Swedbank Debt Investor Presentation Q4 2011

Swedbank Debt Investor Presentation Q4 2011 March 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 33

6. Swedbank’s cover pool 41

7. Appendix 51

1. This is Swedbank

3

The Bank for the many people, households and businesses

4

Latvia Population 2.2m Private customers 1.0m Corporate customers 73 000 Branches 59 ATMs 380 Cards 1.0m Employees 1 767

Lithuania Population 3.3m Private customers 3.2m Corporate customers 105 000 Branches 84 ATMs 492 Cards 1.8m Employees 2 018

Estonia Population 1.3m Private customers 1.2m Corporate customers 114 000 Branches 63 ATMs 534 Cards 1.1m Employees 2 565

Sweden Population 9.3m Private customers 4.1m Corporate customers 263 000 Organisations 67 000 Branches 317 ATMs 662 Cards 3.8m Employees 8 266

This is Swedbank

Source: Swedbank Fact book Q4, 2011

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 Dec 2011

• Largest retail bank and fund manager in Sweden

Market shares, Lending Dec 2011

0 200 400 600 800 1000 1200

Other* 3.6%

Lithuania 2.6%

Latvia 2.4%

Estonia 4.0%

Sweden 87.3%

Mortgage loans (private+corp)

Other corporate (incl. LC&I, Sweden)

Credit institutions

Sweden – the dominating home market • Total lending amounts to SEK 1,309bn (as per Q4 2011), out of which around 87% is

originated in Sweden

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

6

Source: Swedbank Fact book Q4 2011

This is Swedbank

* Russia & Ukraine, Norway, Finland and NY Branch

Total lending distributed by business area (Q4 2011)

SEK 1 143bn

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 2012F

• Kingdom of Sweden rated Aaa/AAA/AAA • GDP growth 4.6% in Q3 2011 (Y/Y) • CPI/CPIF 2.3%/0.5% (Dec 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

Source: Swedish National Debt Office, Jan 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 7.1% (Dec Y/Y))

• Sweden stands out – balanced budget

10

Budget balance The Swedish economy

Source: Eurostat, Nov 10, 2011

-12

-10

-8

-6

-4

-2

0

2

200920102011F2012F2013F

Budget balance as a percentage of GDP

46%

12%

11%

11%

12%

8%EngineeringChemistryOther goodsForestryMineralsEnergy

0

20 000

40 000

60 000

80 000

100 000

120 000Imports

Exports

Exports – key factor for growth

11

The Swedish economy

Exports and imports trend per month, SEKm

Source: Statistics Sweden, Nov, 2011

Data up to and including October 2011

0

2

4

6

8

10

12

Export – distribution by important commodity groups

Top 10 export countries 2011, %

0

10

20

30

40

50

60

70

80

Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311

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 , Sep 30 2011

-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, Jan 9, 2012

0

50

100

150

200

250

300

350

400

450

500

550

600

Mar

-09

Apr

-09

May

-09

Jun-

09Ju

l-09

Aug

-09

Sep

-09

Oct

-09

Nov

-09

Dec

-09

Jan-

10

Feb-

10M

ar-1

0

Apr

-10

May

-10

Jun-

10Ju

l-10

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb-

11M

ar-1

1

Apr

-11

May

-11

Jun-

11Ju

l-11

Aug

-11

Sep

-11

Oct

-11

Nov

-11

Dec

-11

Jan-

12

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

Real estate prices – Sweden 2011

16


Single-family homes1 Tenant owner rights2 Combined3

12M Δ

12M Δ

12M Δ

Jan/11 0% 8% 2%

Feb/11 2% 7% 3%

Mar/11 2% 6% 3%

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%

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

http://www.valuegard.se/�

Price development

17


Source: SCB and Swedbank

Real estate price to disposable income ratio, %

0%

50%

100%

150%

200%

250%

Pace of household borrowing declines

18


Source: Riksbanken stability report 2011:2, Nov 29, and Sweden statistics Jan 27, 2011

Data up to and including December 2011

0

2

4

6

8

10

12

14

03 04 05 06 07 08 09 10 11

Annual percentage change

19

Swedish household financial assets and liabilities

Healthy household balance sheets Swedish housing and mortgage market

Source: Statistics Sweden “Hushållens ställning och transaktioner“ Q3 2011

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


% %

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 • New household formations have between 2006 and 2010 exceeded the actual new

dwellings produced by 100,000 units

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, Dec 31, 2011 (FY 2011 annualized based on Q1-Q3) Source: Reuters Ecowin, Nov 7, 2011 (data as per Q2 2011)

