Interim report Q3, 2006

Shared Services and new operations 60 5 – 84 Eliminations – 247 – 65 – 77 Total ... Net commission income 2,109 2,353 – 10 1,910 10. 25 Net gains and ...

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Interim report Q3, 2006 CEO/CFO presentation 26 October

Jan Lidén, President and CEO

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A strong quarter •

Swedish Banking, stable and profitable development - high level of activity and increased business volumes - increased market shares in several segments - net interest income rose - deposit margins improved



Baltic Banking reported record quarter - impressive volume growth - increased market shares in Estonia and Latvia - net interest income increased - deposit margins improved, lending margins were stable



Swedbank Markets - net profit improved compared with Q3-05, but was lower than previous quarter due to seasonality 3

Lending and savings, Group SEK bn Lending Total Of which Swedbank excl. Baltic Banking Of which Private mortgages, Sweden Baltic Banking

Sep 30 2006

Dec 31 2005

Sep 30 Change, Change, 2005 YTD, % Y/Y, %

891

796

766

12

16

768

707

689

9

11

368 123

340 89

330 77

8 38

12 60

803

729

705

10

14

215 390 21

182 365 13

179 350 11

18 7 61

20 11 91

Savings Total Of which Household deposits Funds under management Equity linked retail bonds

4

Market shares, Sweden New sales Shares of new sales Household deposits Fund Management* Individual Pensions Saving** Equity Linked Bonds Corporate loans Private mortages

Aug 31, 2006

Sep 30, 2005

27.0

25.2

– 0.5

15.6

59.5

55.7

27.8

22.6

29.1

10.2

31.0

24.0

* Refers to September 2006. ** Refers to June 2006 and June 2005. 5

Household mortgages, Sweden Market shares restored %

%

35

35

30

30

25

25

20

20

15

15

10

10

2003

2004

2005

Balance, market share

2006Mar

2006Jun

• Increased sales: - metropolitan and other growth areas - internet - distributors • Tighter cooperation with Group real estate broker • Improved efficiency: - faster handling of loan applications - decreased costs

2006Aug

New sales, market share

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Pension insurance, Robur Insurance, market shares Sweden Total premiums paid

Occupational pensions, premiums paid %

%

10 9 8 7 6 5 4 3 2 1 0

10 9 8 7 6 5 4 3 2 1 0 2002

2003

2004

2005

2006Jun

2002

2003

2004

2005

2006Jun

Source: The Swedish Insurance Federation 7

Baltic Banking Market Shares, % Estonia Balance Aug, 2006 Household deposits Corporate deposits Lending Pension II

Latvia

Lithuania

Market Change Market Change Market Change Share yoy Share yoy Share yoy 63.1 48.9 46.4 52.6

0.0 1.6 0.9 0.7

29.8 13.6 25.6 43.3

1.3 0.3 3.8 5.3

38.2 19.7 23.8 43.3

– 0.6 – 2.2 0.4 – 0.5

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Margins Lending

Deposits %

%

1.80

3.50

1.60 3.00 1.40 2.50

1.20

2.00

1.00

1.50

0.80 0.60

1.00 0.40 0.50

0.20

0.00

0.00 Q3-05 Estonia

Q4-05

Q1-06

Latvia

Q2-06

Lithuania

Q3-06 Sweden

Q3-05

Q4-05 Estonia

Q1-06 Latvia

Q2-06 Lithuania

Q3-06 Sweden

9

Swedish Banking, Cost/Income-ratio SEK M

5,000

**

*

4,500 4,000 3,500

Cost/Income-ratio 0.49

3,000 2,500 2,000 1,500 1,000 500 0 Q3-04

Q4-04

Q1-05

Q2-05

Q3-05

Income

Q4-05

Q1-06

Q2-06

Q3-06

Expenses

*Excluding EnterCard SEK 810 M **Excluding Kundinkasso KIAB AB SEK 1,421 M

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Swedish Banking, net interest income SEK M

3,400 3,200

3%

3,000 2,800 2,600 2,400 2,200 2,000 Q2-04 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06

