with LTV >70% amortise in Q4 (89% in back-book)

• 82% of households with LTV 50-70% amortise in Q4 (56% in back-book)

• In total 81% of households amortise in Q4 (63% in back-book)

42

50%

55%

60%

65%

70%

75%

2009 2010 2011 2012 2013 2014 Q12015

Q22015

Q32015

Q42015

LTV distribution

Single-family homes, back-book Single-family homes, new

Tenant-owner rights, back-book Tenant-owner rights, new

LTV


Amortisation level – new lending

Source: Swedbank, 31 Dec, 2015

0

20 000

40 000

60 000

80 000

100 000

120 000

75 78 81 84 87 90 93 96 99 02 05 08 11 14

Net addition through conversion

Tenant-owned apartments

Rental

Multi-family dwellings (rental and tenant-owned apartments)

Single-family houses

Population change

Shortage of housing Swedish housing and mortgage market

Housing completions in Sweden

Num

ber o

f un

its a

nd p

erso

ns

• 2014 58% of the apartments was produced in the three largest areas (Stockholm, Gothenburg and Malmoe)

• 55% of the single-family dwellings was produced outside of the largest cities

• 52% was rental apartments (35% in Larger Stockholm and 65% outside the three larger areas)

• Housing starts in H1 2015 might show trend-shift

Source: Swedish Riksbank’s Financial Stability Report 2015:2, chart: 2:12 and Statistics Sweden Source: Statistics Sweden Aug 2015

43

Num

ber o

f un

its

0

10 000

20 000

30 000

40 000

50 000

05 06 07 08 09 10 11 12 13 14 H115

0

2

4

6

8

10

12

71 74 77 80 83 86 89 92 95 98 01 04 07 10 13 16Interest-to-income ratio Historical average

0

100

200

300

400

500

600

700

71 74 77 80 83 86 89 92 95 98 01 04 07 10 13 16Total assets excl. collective insurance Real assets (Housing) Debt

Affordability withstands higher indebtedness • Low interest rate environment • Disposable income

– Increase in salaries

– Tax cuts (income + property tax etc.)

• Higher indebtedness – Higher share of home ownership

– Rapid population growth (immigrations)

– Urbanisation trend

• Wealth – Increased house prices

– Mutual funds, pension savings etc.


Swedish household financial assets and liabilities to disposable income

Household interest expenditure in Sweden to disposable income

Source: OECD Economic Outlook 98, table 23, Nov 2015

Source: Swedish Riksbank’s Financial Stability report 2015:2 (chart A3:1)

%

%

Source: Swedish Riksbank’s Financial Stability report 2015:2 (chart 2:10)

44

Household saving rates % of disp. income

-10

-5

0

5

10

15

20

99 01 03 05 07 09 11 13 15F 17F

Sweden

Germany

Norway

United States

Finland

Denmark

STOCKHOLM

Total

MALMÖGÖTEBORG

0

50

100

150

200

250

300

05 06 07 08 09 10 11 12 13 14 15

Total Tenant owner rights (apartments) Single-family houses

0

50

100

150

200

250

300

05 06 07 08 09 10 11 12 13 14 15

Tenant owner rights (apartments) Single-family houses

0

50

100

150

200

250

300

350

05 06 07 08 09 10 11 12 13 14 15


0

50

100

150

200

250

05 06 07 08 09 10 11 12 13 14 15


Upward pressure on house prices Swedish housing and mortgage market

Sweden, total

Source: Valueguard Index (2005=100), 31 Dec, 2015

Stockholm

Gothenburg Malmoe

45

Appendix

46

0

5

10

15

20

25

0

20

40

60

80

100

120

140

160

2011 2012 2013 2014 2015

NSFR LCR CET1 capital ratio, CRDIV (RHS)

Swedbank – a low-risk bank with strong capital base • Low risk – a Board of Directors’ strategic priority – ensures access to funding markets and low funding costs

• Retail profile and four home markets a key feature – 86% of total loans originated in Sweden - Swedish mortgages account for 58% of total loans – 90% of total loans are collateralised (76% real estate and 14% other collateral)

• Strong capital position – Board of Directors’ decision to maintain a buffer above prevailing SFSA capital requirements to have operational flexibility – current buffer 420bp

• Conservative funding and liquidity position – survival horizon longer than 12 months assuming closed funding markets, NSFR 107% and LCR 159%