0

1

2

3

4

5

6

7

8

9

10

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 2010 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 October 2011


Number of Population growth and housing starts

010 00020 00030 00040 00050 00060 00070 00080 00090 000

Population increase New housing units

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

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

Average production cost per sqm for a single family house, SEK (LHS)Average price for a single family house, SEKth (RHS)

House prices are moving in tandem with production costs

23

Average house production cost & average house price development 1980-2008

Source: “Bostads- och byggnadsstatistisk årsbok 2010”, published Feb 15, 2010 by Statistics Sweden; page 128 and 156

SEK SEK, thousands


4. Financial performance

24

Delivered according to last years prospects • Net profit of SEK 11.7bn for 2011

• Core Tier 1 capital ratio of 15.7 per cent

• Return on equity of 12.2 per cent for 2011

• Proposed dividend of SEK 5.30 per share

25

Financial performance

All stakeholders affected by new environment • Shareholders

– Two share issues totalling SEK 27bn – Buy-back programme halted – Goodwill write-downs – Harder to reach ROE target

• Staff – Number of employees down by about 6 000 since end of 2007 – Overhaul of remuneration systems will reduce variable pay

• Customers – Increased cost of money

26


Continued stable development • Goodwill write-down in Latvia SEK

1 913m

• SEK 330m restructuring charge

• Increased capital markets income and positive valuation effects

• Cost reduction 2012: SEK 1bn

• Continued focus on capital efficiency

27


SEKm FY 2010

FY 2011 Q3 11 Q4 11

Net interest income 16 329 19 118 4 857 4 994

Net commission income 9 525 8 963 2 292 2 126

Net gains and losses 2 400 1 584 259 559

Other income 2 790 3 850 782 839

Total income 31 044 33 515 8 190 8 518

Total expenses 17 642 17 869 4 331 4 809

Profit before impairments 13 402 15 646 3 859 3 709

* Basel 2

CT1 ratio, %* 13.9 15.7

Return on equity, % 8.1 12.2

Net recoveries of SEK 174m in Q4 • Credit impairments in Sweden still low

– Known problems – Limited inflow of watch list

and problem loans

• Collective provisions mortgage loans in Latvia and Ukraine

• Net recoveries of SEK 1 911m FY 2011

28

Risk highlights

-483

-972

-324

-441

-174

Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

Credit impairments, SEKm

Retail LC&I Baltic Banking Russia & Ukraine Other

Many factors impacting outlook

• Challenging economic situation in Europe

• Slowing real estate market in Sweden leads to decreased risk in mortgage business

• Positive outlook in Baltic countries

29

Risk highlights

Increased focus on operational efficiency • Improve customer satisfaction

• Increase decision-making close to our customers

• Improve quality and cost effectiveness

30

Priorities going forward

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%

31

Capital management – Core Tier 1 ratio

15.7-1.0

- 0.4

14.3

10%

11%

12%

13%

14%

15%

16%

Q4 2011 Basel 3 IAS 19 Q4 2011 including Basel 3 and IAS 19

Retail mortgage risk-weights

Internal measures (IRB Advanced and

other)

Core Tier 1 ratio

Swedbank regulatory compliant – transformation completed • Transformation of:

– Maturity structure liabilities – Liquidity reserve – Capital buffer

• Significantly reduced risk in balance sheet

• Cost for regulatory compliance taken

32

Capital management

Ratio Swedbank Expected requirements CT1-ratio, Basel 3 14.7% 10% (2013) 12% (2015) Liquidity coverage ratio 139% 100% (2015) EUR/USD Net stable funding ratio 94% 100% (2018)

5. Liquidity and funding

33

0

200

400

600

800

1 000

1 200

1 400

FY 2008 Q4 20110

200

400

600

800

1 000

1 200

1 400

FY 2008 Q4 2011 FY 201X

Significantly reduced risk level

34

Liabilities*

Source: Swedbank, Dec 31, 2008 and Dec 31, 2011 * Simplified balance sheet assets and liabilities

