Annual report

Swedbank Annual Report 2015

SW0013642

CONTACTS Cecilia Hernqvist

Head of Group Communications Telephone: +46 8 585 907 41 E-mail: [email protected] Gregori Karamouzis Head of Investor Relations Telephone: +46 8 585 930 31

E-mail: [email protected]

2015

Responsible lending the foundation for fi nancial stability

A sustainable fi nancial system – a crucial element in building a society

Simple and secure payment solutions

Secure savings converted to investments

Swedbank an overview
The year in brief
Interview with the Chair and the CEO
Market factors
Stakeholder dialogue
Business model
Strategy and sustainable processes
Goals and results
Our priorities
How we create employee value
How we create social value
How we generate our earnings

Board of Directors' report

Financial analysis
Swedish Banking
Baltic Banking
Large Corporates & Institutions
Group Functions & Other
Risk management
The share, owners and important events
Corporate governance report
58 Board of Directors
Group Executive Committee
Disposition of earnings

Income, balance sheet and notes, Group:

Income statement
Statement of comprehensive income
Balance sheet
Statement of changes in equity
Statement of cash fl ow
Notes

Income, balance sheet and notes, parent company:

Income statement
Statement of comprehensive income
Balance sheet
Statement of changes in equity
Statement of cash fl ow
Notes

Sustainability

Notes
Signatures of the Board of Directors and the CEO
Auditors' report
Sustainability report assurance report
Annual General Meeting
Owner and share data
Market shares
198 Five-year summary Group
Three-year summary Business segments
Defi nitions
Addresses

Financial information 2016

Q1 Interim report 26 April Q2 Interim report 18 July Q3 Interim report 25 October

Annual General Meeting 2016

The Annual General Meeting will be held at Dansens Hus, Stockholm on Tuesday, 5 April at 11 am. The proposed record day for the dividend is 7 April 2016. The last day for trading in Swedbank's shares including the right to the dividend is 5 April. For more information, see page 193 and the notice of the AGM

at www.swedbank.com. While every care has been taken in the translation of this annual report, readers are reminded that the original annual report, signed by the Board of Directors, is in Swedish.

Production: Intellecta Corporate • Photography: Jenny Lagerqvist – Miso Creative (page 8 and 38 and Board & Management), Jimmy Eriksson (page 11),

Swedbank's image bank • Printing: Ineko AB, Stockholm

Vision

We enable people, businesses and society to grow.

Purpose

We promote a sound and sustainable financial situation for the many households and businesses.

Values

The bank's values express our engagement and focus on long-term value creation. It is based on openness, simplicity and caring.

Leading position in our home markets: Sweden, Estonia, Latvia and Lithuania

Our roots are firmly entrenched in Sweden's savings bank history, the cooperative agricultural bank tradition and Hansabank's major role in the Baltic countries. We serve everyone, from customers with basic needs to those who require advanced banking services. We work to develop close relationships with our seven million private customers and 600 000 corporate customers. To support their businesses, Swedbank also has operations in Norway, Finland, Denmark, the US, China, Luxembourg and South Africa.

Market shares and number of customers

Private market	Corporate market
Sweden
Deposits 21% Mortgages 25% Customers 4million	Deposits 19% Lending 19%	Customers 331000
Estonia
Deposits 55% Mortgages 46%	Customers 0.8million Deposits 41% Lending 34%	Customers 135 000
Latvia
Deposits 28% Mortgages 31%	Customers 0.9million Deposits 12% Lending 17%	Customers 90 000
Lithuania
Deposits 37% Mortgages 26%	Customers 1.5million Deposits 24% Lending 23%	Customers 84 000

High cost efficicency and low risk profile produce a competitive return

By being attuned to the market, we stay competitive in the long term and create value. We will meet our stakeholders' expectations and financial needs. High cost efficiency is crucial to continue developing a competitive offering. Swedbank has, and will maintain, a robust balance sheet that can withstand swings in the business cycle. Evaluating and managing risks is part of what we do every day, and our broad customer base of individuals and companies in many different sectors spreads the risk while generating stable results with little fluctuation. Taken together, this creates value for customers, society, shareholders and employees.

