080220 UBS Debt investors

8/8/2019 080220 UBS Debt investors

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UBS Debt Investor reverse roadshow

Stockholm20 February 2008Mikael Inglander, CFO

Jan Lilja, Head of Group Treasury


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(2)

LatviaTotal population: 2.3mEmployees: 2,501Private customers: 0.8mCorp. customers: 53,000Branches: 77Typical market share: 30%

The leading bank in four small countries

SwedenTotal population: 9.2m

Employees: 8,750Private customers: 4.1mCorp. customers: 275,000Organisations: 120,000Branches: 459Typical market share: 25%

LithuaniaTotal population: 3.5mEmployees: 3,384Private customers: 3.0mCorp. customers: 78,000Branches: 128Typical market share: 30%

EstoniaTotal population: 1.3m

Employees: 3,227Private customers: 1.2mCorp. customers: 88,000Branches: 94Typical market share: 50%

Supporting markets: Denmark, Finland, Norway, Russia,Ukraine, USA, Luxemburg, China, Japan and Spain

80%

6% 5% 5%4%

Sweden

Estonia

Latvia

Lithuania

Othe

rs

Share of group lending

Potential home markets: Russia and Ukraine


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(3)

Strong position for profitability and growth

Ukraine and RussiaBalticsSweden

Stable baseGrowth andexperience

Future growth andprofitability

Swedbank is the leading bank inSweden. Profitability is high andstable and the bank isconsolidating its market shares inimportant segments in both theprivate and corporate sectors.

Swedbank has a small butgrowing presence in Ukraine andRussia . Long-term, a significantshare of Swedbanks growth willbe generated in these markets.

The Baltic economies areexperiencing strong economicgrowth that is expected to remainfor many years. As the largestbank in the region, growing withthe market ensures Swedbank anattractive earnings growth.

Share of profit2007: 66%

Share of lending2007: 80%






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Swedbank, group overview

52%

32%

2%8% 8%

-2%-10%

0%

10%

20%

30%

40%

50%

60%

SwedishBanking

BalticBanking

SwedbankMarkets

Asset

Management& Insurance

InternationalBanking

SharedServices& Group

Staffs

Share of Group net profit, Q1-3 2007


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(5)

2007 A successful and eventful year Profit attributable to shareholders increased 10% to SEK 12bn

Net interest income increase by 20%

Net commission income increased by 11%

Swedish Banking show a stable result, low risks and high return onequity

Record result in Baltic Banking with balanced risks

Swedbank Markets results on same level as last years all time high

A successful year despite global credit turmoil

and Baltic slowdown


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(6)

Q4 2007 Good development and strong results Good volume development in Sweden

Stable margins on new lending

Continued strong results in Baltic banking

Economic slowdown align with expectations

Strong finish of the year for Swedbank Markets

Success in fixed income trading and structured investment products inSweden and corporate finance in Norway

Swedbank Ukraine continues to develop well

Profit increased 7% compared with Q4 2006


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(7)

Solid profit development

*Loan losses, net = write-offs + provisions recoveries + change in property taken over

-1,000

1,000

3,000

5,000

7,000

9,000

11,000

13,000

15,000

17,000

2000 2001 2002 2003 2004 2005 2006 2007

-1,000

1,000

3,000

5,000

7,000

9,000

11,000

13,000

15,000

17,000

Profit before loan losses Capital gains EnterCard and KIAB

Loan losses, net* Operating profit (excl. capital gains)

SEKm SEKm


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(8)

Minor direct effects from the credit turmoil

Valuation- and accounting effects, SEK M

Q4

2007

Q3

2007

Swedbank Markets 40 60

Group Treasury, liquidity portfolio 5 68

Group Treasury, intra-group lending 20 90

Swedbank Mortgage 66 129


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(9)