Liquidity and funding

Assets*

-122

-10

+94

-47

CEE lending Estonia

Other corporate lending, Sweden & other Nordic

Other private, Sweden

Swedish mortgage loans

Central bank + Government guaranteed

+54

+256

-262

+13

Senior

Covered bonds

Deposits

Core T1 Suppl. cap

Q4 2011 FY 2008 FY 201X Q4 2011 FY 2008

-42

SEKbn SEKbn

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

Total capital market funding Covered bond funding

Active maturity profile extension of market funding

35

• Average maturity of all capital market funding 35 months at end Q4 2011

• Average maturity of covered bond funding 43 months at end Q4 2011 – Average maturity of long-term funding issued during Q4 2011 52 months

Average maturity profile of outstanding market funding

Source: Swedbank interim reports and Fact books


Months

Covered bond strategy

36

*e.g. Registered covered bonds

Source: Swedbank, Dec 31, 2011, Nominal amounts


Maturity, years

Today: SEK ~317bn

Sweden: SEK 300-375bn

Today: SEK ~166bn

EUR/USD SEK 150-200bn

Sweden SEK 300-375bn

>7Y 3-7Y <5Y

Today: SEK ~28bn

Other* SEK 50-85bn

0

20 000

40 000

60 000

80 000

100 000

2012 2013 2014 2015 2016 2017

Senior unsecured debt

Senior unsecured debt strategy

37

Source: Swedbank, Dec 31, 2011, Nominal amounts


• Limited need given Swedbank’s balance sheet structure

• Build and maintain a Euro-curve

• Private placements in all currencies

• Create cover pool OC-level resilience against house price fluctuations

Senior unsecured debt maturity profile SEKbn

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

Domestic CB

Euro CB USD CB (144A)

Other CB Senior unsecured

0

10 000

20 000

30 000

40 000

50 000

Domestic CP

ECP/CD USCP Yankee CD

Finnish CD

French CD

20102011

Funding development FY 2011

38

Issued long-term debt

• SEK 254bn of long-term debt issued in 2011

• Demand for Swedbank short-term paper continued

• USD-funding need covered for more than 12 months


Outstanding short-term debt

2011

SEKm SEKm

Source: Swedbank, Dec 31, 2011

0

20

40

60

80

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

SEKbn

Significantly lower issuance volumes going forward

39

• SEK 44bn of long-term debt issued in Q4 (incl. SEK 7bn of senior unsecured) • Extended average maturity • Continued strong liquidity reserves

Term funding issuance


Average term funding issuance

Maturities 2012

Average term funding need


0

50

100

150

200

250

300

350

Next 12-month term funding maturitiesCP / CDs and net interbank funding

0

50

100

150

200

250

300

350

Additional pledgeable and/or liquid assets

Liquidity reserve, securities

Liquidity reserve, central bank deposits

Conservative liquidity levels • Short-term funding mainly a tool for cash management

• More than 12 months pre-funded

• Level of Liquidity reserve adjusted over time according to refinancing need

40

SEKbn

Source: Swedbank 30 Dec 2011


1 As defined by the Swedish Bankers’ Association

1

1

Low need for USD-funding

41

SEKbn

• USD-funding need covered for more than 12 months • Issued USD 3bn of covered bonds (144a) during 2011

Source: Swedbank, Dec 31, 2011, (Fact book page 72)

0

20

40

60

80

100

120

140

160

180

200

Assets Liabilities

Interest-bearing securities

Lending to the public

Loans to credit institutions

Cash and balances with central banks

Deposits and borrowings from the publicAmounts owed to credit institutions

Debt securities in issue


Liquidity reserve

42


SEKm

1 96% of the securities in the liquidity reserve per Q4 2011 are rated AAA

According to the template defined by the Swedish Bankers' Association1

Cash and holdings in central banks 163 215Deposits in other banks available overnightSecurities issued or guaranteed by sovereigns, central banks or multilateral development banks 27 880Securities issued or guaranteed by municipalities or Public sector entitiesCovered bonds 54 132 - Issued by other institutions 54 132 - Own issuedSecurities issued by non-financial corporatesSecurities issued by financial corporates (excl. covered bonds) 1 715Other

Total 246 942

Additional liquid assets, Group 62 082Other, over-collateralisation in the cover pool 149 500

Total 458 524

2 80% 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.

