Swedbank Investor presentation - February 2018

 
Swedbank Investor presentation - February 2018
Swedbank Investor
presentation

​February 2018
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Swedbank Investor presentation - February 2018
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.

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Swedbank Investor presentation - February 2018
Table of contents

        Executive summary                4
1. Swedbank overview                     5
2. Quarterly financial update            15
3. Capital considerations                25
4. Liquidity and funding                 30
5. Cover pool data                       39
6. Swedish and Baltic economy            46
7. Swedish housing and mortgage market   55
8. Appendix                              70

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Swedbank Investor presentation - February 2018
Executive summary
 Strong financial position                                                                                           Top 10 shareholders
■ Sweden’s largest retail bank with a leading position in our three Baltic home markets                              1.    Sparbanksgruppen, 10.3%
                                                                                                                     2.    Folksam, 7.0%
■ ROE target of at least 15%                                                                                         3.    AMF, 5.5%                            Our four
                                                                                                                     4.    Alecta, 4.5%
■ Strong asset quality!                                                                                              5.    Swedbank Robur, 4.1%
                                                                                                                                                                 home
                                                                                                                     6.    Sparbanksstiftelser, 3.3%            markets
■ Solid liquidity and funding position – survival horizon more than 12 months                                        7.    BlackRock, 2.5%
■ One of the best capitalised banks in Europe* with significant buffers to both MDA and Loss                         8.
                                                                                                                     9.
                                                                                                                           Vanguard, 2.4%
                                                                                                                           Norges Bank, 2.0%
     absorption trigger levels                                                                                       10.   SEB Fonder, 1.8%
■ Dividend policy of 75% - for six consecutive years                                                                 Swedish owners, 59.5%
     *According to EBA stress test 2016                                                                              Int’l owners, 40.5%               Sweden
    Swedbank Q4 2017 (Q3 2017) – Robust performance!
■     ROE:                                        14.4% (15.0%)
■     Cost/income ratio:                          0.42 (0.37)
■     CET1 capital ratio:                         24.6% (23.9%) – with requirements of 21.9% (fully loaded CRD IV)                                              Estonia
■     Leverage ratio:                             5.2% (4.7%)                                                                                                 Latvia
■     Credit impairment ratio:                    0.08% (0.06%)                                                                                            Lithuania
■     Share of impaired loans:                    0.55% (0.55%)
■     Total provision ratio for impaired loans:   45% (45%)
■     Liquidity and funding:                      LCR: 173%, NSFR: 110%
■     Credit ratings:                             AA-(S)/AA-(S)/Aa3(S) from S&P/Fitch/Moody’s

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Swedbank Investor presentation - February 2018
This is
                                                   Swedbank

                            1. Swedbank overview

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Swedbank Investor presentation - February 2018
Swedbank                                                                                                                         This is
                                                                                                                                Swedbank
Low-risk, cost efficient and well capitalised
     Large and diversified customer base                                              Low risk
     Leading retail bank in our 4 home markets                                        Credit impairment ratio

     7m PRIVATE CUSTOMERS                                                             0.08%
     Focus on Mid-corp and SME segments                                               Market-leading cost efficiency
     18% corporate lending market share in Sweden                                     Cost income ratio

     600k CORPORATE CLIENTS                                                           39%
     Stable profitability                                                             Solid capitalisation
     Return on equity target of at least 15%                                          270bps buffer to regulatory requirement

     15.1%                                                                            24.6%

© Swedbank    Information class                  Note: Numbers for full year 2017
              Public                             Source: Swedbank Fact book 4Q 2017
                                                                                                                                           6
Market leading position in our home markets                                                                                                                      This is
                                                                                                                                                                Swedbank
                   Loans (private)*           Loans (corporate)*           Deposits (private)         Deposits (corporate)   Payments**           Funds

                                                           17%                            21%                      20%                                  20%
                                23%
                                                                                                                                     36%

                                                                                                             80%               64%
    Sweden              77%                          83%                           79%                                                            80%

                                                             37%                                                                                          42%
                                46%                                             45%                                 44%       41%
                     54%                           63%                                    55%              56%                                   58%
                                                                                                                                     59%
    Estonia

                                                           18%                                                     16%
                                31%                                                      32%
                                                                                                                                                        42%
                                                                                                                                     50%        58%
                       69%                                                                                                    50%
                                                                                 68%                        84%
      Latvia                                        82%

                                                           18%                                                     23%
                               34%                                                        40%                                                           37%
                                                                                                                              51%    49%
                        66%                                                      60%                                                            63%
    Lithuania                                          82%                                                   77%

                * Excluding the Swedish National Debt Office and repurchase agreements                                                     Swedbank     Other
                ** Bank Giro for Sweden, domestic payment transactions (Estonia, Latvia, Lithuania)

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Strong financial position                                                                                                                                                      This is
                                                                                                                                                                              Swedbank
                       Low risk                                                   Stable earnings                             Market-leading cost
             Liquidity and capital ratios (%)                             Profit before impairments (SEK bn)
                                                                                                                              efficiency
                                                                                                                                           Total expenses (SEK bn)
                                                                  10                                                          20
        NSFR           LCR            CET1 ratio, CRDIV (RHS)
                                                                          One-offs from disposals                                         Acquisition of Sparbanken…
  200                                                      30
                                                                   8                                                          18
                                                           25
  150
                                                           20      6                                                          16
  100                                                      15      4
                                                                                                                              14
                                                           10
   50                                                              2
                                                           5                                                                  12
                                                                                                                                   2012    2013     2014   2015   2016   2017 Target
    0                                                      0       0
                                                                                                                                                                                18
        2012    2013    2014     2015      2016    2017                Q4 12     Q4 13    Q4 14      Q4 15   Q4 16    Q4 17
               Credit impairment (bps)                                              Return on equity (%)                                     Cost / income ratio (%)
  40                                                              18                                                          60
                                                                  16                                                          55
  30                                                              14
                                                                  12                                                          50
  20                                                              10
                                                                                                                              45
                                                                   8
  10
                                                                   6                                                          40
    0                                                              4
                                                                   2                                                          35
  -10                                                              0
                                                                                                                              30
     Q4 12     Q4 13    Q4 14     Q4 15       Q4 16   Q4 17               2012     2013    2014      2015    2016    2017
                                                                                                                                   2012      2013    2014    2015      2016   2017

© Swedbank        Information class                             Source: Swedbank Fact book 4Q 2017
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Stable and profitable business mix                                                                                                           This is
                                                                                                                                            Swedbank

- retail bank profile
                   Total income                     Net Interest Income                        Net Commission Income
             NII      NCI        NGL      Other
                                                  • 86% of total loans in Sweden               • Sweden’s largest fund
 100%                                             • 51% Swedish mortgages                        manager (SEK1.2trn AuM)
  90%                                                                                          • 5th largest card acquirer &
                                                                                                 10th largest card issuer in
  80%                                             • Baltic banking very profitable               Europe
  70%                                                • 10% of Group lending
  60%                                                • 20% of Group operating                                         Other
                                                                                                                      13%
  50%                                                  profit, FY2017
                                                                                                                                 Asset
  40%
                                                                                                                               Management
                                                                                            Lending and                           11%
  30%                                                                                         deposits
                                                                                                              2017
                                                                                                63%           Total
  20%                                                                                                                          Payment,
                                                                                                            income              Cards
                                                                                                                                 9%
  10%
                                                                                                                               Treasury,
   0%                                                                                                                         Trading and
               2015            2016       2017                                                                                   Capital
                                                                                                                                Markets
                                                                                                                                  4%

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Swedbank strategy
                                                                                      Strategy

                                               An available
                                             full-service bank

                                               Sustainability
                                               and customer       Offering based on
                                  Low risk    value through a    customer need and
                                                responsible         expectations
                                               core business

                                                High cost
                                                efficiency

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Key priorities                                                                                              Strategy

      Customer Interaction                      Savings                      Lending & Payment

        Seamless omni-channel         Regain market share through                 Fully-digital
           customer journey          high-quality digital savings offer         mortgage process

                                                                          Enhance corporate relationships
   Proactive, tailor-made product           Increase focus on
                                                                             with our improved cash
         offers and advice                   pension savings
                                                                              management solution

    One financial access point for          Customer-centric                Most convenient payments
             customers                 Financial Planning Platform           solutions for consumers

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Digitalisation – cost and income opportunities                                                                                            Strategy
90% of our customers are happy or very happy with our digital services