Swedbank's return on equity excl. intangible assets (ROTE) compared with industry average

Swedbank

Our business segments satisfy a broad range of customer needs

Swedish Banking

– Sweden, our largest market

Around 4 million private customers and over a quarter of a million corporate customers can bank through our digital channels, 275 branches and the cooperation with savings banks and real estate franchisees. Swedbank is Sweden's largest bank in terms of number of customers and an important part of the local community. Our social engagement focuses on areas such as education, the job market and integration.

Facts	2015	2014
Total income, SEKm	22 551	22 678
Total expenses, SEKm	9 987	10 746
Profit for the year, SEKm	9 534	9 294
Return on equity, %	18.5	25.5
Cost/income ratio	0.44	0.47
Lending to the public, SEKbn	1 064	1 024
Deposits from the public, SEKbn	453	412
Credit impairment ratio, %	0.05	0.03

For more information, see pages 30–31 and 200.

4469

Number of employees

Share of profit before impairments

59 %

Baltic Banking

– largest bank in the Baltic region

Our 3 million private customers and over 300 000 corporate customers in Estonia, Latvia and Lithuania reach us through our digital channels and 36 branches in Estonia, 41 in Latvia and 67 in Lithuania. In terms of number of customers, we are the largest bank in the Baltic region. Swedbank is an important member of the local community, and as part of our social commitment we concentrate on initiatives to promote education and entrepreneurship.

Facts	2015	2014
Total income, SEKm	6 288	6 107
Total expenses, SEKm	2 482	2 517
Profit for the year, SEKm	2 460	3 200
Return on equity, %	12.3	14,6
Cost/income ratio	0,39	0.41
Lending to the public, SEKbn	124	126
Deposits from the public, SEKbn	145	138
Credit impairment ratio, %	-0.14	-0.16

For more information, see pages 32–33 and 201.

Number of employees Share of profit before impairments

1 329	Estonia
1 102	Latvia
1 228	Lithuania

Large Corporates & Institutions – our large corporate business

We provide large companies and institutions with advanced financing solutions and financial services. The business area also develops corporate and capital market products for the rest of the bank and the Swedish savings banks, which are offered a wide range of products with different levels of risk, yield requirements and sustainability.

Facts	2015	2014
Total income, SEKm	7 487	7 768
Total expenses, SEKm	3 346	3 364
Profit for the year, SEKm	3 227	3 143
Return on equity, %	16.2	19.3
Cost/income ratio	0.45	0.43
Lending to the public, SEKbn	182	175
Deposits from the public, SEKbn	121	106
Credit impairment ratio, %	0.16	0.18

For more information, see pages 34–35 and 202.

Group Functions & Other – centralised business support units

Includes our product organisation, whose purpose is to increase efficiency in the development and maintenance of Swedbank's products and services, and not least ensure that our offerings are relevant, competitive and of high quality. The centralised units provide strategic and administrative support in the bank and comprise Accounting & Finance, Communication, Risk, IT, Compliance, Public Affairs, HR and Legal. Group Treasury is responsible for the bank's funding, liquidity and capital planning.

Facts	2015	2014
Total income, SEKm	1 413	2 961
Total expenses, SEKm	633	1 185
Profit for the year, SEKm	525	1 088
Return on equity, %	2.1	3.1
Cost/income ratio	0.45	0.4
Lending to the public, SEKbn	1	0
Deposits from the public, SEKbn	25	5
Credit impairment ratio, %	0.00	-0.47

For more information, see pages 36–37.

