S db k’ d t 2010 ltSwedbank’s second quarter 2010 results22 July 2010

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

Continued progressp g

• Net profit of SEK 1.6bn

• Improved credit quality

• Term funding YTD higher than full year maturitiesTerm funding YTD higher than full year maturities

• Strengthened capitalisation to 12.7 per cent Core Tier 1 l t b b k Ti 2 b dapproval to buy back Tier 2 bonds

2

Business achievements – highlights g g

• Higher mortgage new sales market shares in Sweden

• Increased corporate activity

• Continued strong deposit trendContinued strong deposit trend

• Retail’s tailored service concept well received

• Deleveraging in the Baltic countries levelling off

3

Result by business area

Q2 performanceSEKm Profit before impairments

RetailSolid credit quality, higher customer activity 1 000

2 000

SEKm

Q1 10

Q2 10

Large Corporates & InstitutionsGood credit quality, repricing continues, slower trading -1 000

0

Baltic BankingImproving asset quality, stabilised NII, Estonia back to profit

-2 000Retail Large

Corporates & Institutions

Baltic Banking

Russia & Ukraine

Asset Management

Ektornet

back to profit

Russia & UkraineStabilising credit quality, continued restructuring i R i

Institutions

2 000

SEKmOperating result

Q1 10

in Russia

Asset ManagementStable earnings

0

1 000Q2 10

g

EktornetRepossessed properties valued at SEK 1 010m, intake slower than the plan

-2 000

-1 000

Retail Large Baltic Russia & Asset Ektornet

4

intake slower than the plan Retail Large Corporates &

Institutions

Baltic Banking

Russia & Ukraine

Asset Management

Ektornet

Pressure decreasingNet interest income

g

5 000

SEKm

4 0233 79962 89

4 000

4 500Retail LCI Baltic Banking Russia

& UkraineGroup Treasury

and Other

-34 4162 -89

-204

3 000

3 500

2 500

3 000

1 500

2 000

500

1 000

NII Q1 10

5

0NII Q1 10 NII Q2 10

Commissions back to pre-crisis levelsNet commission income

Paymentprocessing

Asset management

SEKm

Net commission income by source Q2p

• Positive trend from Q1 2009

Brokerage

Lending & guarantee

Payment processing

• Market leader in cards and payments

• Growth driven by Asset Management

0 200 400 600 800 1 000 1 200

Other

Corporate finance

SEKNet commission income*

2 500

3 000

SEKm

Retail

SEKmNet commission income by

business area Q2

1 500

2 000

BB

LCI

0

500

1 000

R&U

AM

0Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10

6

0 500 1 000 1 500

* Excl non-recurring items

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

• Lower trading results in Fixed Income

g g pp y

• Funding related valuation effects in Group Treasury

SEKm Q2 10 Q1 10 Q2 09

Retail 40 32 29

L C t & I tit ti 309 441 900Large Corporates & Institutions 309 441 900

Baltic Banking 89* 72 237

Russia & Ukraine 23 27 13

Group Treasury and Other 348 75 -469

Swedbank Group 809 647 710

* Excluding capital gain of SEK 13m, (MasterCard )

7

Term funding ahead of planLiquidity & Capital management

g p• YTD, SEK 150bn in term funding of

which around SEK 50bn during the d t 456Total long-

Outstanding wholesale funding (nom SEKbn )

second quarter

• SEK 60bn in remaining term funding maturities to roll or replace in 2010

397459

173

456

Total long-

Total long-term, non-guaranteed

maturities to roll or replace in 2010

• YTD around SEK 95bn of central bank repos and guaranteed funding has been

180

108

174

89Central bank

term, guaranteed*

redeemed

• Average maturity of wholesale funding further extended to 25 months

116

87

108

112Total short-term, non-

repos

further extended to 25 months (38 months for covered bonds)

61

97

280Total short-

term, guaranteed***

guaranteed**

Q2 2010

* Issued with more than 12 months maturity, government fee of 83bp** Including interbank deposits*** Issued with less than 12 months maturity government fee of 50bp

61guaranteed*** Q1 2010Q4 2009

8

*** Issued with less than 12 months maturity, government fee of 50bp

Second quarter 2010 results

Income statementSEKm Q2 2010 Q1 2010 ChangeNet interest income 3 799 4 023 -224

Net commission income 2 395 2 282 113Net commission income 2 395 2 282 113

Net gains/losses on financial items, fair value 809 647 162

Other income 753 715 68

Non recurring items 16 0 16

Total income 7 772 7 667 105Staff costs 2 282 2 296 -14

Variable staff costs 141 79 62

Other expenses 2 000 2 016 -16

Total expenses 4 423 4 391 32Profit before impairments 3 349 3 276 73

I i t f i t ibl t 0 14 14Impairment of intangible assets 0 14 -14

Impairment of tangible assets 128 36 92

Credit impairments 963 2 210 -1 247

Operating profit 2 258 1 016 1 242Operating profit 2 258 1 016 1 242Tax expense 672 469 203

