Swedbank’s

S db k’ third
thi d quarter
t 2010 results
lt
21 October 2010
Michael Wolf, CEO
Erkki Raasuke, CFO
Gö
Göran B
Bronner, CRO
Continued financial improvement
p
• Net profit of SEK 2.6bn in Q3

• Baltic Banking net profit in Q3 of SEK 531m

• Improved NII and stable net commission income

Net
et p
profit
o t performance
pe o a ce

Q3 09 Q4 09 Q1 10 Q2 10 Q3 10

2
Result by business area

Business highlights
g g SEKm Profit before impairments
2 000
Retail Q2 10
Q3 10
• Increased NII and seasonally lower costs 1 000

• Increased market share in new mortgage

lending 0

• New in-principle framework agreement with

savings banks -1 000
Retail Large Baltic Russia & Asset Ektornet
Corporates & Banking Ukraine Management
Large Corporates & Institutions Institutions

• Slow trading activity SEKm Operating result

2 000
• Stable corporate lending volumes
Q2 10
Q3 10
1 000
Baltic Banking
• NII supported by lower domestic rates 0
• Deleveraging in Baltic Banking continues
• Decreasing credit impairment trend -1 000
Retail Large Baltic Russia & Asset Ektornet
Corporates & Banking Ukraine Management
Institutions

3
Net interest income

Improved
p NII
• Retail showed increased volumes and improved margins
• LC&I lower activity levels
• Treasury deficit reduced by funding mismatch effects

5 017 Retail Treasury,

4 702 LC&I Baltic Russia,
Banking Ukraine Other
3 980
4 023 102 24 123 146
3 799 45

-113 918

711

2 432
(SEKm)

-227
227
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10

4
Net commission income

Stable commission income

• Strong card and payment volumes

• L
Lower b
brokerage
k and
d corporate
t fi
finance ffees

(SEKm)
Retail LC&I Baltic Russia, Asset Mgmt,
2 395 Banking Ukraine Other
2 361 2 310
2 208 2 282
-57 -21 -2 4
-9 387
19
386

387

1 131

Q3 09 Q4 09 Q1 10 Q2 10 Q3 10

5
Net gains/losses on financial items, fair value

Supported
pp by
y valuation effects
• Low trading activities

• FX losses
l iin Uk
Ukraine
i

• Funding related valuation effects in Group Treasury still high

(SEKm)
809 Retail LC&I Baltic
Banking Russia,,
-5 Ukraine Treasury,
647 -49 Other
-41 574
-48
92
-92
256

48
223

260
87

35
-25
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10

6
 Expenses

Expenses
p seasonally
y lower
SEKm Q3 10 Q2 10 %
Staff costs 2 261 2 282 -1
Variable staff costs 19 141 -87
Other expenses 1 958 2 000 -2
Total expenses 4 238 4 423 -4

C/I ratio

0.56 0.57 0.57 0.55

0.54
Retail LC&I Baltic Russia, Staff and
4 526 4 391 4 423 Banking Ukraine other
4 300 4 238
97
-114 -90
90 530
52
-52 26
-26 202
626

690
(SEKm)

2 190

Q3 09 Q4 09 Q1 10 Q2 10 Q3 10

7
Liquidity & Funding
Solid wholesale funding activity continues
• YTD term funding of SEK 190bn, of which Outstanding wholesale funding
SEK 40bn during the third quarter (nominal SEKbn)

• Remaining maturities of SEK 42bn in Q4, Long-term, 459

out of SEK 137bn in total maturities for the non- 456
guaranteed 397
full year 2010 (nominal values)
163
• SEK 159bn of central bank repos and Long-term,
173
guaranteed*
guaranteed funding were redeemed during 180
the first nine months of 2010
35
Central bank
• Average maturity of all wholesale funding 89
repos
116
of 28 months, 38 months for covered bonds
((nominal value)) Short term,
Short-term, 112
non- 112
guaranteed** 97