Number of employees

Share of profit before impairments

4376 4 %

Number of employees Share of profit before impairments

Stable result

Good cost control
Successful integration of Sparbanken Öresund
Stronger capitalisation
Proposed dividend of SEK 10.70 per share

Key figures	2015	2014
Total income, SEKm	37 624	39 304
Total expenses, SEKm	16 333	17 602
Profit for the year, SEKm1	15 733	16 709
Return on equity, %	13.5	15.2
Cost/income ratio	0.43	0.45
Total assets, SEKbn	2 149	2 121
Lending to the public, SEKbn2	1 371	1 325
Deposits from the public, SEKbn2	744	661
Credit impairment ratio, %	0.04	0.03
Share of impaired loans, gross, %	0.40	0.41
Core Tier 1 capital ratio, %	24.1	21.2
Earnings per share3	14.14	15.05
Cash dividend per share4	10.70	11.35
Yield per year-end, %, Swedbank share	5.7	5.8
Full-time employees	13 893	14 583

1) From continuing operations attributable to the shareholders

2) Excluding the Swedish National Debt Office and repos 3) Continuing operations after dilution

4) Board of Directors' proposal for 2015

Improvements in 3 of 5 target areas

Market-leading cost efficiency – Lower costs in 2015

Solid capitalisation – CET1 capital ratio is among the highest compared to European peers

Increased customer value

– Improved SQI, Private customers Sweden

+2.2

Increased employee engagement – Lower recommendation index

Return on Equity of at least 15%

Our priorities are focused on long-term competitiveness and value creation

Improve customer value

Invest in our digital offering
Stay competitive through simpler, clearer offerings
Strengthen advisory services

Increase effectiveness

Increase internal coordination
Simplify internal processes and increase automation
Centralise procurement and reallocate services internally

Strengthen employee engagement

Strengthen corporate culture
Increase investment in our employees
Develop our leaders

Sustainability and customer value are at the core of our strategy

Customer demand for financial services drives us to continuously improve our business. Through our customer relations and when developing products and services we have an opportunity to impact others and create value-added for our stakeholders. We therefore integrate sustainability into our operations. A long-term approach creates new business opportunities, reduces risks and encourages the business community to be more sustainable. For more information, see pages 17 and 22.

Part of building a sustainable society

Swedbank's sustainability work is rooted in the bank's purpose and values. The focus is on our offerings, sourcing and engagement in the local community. This also makes it critical to the bank's business model. The Sustainability Report, which complies with the Global Reporting Initiative's (GRI) G4 guidelines, consists, in addition to this annual report, of the Detailed sustainability report 2015, which is available at www.swedbank.se.

The year in brief

A selection of value-creating activities during the year

Swedbank joins mortgage lending programme for Latvian families The government-initiated programme grants guaranteed loans to families with children. In 2015, 470 families received SEK 260m to help

1 JANUARY Mobile Bank 5 years with 90% customer satisfaction Our customers are driving

digitisation. They are who we listen to when we develop our digital services. 2.5 million customers are connected to the Mobile Bank.

28 JANUARY 27% The cost target for 2015 was reached and the profit increased by 27 per cent. Year-end report for 2014

27 JANUARY

Economic Outlook: Sweden – An island floating in the global economic sea As a responsible financial player, Swedbank participates in the public debate on the economy and development. The bank's economic reports are issued twice a year.

12 FEBRUARY

Investors in Swedbank Robur's Humane Fund donate SEK 43m to charity

18 FEBRUARY

Prices cut on 23 equity funds and 2 money market funds

12 MARCH

them finance a home.

MARCH

JUNE

Nordic Energy Summit For several years Swedbank has arranged an annual Energy Summit in Oslo for energy companies and investors to discuss sector-specific challenges and opportunities. The year's summit attracted 600 visitors.

Initial release of new Internet Bank

26 MARCH

General Meeting.

Dividend of SEK 11.35 approved and all Board members re-elected 1 337 shareholders, representing 57 per cent of the votes and capital, attended Swedbank's 2015 Annual

APRIL Entrepreneurship

promoted in Latvia Launched development programme for Latvian municipalities to encourage young entrepreneurs.