11

Baltic Banking, Cost/Income-ratio SEK M

1,800 1,600 1,400 1,200 1,000

Cost/Income-ratio 0.41

800 600 400 200 0 Q3-04

Q4-04

Q1-05

Q2-05

Q3-05

Income

Q4-05

Q1-06

Q2-06

Q3-06

Expenses 12

Swedbank Markets, profit trend SEK M

600 500 400 300 200 100 0 Q3-04

Q4-04

Q1-05

Operating profit

Q2-05

Q3-05

Q4-05

Q1-06

Q2-06

Q3-06

Profit for the period attributable to the shareholders 13

Profit trend, Group SEK M

3,500 3,000

*** **

2,500

* 2,000 1,500 1,000 500 0 Q1-04 Q2-04 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Profit for the period attributable to shareholders, excluding larger capital gains: * FIH SEK 1,200 M ** EnterCard SEK 810 M *** Kundinkasso KIAB AB SEK 1,421 M

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Financial objectives, Group Cost/Income-ratio 0.80



Return on equity (higher than average of Nordic peers*)

0.70 0.60 0.50 0.40



Cost/Income-ratio (below 0.50)



Primary capital ratio (>7% long term)

0.30 0.20 0.10 0.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 -02 -02 -02 -02 -03 -03 -03 -03 -04 -04 -04 -04 -05 -05 -05 -05 -06 -06 -06

Return on equity

%

Primary capital ratio

%

30

9 8

24.6

25 17.9 15.9

15

6.9

7.1

7.1

2001

2002

2003

7

20.5

20

8.2

19.2

15.8

6.5

6.5

6.5

6.5

2005

Q1-06

Q2-06

Q3-06

6 5

13.4

4

11.0 11.2

10

3 2

5

1 0

0 2002

2003

Nordic peers*

2004

2005

Q1-3 2006

2004

Swedbank

* Nordic peers consists of SEB, Nordea, SHB, DnB NOR and Danske Bank

15

Group financial overview Mikael Inglander, CFO and Head of Group Staffs

16

Highlights, Q3-06 (Q2-06) •

Profit for the quarter increased by SEK 125 M or 4 percent to SEK 2,911 M (2,786)



Earnings per share, increased by 4 percent to SEK 5.65 (5.40)



Return on equity increased to 20.8 percent (20.2)



Cost/Income-ratio improved to 0.49 (0.51)



Primary capital ratio remained at 6.5



Swedish and Baltic Banking net interest income increased



Baltic Banking reported another record quarter. The quarter’s profit increased by 53 percent to SEK 856 M. 17

Income statement, Group Change, SEK M

Change,

Q3 2006

Q2 2006

%

Q3 2005

%

Net interest income

3,895

3,783

3

3,860

1

Net commission income

2,109

2,353

– 10

1,910

10

757

1,032

– 27

789

–4

403 7,164

410 7,578

–2

– 78

–5

1,839 8,398

– 1,772

– 1,791

–1

– 1,700

4

– 301

– 412

– 27

– 349

– 14

– 1,417 – 3,490

– 1,699 – 3,902

– 17

– 1,315 – 3,364

8

Profit before loan losses

3,674

3,676

5,034

– 27

Loan losses Operating profit

67 3,741

116 3,792

– 42

– 97 4,937

– 24

Tax Profit for the period

– 806 2,935

– 938 2,854

– 14

Attributable to shareholders of Swedbank

2,911

2,786

Net gains and losses on financial items at fair value Other income Total income Staff costs Profit-based staff costs Other expenses Total expenses

– 11

–1

– 15

4

3

– 817 4,120

–1 – 29

4

4,037

– 28 18

Net interest income, Group Change, SEK M

Change,

Q3 2006

Q2 2006

%

Q3 2005

%

Swedish Banking

2,948

2,850

3

3,107

–5

Baltic Banking Operations Baltic Banking Investments

1,032 – 104

920 – 113

12 8

785 – 74

31 – 41

197

183

8

198

–1

9

3

5

80

60

5

– 84

– 247 3,895

– 65 3,783

– 77 3,860

Swedbank Markets Asset Management and Insurance Shared Services and new operations Eliminations