2

6. Swedbank’s cover pool

43

44

Rating, S&P / Moody’s AAA / Aaa Total pool size SEK 669.8bn Geographic distribution Sweden 100% Current OC-level 28.7%

Weighted average seasoning 2 60 months Average LTV 3, 4 – WA LTV on property level (Max LTV) 57% Non-performing loans 5 None

Fixed /Floating interest loans 6

– Fixed 40% – Floating 60%

Repayment structure 7 – Amortising 46% – Interest only 54%

Average loan size SEK 426 544 Number of loans outstanding 1 570 199 Number of borrowers 1 146 976 Number of properties 750 742 Dynamic pool Yes

1 As per Dec 31, 2011

2 Public sector loans not included

3 Index valuation as per Dec 31, 2011 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, Dec 31, 2011

Swedbank’s cover pool

Cover pool data

45


Geographical distribution - Sweden 100% 31 Dec2011

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) 44,7%Dalarna county (W) 2,4%Gävleborg county (X) 2,3%Värmland county (S) 2,3%Örebro county (T) 2,6%Västmanland county (U) 2,7%Uppsala county ( C) 4,1%Södermanland county (D) 2,7%Stockholm county (including Stockholm) (AB) 25,6%South (including Gothenburg and Malmoe) 48,5%Västra götaland county (Including Gothenburg) (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) 3,3%Skåne county (including Malmoe) (M) 12,4%Blekinge county (K) 1,8%Gotland county (I) 0,6%

100,0%

Source: Swedbank, Facts Dec 31, 2011

Type of loans

Residentails 90,9% of which Single-family housing 61,7% of which Tenant owner rights 15,9% of which Tenant owner association 9,4% of which Multi-family housing 3,9%Public 1,8%Commercial 0,1%Forest & Agricultural 7,2%

100,0%

Cover pool loan-to-value distribution

46



• Weighted average LTV 57%

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

30,0%

35,0%

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

LTV distribution per property1

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

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

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

47


Source: Swedbank, Dec 31, 2011 (1excluding public sector loans)

WA LTV per property type

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

1

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

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

OC

House price sensitivity of the cover pool • Resilient LTV-structure with an approximate 2-to-1 relationship between house price

drops and cover pool size

48


Over collateralisation

House price drop Source: Swedbank, Dec 31, 2011

0

200

400

600

800

1 000

Q4 10 Q411 Q4 10 Q411 Q4 10 Q411 Q4 10 Q411 Q4 10 Q411 Q4 10 Q411 Q4 10 Q411 Q4 10 Q411

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

• 73% of total past due loans are past due 30 days or less

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

49


Past due loans distribution by property type


SEKm

50

Source: Swedbank Dec 31 2011

• 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

-100

-50

0

50

100

150

200

2007 2008 2009 2010 2011

New lendingPrepayment/RedemptionAmortisationExtra amortisationProvisions Net change

• Total mortgage loan book of SEK 711bn

Turnover of Swedbank Mortgage AB’s total loan book

51

Swedbank’s Mortgage AB

SEKbn


Gross – Net changes in the total loan book

7. Appendix

52

Rating

53

This is Swedbank

2 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

• 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

54

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 3.4bn in Q4

• Corporate portfolio quality improvements

55

Asset quality

Share of impaired loans, gross

29 657

6 113

4 362 1962 391 -4 088

-3 853

-3 031-1 078

-1 926-3 938

29 657

35 770

40 132 40 32842 719 38 631

34 778

31 747

30 669 28 743 24 805

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

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

SEKm

1 731 319

3 620

7 696

4 792 1 281

5 366

Q4 11

Ukraine 61%

Russia 20%

Lithuania 13%

Latvia 21%

Estonia 6.6% LCI 0.13% Retail 0.19%


Loans past due 60 days – performance Q/Q

56

Asset quality

-150

-130

-110

-90

-70

-50

-30

-10

10

30

Q4

10

Q1

11

Q2

11

Q3

11

Q4

11

Q4

10

Q1

11

Q2

11

Q3

11

Q4

11

Q4

10

Q1

11

Q2

11

Q3

11

Q4

11

Q4

10

Q1

11

Q2

11

Q3

11

Q4

11

Q4

10

Q1

11

Q2

11

Q3

11

Q4

11

EURm

Estonia Latvia Lithuania RussiaUkraine


Provisions – well provided for • Individual provisioning rates maintained • Additional portfolio provisions in Latvian and Ukrainian mortgages • Positive rating migrations