 Increase revenue via digital banking                                    Improve cost and sales efficiency

    • Customers increasingly connected via our                       •     Further potential in manual to digital sales
      digital channels                                                     transformation
       • Higher transaction volumes
       • More cross-selling opportunities                             100%

                                                                         80%

                                     Customers                           60%
                                   w ithout Internet
                                   bank agreement                        40%
             Digitally active            29%
               customers                                                 20%
                   47%
                                  Connected                              0%
                                customers (less                                  Payments         Savings &      Lending      Insurance
                                 than monthly                                                     pensions
                                    usage)
                                     24%                                                       Digital sales   Manual sales

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2017 Strategic achievements                                                             Strategy

Launched in Sweden                                 Retail channels
Already operating in the Baltics

Fully digital consumer lending                     Positive AuM inflows

Strategic co-operation with Kepler Cheuvreux       Personal finance app for customers
                                                   Mina Tjänster
Enhanced equity capabilities                       Fintech partnership
SmartID launched in the Baltics                    PayEx acquisition
Enables faster transaction process for customers   Integration and new launches begun
Digital customer identification                    Enhanced merchant omni-
and authorisation                                  channel payment solutions

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Swedbank creates value                                                                                                                                             Strategy

 %                                                                                                              SEK      Return on Equity
30                                                                                                               14      >15% target
                                                                                                      *
25                                                                                                                  12

20
                                                                                                                    10   15.1% FY 2017
                                                                                                                    8
15                                                                                                                       Common Equity Tier 1 ratio
                                                                                                                    6
10
                                                                                                                         One of the highest among European banks
                                                                                                                    4
5                                                                                                                   2
                                                                                                                         24.6%
0                                                                                                                   0
         2012              2013              2014              2015              2016              2017
                                                                                                                         Dividend per share
              Return on Equity (LHS)                                  CET1 capital ratio (LHS)                           75% payout ratio for 6th year in a row
              Dividend per share (RHS)

                                                                                                                         SEK 13.00
 * Dividend proposal (for the financial year of 2017) - to be decided by the Annual General Meeting in March 2018

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Quarterly
                                                          financial
                                                           update

                                 2. Quarterly financial
                                       update

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Swedish Banking                                                                                            Quarterly
                                                                                                           financial
Solid mortgage volume growth                                                                                update

 SEKm                            Q4 17        Q3 17       ▲QoQ   • Net interest income
 Net interest income             3 861        3 812         49
                                                                   – Continued mortgage loan volume growth and
 Net commission income           1 952        1 859         93
                                                                     stable back book margins
 Other income                     625               443    182
 Total income                    6 438        6 114        324
                                                                 • Net commission income
 Total expenses                  2 309        2 204        105     – Benign stock market development supported
 Profit before impairments       4 129        3 910        219       asset management and brokerage income
 Credit impairments               264               66     198     – PayEx included for the full quarter
 Ratios                          Q4 17        Q3 17              • Other income
 ROE, %                           21.2          21.6               – Higher contribution from Entercard and life
 C/I ratio                        0.36          0.36                 insurance
 Volumes, SEKbn                  Q4 17        Q3 17       ▲QoQ   • Solid asset quality
 Loans                           1 150         1 138        12
 Deposits                          525              519      6

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Baltic Banking                                                                                       Quarterly
                                                                                                     financial
Record high profitability                                                                             update

 SEKm                            Q4 17        Q3 17       ▲QoQ   • Net interest income
 Net interest income             1 116        1 060         56
                                                                  – Lending to households continues to grow
 Net commission income             711              565    146
                                                                  – Stable margins
 Other income                     226               218      8
 Total income                    2 053        1 843        210    – Firm deposit growth
 Total expenses                   737               647     90   • Net commission income
 Profit before impairments       1 316        1 196        120
                                                                  – Benefited from annual performance fees
 Credit impairments                -12              -26     14
                                                                 • Positive FX effects
 Ratios                          Q4 17        Q3 17
                                                                 • Stable asset quality
 ROE, %                           20.8          18.2
 C/I ratio                        0.36          0.35

 Volumes, SEKbn                  Q4 17        Q3 17       ▲QoQ
 Loans                             149              146      3
 Deposits                          185              172     13

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Large Corporates & Institutions                                                                        Quarterly

Result reflected mixed market dynamics                                                                 financial
                                                                                                        update

 SEKm                            Q4 17        Q3 17       ▲QoQ    • Stable net interest income
 Net interest income              934               896     38
                                                                  • Net commission income
 Net commission income            656               525    131
 Net gains and losses             332               554    -222
                                                                   – PayEx contributed positively
 Other income                      42               32      10     – Positive stock market performance increased
 Total income                    1 964        2 007         -43      asset management and custody income
 Total expenses                   867               841     26     – Annual covered bond market maker fees
 Profit before impairments       1 097        1 166         -69
                                                                  • Net gains and losses
 Credit impairments                59               195    -136
                                                                   – Low FX and fixed income trading activity
 Ratios                          Q4 17        Q3 17
 ROE, %                           14.2          13.0
                                                                   – Negative valuation effects
 C/I ratio                        0.44          0.42              • Lower credit impairments
 Volumes, SEKbn                  Q4 17        Q3 17       ▲QoQ
 Loans                             203              204      -1
 Deposits                          128              129      -1
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Group results                                                                                                    Quarterly
                                                                                                                 financial
Robust performance                                                                                                update

 SEKm                               Q4 17          Q3 17       ▲QoQ
                                                                       • Mortgage volume growth strengthened net
 Net interest income                 6 326          6 208       118
                                                                         interest income
 Net commission income               3 291          2 917       374
 Net gains and losses                 356               525     -169   • Stock market performance and full quarter
 Other income                        1 003              768     235      PayEx inclusion benefited net commission
 Total income                       10 976        10 418        558      income
 Total expenses                      4 563          3 883       680
 Profit before impairments           6 413          6 535       -122
                                                                       • FX effects and lower market activity
 Credit impairments                   311               235      76
                                                                         impacted net gains and losses negatively
 Other impairments                     86               107      -21
                                                                       • Expenses
 Tax                                 1 277          1 444       -167
 Net profit                          4 737          4 743         -6     – Restructuring charge of SEK 300m
 Ratios                             Q4 17          Q3 17                 – PayEx included for the full quarter
 ROE, %                               14.4              15.0
                                                                       • Solid asset quality
 C/I ratio                            0.42              0.37
 CET1 capital ratio, %                24.6              23.9
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Capital                                                                                                    Quarterly

Strong capitalisation – no excess capital                                                                  financial
                                                                                                            update

   24.2%      24.6%              23.9%     24.6%
                                                                    • CET1 capital increased by SEK 0.4bn
                                                         21.9%
                                                                     – Positive effect from net profit of SEK 1.1bn
                                                                       excl. dividend
                                                                     – Negative effect from IAS19 of SEK 0.6bn
                                                                    • REA decreased by SEK 11.1bn
                                                                    • Buffer above minimum requirements of
 Q1 2017     Q2 2017             Q3 2017   Q4 2017   CET1 capital
                                                        ratio
                                                                      around 270bps
                                                     requirement

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Capital                                                                                                      Quarterly
                                                                                                             financial
Lower REA                                                                                                     update

SEKbn
425                                                                      • REA decreased by SEK 11.1bn
         419.5
                                                                          – Received VISA-related proceeds
420
                                                                            reduced REA
415                                                                       – Year-end effects reduced REA
                      -7.3
410                                  -1.1   -0.7                408.4
                                                   -2.0
405

400
        Q3 2017 Credit risk Market risk     CVA    Other       Q4 2017

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Group results – FY 2017                                                                                               FY
                                                                                                                   financial
Strong result                                                           • ROE of 15.1% - target achieved           update

 SEKm                               FY 2017      FY 2016        ▲YoY    • Strong organic income generation
 Net interest income                 24 595         22 850      1 745     – One-off tax-free gains:
 Net commission income               12 030         11 333       697         • SEK 2.1bn from VISA in 2016
 Net gains and losses                 1 934          2 231       -297        • SEK 0.7bn from Hemnet in 2017
 Other income                         3 879          4 407       -528
 Total income                        42 438         40 821      1 617
                                                                        • Underlying expenses in line with FY 2017
 Total expenses                      16 415         15 627       788
                                                                          guidance of SEK 16.1bn 
 Profit before impairments           26 023         25 194       829    • Strong asset quality
 Credit impairments                   1 285          1 367        -82
                                                                          – Lower-than-anticipated credit impairments 
 Other impairments                     196                66     130
 Tax                                  5 178          4 209       969
                                                                        • Higher tax expense - changed dividend
 Net profit                          19 350         19 539       -189     policy in Estonia and tax on subord. liabilities
 Ratios                             FY 2017      FY 2016                • CET1 capital ratio of 24.6%
 ROE, %                                15.1              15.8           • Board proposal – dividend of SEK 13.00 per      
 C/I ratio                             0.39              0.38             share
 CET1 capital ratio, %                 24.6              25.0
                                                                          – 75% pay-out ratio: Six consecutive years
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Group                                                                                                        Quarterly
                                                                                                             financial
Solid asset quality                                                                                           update

