S db k’ thi d t 2010 ltSwedbank’s third quarter 2010 results21 October 2010

Michael Wolf, CEOErkki Raasuke, CFOGö B CROGöran Bronner, CRO

Continued financial improvementp

• Net profit of SEK 2.6bn in Q3

• Baltic Banking net profit in Q3 of SEK 531m

• Improved NII and stable net commission incomeImproved NII and stable net commission income

Net profit performanceet p o t pe o a ce

2

Q3 09 Q4 09 Q1 10 Q2 10 Q3 10

Result by business area

Business highlightsSEKm Profit before impairments

Retail• Increased NII and seasonally lower costs

g g

1 000

2 000SEKm Profit before impairments

Q2 10

Q3 10

• Increased market share in new mortgage lending

• New in-principle framework agreement with 0

savings banks

Large Corporates & Institutions

-1 000Retail Large

Corporates & Institutions

Baltic Banking

Russia & Ukraine

Asset Management

Ektornet

• Slow trading activity• Stable corporate lending volumes 2 000

SEKm Operating result

Q2 10

Q3 10

Baltic Banking• NII supported by lower domestic rates• Deleveraging in Baltic Banking continues

0

1 000

• Deleveraging in Baltic Banking continues• Decreasing credit impairment trend -1 000

Retail Large Corporates & Institutions

Baltic Banking

Russia & Ukraine

Asset Management

Ektornet

3

Institutions

Improved NIINet interest income

p• Retail showed increased volumes and improved margins

• LC&I lower activity levels• LC&I lower activity levels

• Treasury deficit reduced by funding mismatch effects

5 017 4 702

4 023

Retail LC&I Baltic Banking

Russia, Ukraine

Treasury, Other

102 24 1461233 980

4 023 3 799 102

-113

711

45

918

24 146 123

711

2 432

227

(SE

Km

)

4

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

Stable commission incomeNet commission income

• Strong card and payment volumes

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

2 208 2 361 2 282

2 395 Retail LC&I Baltic

BankingRussia, Ukraine

Asset Mgmt,Other

(SEKm)

2 310

-57 -21 -2

386

-9

19

4 387

387

1 131

5

Q3 09 Q4 09 Q1 10 Q2 10 Q3 10

Supported by valuation effectsNet gains/losses on financial items, fair value

• Low trading activities

FX l i Uk i

pp y

• FX losses in Ukraine

• Funding related valuation effects in Group Treasury still high

809 Retail LC&I Baltic Banking Russia,

(SEKm)

647

Banking ,Ukraine Treasury,

Other-5

-49-41

-48-92

574

22348

92256

87

35

260

-25

6

-25

Q3 09 Q4 09 Q1 10 Q2 10 Q3 10

Expenses seasonally lowerExpenses

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

0.56 0.540.57 0.57 0.55

C/I ratio

4 526 4 300 4 391 4 423

Retail LC&I Baltic Banking

Russia, Ukraine

Staff andother

-114 -90 52 26

97530

4 238

90

690

-52

626

-26 202

2 190

(SE

Km

)

7

Q3 09 Q4 09 Q1 10 Q2 10 Q3 10

Solid wholesale funding activity continues Liquidity & Funding

Outstanding wholesale funding • YTD term funding of SEK 190bn, of which SEK 40bn during the third quarter (nominal SEKbn)

397456459Long-term,

non-guaranteed

• Remaining maturities of SEK 42bn in Q4, out of SEK 137bn in total maturities for the full year 2010 (nominal values)

180173

35

163Long-term, guaranteed*

• SEK 159bn of central bank repos and guaranteed funding were redeemed during the first nine months of 2010

11689

112

35

Short-term,

Central bank repos• Average maturity of all wholesale funding

of 28 months, 38 months for covered bonds (nominal value)

97112

0

112

Short-term

Short term, non-

guaranteed**

( )

610Short term,

guaranteed*** Q3 2010Q2 2010Q4 2009

* Issued with more than 12 month maturity

8

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

Third quarter 2010 results

Income statement

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

Income 7 647 7 772 2 23 086 26 800 14Income 7 647 7 772 -2 23 086 26 800 -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 -14.1Cost-income ratio 0.55 0.57 0.57 0.51Loan deposit ratio % 233 229 233 257Loan-deposit ratio, % 233 229 233 257Core Tier 1 capital ratio, %* 13.4 12.7 13.4 9.9Risk-weighted assets * 559.7 579.4 559.7 607.5