0
Short term,
Short-term
0 Q3 2010
guaranteed***
61 Q2 2010
Q4 2009

* Issued with more than 12 month maturity

** Including interbank deposits
*** Issued with less than 12 month maturity

8
Third quarter 2010 results

Income statement
SEKm Q3 10 Q2 10 QoQ % YTD 10 YTD 09 YoY%

Income 7 647 7 772 -2

2 23 086 26 800 -14
14

Expenses 4 238 4 423 -4 13 052 13 548 -4

Profit before impairments 3 409 3 349 2 10 034 13 252 -24

Total impairments 173 1 091 3 524 21 040

Operating profit 3 236 2 258 43 6 510 -7 788

Tax expense 638 672 -5 1 779 866 105

Profit attributable to shareholders 2 591 1 567 65 4 694 -8 707

Return on equity, % 11.3 7.0 6.9 -14.1

Cost-income ratio 0.55 0.57 0.57 0.51
Loan deposit ratio
Loan-deposit ratio, % 233 229 233 257
Core Tier 1 capital ratio, %* 13.4 12.7 13.4 9.9
Risk-weighted assets * 559.7 579.4 559.7 607.5

* Basel 2

9
Asset quality

Continues to improve
p
• Asset quality indicators in the right direction
– Impaired loans
– 60 days overdue
All declining
– Restructured loans
– Watch list

• Well
W ll provided
id d ffor within
ithi existing
i ti problem
bl areas

• Positive rating
g migration
g in Sweden,, stable in the Baltic countries

• Significant RWA reduction

• Business activity increasing

10
Asset quality

Volumes
• CEE lending decreased partly due to SEK 7.5bn FX effect

• Continued relative shift from corporate to private in Sweden

SEKbn
1 000 948 955 961
Private
900
C
Corporate
t
800
700 521 573
566
600
500
400
300 251
200 427 389 388 97 163 150
90
100 77 71
154 43
86 79 47
0
Q4 08 Q2 10 Q3 10 Q4 08 Q2 10 Q3 10 Q3 10
Sweden CEE Excl Estonia

11
Asset quality

Credit impairments
p significantly
g y reduced
• Sweden small reversals SEKm

7 000
• B lti countries
Baltic ti 6 121
6 000
– Credit impairments in Latvia
5 003

5 000
• R
Recoveries
i iin R
Russia
i and
d Uk
Ukraine
i
4 000

3 000
2 210

2 000
963

1 000 120

-1 000
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10

Retail LC&I Baltic Banking Russia & Ukraine Other

12
Asset quality

Provisions
• Provision ratio levels maintained

SEKm
30 000
64 8%
64.8% 65 9%
65.9% 63 5%
63.5% Provision ratios Q3 10
63.9%
25 000 4 104 Retail 87%
62.9% 4 684
5 135 3 606
LC&I 92%
20 000
6 922 B lti B
Baltic Banking
ki 61%
Russia 58%
15 000
Ukraine 66%
21 889 23 028
10 000 20 882 21 068 Group 64%
15 582
3 953 4 603
5 000 3 311
2 504
958
0
Q3 2009 Q4 2009 Q1 10 Q2 10 Q3 10
Individual provisions Portf olio provisions Write-of f s, gross, cum Provision ratio

13
Simplified
p core balance sheet
• High quality mortgage portfolio – low LTV
• Limited impact
p under severe economic conditions
• Strategy – preserve quality and AAA rating

1 400 SEKbn

1 200

1 000

800

600

400
Swedish mortgage lending

200

0
Assets

14
Swedish mortgage
g g lending
g funded by
y covered bonds
• High quality mortgage portfolio
• Limited impact
p under severe economic conditions
• Strategy – preserve quality and AAA rating
• Government guaranteed funding expected to be replaced largely by covered bonds
1 400 SEKbn