• Baltic operations self-funded – Loan-to-Deposit ratio < 100%

%

This is Swedbank

Liquidity & capital %


Credit impairment ratio %

47

-0.40

-0.30

-0.20

-0.10

0.00

0.10

0.20

Q410 Q211 Q411 Q212 Q412 Q213 Q413 Q214 Q414 Q215 Q415

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

Q4 10 Q4 11 Q4 12 Q4 13 Q4 14 Q4 15

Swedbank – strong and stable earnings capacity • Four home markets – Sweden, Estonia, Latvia and Lithuania

– Strong and stable economies – Market-leading position in all home markets – Largest customer base in all home markets

• Retail profile ensures stable earnings with low volatility

• High cost efficiency – a strategic priority – ensures good profitability

• Stable earnings is first line of defence supporting low risk profile and strong capital position

SEKm

This is Swedbank


Profit before impairment

48

0.30

0.35

0.40

0.45

0.50

0.55

0.60

2010 2011 2012 2013 2014 201512 000

14 000

16 000

18 000

20 000

2010 2011 2012 2013 2014 2015 Ambition2016

Acquistion of Sparbanken Öresund

Swedbank – market leader in cost efficiency • Best in-class cost efficiency – an executive management strategic priority • Strong dedication from executive management on cost and change management

− Integrated in corporate culture − Focus on straight-through-processing − Evolving household banking model – digitalisation trend

• Retail profile a key feature − Four home markets – Sweden, Estonia, Latvia and Lithuania – reduce complexity − Largest private and SME customer base − High degree of digitalisation in home markets

SEKm Total expenses

This is Swedbank


C/I ratio

49

Sweden’s largest retail bank

50

Latvia Population 2.0m Private customers 0.9m Corporate customers 90 000 Branches 41 ATMs 413 Cards 1.0m Employees 1 570

Lithuania Population 3.0m Private customers 1.5m Corporate customers 84 000 Branches 67 ATMs 454 Cards 1.6m Employees 1 880

Estonia Population 1.3m Private customers 0.8m Corporate customers 135 000 Branches 36 ATMs 423 Cards 1.1m Employees 2 303

Sweden Population 9.6m Private customers 4.0m Corporate customers 265 000 Organisations 66 000 Branches 275 ATMs * Cards 4.1m Employees 7 789

This is Swedbank

~9%* ~86%*

* Share of loanbook

* ATMs are handled in Bankomat AB (www.bankomat.se)

Source: Swedbank Fact book Q4 2015

Stable result – strong capitalisation

51

Group results – FY2015

SEKm FY 2015 FY 2014 ▲YoY

Net interest income 22 993 22 642 351

Net commission income 11 199 11 204 -5

Net gains and losses 571 1 986 -1 415

Other income 2 861 3 472 -611

Total income 37 624 39 304 -1 680

Total expenses 16 333 17 602 -1 269

Profit before impairments 21 291 21 702 -411


Other impairments 326 257 69

Tax 4 625 4 301 324

Net profit 15 727 16 447 -720

• Strong NII in negative interest rate environment

• Stable commission income

• Weaker NGL due to valuation effects

• Total expenses in line with ambition to reach SEK 16bn in 2016


• Extra dividend from Estonia triggered increased tax expense

Ratios FY 2015 FY 2014

ROE, % 13.5 15.0

Cost/income ratio 0.43 0.45

CET1 capital ratio, % 24.1 21.2

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

52

% %

Source: Source Sweden: Statistics Sweden (SCB) as per Dec 2015 Source Estonia: Estonian Central Bank, as per Dec 2015 Sources Latvia: Association of Commercial Banks of Latvia (ACBL) & The Financial and Capital Market Commission (FCMC), as per Dec 2015 ** Lending as per Sep2015 Source Lithuania: Association of Lithuanian Banks (LBA), * Deposits as per Sep 2015, *** Lending as per Sep2015

This is Swedbank

Market shares, Deposits

• Largest retail bank and fund manager in Sweden

Market shares, Lending

Sweden 80%

Estonia 7%

Latvia 5%

Lithuania 5%

Other 3%

Lending and deposits

67%

Treasury, Trading and

Capital Markets2%

Asset Management

12%

Payment, Cards

9%

Insurance3%

Share of P&L of associates

2%

Other5%

Strong earnings capacity – retail bank profile

53

This is Swedbank

FY Total Income evolution, SEKbn

…And distribution by business area

FY 2015 Total income geographic distribution…


0

5

10

15

20

25

30

35

40

45

2011 2012 2013 2014 2015

OtherNet Gains & Losses on financial itemsNet Commission Income, otherNet Commission Income, Retail