9

* Basel 2

Continues to improveAsset quality

p

• Asset quality indicators in the right directionImpaired loans– Impaired loans

– 60 days overdue– Restructured loans

All decliningRestructured loans

– Watch list

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

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

• Significant RWA reduction

• Business activity increasing

10

VolumesAsset quality

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

• Continued relative shift from corporate to private in Sweden

948 955 961900

1 000SEKbn

PrivateC t

521 566 573600

700

800Corporate

427 389 97251

163 150200

300

400

500

427 389 388

154 86 79 47

9777 71

43

163 150 90

0

100

200

Q4 08 Q2 10 Q3 10 Q4 08 Q2 10 Q3 10 Q3 10

11

Sweden CEE Excl Estonia

Asset quality

Credit impairments significantly reduced• Sweden small reversals

B lti t i

p g y

7 000

SEKm

• Baltic countries – Credit impairments in Latvia

R i i R i d Uk i

6 121

5 003

5 000

6 000

• Recoveries in Russia and Ukraine4 000

5 000

2 210

9632 000

3 000

963

120

0

1 000

-1 000

0

Q3 09 Q4 09 Q1 10 Q2 10 Q3 10

12

Retail LC&I Baltic Banking Russia & Ukraine Other

ProvisionsAsset quality

• Provision ratio levels maintained

Provision ratios Q3 1064 8% 65 9% 63 5%30 000SEKm

Provision ratios Q3 10

Retail 87%

LC&I 92%

B lti B ki 61%6 922

5 135 4 684 4 1043 606

62.9%

64.8% 65.9% 63.5%63.9%

20 000

25 000

Baltic Banking 61%

Russia 58%

Ukraine 66%21 889 23 028

21 068

6 922

15 000

Group 64%15 582

20 882 21 889 23 02821 068

9582 504 3 311

3 953 4 6035 000

10 000

9580

Q3 2009 Q4 2009 Q1 10 Q2 10 Q3 10

Individual provisions Portfolio provisions Write-of fs, gross, cum Provision ratio

13

Simplified core balance sheetp• High quality mortgage portfolio – low LTV• Limited impact under severe economic conditionsp• Strategy – preserve quality and AAA rating

1 200

1 400 SEKbn

800

1 000

400

600

0

200

Swedish mortgage lending

14

0Assets

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

1 200

1 400 SEKbn

800

1 000

400

600Government guaranteed

0

200

Swedish mortgage lending

Covered bonds

15

0Assets Liabilities

Other Swedish and Nordic lendingg• Stress test real estate related – very high resilience • Strategy – Improve risk adjusted return, increased diversificationgy p j

1 400

1 200

1 400SEKbn

800

1 000

Other Sw private

Other Swedish and Nordic corporate lending

400

600

Other Sw. private

Swedish mortgage lending

Government guaranteed

0

200

Swedish mortgage lending

Covered bonds

16

0Assets Liabilities

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

1 400

1 200

1 400SEKbn

800

1 000

Other Sw private

Other Swedish and Nordic corporate lending

Swedish and Nordic deposits

400

600

Other Sw. private

Swedish mortgage lending

Government guaranteed

0

200

Swedish mortgage lending

Covered bonds

17

0Assets Liabilities

CEE lendingg• CEE lending decreased substantially since end 2008• ICAAP stress test show significant resilience

1 400

g• Estonia to adopt the euro – becomes different risk category• Strategy – selective reductions, LTD restriction

CEE

1 200

1 400SEKbn

800

1 000

Other Sw private

Other Swedish and Nordic corporate lending

Swedish and Nordic deposits

400

600

Other Sw. private

Swedish mortgage lending

Government guaranteed

0

200

Swedish mortgage lending

Covered bonds

0Assets

18

Liabilities

Limited need of senior unsecured fundingg• Large and stable deposit base• High quality Swedish mortgage portfoliog q y g g p