1 200

1 000

800

600
Government guaranteed
400
Swedish mortgage lending

200 Covered bonds

0
Assets Liabilities

15
Other Swedish and Nordic lending
g
• Stress test real estate related – very high resilience
• Strategy
gy – Improve
p risk adjusted
j return, increased diversification

1 400
SEKbn

1 200

1 000
Other Swedish and
800 Nordic corporate lending

Other Sw.
Sw private
600

Government guaranteed
400
Swedish mortgage lending

200 Covered bonds

0
Assets Liabilities

16
Other Swedish and Nordic lending
g funded with deposits
p
• Stress test real estate related – very high resilience
• Strategy
gy – Improve
p risk adjusted
j return, increased diversification
• Funded with large deposit base

1 400
SEKbn

1 200

1 000
Other Swedish and
800 Nordic corporate lending
Swedish and Nordic deposits
Other Sw
Sw. private
600
Government guaranteed
400
Swedish mortgage lending

200 Covered bonds

0
Assets Liabilities

17
CEE lending
g
• CEE lending decreased substantially since end 2008
• ICAAP stress test show significant
g resilience
• Estonia to adopt the euro – becomes different risk category
• Strategy – selective reductions, LTD restriction
1 400
SEKbn

1 200

CEE
1 000
Other Swedish and
800 Nordic corporate lending
Swedish and Nordic deposits
Other Sw
Sw. private
600
Government guaranteed
400
Swedish mortgage lending

200 Covered bonds

0
Assets Liabilities

18
Limited need of senior unsecured funding
g
• Large and stable deposit base
• High
g quality
q y Swedish mortgage
g g pportfolio

1 400
SEKbn

1 200 Subordinated debt

Equity
CEE Senior unsecured
1 000 CEE d deposits
it

Other Swedish and

800 Nordic corporate lending
Swedish and Nordic deposits
Other Sw
Sw. private
600
Government guaranteed
400
Swedish mortgage lending

200 Covered bonds

0
Assets Liabilities

19
Appendix

21
Asset quality

Impaired
p loans decreased by
y SEK 4bn
• Without FX effect down SEK 1.5bn

• Underlying decreases mainly relate to the Baltic countries

SEKm Impaired loans as

% of gross lending
45 000 42 719 38 631
40 132 40 328
40 000 -4 088
196 2 391
35 770 4 362 8 531 Ukraine 67%
35 000
6 113
29 657
30 000 2 152 Russia 24%
6 971
25 000 Lithuania 17%

20 000 12 907 Latvia 27%

15 000 29 657

10 000
5 134 Estonia 8.1%
5 000
1 123 LC&I 0.3%
0 1 813 Retail 0
0.2%
2%
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q3 10

22
 50
-50
0
100
00
150
200
250

-150
-100
50
EURm
Q3 0
09
Q4 0
09
Q1 10
Loans p

Estonia
Q2 10
Q3 10

09
Q3 0
Q4 0
09
Q1 10

Latvia
Q2 10
Q3 10
past due 60 days
y –p

09
Q3 0
Q4 0
09
Q1 10

Lithuania
Q2 10
Q3 10

09
Q3 0
Q4 0
09
Q1 10
Russia
performance Q/Q

Q2 10
Q3 10

09
Q3 0
Q4 0
09
Q1 10
Ukraine

Q2 10
Q3 10
23
Asset quality

Repossessed
p assets

SEKm
2 500

2 000

1 500

1 000

500

0
Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 10

Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other

24
Real estate p
prices
Tallinn Riga*
1 800 1 800
1 762
1 800 1 800
1 611
1 500 1 500 1 500 1 500

ns

No of transactionss
No of transaction
1 200 1 200 1 200 1 200

EUR/m2
EUR/m2

900 822 900 900 900

616
600 600 600 600

300 300 300 300

0 0 0 0
Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 Q2'10 Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 Q2'10
No of deals Average price No of deals Average price