25 MARCH

Swedbank signs card acquiring agreement in Finland

Swedbank signed a card acquiring agreement with S Group (SOK), Finland's largest network of retail and service companies, making Swedbank the acquiring bank for a large number of Finnish retailers.

MAY

Swedbank Economic Forum in Baltic countries 150 corporate and private

banking customers gathered with opinion makers and the media. The focus was on challenges in the labour market.

APRIL Young Lithuanians encouraged to study IT

Swedbank is an active member of the IT initiative Tech City Lithuania, where our employees provide free lectures on IT topics to students aged 9–12.

28 APRIL Improved results under extraordinary market conditions Interim report for the first quarter 2015

Q3

Moody's upgrades Swedbank's rating to Aa3

23 SEPTEMBER

JUNE

127 000 new Swedbank customers

Swedbank strengthened its presence in the Baltic countries through an agreement to acquire Danske Bank's retail banking business in Lithuania and Latvia.

8 JULY

Swedbank decides to take extra dividend from Estonian sub-group which provides a tax injection in Estonia

home markets First time there was loan growth in all three Baltic countries since 2008. Interim report for second quarter 2015.

3%

1 SEPTEMBER Swedbank Insight Swedbank launched a new website with analyses and market comments.

SEPTEMBER

Award for world's best customer service in social media Swedbank ranks first in Social Bankers' quarter in a row. The survey is based on,

survey of financial companies for the second among other things, response rates.

SEPTEMBER Employees and bank donate over

SEK 1m

to the Red Cross to help address refugee crisis

12 OCTOBER

100 000 new customers welcomed from Sparbanken Öresund

OCTOBER Swedbank celebrates

years in Finland

The conversion of customers to Swedbank's system was an important milestone after the acquisition of Sparbanken Öresund in 2014. This gave our new customers access to a broader range of products and services, as well as a better Mobile and Internet Bank.

13 NOVEMBER

Swedbank one of Sweden's most sustainable brands Swedbank came 16th when Sustainability Engagement Mapping

ranked Sweden's most influential digital opinion leaders in sustainability.

4 December

S&P upgrades Swedbank's rating to AA-A rating in line with the top-ranked Nordic banks that also compares well internationally.

3 November

Swedbank's website gets new look with responsive design After the change, pages work just as well when viewed

on a mobile phone, tablet or computer.

Strong cost control and low risk

Swedbank further strengthened its financial position in 2015, whilst at the same time undertaking measures to improve its customer offering. Now we need to focus on the next steps in the ongoing digital transformation of the bank, according to the Chair Anders Sundström.

What were the most important profit contributors in 2015?

"In a turbulent market with seesawing share prices and negative interest rates that are slowing revenue, we kept our focus on cost control and low risk in the balance sheet. As a result, we were able to maintain stable profitability at the same time that our financial position has never been stronger. This means that we can focus even more on our customers."

What did the Board of Directors focus on in 2015?

"Mainly two areas. First, we tried to understand the marketplace even better. Much of this involved staying updated on regulatory developments and making sure we live up to the requirements set. The second is how we could build closer relations with customers and successfully transform to a more digital bank."

Interview with Chair Anders Sundström (AS) and President and CEO Michael Wolf (MW)

What are Swedbank's strengths?

"Our history and our customer base. We have 4 million private customers in Sweden and another 3.2 million in the Baltic countries, as well as nearly 600 000 corporate customers in both Sweden and the Baltics. Another of our strengths is that we are quick to respond to technological change. Our customers like new technology, and since the introduction of the ATM to today's mobile bank, we have seen rapid acceptance among our customers."

What areas will the bank be focusing on?

"We will continue to work on diversity and openness and being an inclusive bank. There is a lot of research showing that communities and organisations with this attitude are winners in the long run. Today we are one of the most inclusive banks in Sweden, and we will continue to be so. Beyond that it is obvious that technological changes are crucial for us."

It has been a very turbulent period with volatile stock markets and extremely low interest rates. What kind of challenges does this pose for Swedbank?