1 400

CEE

1 200

1 400SEKbn

Equity

CEE d it

Subordinated debt

Senior unsecured

800

1 000

Other Sw private

Other Swedish and Nordic corporate lending

Swedish and Nordic deposits

CEE deposits

400

600

Other Sw. private

Swedish mortgage lending

Government guaranteed

0

200

Swedish mortgage lending

Covered bonds

19

0Assets Liabilities

Appendix

21

Impaired loans decreased by SEK 4bn Asset quality

p y

• Without FX effect down SEK 1.5bn

• Underlying decreases mainly relate to the Baltic countries

Impaired loans as% of gross lending

196 2 391-4 08840 132 40 328

42 719 38 631

40 000

45 000

SEKm

Ukraine 67%

Russia 24%6 113

4 362 196 2 391

29 657

35 770

30 000

35 000

6 9712 152

8 531

Lithuania 17%

Latvia 27%

29 65715 000

20 000

25 000

12 907

6 971

Estonia 8.1%

LC&I 0.3%Retail 0 2%

5 000

10 000

1 8131 123

5 134

22

Retail 0.2%0Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10

1 813

Q3 10

Loans past due 60 days – performance Q/Qp y p

250

EURm

100

150

200

50

0

50

00

-150

-100

-50

09 09 0 0 0 09 09 0 0 0 09 09 0 0 0 09 09 0 0 0 09 09 0 0 0

Q3

0

Q4

0

Q1

1

Q2

1

Q3

1

Q3

0

Q4

0

Q1

1

Q2

1

Q3

1

Q3

0

Q4

0

Q1

1

Q2

1

Q3

1

Q3

0

Q4

0

Q1

1

Q2

1

Q3

1

Q3

0

Q4

0

Q1

1

Q2

1

Q3

1

Estonia Latvia Lithuania UkraineRussia

23

Repossessed assetsAsset quality

p

2 500

SEKm

2 000

1 000

1 500

500

0Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 10

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

24

Real estate pricesTallinn Riga*

p1 762

1 500

1 800

1 500

1 800

s

1 6111 500

1 800

1 500

1 800

ns

616600

900

1 200

600

900

1 200

No

of tr

ansa

ctio

ns

EU

R/m

2

822

600

900

1 200

600

900

1 200

No

of tr

ansa

ctio

n

EUR

/m2

0

300

0

300

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

0

300

0

300

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

S S db k E t i L d B d S S db k

Vilnius*

1 731

Source: Swedbank, Estonian Land Board Source: Swedbank

1 731

1 016900

1 200

1 500

1 800

900

1 200

1 500

1 800tra

nsac

tions

EUR

/m2

0

300

600

0

300

600

Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 Q2'10

No

of tE

No of deals Average price

25

g p

* Data as of August 2010

Source: Swedbank, State Enterprise Centre of Registers

Liquidity & FundingLong-term funding g 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 ( i l l )

Swedbank, long-term maturity profile

(nominal value)

• SEK 180bn (nominal value) in maturities during 2011

80

100

SEKbn, nom

Swedbank, long term maturity profile(including Swedbank Mortgage)

40

60

80

0

20

40

-

Q4

10

Q1

11

Q2

11

Q3

11

Q4

11

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

2016

-

2626

Liquidity & FundingRemaining funding under the Swedish guarantee programmeg g g p g

• Swedbank exited the guarantee programme on 30 April 2010

Currency distributionprogramme on 30 April 2010

• No issuance under the programme as of August 2009

USD 27%

EUR 41%

g

• Outstanding guaranteed funding decreased during the third quarter by SEK 10bn to SEK 163bn (nominal value)

CHF 5%

SEK 25%

SEK 10bn to SEK 163bn (nominal value), mainly due to FX effects

JPY 2%

Maturity distribution

2-3Y 6%

3-4Y 18%

< 12 M 25%

1-2Y 51%

2727

Cover pool and covered bond funding sourcesLiquidity & Funding

p g• AAA/Aaa Rating from S&P and

Moody’sTotal pool size SEK 626bnGeographic distribution Sweden 100%

As per Q3 2010

• Unlimited domestic covered bond programme, through tap system

Average seasoning 56 monthsAverage LTV 1, 2

– WA LTV on property level 58%Non-performing loans 3 None

• EUR 25bn EMTN covered bond programme

SEK150b d ti MTN d

p g

Types of loans– Residential mortgages 90.8%– Public 2.3%

Commercial 0 1% • SEK150bn domestic MTN covered bond programme

• Unlimited Norwegian covered

– Commercial 0.1%– Forest and Agriculture 6.8%

Fixed /Floating interest loans 4

– Fixed 51% Unlimited Norwegian covered bond programme

• Registered covered bonds

– Floating 5 49%Average loan size SEK 413 441Number of loans outstanding 1 514 910Dynamic pool Yes

• In addition to public deals, private placements are executed through all programmes mentioned above

y

1 Index valuation as of 31 May 20102 Maximum LTV: Residential 75%, Commercial 60%, Forest and Agriculture 70%3 Past due loans > 60 days are not eligible for the cover pool4 Distribution by origination all programmes mentioned above

28

y g5 Floating interest loans < 365 days

Source: Swedbank

Swedbank Mortgage total loan portfolio of SEK 687bn100% f l di i S d• 100% of lending in Sweden

• 90% in residential lending

• Average LTV of 46% (loan level) 61% (property level*) Cover pool 43% and 58%• Average LTV of 46% (loan level) 61% (property level*). Cover pool 43% and 58% respectively.

110Lending distributed by collateralLoan-to-value*SEKbn

Cooperativeapartments

15%

Commercialproperties

0 2%80

90

100

110

15% 0.2%Municipalities

2%Multi-family

housing15%50

60

70

Forest &Agriculture

7%20

30

40

Single-familyhousing

61%

0

10

<30% >30-40% >40-50% >50-60% >60-70 >70-80% >80-90% >90%

Single-family housing Cooperative apartments Multi-family housing (incl housing coop. ass.) Forest & Agriculture

29

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