Business volumes

84

13 24

334

102

1931

289

398 401

0

100

200

300

400

500

Deposits,

Sweden

Deposits,

Baltics

AM funds,

Sweden

AM funds,

Baltics

Structured

products,

bondsDec, 2006 Dec, 2007

SEKbnSavings

919

425

333

53 74 3477

100

61

390475

1,103

0

200

400

600

800

1,000

1,200

Lending,

Group

Private,

Sweden

Corporate,

Sweden

Private,

Baltics

Corporate,

Baltics

Other

Dec, 2006 Dec, 2007

SEKbnLending


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Credit quality, group

200

0

2001

2002

2003

2004

2005

2006

2007

-0.08

0.00

0.08

0.160.24

0.32

0.40

0.48

0.56

0.64

Loan loss ratio, net Share of impaired loans

Share of provisions

%


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(11)

Margins

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Q3-

06

Q4-

06

Q1-

07

Q2-

07

Q3-

07

Q4-

07

Estonia Latvia

Lithuania Sweden

% Lending

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Q3-

06

Q4-

06

Q1-

07

Q2-

07

Q3-

07

Q4-

07

Estonia Latvia

Lithuania Sweden

Deposits%


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(12)

Swedish Banking Continued stable earnings and high profitability

Strong corporate lending during Q4

Total lending increased by 4% vs. Q3 and 14%

during the full year

Continued good deposit trend

Deposits increased by 3% vs. Q3 and 15% duringthe full year

Share of new savings from households

increased to 18% (17% in Dec 06)

Rise in funding costs are gradually, but withcertain delay, passed on through higher lendingrates

Minor valuation effects as a consequence of theturmoil on the credit market

Covered bonds as from Q2 2008

In agreement to sell 8 branches to savingsbanks

Swedish economy still relatively strong.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,0004,500

5,000

Q2

06

Q3

06

Q4

06

Q1

07

Q2

07

Q3

07

Q4

07

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Income Costs C/I-ratio

SEKm %


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(13)

Baltic Banking Operations Continued high profitability

Net interest income increased 7% vs. Q3

Lending growth in 2007 was 33%, the gradualslowdown is expected to continue

Weak trading income due to market turmoil

Costs affected by

Annual wage increases in Latvia and Lithuania,hits P&L as of October every year

Investments in operational excellence projectfor increased productivity

High marketing costs.0200

400

600

8001,000

1,200

1,400

1,600

1,800

2,0002,200

2,400

Q2

06

Q3

06

Q4

06

Q1

07

Q2

07

Q3

07

Q4

07

0.0

0.1

0.2

0.3

0.4

0.5

Income Costs C/I-ratio

SEKm %


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(14)

Credit quality, Baltic Banking

Loan loss ratio, net (average portfolio)

-2.0%

-1.2%

-0.4%

0.4%

1.2%

2.0%

2002 2003 2004 2005 2006 2007

Estonia Latvia Lithuania Group

Share of impaired loans (12 month old portfolio)

0.0%

0.5%

1.0%

1.5%

2.0%

2002 2003 2004 2005 2006 2007

Estonia Latvia Lithuania Baltics Group


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(15)

Decreasing Baltic lending growth

0%

10%

20%

30%

40%

50%

60%

07

/Dec

07

/Sep

07

/Jun

07

/Mar

06

/Dec

06

/Sep

06

/Jun

06

/Mar

05

/Dec

05

/Sep

05

/Jun

05

/Mar

0

1,000

2,000

3,0004,000

5,000

6,000

7,000

8,000 Hansabank, Estonia

0%

10%

20%

30%

40%50%

60%

70%

80%

90%

100%

07

/Dec

07

/Sep

07

/Jun

07

/Mar

06

/Dec

06

/Sep

06

/Jun

06

/Mar

05

/Dec

05

/Sep

05

/Jun

05

/Mar

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000 Hansabank, Latvia

0%

10%

20%

30%

40%

50%

60%

70%

07

/Dec

07

/Sep

07/Jun

07

/Mar

06

/Dec

06

/Sep

06/Jun

06

/Mar

05

/Dec

05

/Sep

05/Jun

05

/Mar

0

1,000

2,000

3,000

4,000

5,000

6,000 Hansabank, Lithuania

0%

10%

20%

30%

40%

50%

60%

70%

07

/Dec

07

/Sep

07/Jun

07

/Mar

06

/Dec

06

/Sep

06/Jun

06

/Mar

05

/Dec

05

/Sep

05/Jun

05

/Mar

0

2,000

4,000

6,000

8,00010,000

12,000

14,000

16,000

18,000

20,000 Baltic Banking

0

%

0

00

0

,Total lending, EURm YoY growth


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(16)