"Basically, the same challenges as for society as a whole. With central banks pumping out so much liquidity, there is a big risk that we could see various types of asset price imbalances. As such, it is very important to have buffers. So that's what we are focusing on, for ourselves and for our customers."

Swedbank has introduced stricter amortisation principles. Isn't the bank at risk of being exclusive with such high amortisation requirements?

"In the short term that's true, and it concerns us. Young people and new arrivals are struggling to get over the high thresholds in the housing market. That's why we are very clear in pushing for more housing construction. More housing is needed, as are new forms of savings that make it easier for people to put away money for a home."

Do we have a housing bubble in Sweden?

"No, we still have considerable population growth, and what we need is to build more housing."

There were reports in 2015 that certain managers were involved in real estate deals outside the bank. Is it appropriate that senior executives engage in such deals?

"In retrospect, we deeply regret that these outside activities were approved, since it has brought unwanted attention to the bank and raised questions from our employees. The actions complied with our guidelines, but easily drew suspicion. It is vital for us that our customers, owners and employees feel that they can trust us and that we always strive to be as transparent as possible. We take very seriously the criticism we have heard and conducted a review of our rules on employee conflicts of interest and how they are applied, which the persons concerned have adapted to. The Board of Directors commissioned an external review of the financial circumstances, business relationships and transactions related to these real estate deals. This investigation concluded that all laws and external regulations have been followed. No customers have come to financial harm. In addition, an internal audit of the bank's regulations was conducted. Details regarding this regulation have also been conveyed to the FSA in response to their audit of the Bank's compliance with internal and external rules on conflicts of interest. The internal investigation identified minor discrepancies regarding the scope and documentation of the regulations. These deficiencies have now been resolved. The Board has also clarified the rules and decided to implement an outside evaluation of them vis-à-vis best practices."

The Board of Directors decided to dismiss Michael Wolf as CEO as of 9 February 2016. Why?

"Michael did a good job during the seven years he was CEO of Swedbank. He was able, in an inspiring way, to guide the bank in a challenging situation, when the entire financial system was in turmoil, to become the stable and profitable bank we are today. But now we must take the next step by improving customer satisfaction and tie our brand closer to the businesses while at the same time ensuring that our investments in our IT development take off. This means that the Group Executive Committee has to work even more cohesively and efficiently, and this requires a different type of leadership."

The geopolitical situation has worsened with a huge wave of refugees and turmoil in our region. How is Swedbank affected?

"The worsening security situation in the region around Russia, has a direct impact on the Baltics and has been a frequent topic of discussion for the Board of Directors. The global geopolitical situation has a negative impact on economic growth, and is also a reason for the refugee streams. These refugee streams affect Sweden positively in the short term, providing an economic injection. In the medium term there will be strains on the Swedish economy, but if we play our cards right the pluses will outweigh the minuses in the long term."

What is the bank doing right now to address the big increase in migration?

"We are an inclusive bank, and together with another bank we are administering a majority of all the compensation being paid out to refugees. In smaller communities we are also working with municipal authorities to provide refugees with information on opening a bank account and understanding the Swedish banking system. Eventually, these individuals will become our customers. We have seen that many of those who come here have an entrepreneurial background and a post-secondary education and will quickly be integrated in society. But obviously there will also be areas where challenges arise."

Lastly, can shareholders continue to expect a dividend in the same range as before?

"Our policy is to distribute 75 per cent of profit, and we feel comfortable with that, since our capitalisation far exceeds the requirements set by the Swedish Financial Supervisory Authority. Despite some uncertainty about future regulations we are in a very good position to address any changes.

Stockholm February 2016

Anders Sundström Chair of the Board

"We must continue to adapt to changing customer preferences"

On 9 February 2016 Birgitte Bonnesen was appointed Acting CEO of Swedbank. As someone who has been with the bank for many years, there was no doubt that she would say yes. Topping her agenda is speeding up the pace of the digital transformation.

You were recently asked to take over as Acting CEO of the bank. How does it feel?