 Credit impairments, SEKm             Q4 17          Q3 17      ▲QoQ    • Resilient asset quality in all business
 Swedish Banking                       264                66     198
                                                                          segments
 Baltic Banking                         -12              -26      14
 Large Corporates & Institutions        59               195     -136
                                                                        • Lower-than-anticipated credit
 Swedbank Group                         311              235      76      impairments for the full year (0.08%)

 Ratios                               Q4 17          Q3 17
 Credit impairment ratio, %            0.08              0.06
 Share of impaired loans, gross %      0.55              0.55
 Total provision ratio for impaired
                                         45               45
 loans, %

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ROE target of 15% remains                                                                   Outlook
                                                                                             2018

• Additional investments to further accelerate our digitisation and automation efforts
   – Channel transformation
   – Digital payment solutions and e-commerce
   – Customer offerings
   – Automation
• Investments will allow us to offset underlying cost inflation and over-time lead to net
  cost reductions
   – The re-organisation of our IT and business development processes – a key facilitator
• Total annual expenses for 2018 and 2019 will be below SEK 17bn
• ROE target of 15% remains
• No excess capital – dividend policy of 75% remains
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Capital
                                                              – fully
                                                             loaded
                                                             CRD IV

                                 3. Capital considerations

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Composition of Swedbank’s CET1 and total
                                                                                                                                                                                       Capital
                                                                                                                                                                                        – fully
                                                                                                                                                                                       loaded

    capital ratio requirements                                                                                                                                                         CRD IV

                                  270bp
                                                                                                      30.7%

                                                                                                                           Systemic Risk
                                                                          27.7%                                            charge in Pillar 2

                                            24.6%                          2.0%                                            25% REA Mortgage
                                                                                                                           Floor
                  21.9%                                                                                15.9%
                                                                                                                           Individual Pillar 2
                                                                           8.2%
                   2.0%                                                                                                    charge

                                                                                                                           Capital Conservation
       Pillar 2

                                            13.3%
                   6.8%                                                                                                    Buffer
                                                                           2.3%
                                                                                                                           Countercyclical
                                                                           2.5%                                                                   Available Distributable Items
                                                                                                                           buffer (2.0%)
                   1.8%                                                                                                                         Swedbank AB (parent comp) FY 2016**                  FY 2017
Automatic MDA                                                              1.3%
 Restrictions                                                                                                                                   Share premium reserve         13 206                  13 206
                   2.5%                                                                                                    Systemic Risk Buffer
                                                                                                                                                Retained earnings             41 277                  43 099
                                                                           3.0%                                                                 Available distributable items 54 483                  56 305
                   1.3%
                                            11.3%                                                     14.8%                Min. Additional T1     Dividend*                              -14 695
       Pillar 1

                   3.0%                                                    3.5%                                                                   Comprehensive income                     6 988
                                                                                                                           and T2 capital
                                                                                                                                                  other                                      195
                                                                                                                                                  ADI Q1 2017                             46 971
                                                                                                                           Minimum CET1
                   4.5%                                                    4.5%                                                                   * paid out in April 2017
                                                                                                                           Requirement
                                                                                                                                                  ** Based on fully audited numbers
                                                                                                                                                  ** The calculation of the ADI is based on the Annual report,
      Swedbank CET1 Requirements Swedbank CET1 Capital Ratio       Swedbank Total Capital   Swedbank Total Capital ratio                          why this exercise as per Q4 2017 should be seen as an
                                                                      Requirements                                                                example based on changes during the year.

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Capital
Regulatory uncertainty remains                                                                 – fully
                                                                                              loaded
                                                                                              CRD IV

• Basel proposal – largely as expected
   – Awaiting final details from EU and then Swedish regulator on new standardised approach
   – Likely long phasing in period – potentially until 2027
   – Comfortable buffers to current capital requirements
   – Feel great comfort in our capital generation capacity
   – No need to review current dividend policy on the back of the proposal

• IFRS 9
   – Limited impact on CET1 capital ratio of – 6bps as per 1 Jan, 2018

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Capital
MREL needs in line with expectations                                                                                                                               – fully
                                                                                                                                                                  loaded

– no imminent issuance plan                                                                                                                                       CRD IV

• Requirements for 2018 set and published by the                                            Swedbank MREL requirements
  Swedish National Debt office (NDO) on 20
                                                                       Based on Risk Exposure Amount                                      Based on total liabilities
  December 2017                                            SEKbn
                                                           140                                                                            14%
                                                                                                                                               + own funds
   – 7.3% based on Total liabilities + Own funds                                                                      31.8%                                        12.9%
                                                                                       30.7%
                                                           120                                                                            12%
   – 34.8% based on Risk Exposure Amount (REA)
                                                           100                                                                            10%
• Transition period until 1 Jan, 2022                                                                      21.4%
                                                           80                                                                              8%       7.3%
   – Already in compliance with current senior unsecured
     debt outstanding                                      60              13.4%                                                           6%

   – Issuance need to the equivalent of around SEK 87bn    40                                                                              4%
     in subordinated MREL eligible securities to meet
                                                           20                                                                              2%
     requirement by 1 Jan 2022
• Sweden to adopt EU insolvency law                         0
                                                                       Loss absorption amount         Swedbank total capital
                                                                                                                                           0%
                                                                                                                                                     NDO      Swedbank total
                                                                       Recapitalisation amount        Senior unsecured debt >1Y*                  requirement liabilities + own
   – Expected by year end 2018                                                                                                                   SREP 2017**      funds***
                                                                 *Nominal amount, ** Based on FY 2016 numbers, *** FY 2017, based on consolidated situation

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Asset portfolios – low risk                                                                                                                              Asset
                                                                                                                                                         quality
Group loan book* Q4 2017, total SEK 1 502bn                                                       CET1 – EBA stress test, 2016, %
                                                                                           25%
                                        Hotels and restaurants, Retail
                                        Shipping and offshore, Transportation      8%
                                        Manufacturing
                                                                                           20%
                                        Other corporate lending                    7%
                                                                                           15%                                              2015
                                       Other property management
                                                                                                                                            2016
                                                                                   15%
                                                                                           10%                                              2017
                                        Residential properties
                                                                                                                                            2018
                                       Agriculture and forestry
                                                                                           5%

                                                                                           0%
                                                                                                   SHB    Nordea        SEB     Swedbank

                                                                                                    Loan distribution
                                           Household loans                         70%       Sweden                  Baltic banking
                                           (90% mortgages)

                                                                                            30%
                                                                                                            Private                                Private
                                                                                                                              45%
                                                                                                            Corporate                 55%          Corporate
                                                                                                   70%

                                        Tenant ow ner associations

* Loans to the public excl. loans to credit institutions and SNDO

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Liquidity
                                                              and
                                                            funding

                                 4. Liquidity and funding

© Swedbank   Information class
             Public
Core balance sheet structure                                                                                           Liquidity
                                                                                                                         and
                                                                                                                       funding
SEKbn                                                    SEKbn
1 800
                   Assets                                1 800
                                                                 Liabilities

1 600                                                    1 600                 CET1
                                                                               Suppl. capital
                                                                                                 Simplified balance sheet
                                 Lithuania                                     Senior
                                 Latvia                                        unsecured debt
1 400                            Estonia                 1 400

1 200                            Other corporate        1 200
                                 lending, Sweden &
                                 other Nordic countries
                                                                               Deposits
1 000                                                    1 000

                                 Other private, Sweden
 800                                                      800

 600                                                      600

                                 Swedish
 400                                                      400
                                 mortgage loans
                                                                               Covered
                                                                               bonds
 200                                                      200

    0                                                       0
                     Q4 2017                                      Q4 2017

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Covered bond strategy                                                                                                                                       Liquidity
                                                                                                                                                              and
                                                                                                                                                            funding