Baltic macro development

Real GDP growth

0%

2%

4%

6%

8%

10%

12%

2005 2006 2007F 2008F 2009FEst Lat Lit

CPI growth

0%

2%

4%

6%

8%

10%

12%

2005 2006 2007 2008F 2009FEst Lat Lit

Economic slowdown in Estonia continues: GDP growth slows from ~7% in 2007 to ~5% in2008; the bottom of the cycle is expected to be in Q2 2008

In Latvia growth slows from ~10.5% to 6% in 2008, the bottom of the cycle is expected to bein H2 of 2008

Slowdown in Lithuania started in Q4 2007: GDP growth will slow from 2007s 8.7% to ~7.5%in 2008

Weak domestic demand reduces imports and exports growth continues. Trade and currentaccount deficits are falling. CPI will peak in Q1 2008. Long term GDP growth (6-7%) will beabove EU average.

Source: Hansabank Market


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Swedbank Markets

Good end to the year despite the capitalmarket turmoil

Strong results in, above all, fixed income andFX trading, structured investment productsand corporate finance fees First Securities

Minor valuation effects due to market turmoil,

SEK - 40m Continued market leader in corporate bonds,

new issues in SEK

Sustained growth and market leading

position in structured products, sales grew by39% in 2007.

0

50

100

150

200

250

300

350

400

450

500

Q1

06

Q2

06

Q3

06

Q4

06

Q1

07

Q2

07

Q3

07

Q4

07

Profit for the period attributable to shareholdersof Swedbank

SEKm


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(18)

International Banking Continued strong lending growth in Ukrainian

Banking, + 112% to SEK 11bn in 2007

Loan loss ratio, net in Ukrainian Bankingdecreased after adjusting calculation methodto Swedbank Groups principles

Annual lending growth in Russian Banking

was 50% to SEK 10bn

Following positive court rulings regarding VATdispute in leasing operations, a reversal ofSEK 60m was made in Russian Banking

Lending in Nordic branches more thandoubled in 2007, reaching SEK 13bn.

-100

-75

-50

-25

0

25

50

75

100

Q206

Q306

Q406

Q107

Q207

Q307

Q407

International Banking, profit for the period

of which Russian Banking

of which Ukrainian Banking Operations

SEKm


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(19)

Business areas

2007 vs 2006, SEKm 2007 % 2007 % 2007 % 2007 % 2007 %

Net interest income 11,701 5,667 986 1,343 83

Net commission income 4,504 1,854 196 1,441 1,868

Other income 1,473 1,252 97 773 232

Total income 17,678 4 8,773 42 1,279 3,557 1 2,183 19

Staff costs 4,296 2,044 405 1,239 425

Other expenses 4,704 1,502 366 753 463Total expenses 9,000 3 3,546 32 771 1,992 3 888 31

Profit before loan losses 8,678 5 5,227 50 508 1,565 0 1,295 13

Loan losses 71 450 170 0 0

Operating profit 8,607 -2 4,777 49 338 1,565 -1 1,295 13Tax 2,413 455 70 427 320Profit for the period 6,194 4,322 268 1,138 975

To Swedbank's

shareholders 6,182 2 4,322 46 268 1,010 3 975 11

Return on allocated equity % 23.2 31.2 6.9 24.2 57.0

Asset

Mgmt

Internat.