57

Asset quality

Provision ratios, % Q4 11

Retail 90

LC&I 135

Baltic Banking 55

Russia 46

Ukraine 72

Group 62

18 49416 598 15 952

14 78212 821

3 2972 769 2 436

2 4092 435

4 373 5 204 6 3068 206 9 255

62.7%

61.0%60.0% 59.8% 61.5%

0

5 000

10 000

15 000

20 000

25 000

30 000

Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

SEKm

Individual provisions Portfolio provisions Write-of fs, gross, cum f rom 2010 Provision ratioSource: Swedbank Dec 31, 2011

Repossessed assets

58

Asset quality

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

SEKm

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


Credit impairments by category

59

Asset quality

- 483 - 972

- 324

- 441

- 174

-1 500

-1 000

- 500

0

500

1 000

Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

SEKm

Portfolio provisions Individual provisions Recoveries Write-offs net


60

• Lending exposure to the shipping and offshore sector is SEK 22.7bn plus unutilised commitments of SEK 6.1bn – Portfolio duration 4-5y – Average fleet age 7y – Other represents dry bulk (4%),

ro/ro/car (7%), container (5%) – Strong employment profiles

Shipping and offshore Credit portfolio – Large Corporates & Institutions

Tanker26%

Other16%

Offshore58%

Shipping and offshore portfolio

Note: Portfolio breakdown based on total exposure (lending + unutilised commitments).


Core Tier1 capital ratio

61

Capital management

13,94%

2,13%

0,41%

0,23% 0,08%

- 1,08%

- 1,13%

0,95% 0.11%15,65%

10%

11%

12%

13%

14%

15%

16%

17%

18%

Q4 2010 Profit Dividend Repurchase own shares

Other CT1 changes

Credit Risk, IRB

Credit Risk standardised

Market risk Operational risk

Q4 2011

Increase Decrease


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

62

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

New private lending in Sweden • Internal LTV limit of 75% having a clear impact on average LTV levels

of new origination

63

Swedish housing market

62

64

66

68

70

72

74

76

78

2009 2010 2011

Weighted average LTV on new lending

Tenant owner rights Single-family houses Total1

1 Total of Tenant owner rights and Single-family houses Source: Swedbank Dec 31, 2011

Mortgage loans gross margin (3-months) Swedish housing market

Should cover: Liquidy costs Cost of administration Credit Impairments Profit

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Q1 03

Q2 03

Q3 03

Q4 03

Q1 04

Q2 04

Q3 04

Q4 04

Q1 05

Q2 05

Q3 05

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

Q1 11

Q2 11

Q3 11

Q4 11

Perc

ent

Swedbanks price towards customer (3 months)Swedbank's funding cost

Stibor 3 months

Swedish Riksbanks reporate


65

Real estate prices – Baltic countries

Source: Swedbank, Estonian Land Board

Source: Swedbank, State Enterprise Centre of Registers

Source: Swedbank

1 616

976

0200400600800

1 0001 2001 4001 6001 800

Jan-

05M

ay-0

5S

ep-0

5Ja

n-06

May

-06

Sep

-06

Jan-

07M

ay-0

7S

ep-0

7Ja

n-08

May

-08

Sep

-08

Jan-

09M

ay-0

9S

ep-0

9Ja

n-10

May

-10

Sep

-10

Jan-

11M

ay-1

1S

ep-1

1

Tallinn

Nr.of deals EUR/m2

1 762

590

0200400600800

1 0001 2001 4001 6001 8002 000

Jan-

05

Aug

-05

Mar

-06

Oct

-06

May

-07

Dec

-07

Jul-0

8

Feb-

09

Sep

-09

Apr

-10

Nov

-10

Jun-

11

Riga

Nr.of deals EUR/m2

1 731

1 103

0200400600800

1 0001 2001 4001 6001 8002 000

Jan-

05

Aug

-05

Mar

-06

Oct

-06

May

-07

Dec

-07

Jul-0

8

Feb-

09

Sep

-09

Apr

-10

Nov

-10

Jun-

11

Vilnius

Nr.of deals EUR/m2

Baltic housing market

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

Domestic CB Euro CB Other CB Senior unsecured

0

10 000

20 000

30 000

40 000

50 000

60 000

Domestic CP

ECP/CD USCP Yankee CD

Finnish CD

French CD

Q3 11Q4 11

Funding development Q4

66

Long-term debt issued in Q4

• SEK 44bn of long-term debt issued in Q4 (mainly domestic covered bonds and senior unsecured private placements)