Total

3

1

19

Swedish Banking Change in net interest income Q3-06 vs Q2-06

Q3-06 vs Q3-05

Increased lending volumes

64

224

Increased deposit volumes

24

61

Increased deposit margins

62

141

– 95

– 380 – 44

43 98

– 161 – 159

SEK M

Decreased lending margins Sold operation (KIAB) Other Total

20

Swedbank Mortgage, Investment margin % 1.20 1.10

1.09

1.10 1.06

1.11

1.09 1.01

1.00

1.00

0.98

0.90 0.80

0.77

0.74

0.75

0.70 0.60 0.50 0.40 Q1-04 Q2-04 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06

21

Baltic Banking Change in net interest income

SEK M

Q3-06 vs Q2-06

Q3-06 vs Q2-05

Increased lending volumes

79

368

Increased deposit volumes Increased deposit margins

8 62

39 101

Increased lending margins

11

Decreased lending margins

– 156

Accrued loan fees IFRS Other Total

– 88 – 48

– 17

112

247

22

Eliminations SEK – 182 M change in eliminations Q3/Q2

SEK M 300

200

100

0 Q3-05

Q4-05

Q1-06

Q2-06

Q3-06

-100

-200

-300

Net interest income Net gains and losses on financial items at fair value Net change 23

Net commission income, Group Change, SEK M

Change,

Q3 2006

Q2 2006

%

Q3 2005

%

Payment processing

687

639

8

643

7

Lending Brokerage

149 168

189 294

– 21 – 43

154 190

–3 – 12

Asset management

915

937

–2

820

12

Insurance

115

122

–6

108

6

75 2,109

172 2,353

– 56 – 10

-5 1,910

10

Other Net commission income

24

Net gains and losses on items at fair value SEK M 1,200 1,000 800

Strategic holdings Elimination Other

600 400

Baltic Banking

200

Swedbank Markets 0 -200 Q1 -05

Q2 -05

Q3-05

Q4-05

Q1-06

Q2-06

Q3-06

Strategic holding sold during Q3:

Strategic holding still on board:

Primary Capital Certificates (Grunnfondbevis) • SpareBank1 Midt-Norge • SpareBank 1 SR-bank Shares • SpareBank 1 Gruppen

Primary Capital Certificates (Grunnfondbevis) • SpareBank 1 Nord-Norge

25

Expenses, Group Change, SEK M

Change,

Q3 2006

Q2 2006

%

Q3 2005

%

– 2,068

– 2,195

–6

– 2,167

–5

Baltic Banking Operations

– 698

– 816

– 14

– 545

28

Swedbank Markets

– 436

– 558

– 22

– 389

12

– 288 – 3,490

– 333 – 3,902

– 14 – 11

– 263 – 3,364

10 4

Swedish Banking

Other Total

26

Loan losses, Group Loan losses SEK M

Loan loss level, %

500 450 400 350 300 250 200 150 100 50 0 -50 Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q302 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 -100 -150

Loan losses

0.30 0.25 0.20 0.15 0.10 0.05 0.00 -0.05 -0.10

Loan loss level 27

Profit per business area Q3, 2006 SEK M Net interest income Net commission income Other income Total income Staff costs Other expenses Total expenses Profit before loan losses Loan losses Operating profit Tax Profit for the period Attributable to shareholders of Swedbank Allocated equity Return on equity, %

Swedish Banking 2,948 991 248 4,187 – 1,001 – 1,067 – 2,068 2,119 144 2,263 – 634 1,629

Baltic Banking 1,032 380 302 1,714 – 385 – 313 – 698 1,016 – 81 935 – 78 857

Swedbank Markets 197 338 185 720 – 268 – 168 – 436 284 4 288 – 81 207

Asset Mgmt. & Insurance 9 416 51 476 – 76 – 89 – 165 311

1,628 29,428 22.1

856 10,355 33.1

185 3,507 21.1

237 1,671 56.7

311 – 74 237

28

A strong quarter •

Swedish Banking, stable and profitable development - high level of activity and increased business volumes - increased market shares in several important segments - net interest income rose - deposit margins improved



Baltic Banking reported record quarter - impressive volume growth - increased market shares in Estonia and Latvia - net interest income increased - deposit margins improved, lending margins were stable



Swedbank Markets - net profit improved compared with Q3-05, but was lower than previous quarter due to seasonality 29

Welcome to Swedbank’s Capital Markets Day in Stockholm on 16 November www.swedbank.se/cmd

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