Result for the period 1 586 547 1 039

Profit for the period attributable to: Shareholders of Swedbank AB 1 567 536 1 031

9

Profit for the period attributable to: Shareholders of Swedbank AB 1 567 536 1 031

Q2 developmentAsset quality

p

• No impact of European sovereign debt crises

• Further stabilisation/improvement in the Baltic countries

• Continued improved risk profiles on both the assetContinued improved risk profiles on both the asset and liability side

S db k’ ili tl i d• Swedbank’s resilience vastly improved– ICAAP

I t l t t t– Internal stress tests– Stress test of the Committee of European Banking Supervisors

10

Volumes – signs of stabilisationAsset quality

g

• Sweden – same pattern with better corporate demand

• CEE exposure not a restriction

SEKbn

959 952 955

800

900

1 000

SEKbn

PrivateCorporate

555 559 566

500

600

700

290%

404 393 389 9784 79

251188 173 163

99200

300

400 210%of equity 194% 179% 109%290%

154 104 94 86 52

84 79 774799

0

100

Q4 09 Q1 10 Q2 10 Q4 08 Q4 09 Q1 10 Q2 10 Q2 10

S d CEE l E t i

11

Sweden CEE excl Estonia

Note: CEE lending as % of equity calculated as net lending to the public divided by balance sheet equity

Impaired loans – small increaseAsset quality

p

• Up SEK 2.4bn in Q2

Impaired loans asImpaired loans as% of gross lending

Ukraine 64%4 362 196 2 39135 770

40 132 40 32842 719

40 000

45 000

SEKm

9 789

Russia 21%

Lithuania 18%9 736

6 113

4 362

29 657

35 770

25 000

30 000

35 000

7 6882 557

Latvia 27%

9 73619 921

15 000

20 000

25 000

13 916

Estonia 8.5%

LCI 0.3%Retail 0.2%0

5 000

10 000

1 8631 167

5 739

12

0Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q2 10

Asset quality

Credit impairments significantly reduced• Sweden very low levels

S ll i i R i d

p g y

8 000

SEKm

• Small recoveries in Russia and Ukraine

• Baltic countries

6 672

6 1216 000

7 000

• Baltic countries – Few new problems– Property prices stabilising/increasing

5 003

4 000

5 000

– Insolvency and debt restructuring laws2 210

2 000

3 000

963

0

1 000

2 000

-1 000

0

Q2 09 Q3 09 Q4 09 Q1 10 Q2 10

13

Retail LCI Baltic Banking Russia & Ukraine Other

ProvisionsAsset quality

• Stability in portfolio provisions

Provision ratios Q2 1065 9% 63.5%30 000SEKm

Provision ratios Q2 10

Retail 88%

Large Corporates 101%

B lti B ki 59%6 922

5 135 4 684 4 104

63.3%

62.9%

64.8%65.9% %

20 000

25 000

Baltic Banking 59%

Russia 59%

Ukraine 68%20 882 21 889 23 028

8 914

6 922

15 000

Group 64%

9 864

15 582

20 882 21 889

1 6003 146

3 953 4 5955 000

10 000

6421 600

0Q2 2009 Q3 2009 Q4 2009 Q1 10 Q2 10

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

14

Appendix

16

Balance sheetSwedbank Group SEKm Jun 10 Dec 09 %

Loans to credit institutions 204 327 92 131 122%

Loans to the public 1 239 104 1 290 667 -4%Loans to the public 1 239 104 1 290 667 -4%

Interest-bearing securities 215 569 170 615 26%

Fund shares for which customers bear the investment risk 85 181 78 194 9%

Shares and participating interests 12 716 12 245 4%

Derivatives 89 199 72 969 22%

Other assets 58 492 77 866 -25%

Total assets 1 904 588 1 794 687 6%

Amounts owed to credit institutions 243 947 231 687 5%

Deposits and borrowings from the public 529 048 504 424 5%

Debt securities in issue 710 509 703 258 1%

Financial liabilities for which customers bear the investment risk 85 471 80 132 7%Financial liabilities for which customers bear the investment risk 85 471 80 132 7%

Derivatives 76 950 72 172 7%

Other liabilities and provisions 134 766 75 057 80%

Subordinated liabilities 32 630 37 983 -14%

Equity 91 267 89 974 1%

- Non-controlling interest 260 304 -14%

- Equity attributable to shareholders 91 007 89 670 1%

T t l li biliti d it 1 904 588 1 794 687 6%

17

Total liabilities and equity 1 904 588 1 794 687 6%

Liquidity & FundingLong-term funding g g• SEK 60bn in remaining term

funding maturities to roll or replace in 2010

• Continued focus on covered bonds YTD SEK 129bn issuedbonds, YTD SEK 129bn issued

• YTD issued SEK 21bn in senior unsecured funding SEKbn nom

Swedbank, long-term maturity profile(including Swedbank Mortgage)g

• Average maturity of wholesale funding further extended to 25 months (covered bonds 38

80

100

SEKbn, nom

25 months (covered bonds, 38 months)