S
Source: S
Swedbank,
db k E Estonian
t i L Land
dBBoard
d S
Source: S db k
Swedbank

Vilnius*

1 731
1 800 1 800

1 500 1 500
No of ttransactions

1 200 1 016 1 200

EUR/m2

900 900
E

600 600

300 300

0 0
Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 Q2'10
No of deals Average
g pprice

Source: Swedbank, State Enterprise Centre of Registers

* Data as of August 2010

25
Liquidity & Funding
Long-term
g funding
g
• SEK 42bn (nominal value) of remaining term funding maturities in Q4
• Continued focus on covered bonds with YTD issuance of SEK 164bn
• YTD issued SEK 26bn in senior unsecured and structured funding
• Average maturity of wholesale funding of 28 months, covered bonds of 38 months
(
(nominal
i l value)
l )
• SEK 180bn (nominal value) in maturities during 2011
Swedbank, long
long-term
term maturity profile
(including Swedbank Mortgage)
SEKbn, nom
100

80

60

40

20

0
2016--
Q4 10

Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
Q4 14
Q1 15
Q2 15
Q3 15
Q4 15
Q1 11
Q2 11
Q3 11
Q4 11

26
Liquidity & Funding
Remaining
g funding
g under the Swedish g
guarantee programme
p g

• Swedbank exited the guarantee Currency distribution

programme on 30 April 2010
EUR 41%

• No issuance under the programme as of USD 27%

August
g 2009
SEK 25%
• Outstanding guaranteed funding
CHF 5%
decreased during the third quarter by
SEK 10bn to SEK 163bn (nominal value)
value), JPY 2%
mainly due to FX effects
Maturity distribution

3-4Y 18%

2-3Y 6%

1-2Y 51%

< 12 M 25%

27
Liquidity & Funding

Cover p
pool and covered bond funding
g sources
As per Q3 2010
Total pool size SEK 626bn
• AAA/Aaa Rating from S&P and
Geographic distribution Sweden 100% Moody’s
Average seasoning 56 months
Average LTV 1, 2 • Unlimited domestic covered bond
– WA LTV on property level 58% programme, through tap system
Non-performing
p g loans 3 None
Types of loans • EUR 25bn EMTN covered bond
– Residential mortgages 90.8% programme
– Public 2.3%
– Commercial 0 1%
0.1% • SEK150bn domestic
SEK150b d ti MTN covered
d
– Forest and Agriculture 6.8%
bond programme
Fixed /Floating interest loans 4
– Fixed 51% • Unlimited Norwegian covered
– Floating 5 49%
Average loan size SEK 413 441
bond programme
Number of loans outstanding 1 514 910
Dynamic
y pool Yes • Registered covered bonds

1 Index valuation as of 31 May 2010

• In addition to public deals, private
2 Maximum LTV: Residential 75%, Commercial 60%, Forest and Agriculture 70%
3 Past due loans > 60 days are not eligible for the cover pool
placements are executed through
4 Distribution by
y origination
g
5 Floating interest loans < 365 days
all programmes mentioned above
Source: Swedbank

28
Swedbank Mortgage total loan portfolio of SEK 687bn
• 100% off llending
di iin S
Sweden
d
• 90% in residential lending
• Average LTV of 46% (loan level) 61% (property level*)
level*). Cover pool 43% and 58%
respectively.
SEKbn Loan-to-value* Lending distributed by collateral
110

100

90
Cooperative Commercial
80 apartments properties
15% 0 2%
0.2%
70 Municipalities
2%
60 Multi-family
housing
50 15%
40
Forest &
30 Agriculture
7%
20

10

0
<30% >30-40% >40-50% >50-60% >60-70 >70-80% >80-90% >90% Single-family
housing
Single-family housing Cooperative apartments Multi-family housing (incl housing coop. ass.) Forest & Agriculture 61%

*From Q3 2010 the LTV distribution in the graph is changed from ”loan level” to ”property level”

29