0 200 400 600 800 1000 1200

Other* 4.4%

Lithuania 2.7%

Latvia 2.1%

Estonia 4.3%

Sweden 86.5%

Swedish Mortgage loans (private+corp)

Other corporate (incl. LC&I, Sweden)

Sweden – the dominating home market • Total lending to the public amounts to SEK 1 371bn (as per Q4 2015), out of which

around 86% is originated in Sweden

• Estonia makes up 47% of total lending in the Baltics

54


This is Swedbank

* Denmark, Norway, Finland and NY Branch

Lending distributed by countries (Q4 2015)

SEK 1 186bn

0123456789

102014-12-31 2015-12-31

Oil sector under stress

55

Asset quality

25

30

35

40

45

50

55

60

65

70

Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16

Brent crude oil price, USD/barrel 2016Historic oil price, USD

Shipping & Offshore, loans, SEK 29.8bn • Loan portfolio negatively impacted by lower oil price, SEK 18.3bn

• Derivative exposures of SEK 2.7bn

• Negative rating migrations

60% of the portfolio is negatively impacted by lower oil price

Source: Bloomberg

11.0%

9.0%

Pillar 2 CET1Requirements

Pillar 1 CET1Requirements

56

● “It is particularly important that FI has the possibility of giving due consideration to the specific situation…in which a firm in financial stress finds itself… For example, certain risks included in the assessment of the Pillar 2 basic requirement might have materialized, which might mean there are no longer grounds for requiring the firm to hold capital for them”.

● “It ought to be positive for financial stability that a firm has the possibility… to restore its capital without the firm necessarily becoming subject to priorly specified and automatic legal restrictions. In other words, firms are hence given the possibility of re-establishing their capital in a strained situation without automatic restrictions on distributions or, depending on the size of the capital shortage, a formal resolution phase being activated."

● “Hence…a firm may freely choose…the most suitable way of restoring the capital in that specific situation. For example, the firm is not obliged to halt or limit dividends or interest payments on Tier 1 capital contributions, if the firm can identify other and more appropriate ways of restoring the capital sufficiently quickly.”

Source: Swedish FSA Memorandum: ”Capital requirements for Swedish banks” – 8 Sep 2014 and Swedbank

AT1 capital transaction

Corrective M

easures R

estrictive Measures

*Fully loaded CRD IV

19.9%*

No automatic sanctions for breaching the Pillar 2 capital requirements

MDA Restrictions

Swedbank CET1 Requirements

0

10

20

30

40

50

60

70

80

Average2014

Q115 Q215 Q315 Q415

Other


Covered bonds

92

94

96

98

100

102

104

106

108

2013 2014 2015

NSFR

Increased long-term funding activity

• FY 2015 issuance of SEK 229bn

• NSFR at 107 per cent

57


Net Stable Funding Ratio

Quarterly long-term funding issuance

SE

Kbn

P

er c

ent


0

5

10

15

20

25

30

35

40

45

Total capital market funding Covered bond funding

29%

15%

35%

11%

34%

62%

2%11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 Q4 2015

5 years +

1-5 years

3-12 months

0-3 months

Fundamental change of maturity profile

58

Average maturity profile of outstanding market funding


Months

SEK 673bn

SEK 827bn

• 2007 – 64% of wholesale funding < 12 months, SEK 13bn placed with central banks

• Q4 2015 – 26% of wholesale funding < 12 months, SEK 186bn placed with central bank


0

50

100

150

200

2016 2017 2018 2019 2020 2021 2022-

Senior unsecureddebtCovered bonds

59

Long-term funding maturity profile

Long-term funding maturity profile, by funding source



SEKbn SEKbn

Long-term funding maturity profile, by currency

Benchmark transactions FY 2015 ● USD 750m, Perp. NC5 (2020), AT1, 5.50% - equity conversion

● USD 1bn 144a Senior, 5Y (2020), T+77bp (+ USD 400m 3Y (2018) T+65bp)