40

60

0

20

0 0 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5-

1818

Q3

1

Q4

1

Q1

1

Q2

1

Q3

1

Q4

1

Q1

1

Q2

1

Q3

1

Q4

1

Q1

1

Q2

1

Q3

1

Q4

1

Q1

1

Q2

1

Q3

1

Q4

1

201 5

Liquidity & Funding

Funding under the Swedish guarantee programmeg g p g

• Swedbank exited guarantee programme as per 30 April 2010

(total outstanding as per 30 June, nom SEK 173bn)

Currency distributionprogramme as per 30 April 2010

• Outstanding guaranteed funding decreased during the second quarter

USD 30%

EUR 41%

decreased during the second quarter by SEK 28bn to SEK 173bn

• Strive to buy back longest maturities JPY 2%

CHF 4%

SEK 23%

• Strive to buy back longest maturities of guaranteed funding when liquidity rules are clearer Maturity distribution

JPY 2%

2-3Y 10%

3-4Y 15%

1-2Y 42%

2 3Y 10%

1919

< 12 M 33%

Cover pool and new issuance of covered bonds YTD 2010p• YTD three euro covered bonds in primary

market – Euro MTN CB 3Y ms+39bp

Total pool size SEK 618bnAverage loan size SEK 401 082 – Euro MTN CB 3Y, ms+39bp

EUR 1bn, issued Jan 2010– Euro MTN CB 7Y, ms+57bp

EUR 1bn, issued Mar 2010E MTN CB Y 2b

Number of loans outstanding 1 504 480

Types of loans– Residential mortgages 90.7%

Public 2 4% – Euro MTN CB 5Y, ms+52bpEUR 1bn, issued Jun 2010

• Also continued good demand f d ti d b d i th h

– Public 2.4%– Commercial 0.1%– Forest and Agriculture 6.8%

Fixed /Floating interest loans 1for domestic covered bond issuance through tap system

• Registered CBs

– Fixed 48%– Floating 2 52%Remaining fixing period – Fixed 32%

• Private placements

• YTD SEK 129bn issued in domestic and international markets

– Floating 2 68%

Average LTV 4, 5

– WA LTV on loan level 3 43%WA LTV on property level 57%– WA LTV on property level 57%

Average seasoning 56 monthsNon-performing loans 6 NoneGeographic distribution Sweden 100%

1 Distribution by origination2 Floating interest loans < 365 days 3 LTV: by volume4 Index valuation as of 31 Dec 20085 Maximum LTV: Residential 75%, Commercial 60%, Forest and

20

Dynamic pool Yes Agriculture 70%6 Past due loans > 60 days are not eligible for the cover pool

Swedbank Mortgage, 30 Jun 2010, total loan portfolioSEK 681bnSEK 681bn• 100% lending – Swedish properties

• 90% residential lending90% residential lending

• Average LTV of 45% (loan level) 61% (property level). Cover pool 43% / 57%

• 79% of the total lending book within a loan-to-value ratio below 50%g

Lending distributed by collateral

C ti

80

90SEKbn

Cooparativeapartments

15%

Commercialproperties

0.2%Municipalities

2%Multi -family

50

60

70

Multi -familyhouses

15%

Forest &Agriculture

Si l f il

20

30

40

7%Single-familyhomes60%0

10

>0-1

0%

0-20

%

20-3

0%

30-4

0%

40-5

0%

50-6

0%

60-7

0%

70-8

0%

80-9

0%

>90%

21

> >1 >2 >3 >4 >5 >6 >7 >8

Single-family homes Cooperative apartments Multi-family houses (incl housing coop. ass.)

Foreign exchange positions as of 30 June 2010Earnings capacity

g g p

SEKm EEK LVL LTL UAH RUB

Structural position -34 331 -293 -15 935 68 58Structural position 34 331 293 15 935 68 58

Net assets 17 493 6 315 4 572 1 018 1 184

Equity hedge 0 - 6 315 -4 574 0 0

Goodwill 10 581 0 0 0 0

Total position - 6 257 -293 -15 937 1 086 1 242

22

Repossessed assetsAsset quality

p

2 500

SEKm

2 000

1 000

1 500

500

0Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010

23

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

Real estate prices stabilisedMarket situation

• Slight fluctuations in average priceRiga

p

1 7621 8001 800• Slight fluctuations in average price

influenced by the small transaction volumes

614 900

1 200

1 500

800

900

1 200

1 500

800

f tra

nsac

tions

EU

R/m

2

0

300

600

0

300

600

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

No

ofE

Tallinn Vilnius*

No of deals Average price

1 7311 611

851 900

1 200

1 500

1 800

900

1 200

1 500

1 800

rans

actio

ns

UR

/m2

1 731

1 040

900

1 200

1 500

1 800

900

1 200

1 500

1 800

rans

actio

ns

UR

/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 tEU

0

300

600

0

300

600

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

No

of tr

EU

24

No of deals Average priceNo of deals Average price

* Based on preliminary data for Q2 2010