                     Covered bond strategy                              Swedish households’ financial assets
      Sweden                                                                                                                                            SEKbn
                                                               100%                                                                                     12 000
 SEK 300-375bn

                                                                                                                                                                 Thousands
                                                               90%
                                                                                                                                                        10 000
                                                               80%

                                                               70%
                                                                                                                                                        8 000
                                                               60%

                                                               50%                                                                                      6 000
                                   EUR/USD
                                                               40%
                              SEK 100-150bn                                                                                                             4 000
                                                               30%

                                                               20%
                                                                                                                                                        2 000
                                                    Other
                                                               10%
                                                 SEK 20-50bn
                                                                0%                                                                                      0
                                                                       1980          1990            2000      2005   2010          2015         2016

         7Y              Deposits, cash and retail bonds (LHS)           Equities (LHS)

                                                                      Pension savings and mutual funds (LHS)          Other financial assets (LHS)
                               Maturity, years                        Total financial assets (RHS)

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Senior unsecured debt strategy                                                              Liquidity
                                                                                              and
                                                                                            funding

SEKbn*
                  Senior unsecured debt maturity profile
60                                       Senior unsecured debt

40

20

 0
         2018          2019           2020       2021            2022        2023   2024-

     *Nominal amount

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Conservative funding position                                                                                                                     Liquidity
                                                                                                                                                    and
                                                                                                                                                  funding
• LCR 173% (Swedish FSA definition FFFS 2012:6)

• NSFR 110% (Basel committee)

• Issued SEK 181bn of term funding FY 2017

• Plan to issue around SEK 145bn in 2018
        Term funding issuance – completed and planned                  SEKbn
                                                                                           Prefunded for more than 12 months
SEKbn
                                                                       700
100          Covered bonds            Senior unsecured debt
 90          Planned, covered bonds   Planned, senior unsecured debt   600
                                                                                                           Survival horizon
 80
                                                                       500
 70
 60                                                                    400
 50
                                                                       300
 40
 30                                                                    200
 20
                                                                       100
 10
  0                                                                      0
                                                                             0   20   40   60   80 100 120 140 160 180 200 220 240 260 280 300 320 340 365
                                                                                                            Days forward

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Long-term funding maturity profile                                                                                                   Liquidity
                                                                                                                                       and
                                                                                                                                     funding

Long-term funding maturity profile, by funding source                Long-term funding maturity profile, by currency
SEKbn                                                                SEKbn
               Senior unsecured debt             Covered bonds
200                                                                  200

150                                                                  150
                                                                                                                               Other
                                                                                                                               GBP
100                                                                  100                                                       USD
                                                                                                                               EUR
                                                                                                                               SEK
 50                                                                  50

  0                                                                   0
        2018   2019         2020   2021   2022       2023    2024-           2018   2019   2020   2021   2022   2023   2024-

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Private placements – active in both covered                                                                                                                        Liquidity
                                                                                                                                                                     and
                                                                                                                                                                   funding
bonds and senior unsecured debt
• All major currencies                                                                   • FRN’s (SEK and EUR) – issued with a
• Bullet format, FRN or Fixed                                                              “strike adjustment spread”*

• EUR 10m equivalent minimum size                                                        • Program formats available:
                                                                                             – Senior unsecured debt: MTN, NSV and potentially
• Sweet spots:
                                                                                               USD 144a format
   – Senior: 2.5-5Y
                                                                                             – Covered bonds: MTN, RCB and Norwegian CB
   – Covered: 3-8Y                                                                             program
   – Longer tenors also possible
• Open to larger placements with smaller investor
  groups
• Open to tap existing bonds
• Listing is optional
*Spread added to the coupon to avoid negative coupon fixings. Bond issued above par to compensate for this. The above par value reflects the NPV of the adjusted
spread

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Liquidity reserve                                                                                                                                                         Liquidity
                                                                                                                                                                            and
According to the template defined by the Swedish Bankers' Association                                                                                                     funding

                                                                                                                                                            SEKm
                                                   1
Cash and holdings in central banks                                                                                                                     208 370
Deposits in other banks available overnight                                                                                                                  3
Securities issued or guaranteed by sovereigns, central banks or multilateral development banks                                                          88 006
Securities issued or guaranteed by municipalities or public sector entities                                                                              5 636
Covered bonds                                                                                                                                           46 621
    - Issued by other institutions                                                                                                                      44 349
    - Own issued                                                                                                                                         2 272
Securities issued by non-financial corporates                                                                                                              292
Securities issued by financial corporates (excl. covered bonds)                                                                                            409
Other

Total2                                                                                                                                                 349 337

1) Including loans to the Sw edish Ntional Debt Office
2) 95% of the securities in the liquidity reserve per Q4 2017 are rated AAA. The rating requirement is AA-.

Assets included in the liquidity reserve should comply w ith the follow ing:
- assets shall be under the control of the Treasury function in the bank
- assets can not be encumbered
- market values are used for the assets
- only unencumbered securities receiving 0-20% risk w eight under the standardised approach to credit risk of the Basel II framew ork can be included
- securities received in reverse repo transactions shall be included in the liquidity reserve and securities used as collateral for repo transactions shall be excluded

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Rating                                                                                                                               Liquidity
                                                                                                                                       and
                                                                                                                                     funding

•    On 1 September 2017, Moody’s affirmed Swedbank's ratings at Aa3/P-1 with a stable outlook. The ratings reflect Swedbank’s
     strong credit quality, solid regulatory capital and stable earnings, underpinned by its established franchise in Sweden. Swedbank is
     also expected to be broadly resilient to the risks in the residential housing market and household sector in Sweden.

•    May 26, 2016, Fitch upgraded the rating to AA- from A+, with a stable outlook. The main drivers behind the upgrade
     are: Execution of the low risk strategy including conservative risk-returns and underwriting standards, strong retail
     franchise and continued strong capitalisation.

•    November 24, 2017, S&P affirmed the rating of Swedbank at AA-/A-1+, with a stable outlook. The rating reflect Swedbank’s
     strong business position, given the market-leading retail position, strong revenue performance, and efficiency, as well as prudent
     management and strategy. S&P also assess the capital and earnings as strong, reflecting the strong earnings capacity. The stable
     outlook on Swedbank resilient earnings and capital as Sweden's economy benefits from improvements in Europe's economic
     environment and the domestic housing market adjusts to higher volumes and stricter amortization requirements.

                                                            S&P (Stable)          Moody's (Stable)            Fitch (Stable)
                                                      Short    Long    SACP1 Short     Long    BCA1   Short      Long          VR1

                             Swedbank                 A-1+      AA-        a+    P-1    Aa3     a3    F1+         AA-          AA-
                             Swedbank Mortgage        A-1+      AA-          -   P-1    Aa3      -      -          -            -
                             Covered bonds              -       AAA          -    -     Aaa      -      -          -            -
                             1
                                  Standalone Rating

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                                                                                                                                                 38
Swedbank is a labeled issuer of
                                                  the ECBC Covered Bond Label
                                                  Foundation
                                                  (www.coveredbondlabel.com )

                                 5. Cover pool data

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             Public
Cover pool data1                                                                                                                    Swedbank is a labeled issuer of
                                                                                                                                    the ECBC Covered Bond Label
                                                                                                                                    Foundation
                                                                                                                                    (www.coveredbondlabel.com )

Rating, S&P / Moody’s                     AAA / Aaa    Repayment structure 7
Total pool size                         SEK 928.6bn    – Amortising                                                           68%
Geographic distribution                Sweden 100%     – Interest only                                                        32%
Current OC-level                             85.5%

Weighted average seasoning 2              66 months    Average loan size                                            SEK 577 975
Average LTV 3, 4                                       Number of loans outstanding                                    1 606 567
– WA LTV on property level (Max LTV)             49%   Number of borrowers                                            1 119 065
Non-performing loans 5                          None   Number of properties                                             752 474

                                                       Dynamic pool                                                            Yes
Fixed /Floating interest loans 6
– Fixed                                        29.3%   1 As per 31 Dec, 2017
                                                         Public sector loans not included
– Floating
                                                       2
                                               70.7%   3 Index valuation as per Sep, 2017
                                                       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

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Cover pool data                                                                                                    Swedbank is a labeled issuer of
                                                                                                                   the ECBC Covered Bond Label
                                                                                                                   Foundation
                                                                                                                   (www.coveredbondlabel.com )