● EUR 1bn CB, 7Y (2022), Fixed MS-5bp

● GBP 500m CB, 3Y (2018 FRN, 3m £L+20bp

● GBP 300m Senior, 4Y (2019), Fixed G+80bp

● SEK 3bn, Senior 5Y (2020), Fixed/FRN, 3m Stibor + 50bp

● USD 1bn, RegS. CB 5Y (2020), Fixed, 3m $L + 37bp

● EUR 750m Senior 7Y (2022), Fixed, MS+45bp

● EUR 500m Senior 5Y (2020), FRN, 3m€+40bp

● EUR 1.25bn CB, 5Y (2020), Fixed MS+7bp

● AUD 325m Senior, 3Y (2018), FRN 3m BBSW+115bp

● GBP 350m CB, 3Y (2018), FRN 3m£+38bp

● EUR 750m Senior, 5Y+ (2021), Fixed MS+53bp

0

50

100

150

200

2016 2017 2018 2019 2020 2021 2022-

Other

GBP

USD

EUR

SEK

70% of the domestic covered bonds held by Sweden Liquidity and funding

Owners of Swedish covered bonds, SEKbn

21%

15%

28%

6%

29%

Swedish banks

Swedish investmentfunds

Swedish insurancecompanies

Public sector, incl. APfunds

Foreign investors

0

100

200

300

400

500

600

700

05 06 07 08 09 10 11 12 13 14

Foreign investors

Swedish insurancecompanies

Swedish banks

Swedishinvestment funds

Public sector, incl.AP funds

Source: Swedish Central banks Financial Stability Report 2015:2, chart 2:3

Owners of Swedish covered bonds, Q2 2015, %

Asset encumbrance

61


Source: Swedbank Facts 31 Dec 2015 – All amounts according to Swedbank consolidated situation

Type of assets (Off-balance sheet items)

SEKm

Encumbered received collateral

Unencumbered received collateral

available for secured funding

Fair value Fair value

Collateral received by the reporting institution 4 711 60 612 Loans on demand Equity instruments 3 072 Debt securities 4 711 34 084 Loans and advances other than loans on demand 19 980 Other collateral received 3 475 Ow n debt securities issued other than ow n covered bonds or ABSs

Type of assets (Balance Sheet items)

SEKm

Carry Amount Fair Value Carry Amount Fair Value

Assets of the reporting institution 541 055 1 452 590 Loans on demand 188 333 Equity instruments 11 041 11 041 Debt securities 10 031 10 102 154 648 155 001 Loans and advances other than loans on demand 531 024 985 199 of w hich mortgage loans 515 031 543 669 Other assets 113 369

Encumbered assets

Unencumbered assets, additional assets available

for secured funding

Purpose for encumbrance (On- and off-balance

SEKm 31 Dec 30 Sep 30 Jun 31 Mar2015 2015 2015 2015

Carrying amount of selected f inancial liabilities 542 070 549 098 566 294 533 967 of w hich Derivatives 18 911 18 190 22 819 23 029 of w hich Deposits 8 127 30 858 41 935 28 820 of w hich Debt securities issued 515 031 500 050 501 540 482 118Other sources of encumbrance 3 696 6 611 5 944 5 900Total 545 766 555 709 572 238 539 867

Encumbered Assets

• Total balance sheet, SEK 2 149bn

• Asset encumbrance ratio of around 25%

Funding sources

62

Swedbank AB Swedbank Mortgage AB*

* 100% guaranteed by parent company - Irrevocable - Unconditional - Timely ** Combined limit for unsecured- and covered bonds *** Limited by cover pool size

100% owned



Program LimitLong Term

Global MTN USD 40bnDomestic MTN SEK 60bnUSD Senior (144a / Reg.S) USD 15bnAUD Senior** AUD 10bn

NSV (stand alone doc.)

Short TermDomestic CP SEK 80bnEuropean CP/CD EUR 6bnUS CP USD 20bnYankee CD USD 20bnFinnish CD EUR 4bn

Program LimitLong Term

Domestic Benchmark CB Unlimited***EMTN CB EUR 25bnUSD Covered bonds (144a / Reg.S) USD 15bnDomestic MTN CB SEK 150bnNorwegian Benchmark CB Unlimited***AUD Covered bonds** AUD 10bn

Registered CB (stand alone doc.)