"It feels very exciting. I didn't hesitate to say yes. I already know everyone on the management team, the plans for 2016 are set and we have a very strong starting point with a large customer base and skilled employees."

What's on top of the agenda?

"Speeding up the pace of the transformation that has already begun. We have a long and important IT agenda as well as plenty of initiatives for private customers that will be implemented. This requires that we work even more closely and that all our employees feel that they are playing a part. That's why it is also very important that everyone at the bank has a clear understanding of where we are headed."

Employee engagement has been mentioned by the Board of Directors as an important area that needs improvement. How will this be achieved?

"When it comes to our employees, we have to first and foremost be even better at getting everyone to feel involved at a time of major changes. For me personally, it's a question of trying to be as operationally focused as possible in my leadership and being active in important business development issues."

Another important area emphasized by the Board is customer satisfaction. What are your thoughts?

"We must continue to adapt to changing customer preferences in every channel. But we can't forget that we already have very high customer satisfaction in the Baltic countries. Although it is lower in Sweden, we are making progress. For example, we have a high level of satisfaction among large companies. At the same time the use of digital channels has a positive effect on customer satisfaction, since it makes it easier for them to do their day-to-day banking. So we see good potential for improvement in our current customer base, but also when it comes to attracting new customers. "

"When it comes to our employees, we have to first and foremost be even better at getting everyone to feel involved at a time of major changes."

How will digitisation affect Swedbank's operations going forward?

"It will lead to major changes in how we do business. Customers today have access to many more choices and information than before. This leads to greater competition and means that some of the advisory services that we have offered will no longer be in demand. At the same time it opens big opportunities. We can transition more of our business to customer groups with more complex needs, especially on the corporate side, where our advice and expertise have a big impact on the end result. It also becomes more cost-effective to work with a large customer base, which benefits a bank like us."

What are Swedbank's biggest advantages in an increasingly digital world?

"That we can provide customers with a comprehensive overview of their finances. At a time when financial service providers are growing in number, there is a clear advantage for customers in consolidating everything in one place from both a financial and efficiency standpoint. We don't see digital as merely a new sales channel, but understand that it also changes the way we see both product development and our customer relationships."

There has been a great focus on costs. Are there any untapped areas where you see opportunities to be more efficient?

"There is a very big potential to improve and simplify everything we do. With customers, it's mainly a question of offering easyto-use and easily available products. We also place great focus on simplifying processes internally, coordinating everything from IT structure to governance, and centralising procurement."

You have been head of Baltic Banking, which has come quite far in the digitisation process. Does it have anything to teach the rest of the Group?

"Baltic Banking has the ability to quickly make and execute decisions. We have also been successful in analysing customer data, so that we can create better offerings and be more proactive in dialoguing with customers. We have a similar potential in Sweden."

What type of new demands does digitisation place on the bank's employees?

"It will require greater availability, more advanced advice and more employees who work directly with customers. To facilitate this change, we are working with, among other things, competence centres, where employees with expertise in various areas work together. In this way we encourage knowledge transfers

INTERVIEW WITH THE CHAIR AND THE CEO

at the same time that we ensure that customers receive prompt and professional service regardless of their need. We have fantastic employees, and we believe that everyone with the right attitude and will can develop by accepting new challenges within the bank."

What improvements can customers look forward to?

"Most importantly, we will make it even easier for customers to manage their banking in our digital channels. For example, by digitising mortgage loans and providing greater transparency in terms of price and by giving them the option to sign contracts electronically. To support interactions with customers in digital channels, we will also provide improved service and support such as chat functions and identification in the Telephone Bank with Mobile BankID. Basically, it will be easier to contact the bank. From a slightly longer perspective, we know that new regulations will accelerate development even more and give customers new tools and services – from the bank but also from third parties. We have to be open to collaborating more with third parties rather than competing with them, which will also benefit customers."