Type of loans                                                    Geographical distribution, Sw eden, per cent              31 Dec
(based on loan volum e)                                          (based on loan volum e)                                     2017
Residentials                                 91.9%               North                                                        6.5
   of w hich Single-family housing           56.9%               Norrbotten county (BD)                                       1.4
   of w hich Tenant ow ner rights            20.7%               Västerbotten county (AC)                                     2.4
   of w hich Tenant ow ner association        9.6%               Västernorrland county (Y)                                    1.5
   of w hich Multi-family housing             4.7%               Jämtland county (Z)                                          1.2
Public                                        0.7%               Middle (including Stockholm )                               43.9
Commercial                                    0.8%               Dalarna county (W)                                           2.0
Forest & Agricultural                         6.6%               Gävleborg county (X)                                         2.1
                                             100.0%              Värmland county (S)                                          2.0
                                                                 Örebro county (T)                                            2.5
                                                                 Västmanland county (U)                                       2.4
Population, Sep 2017                                             Uppsala county ( C)                                          4.1
(thousands)                                                      Södermanland county (D)                                      2.1
Sw eden                                      10 094              Stockholm county (including Stockholm) (AB)                 26.7
Stockholm, county                             2 299              South (including Göteborg and Malm ö)                       49.6
Västra Götaland, county (incl. Gothenburg)    1 686              Västra götaland county (Including Göteborg) (O)             17.9
Skåne, county (incl. Malmoe)                  1 340              Östergötland county (E)                                      4.2
                                                                 Jönköping county (F)                                         3.5
                                                                 Halland county (N)                                           4.1
                                                                 Kronoberg county (G)                                         2.1
                                                                 Kalmar county (H)                                            2.9
                                                                 Skåne county (including Malmö) (M)                          12.9
                                                                 Blekinge county (K)                                          1.4
                                                                 Gotland county (I)                                           0.6
                                                                                                                            100.0

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Cover pool loan-to-value distribution                                                                                                                          Swedbank is a labeled issuer of
                                                                                                                                                               the ECBC Covered Bond Label

• Weighted average LTV on property level 49%                                                                                                                   Foundation
                                                                                                                                                               (www.coveredbondlabel.com )

             LTV distribution per property1                                                   LTV distribution by volume1, 2

    30%                                                                                 30%

    25%                                                                                 25%

    20%                                                                                 20%

    15%                                                                                 15%

    10%                                                                                 10%

     5%                                                                                  5%

     0%                                                                                  0%
             00-10      10-20      20-30   30-40   40-50   50-60    60-70     70-75             00-10    10-20    20-30   30-40    40-50    50-60    60-70   70-75
     1Public loans of 0.7% 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)

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Cover pool loan type and loan-to-value                                                                                                                Swedbank is a labeled issuer of

distribution                                                                                                                                          the ECBC Covered Bond Label
                                                                                                                                                      Foundation
                                                                                                                                                      (www.coveredbondlabel.com )

                                                                                  WA LTV per property type1
                                                                          Percentage of the pool   Average LTV per loan type
                            120%                                                                                                               120%

                            100%                                                                                                               100%

                                 80%                                                                                                           80%

                                 60%                                                                                                           60%

                                 40%                                                                                                           40%

                                 20%                                                                                                           20%

                                 0%                                                                                                            0%
                                       Single-family Tenant owner Tenant owner Multi-family Commercial Forestry &              Total all
                                                                                                                                           1
                                          homes         rights    associations  housing                Agricultural             types
                                                     (apartments)
                                       1excluding   public sector loans of 0.7%

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Strong resilience to house price changes                                                                                 Swedbank is a labeled issuer of
                                                                                                                         the ECBC Covered Bond Label
                                                                                                                         Foundation
                                                                                                                         (www.coveredbondlabel.com )

                                  House price sensitivity of the cover pool                • Current OC-level of 85.5%
                         90%
                                                                             OC, Q417
                                                                                           • 2% legal minimum requirement
                         80%                                                 Min req. 2%
                                                                                           • Can withstand a severe house price drop
                         70%
                                                                                             and still be able to issue AAA-rated
                         60%                                                                 covered bonds
Over-collateralisation

                         50%

                         40%

                         30%

                         20%

                         10%

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

                                                      House price drop

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Overview of the Swedish covered bond legislation
                                         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
 The Covered Bond Act                        Dynamic, regulated pool of assets, frequently monitored by the Swedish FSA via appointment of an
                                              independent inspector
                                             Regulated valuation of cover pool assets which remain on the balance sheet
                                         The cover pool may consist of certain mortgage credits, public credits and supplemental assets. There is no
                                          requirement to segregate mortgage and public credits.

                                         Maximum LTVs: Residential 75%, Agricultural 70%, Commercial 60%

 Loan-to-value ratios and                Maximum 10% commercial loans and 20% supplemental assets in cover pool
 other limitations                       Regular monitoring of the property values, revaluation of property prices in case of significant drop (generally
                                          interpreted as 15% drop)

                                         The S.O. Act amended, effective as of 21 June 2016, requires that the nominal value of the cover pool shall, at all
                                          times, be at least two per cent. higher than the aggregate nominal value of the liabilities relating to the covered
                                          bonds..
                                         Regional constraint on collateral assets (Mortgage - EEA, Public - OECD)

 Matching requirements                   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. Present value cover must hold even after 1% upward and downward shift in the yield curve and a
                                          10% change in the currency
                                         Non-performing assets in the cover pool which are more than 60 days overdue must be disregarded for the
                                          purposes of the matching tests
 Benefit of a priority right
 over the cover pool                     Holders of covered bonds and relevant derivative counterparties benefit from a priority claim over the cover pool
                                          should the institution be declared bankrupt and rank pari passu ahead of unsecured creditors and all other creditors
                                          of the institution in respect of assets in the cover pool
                                         The registered assets in the cover pool, the covered bonds and any relevant derivative contracts are required to be
 Administration in event of               maintained as a unit and kept segregated from other assets and liabilities of the bankruptcy estate of the institution.
 bankruptcy                               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

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                                                                                                                                                                    45
Swedish
                                                         and Baltic
                                                           macro

                                 6. Swedish and Baltic
                                      economies

© Swedbank   Information class
             Public
Sweden - Strong growth gradually slowing                                                                                                    Swedish
                                                                                                                                           and Baltic
                                                                                                                                             macro
 Key economic indicators1, 2016-2019

Real GDP (calendar adjusted)
                                                        Most recent
                                                          2.9 (Q3)
                                                                        2016
                                                                         3.0
                                                                               2017E
                                                                                    2.6
                                                                                          2018F
                                                                                            2.7
                                                                                                  2019F
                                                                                                    2.1
                                                                                                          •   Kingdom of Sweden rated
CPI growth, average                                       1.7 (Dec)      1.0        1.8     2.1     2.8       Aaa/AAA/AAA
CPIF growth, average                                      1.9 (Dec)      1.4        2.0     1.9     1.9
Unemployment rate (15-74), % of labor force              6.5   (Dec)2    6.9        6.7     6.4     6.3
Savings ratio (households),% of disp. income                   …        16.5    16.1       16.9    16.5
Real disposable income (households)                            …         3.3        2.1     3.3     1.5

 Sources: Statistics Sweden & Swedbank Research
 1 Annual percentage growth in percent unless indicated otherwise.
 2 Seasonally adjusted and smoothed

 Domestic demand drives growth                                                                                Sentiments remain elevated

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The Swedish economy                                                                                               Swedish
                                                                                                                 and Baltic
  Households remain cautious                           Housing investments to be replaced by other investments     macro
                                                           Percentage points
                                                           of GDP

                                                        Exports picking up
  Overall investments are trending higher

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The Swedish economy, con’t                                                                                                         Swedish
                                                                                                                                  and Baltic
Strong employment; wages and unemployment lag      Solid public finances                                                            macro
                                                    4.0   % of GDP                                                        49

                                                    3.0                                                                   47
                                                                                                                          45
                                                    2.0
                                                                                                                          43
                                                    1.0
                                                                                                                          41
                                                    0.0
                                                                                                                          39
                                                   -1.0                                                                   37
                                                   -2.0                                                                   35

                                                           Budget balance   forecast    Public debt (Maastrict), rhs   forecast

                                                   Sources: Swedbank Research & Macrobond.