Short Term

Domestic CP SEK 50bn

Swedish FSA’s mortgage market report 2015

• Average LTV: 67%

• Amortise, LTV>70%: 90%

• Amortise, LTV 50-70%: 40%

• Debt to disp. Income*: 366%

• Around 5% of households (with amortisations) will have a deficit if interest rates increase by 5%-points

63


*Mortgage loans only

Source: Swedish FSA’s memorandum “The Swedish Mortgage Market 2015, published 14th April 2015 and Swedbank

Loan-to-value distribution – new lending, %

0

5

10

15

20

25

30

35

40

45

50

0

5

10

15

20

25

30

35

40

45

50

0-25 25-50 50-70 70-85 over 85

2011 2012 2013 2014

0

2

4

6

8

0

2

4

6

8

0 1 2 3 4 5Not amortising Amortising 2013 (not amortising)

Stress test – share of households with deficit post interest rate hike, %

Increased interest rate, percentage points

New lending

Sha

re o

f hou

seho

lds

LTV

100

120

140

160

180

200

220

05 06 07 08 09 10 11 12 13 14 15

Single-family homes

Real estate prices – Sweden 12 months development

64


Single-family homes1 Tenant-owner rights2 Combined3

12M Δ

12M Δ

12M Δ

Jul/14 9% 14% 11%

Aug/14 9% 14% 11%

Sep/14 9% 15% 11%

Oct/14 8% 15% 11%

Nov/14 13% 15% 14%

Dec/14 15% 15% 15%

Jan/15 11% 15% 12%

Feb/15 12% 17% 14%

Mar/15 13% 19% 15%

Apr/15 13% 20% 16%

May/15 13% 18% 15%

Jun/15 12% 19% 14%

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

House price index, Sweden3

2005=100

http://www.valuegard.se/

0200400600800

1 0001 2001 4001 6001 800

Dec

-05

Jun-

06D

ec-0

6Ju

n-07

Dec

-07

Jun-

08D

ec-0

8Ju

n-09

Dec

-09

Jun-

10D

ec-1

0Ju

n-11

Dec

-11

Jun-

12D

ec-1

2Ju

n-13

Dec

-13

Jun-

14D

ec-1

4Ju

n-15

Dec

-15

Riga

No. of deals EUR/m2

0200400600800

1 0001 2001 4001 6001 800

Dec

-05

Jun-

06D

ec-0

6Ju

n-07

Dec

-07

Jun-

08D

ec-0

8Ju

n-09

Dec

-09

Jun-

10D

ec-1

0Ju

n-11

Dec

-11

Jun-

12D

ec-1

2Ju

n-13

Dec

-13

Jun-

14D

ec-1

4Ju

n-15

Dec

-15

Tallinn

No. of deals EUR/m2

0200400600800

1 0001 2001 4001 6001 800

Jun-

05D

ec-0

5Ju

n-06

Dec

-06

Jun-

07D

ec-0

7Ju

n-08

Dec

-08

Jun-

09D

ec-0

9Ju

n-10

Dec

-10

Jun-

11D

ec-1

1Ju

n-12

Dec

-12

Jun-

13D

ec-1

3Ju

n-14

Dec

-14

Jun-

15

Vilnius

No. of deals EUR/m2

Baltic countries Real estate prices

65

EUR/m2 /No. of deals EUR/m2 /No. of deals

EUR/m2 /No. of deals


66

Swedbank – contacts and financial calendar

Helo Meigas, Head of Group Treasury

[email protected] +46 8 585 900 25

Gregori Karamouzis, Head of Investor Relations


Bogdan Woronowicz, Debt Investor Relations


Peter Stenborn, Debt Investor Relations


Ulf Jakobsson, Head of Funding


Kimmy Samuelsson, Head of Long-Term Funding


Joakim Henriks, Money Markets and Short-Term Funding


Annual Report 2015 25 Feb 2016

AGM 5 Apr 2016

Q1 Interim report 26 Apr 2016

Q2 Interim report 18 Jul 2016

Q3 Interim report 25 Oct 2016

[email protected]

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

Swedbank Group Treasury Landsvägen 40,

SE-105 34 Stockholm, Sweden Sundbyberg

Contact debt investor relations:

For further information, please contact: Financial calendar

Postal address: Visitors:

Appendix

mailto:[email protected]








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





67

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.

February 2016 - Swedbank

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