Banking

Swedish

Banking

Baltic

Banking

Swedbank

Markets


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Key figuresJan - Dec,

2007

Jan - Dec,

2006

Return on equity, % 18.9 19.3

Earnings per share, SEK 23.28 21.11

Equity per share, SEK 131.96 116.37

C/I ratio before loan losses 0.51 0.52

Loan loss ratio, net, % 0.07 0.02Share of impaired loans, % 0.13 0.07

Dividend, SEK* 9.00 8.25

Tier 1 capital ratio, new principles, % 8.5 -

Tier 1 capital ratio, transition principles, % 6.2 6.5 **

Capital adequacy ratio, new principles, % 12.7 9.8 **

*according to Board of Directors proposal**according to old principles


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Tier-1 ratio, Group

Tier 1 ratio amounted to 8.5%

Tier 1 ratio, according to transitionprinciples, was 6.2%

As of January 1, 2008, tier 1 ratioaccording to transition principles,increased by 31 bps due to the gradualimplementation of Basel 2 regulations.

0

1

2

34

5

6

7

8

9

10

Q1-05

Q2-05

Q3-05

Q4-05

Q1-06

Q2-06

Q3-06

Q4-06

Q1-07

Q2-07

Q3-07

Q4-07

0

1

2

34

5

6

7

8

9

10

Tier 1 ratio, Basel 2

Tier 1 ratio, transition rules

Target Tier 1 ratio

% %


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Swedbank Funding Structure

Swedbank

Mortgage

SEK 561bn

Swedbank Group,

excl. SwedbankMortgage

SEK 542bn

51%49%

Funding95%

Equity

5%

Deposits

85%

Equity

8%

Funding

8%

Swedbank Treasury (excluding Mortgage)

Large deposits

Liquidity reserves

Net lender in theinterbank market

Liquidity limits conservative view

Swedbank Mortgage

constitutes a larger part of

Swedbank Groups balance

sheet compared to other

financial institutions

Distribution of Net Funding Need

Swedbank Mortgage

Lending to the public, SEK 1103bn


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(23)

Swedbank Mortgage Credit RiskMunicipalities

3% (4)Commercial

buildings

1% (1)

Agriculture

6% (6)

Multi-family housing

incl. Condominium

associations

16% (17)

Individual

condominiums

13% (11)

Single-family homes

61% (61)

0,00

10,00

20,00

30,00

40,00

50,00

60,00

70,00

85%

Distribution of loan to value

Net

0

500

1000

1500

2000

2500

3000

2000 2001 2002 2003 2004 2005 2006 2007

SEKm

=90% Residential loans

%

Average LTV of 44%80% percent of the portfolio has an LTV of 50% or lower

Credit losses

-Net recoveries during 2007

Impaired, restructured and past due loans At historically low levels

31-dec

-100

0

100

200

300

400

500

600

700

2000 2001 2002 2003 2004 2005 2006 2007

SEKm


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(24)

Converting to Covered Bonds, Q2 2008 Possibility to meet a broader investor base

Larger investor base ensures for even more stable liquidity

AAA-rating - funding at lower cost

Increased liquidity reserve through Swedbanks possibility to pledgesubsidiary covered bonds in Riksbanken

Funding strategy to prolong maturity structure with covered bonds


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(25)

Swedbank Mortgage Long Term Funding

Action plan:

Conversion to covered bonds during Q2, 2008 and covered bond issues, approx. EUR 6.0bn

Continuous activities in the market for private placements, approx. EUR 1.5bn

Continuous issues on tap in the Swedish mortgage bond market under existing mortgage

bond programme, approx. EUR 7.5bn

The issue of a new 5-year Swedish benchmark bond Swedbank Mortgage 177

The maturity of SPI173 in June, 2008 is smaller than the average yearly maturing domestic

benchmark bond

Swe dbank Mortgage - Long Term Funding

0

50 000

100 000

150 000

200 000

250 000

5y


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Additional questions?

Johannes RudbeckInvestor relations

[email protected]

+46858593322
mailto:[email protected]:[email protected]

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080220 UBS Debt investors