 Gradually increasing inflation                    Stable krona

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The Swedish credit market                                                                                   Swedish
                                                                                                           and Baltic
Lending to households dampens                        Interest rates remain low; while margins are stable     macro

A gradual tightening of monetary policy              Quantitative easing formally ended in 2017

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Baltics – continued growth albeit at slower rates                                                                                                               Swedish
                                                                                                                                                               and Baltic
                                                                                                                                                                 macro

Key economic indicators1, 2015-2019
                                                                      Most recent    2016 2017E    2018F    2019F
Real GDP                                               Estonia          4.2 (Q3)      2.1    4.4      3.9      3,0        Ratings
                                                       Latvia           4.2 (Q4)      2.1    4.7     4.2      3.2         • Republic of Estonia: A1/AA-/A+
CPI growth, average
                                                       Lithuania
                                                       Estonia
                                                                        3.6 (Q4)
                                                                        3.4 (Dec)
                                                                                      2.3
                                                                                      0.1
                                                                                             3.8
                                                                                             3.4
                                                                                                     3.2
                                                                                                     3,0
                                                                                                              2.5
                                                                                                              2.5
                                                                                                                          • Republic of Latvia: A3/ A-/A-
                                                       Latvia           2.2 (Dec)     0.1    2.9     3.7      2.5         • Republic of Lithuania: A3/ A-/A-
                                                       Lithuania        3.9 (Dec)     0.9    3.7     3.3      2.5
Unemployment rate (15-74), % of labor force            Estonia          5.2 (Q3)      6.8    6,0     7,0      7.2
                                                       Latvia           8.5 (Q3)      9.6    8.8     8.1      7.5
                                                       Lithuania        6.6 (Q3)      7.9    7.2     6.9      6.9
 1   % growth rate unless indicated otherwise, Y/Y growth for the most recent data

 Real economic growth peaked in 2017                                                                           Unemployment is declining

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Estonia: Growth to slow after peak                                                           Swedish
                                                                                            and Baltic
Economic growth expanded in the fastest pace in five years in 2017                            macro

 Domestic demand and export the main drivers   Export and manufacturing output accelerate

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Latvia: Solid growth to continue                                                                   Swedish
                                                                                                  and Baltic
Supported by strong confidence, pro-cyclical fiscal policy, rapid wage growth, global tailwinds     macro

Sharp cyclical pick up in growth to moderate in 2019   Sentiments are strengthening

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Lithuania: GDP growth will revert to potential                                                 Swedish
                                                                                              and Baltic
Weaker household consumption and export growth, but investments to pick up                      macro

Growth has peaked and start to ease            Capacity constrains will limit export growth

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Swedish
                                                          housing
                                                            and
                                                          mortgage
                                                           market

                                 7. Swedish housing and
                                     mortgage market

© Swedbank   Information class
             Public
Swedish

The decline in prices is not unexpected                                                                                         housing
                                                                                                                                  and
                                                                                                                                mortgage
• Strong price increases in recent years due to high demand and limited supply                                                   market

• Supply has increased on the back of a surge in housing investments
• Stricter borrowing criteria both by lenders and authorities
Home prices and macroprudential measures
       2010                2011           2012              2013       2014       2015        2016           2017        2018
20%
              Valueguard HOX Sweden house price index y/y
15%
10%
 5%
 0%
-5%
                      1                                            2          3      4    7          8   9   10     11     12
-10%                                                                                5 6

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Swedish

Price developments have varied across the                                                                                 housing
                                                                                                                            and
                                                                                                                          mortgage
country and type of housing                                                                                                market

• Price increases, and recent falls, have been most pronounced in the Stockholm area
• Prices of apartments most volatile, again in the Stockholm area
• Single-family houses are holding up better

Flats +177%, houses +104% since 2005 1)        Trends and average house prices, December 20172)
                                               Tenant owner rights
                                                                                      1 month   3 months   12 months   SEK/sqm
                                               Sweden total                             -3%       -7%         -2%       34 944
                                               Stockholm greater area                   -3%       -7%         -6%       53 998
                                               Gothenburg greater area                  -2%       -6%         +4%       42 650
                                               Malmoe greater area                      -2%       -8%         +8%       26 399

                                               Single-family homes
                                                                                      1 month   3 months   12 months      SEK
                                               Sweden total                             -2%       -3%         +5%      2 814 000
                                               Stockholm greater area                   -3%       -6%         -1%      5 271 000
                                               Gothenburg greater area                  -1%       -3%         +4%      4 335 000
                                               Malmoe greater area                      -1%       -3%         +7%      3 573 000

                                                1)   Source: Valueguard (HOX index)
                                                2)   Source: Mäklarstatistik
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Swedish

Supply increase puts pressure on prices, but                                                                                                 housing
                                                                                                                                               and
                                                                                                                                             mortgage
supports transaction volumes                                                                                                                  market

• Following recent years’ investment increase, supply will continue to grow
• Demand and number of transactions is still high, especially in large city areas
• Housing shortages still persist, in particular in the larger cities
  Housing investments support continued supply                       Transactions increase, as well as supply
  80 000
                                                                     19 000
  70 000
                                                                     17 000
  60 000
                                                                     15 000
  50 000
                                                                     13 000
  40 000

  30 000                                                             11 000

  20 000                                                              9 000

  10 000                                                              7 000

      0                                                               5 000
                                                                          Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18
                                                                                                  Number of transactions
                                                                                                  Newly added for sale on Hemnet
                   Housing starts (lagged 2 yr)   Finished housing
                                                                                                  Newly added for sale incl new production
    Source: Statistics Sweden                                        Source: Mäklarstatistik and Hemnet

© Swedbank          Information class
                    Public
Swedish

Household borrowing dampens while financing                                           housing
                                                                                        and
                                                                                      mortgage
costs remain low                                                                       market

• Mortgage volume growth benefitting from new housing supply, housing turnover and higher
  mortgage amounts by existing borrowers
• Housing financing costs at historically low level
• Reasonable to expect some slowdown from last year’s 7.4% market growth
 Mortgage growth and housing prices                   Low mortgage costs

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Swedish

Structural foundation for the housing and                                                                             housing
                                                                                                                        and
                                                                                                                      mortgage
mortgage market                                                                                                        market

• Full recourse (very limited debt forgiveness possibilities)
• No securitisation (on balance sheet), no sub-prime market, no 3rd party origination
• Restricted buy-to-let market – limited speculation
• 64% home ownership
• Rental market is regulated
• 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 and
  conservative cost of living
• Strong social security and generous unemployment benefit system

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Swedish

Household fundamentals support the housing                                                                 housing
                                                                                                             and
                                                                                                           mortgage
market                                                                                                      market

• Population growth and urbanisation trends continue
• Solid labour market developments
• Solid balance sheets among households

 High population growth and urbanisation Solid labour market             Strong household balance sheets

                             The overcrowding rate is defined as the
                             percentage of the population living in an
                             overcrowded household.
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Swedish

Overall indebtedness among Swedish                                                                                                                housing
                                                                                                                                                    and
                                                                                                                                                  mortgage
households remains low                                                                                                                             market

• Of appr. 4 million households less than 50% carry a mortgage
• Median debt-to-income ratio of mortgage holders less than 300%
• Less than 15% of mortgage holders have a debt to income ratio of more than
  600%
Debt ratios of Swedish households                                         Distribution of debt ratios in 2016
 Total debt as % of gross income                                          No. of households w/ mortgages
                                                                          450000
 100%
                                                              >600        400000
                                                                          350000
  80%
                                                              400-600     300000
  60%                                                                     250000
                                                              200-400     200000
  40%                                                                     150000
                                                              0-200
                                                                          100000
  20%                                                         No           50000
                                                              mortgages         0
   0%                                                                                0-100 100-200 200-300 300-400 400-500 500-600 600-700 >700
             2011     2012      2013     2014   2015   2016                Source: Riksbank      Total debt as % of post tax income
  Source: Riksbank

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Swedish

The Swedish economy underpins the                                                                                                                            housing
                                                                                                                                                               and
                                                                                                                                                             mortgage
housing market                                                                                                                                                market

• Fiscal policy will be supportive and public debt is at a historic low level
• Monetary policy to remain expansionary
• Economic growth expected to continue at solid rates despite weakening housing
  investments

 Expansionary fiscal policy                                Gradually tightened monetary policy                                 Slowdown in growth from high rates
  4.0   % of GDP                                     49
                                                          0.25                                                                     %points
  3.0                                                47
                                                     45
  2.0                                                     0.05
                                                     43
  1.0
                                                     41
  0.0                                                     -0.15
                                                     39
 -1.0                                                37
                                                          -0.35
 -2.0                                                35