• Demand for Swedbank short-term paper continued

• USD-funding need covered for more than 12 months


Outstanding short-term debt

Q4 11

SEKm SEKm


-100,0

-50,0

0,0

50,0

100,0

150,0

200,0

250,0

300,0

-75

-50

-25

0

25

50

75

100

Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11

Nominal SEK 523bn term funding issued in 24 months…

67

• …with around SEK 315bn of maturities during the same period

• Issued around SEK 462bn in covered bonds

(nom

inal

SE

Kbn

)

Source: Swedbank, Sep 30, 2011

2010

Term funding Issued & matured as per Dec 2011 (LHS)

2011

Acc. Net funding (RHS)


68

Long-term funding • Maturities for 2012 amount to nominal SEK 86bn

68


Long-term funding maturity profile, SEKbn

0

50

100

150

200

2012 2013 2014 2015 2016 2017-

Government guaranteed debtSenior unsecured debtCovered bonds


69

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

• No issuance under the programme since summer 2009

• SEK 37bn of government guaranteed debt matured during 2012

69


Maturity profile as per Q4 2011, SEKbn

0

20

40

2012 2013 2014

USDSEKEURCHFHKDJPY


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

70

Source: Swedbank


71

Natural domestic wholesale funding market Liquidity and funding

Swedish households’ financial assets

Source: Statistics Sweden “Hushållens ställning och transaktioner“ Q3 2011

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

100%

1980 1990 2000 2005 2010 Q3 2011

Deposits and retail bonds Equities

Pension savings and mutual funds Other f inancial assets

0

10

20

30

40

50

60

70

80

Dec 11 Jun 12 Jun 13 May 14 Mar 15 Sep 15 Jun 16 Mar 17 May 20

SPI 181 SPI 176 SPI 177 SPI 166 SPI 182 SPI 183 SPI 184 SPI 185 SPI 180

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

Swedbank’s domestic covered bonds

72



SEKbn

The Swedish covered bond market

73

Swedish Domestic Covered Bonds, in SEKbn Public debt projections 2010-2014, in SEKbn

Source: Government budget statement, Oct 25, 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


1168 11191189 1 151 1 086 1 061 1 032

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0

200

400

600

800

1 000

1 200

1 400

2007 2008 2009 2010 2011F 2012F 2013F

Government Debt 2007-2013F % of GDP

0

200

400

600

800

1 000

1 200

1 400

Q109Q209Q309Q409Q110 Q210Q310Q410 Q111 Q211 Q311 Q411

Total SEK denominated outstandings

http://www.ascb.se/�

Funding sources

74

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


Swedbank Mortgage AB loan-to-value distribution

75

Swedbank’s Mortgage AB


LTV distribution per property LTV distribution by volume

• Weighted average LTV 60%

0%

5%

10%

15%

20%

25%

30%

0%

5%

10%

15%

20%

25%

30%

Public loans of SEK 13bn are excluded as they are either guaranteed by a Swedish municipality or the government and have therefore no LTV assigned to them

Origination process – mortgage loan application 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.

Swedbank’s lending process in Sweden

Source: Swedbank

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

77


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 condominium association for condominiums); 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

78

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

79


• 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.

80

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

Growth in mortgages primarily in LTV < 75% brackets

81

• By Q4 2011 the portfolio had grown by SEK 25bn since Q3 2011 to SEK 825bn • The portfolio with LTV above 75% has decreased from 3.1% to 3.0%

Souirce: Swedbank, Dec 31, 2011


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 825 billion

3.0% of portfolio above 75% LTV97.0% of portfoliobelow 75% LTV

0.5% of portfolio above 100% LTV

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

82

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.

83

Swedish covered bond legislation

Source: www.ascb.se


84

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


Cecilia Mattsson, Debt Investor Relations


Ulf Jakobsson, Head of Funding


Kimmy Samuelsson, Head of Long-Term Funding


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


AGM 30 March 2012

Q1 Interim report 25 April 2012

Q2 Interim report 18 July 2012

Q3 Interim report 23 October 2012

[email protected]

www.swedbank.com/investor-relations

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

84

mailto:[email protected]�








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



85

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.

Documents

Swedbank Debt Investor Presentation Q4 2011