                                                          -0.55
                                                               2015            2016   2017     2018              2019
         Budget balance                   forecast
         Public debt (Maastrict), rhs     forecast                Market pricing             Swedbank forecast
                                                                  Outcome                    Riksbank forecast December 2017

  Sources: Swedbank Research & Macrobond.                  Sources: Swedbank Research & Macrobond

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Swedish

Swedbank and the real estate market                                                          housing
                                                                                               and
                                                                                             mortgage
                                                                                              market

                                  • Swedbank has a low risk residential property portfolio

                                  • Origination discipline and profitability have been

                                    prioritised over volume

                                  • Engagement in low risk projects with well-known

                                    residential property developers will continue

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Swedish

Swedbank has a low risk residential property                                                                                               housing
                                                                                                                                             and
                                                                                                                                           mortgage
portfolio                                                                                                                                   market

Real estate lending, net loans in Sweden, SEKbn
1 200
                                                                                                  • Swedbank has pursued a low risk
                                            •   Private mortgages: SEK 759bn, average
                                                                                                    strategy by tightening origination
1 000                                           LTV 54%                                             standards, and prioritised price and
                                            •   Tenant Owner Associations (“TOA”): SEK              risk over volume growth
                                                109bn
  800

              759
                                                 SEK 95bn existing TOA, average LTV 40%          • Bulk of assets in low risk segments
                                                 SEK 14 bn TOA under construction
  600
                                            •   Property Management: SEK 187bn, average           • Average LTVs in lower ranges
                                                LTV 58%
  400                                            SEK 64bn in residential property management     • Exposures towards residential
                                                  (rental apartment properties)
              109                                SEK 123bn in other property management
                                                                                                    property developers of SEK 21bn
  200
              64                            •   Construction SEK 16bn
              123                 21             SEK 7bn residential property development
     0         16
                                                 SEK 9bn infrastructure, groundwork, craftsmen
       Total real estate       Of which:
           portfolio          Residential
                               property
                             development

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Swedish

Private mortgages – a low risk portfolio                                                                                                                             housing
                                                                                                                                                                       and
                                                                                                                                                                     mortgage
                                                                                                                                                                      market
•       Low average LTVs (54%)
•       Low historic losses (0.04% on average during the last 25 years)
•       About 73% of total loans to single family homes
•       Swedbank has grown, but at a slower rate than the market

Growth but lower than the market                                 High diversification                             Only 1% above 75% LTV
    9    Loan growth in %                                        Loans net1) by geography                         Loans1) to Private Mortgage by LTV-bucket
    8                                                                                                             20
                                                                                                                  18   SEKbn             87% with         99% with
    7                                                                                                                                                    LTV
Swedish

Tenant Owner Associations – low leverage                                                                                                                                                                                                      housing
                                                                                                                                                                                                                                                and
                                                                                                                                                                                                                                              mortgage
                                                                                                                                                                                                                                               market
• Total loan portfolio SEK 109bn, of which SEK 14bn is construction loan for new
  development:
   – 50-80% needs to be pre-sold and before final financing 100% needs to be sold
   – When the construction is finalised about 60% of construction loans will be repaid through equity from the TOA
     members
• Low historic losses (average 0.17% over the last 25 years)

 Growth but lower than the market                    Portfolio reflects market                         Average LTV of only 40%
 12   Loan growth in %                               Loans net1) by geography                          Loans1) to Tenant Owner Associations by LTV-bucket
                                                                                                       4
 10
                                                                                                            SEKbn                                   95% with                                100% with
  8                                                                   12%                                                                          LTV 50 000 inhabitants
Swedish

Residential property developers - low exposure                                                                                                          housing
                                                                                                                                                          and
                                                                                                                                                        mortgage
                                                                                                                                                         market
• Total exposures of SEK 21bn, more than half of it to the larger listed construction firms, with
  which Swedbank has long-term relations
    – SEK 14bn of the exposures are related to tenant-owner rights projects through loans to Tenant Owner
      Associations backed by residential property developers
       • 99% of these projects will be finalised in 2018 and 2019
    – SEK 7bn of the exposures are related to residential rental housing and other non-residential projects
• Pre-sale level of tenant owner rights close to 90%

Mainly exposures to the larger construction firms                       Tenant owner rights related construction loans1) – the risk is highly mitigated
Loans1), SEKbn                                                                By geography                 Finalisation year    Average % pre-sold by
                                                                                                                                  finalisation year2)
                                                                                                                                100
 Large building firms                                                                         7%                    1%           90
                                          10
                                                                                                           29%                   80
                                                                                  25%                                            70
     New developers               4                                                           SEK                                60
                                                                                              14bn   55%                         50
                                                                                    4%                                    70%    40
Smaller building firms                7                                                  9%                                      30
                                                                                                                                 20
                                                                                                                                 10
                         0                                 10                        Stockholm region            2018    2019     0
                                                                                     Gothenburg region           2020-                 2018     2019    2020-
                                                                                     Malmö region

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Swedish

Residential property management – stable                                                                                                                               housing
                                                                                                                                                                         and
                                                                                                                                                                       mortgage
cash-flow generation                                                                                                                                                    market

• Total exposures of SEK 64bn towards residential property management companies
     – Financing of rental apartment properties
• Well-known companies with solid finances and high collateralization
• Strong and stable cash-flow generation, no speculation and low vintage risk

Slower growth in 2017                                      Regional cities dominate                            Average LTV of 58%
 8                                                           Loans net1) by geography                          Loans1) to Residential Prop Mgmt by LTV-bucket
     Loan growth, %
                                                                                                               1.4
                                                                                                                     SEKbn              86% with          99.7% with
 6                                                                                                             1.2                     LTV
Appendix

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Swedbank – largest retail bank in our four                                                                                                                                This is
                                                                                                                                                                         Swedbank

home markets
  Sweden
                                                                                                                                     Latvia
  Population                  10.0m
                                                                                                                                     Population                  2.0m
  Private customers            4.1m
                                                                                                                                     Private customers           0.9m
  Corporate customers        270 000
                                                                                                                                     Corporate customers        83 000
  Organisations               68 000
                                                                                                                                     Branches                       36
  Branches                       218
                                                                                                                                     Cards                       1.0m
  Cards                        4.2m
                                                                                                                                     Number of card purchases 38.5m
  Number of card purchases 323m
                                                                                                                                     Digitally active customers* 0.7m
  Digitally active customers* 3.1m

 Estonia                                                                                                                             Lithuania
 Population                   1.3m                                                                                                   Population                  2.9m
                                                        ~86%*
 Private customers            0.9m                                                                                                   Private customers           1.5m
 Corporate customers        135 000                                                                                                  Corporate customers        69 000
 Branches                        34                                                                                                  Branches                       63
 Cards                        1.1m                                                                                                   Cards                       1.7m
 Number of card purchases 50.9m                                                                          ~10%*                       Number of card purchases 36.3m
 Digitally active customers* 0.6m                                                                                                    Digitally active customers* 0.7m
                                                           * Share of loan book

© Swedbank   Information class         Source: Swedbank Factbook 4Q 2017
             Public                    * Number of customers that have made a payment, transfer, application, investments or lending activity in the last month
                                                                                                                                                                                71
Swedbank – low-risk bank with strong capital                                                                                        This is
                                                                                                                                   Swedbank

base
• Low risk – a Board of Directors’ strategic priority – ensures access to funding
  markets and low funding cost
• Retail profile and four home markets a key feature                                                      Liquidity & capital, %
                                                                                                  NSFR       LCR          CET1 ratio, CRDIV (RHS)
   – 86% of total loans originated in Sweden - Swedish mortgages account for 50% of         200                                                30
     total loans
                                                                                            150
   – 91% of total loans are collateralised (78.5% real estate and 12.5% other collateral)                                                      20
                                                                                            100
• Strong capital position – Board of Directors’ decision to maintain a buffer above                                                            10
                                                                                             50
  prevailing SFSA capital requirements to have operational flexibility – current buffer
  around 270bp                                                                                0                                                0
                                                                                                   2012    2013   2014    2015   2016   2017
• Conservative funding and liquidity position – survival horizon longer than 12 months              Credit impairment ratio, bps
                                                                                             40
  assuming closed funding markets, NSFR 110% and LCR 173%
                                                                                             30
• Baltic operations self-funded – loan-to-deposit ratio < 100%
                                                                                             20

                                                                                             10

                                                                                              0

                                                                                            -10
                                                                                               Q4 12      Q4 13   Q4 14    Q4 15   Q4 16   Q4 17
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Swedbank – strong and stable earnings                                                                                   This is
                                                                                                                       Swedbank

capacity
• Four home markets – Sweden, Estonia, Latvia and Lithuania
  – Strong and stable economies
  – Market-leading position in all home markets
  – Largest customer base in all home markets
• Retail profile ensures stable earnings with low volatility
• High cost efficiency – a strategic priority – ensures good profitability
• Stable earnings support a low risk profile and a strong capital position        Profit before impairments, SEKbn
                                                                             10
                                                                                     One-offs from disposals
                                                                              8

                                                                              6

                                                                              4

                                                                              2

                                                                              0
                                                                                  Q4 12   Q4 13     Q4 14      Q4 15   Q4 16   Q4 17

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Swedbank – market leader in cost efficiency                                                                             This is
                                                                                                                       Swedbank

•   Best-in-class cost efficiency – an executive management strategic priority
•   Executive management strongly focused on cost and change management
                                                                                         Total expenses, SEKm
     − Integrated in corporate culture                                           20
                                                                                             Acquisition of Sparbanken…
     − Focus on straight-through-processing                                      18

     − Evolving household banking model – digitisation trend                     16

•   Retail profile a key feature                                                 14

       − Four home markets – Sweden, Estonia, Latvia and Lithuania – reduce      12
         complexity                                                                   2012    2013     2014   2015   2016   2017 Target
       − Largest private and SME customer base                                   60
                                                                                                                                   18
                                                                                                        C/I ratio, %
       − High degree of digitisation in home markets                             55

                                                                                 50

                                                                                 45

                                                                                 40

                                                                                 35

                                                                                 30
                                                                                      2012      2013     2014   2015      2016   2017

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Focus on sustainable business
   Improved sustainability scores                                                      First green bond issued in October (5yr EUR 500m)
                                                                                     Swedbank issued its first Green Bond                             Approximately 72% of the amount was
Dow Jones                                                                            Proceeds will                                                    allocated to investors with dedicated green
                                                                                     • Finance sustainable real-estate                                funds.
Sustainability                                                                       • Renewable energy
Index                                                                                • Reduction of carbon emissions                                  With our established Green Bond
                                                                                     • Contribute to several of the UN                                framework Swedbank intends to be a
                   2011      2012   2013   2014   2015     2016    2017
                                                                                        Sustainable Development Goals.                                regular issuer in the green bond market.

   Swedbank Robur’s sustainability funds                                             Eligible green assets                                                          Sustainable Development Goal

 Nordic Swan       Since October 2017, five of Swedbank Robur's active               Renewable energy                                                               SDG7 and SDG13
                   managed sustainability funds have the Nordic Swan Ecolabel.
 Ecolabel          Sustainability work is also further progressing in the
                                                                                     Energy efficiency                                                              SDG7, SDG11 and SDG13

                   management of the Access Index-based funds.                       Sustainable management of living natural resources                             SDG15

                                                                                     Pollution prevention and control                                               SDG6 and SDG11
   Stronger Environmental Management System (EMS)                                    Clean transportation                                                           SDG9 and SDG11, SDG13
                   Swedbank’s upgraded Environmental Management System
ISO                was certified with the new and more rigorous standard               Sustainability Indicators: towards the 2030 Agenda
                   ISO14001:2015.
                                                                                   Swedbank has developed a new methodology, Sustainability Indicators, to review the
                                                                                   progress towards the UN 2030 Agenda for Sustainable Development. The aim is to support
   Swedbank is included in The Sustainability Yearbook 2018                        the business looking at ESG (environmental, social, governance) criteria and help to
                                                                                   identify weaknesses and strengths in Sweden and the Baltic countries operations.
 The              The Sustainability Yearbook lists the world’s most sustainable   Progress towards UN SDGs, % of benchmark*

                  companies in each industry as determined by their score in                                                                        Estonia         Latvia        Lithuania        Sw eden
 Sustainability   RobecoSAM’s annual Corporate Sustainability Assessment.           Sustainable medium-term grow th (SDGs #4, 8, 9)                    71              61              64              90
                                                                                    Social inclusion (SDGs # 1, 3, 5, 10)                              56              55              55              89
 Yearbook                                                                           Environmental protection (SDGs # 6, 7, 11, 12, 13)                 58              72              70              82
                                                                                    Governance and institutions (SDGs # 16, 17)                        70              51              62              97
                                                                                                                                       Dow nw ard/stable trend during last 5 years (4 years for governance) – ↓
                                                                                   * Benchmark is 90 or 10th percentile of the EU 28 in 2015. In total 40 indicators covering 14 from 17 SDGs, aggregated to four pillars.
                                                                                   Traffic lights - Sw eden: >90% for green, 70-90% for yellow 0-70% for red; Baltics: >80% for green, 60-80% for yellow , 0-60% for red.

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Our objective                                                                               Strategy

• Daily banking is fully digital – 100% self service
• Meet our customers with relevant offerings, in our own or external channels
• Data and knowledge automation – to foresee needs, provide proactive offering and advice.
  This will generate loyalty as well as increased sales
• Have an attractive financial platform for customers and 3rd party suppliers, providing value-
  added and competitive edge
• Branches attract new customers - build the brand and increasingly focus on corporate
  customers

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Sweden – the dominating home market                                                                               This is
                                                                                                                 Swedbank

• Total lending to the public amounts to SEK 1 502bn (as per Q4 2017), out of
  which around 86% is originated in Sweden
• Estonia makes up 48% of total lending in the Baltics
                      Lending distributed by countries

 Sweden       85.8%                                                 SEK 1 288bn

    Estonia   4.7%
                                                                      Swedish Mortgage loans (private+corp)

     Latvia    2.1%                                                   Other corporate (incl. LC&I, Sweden)

  Lithuania   3.1%

     Other*    4.3%

                      0       200   400   600   800   1000   1200   1400           * Mostly Norway and Finland

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Oil sector still under pressure                                                                                                                                                      Asset
                                                                                                                                                                                     quality

• Loan portfolio negatively impacted by lower oil price, SEK 13.4bn
     – Less than 1% of total loans gross
     – Derivatives exposures of SEK 1.0bn (incl. collateral)
• Net, unchanged provisions* in Q4

10    LC&I Shipping & Offshore, loans gross, SEK 24bn                                             14       Oil-related, exposure by risk grade, SEKbn
             2016-12-312       2017-12-31                                                         12
 8                                          56% of the portfolio is
                                            negatively impacted by                                10
                                            lower oil price
 6
                                                                                                   8

 4                                                                                                 6
                                                                                                   4
 2
                                                                                                   2
 0                                                                                                 0
                                                                                                        Def 0     1   2    3   4    5   6    7   8    9 10 11 12 13 14 15 16 17 18 19 20 21
                                                                                                                 2014-12-31             2015-12-31             2016-12-31   2017-12-31

© Swedbank         Information class                 * Total provisions of SEK 1 358m for the whole Shipping and Offshore sector with a provision ratio (for impaired
                   Public                            loans) of 30%.
                                                                                                                                                                                               78
Capital
No automatic sanctions for breaching the                                                                                             – fully
                                                                                                                                    loaded

Pillar 2 capital requirements                                                                                                       CRD IV

                                                                                                 21.9%
● “It is particularly important that FI has the possibility of giving due
  consideration to the specific situation…in which a firm in financial stress
  finds itself… For example, certain risks included in the assessment
  of the Pillar 2 basic requirement might have materialized, which                               10.6%
  might mean there are no longer grounds for requiring the firm to
  hold capital for them”.
● “It ought to be positive for financial stability that a firm has the                                              Pillar 2 CET1
  possibility… to restore its capital without the firm necessarily becoming                                         requirements
  subject to priory specified and automatic legal restrictions. In other        Automatic MDA
  words, firms are hence given the possibility of re-establishing their         Restrictions

  capital in a strained situation without automatic restrictions on                                                 Pillar 1 CET1
                                                                                                                    requirements
  distributions or, depending on the size of the capital shortage, a
  formal resolution phase being activated."                                                      11.3%

● “Hence…a firm may freely choose…the most suitable way of restoring
  the capital in that specific situation. For example, the firm is not
  obliged to halt or limit dividends or interest payments on Tier 1
  capital contributions, if the firm can identify other and more
  appropriate ways of restoring the capital sufficiently quickly.”

                                                                                       Swedbank CET1 requirements

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