Stockholm, February 2016

Birgitte Bonnesen Acting President and CEO, Head of Swedish Banking

Technological change is reshaping the banking sector…

Digitisation, macroeconomic development and regulatory changes continue to challenge and create new opportunities for Swedbank and the banking sector as a whole. Of these changes, digitisation is the most revolutionary and can rightfully be called a paradigm shift. Rapid technological developments create new expectations in terms of availability. At the same time competition is growing and customer behaviour is changing. Keeping pace with and quickly adapting is critical in order to meet demand, but also because of the new opportunities that are created.

Digitisation

Creates new customer behaviour and increased competition from new players
Customers' experiences with other industries are raising the demands on banks
Leads to increased interaction with customers
Analysis of customer data allows us to customise offerings
Demand for availability increases when new (mobile) technology keeps people connected 24/7
Makes it easier to compare offerings, which leads to price pressure and standardised offerings
Transparency and increased availability are creating higher demands and changing the advice we offer
Leads to new forms of distribution
Facilitates the automation of processes and knowledge work as computers take over people's jobs
Generates economies of scale
Creates new risks, including in security and functionality

Macroeconomic development

Globalisation has made growth more dependent on the major economies and geopolitical developments. This in turn affects bank earnings and credit demand
Demographic changes such as urbanisation and population growth lead to higher GDP and lending. Economic growth in Sweden is being constrained, however, by the housing shortage as major cities continue to grow. At the same time property prices are rising and debt is increasing
Expansionary monetary policy and a low interest rate environment – caused by low inflation – increase risk taking and debt levels, which could create imbalances and increase vulnerability to unforeseen events

Regulatory changes

Tighter requirements in certain areas increase costs for banks, as well as the barriers to entry for new players
Less stringent requirements in other areas increase competition and transparency, giving consumers more power through greater choice. This in turn leads to lower prices for them and puts pressure on banks' revenues

…and forcing us to adapt our offerings

Global changes are affecting everything from distribution to the pricing of our products and services. Our business areas are therefore working continuously to adapt their offerings to prevailing conditions.

Simplicity and speed are becoming increasingly important

Digitisation is continuing at a rapid pace and placing ever higher demands on the banking sector's ability to adapt its products and distribution channels as well as on the stability of its IT systems. At the same time it enables our customers to compare offerings from different providers, which is affecting competition in the bank's product areas: save, borrow and pay. Savings, for example, have become easier to transfer between institutions, at the same time that simplicity and speed have grown in importance, which is also evident in the consumer finance market. One of the areas most affected by digitisation, in terms of product development, is payments, as more retail purchases are made online and using mobile solutions. For more on how Swedbank is adapting its product offering, see page 36.

Negative interest rates increase the willingness to take risks

Macroeconomic development in our home markets and the rest of the world affected our customers' actions in 2015, as well as our own. Central banks maintained highly expansionary monetary policy during the year. In Sweden the Riksbank introduced a negative repo rate, while the ECB continued to cut its deposit rate on top of extensive bond buying. For Swedbank and other banks this puts pressure on earnings, since we have to pay to invest our surplus liquidity in one of two central banks at the same time that we have chosen not to introduce negative deposit rates for our customers, with the exception of certain professional counterparties in the financial market. For more on how our results are affected, see page 26.

The low market interest rates – and the undersupply of housing and continued urbanisation – have led to a further increase in housing prices and mortgage demand in Sweden, with rising debt levels as a result. Swedbank is Sweden's mortgage leader, with a market share of 25 per cent. For the sake of our customers' financial stability and to help them avoid excessive debt, we tightened our amortisation guidelines in 2015.

Credit demand increased in the Baltic countries as strong domestic consumption offset the negative effects of geopolitical concerns in the region.

Macroeconomic development has also had a big effect in the area of savings, where low interest rates have increased risk appetite and have driven up the prices of many asset classes. Equity prices have been volatile, however, and been affected by concerns about Greek debt, slowing growth in China and expected rate hikes in the US, to name just a few areas. This has affected our asset management business as well as activity among corporate customers. For more on how developments have affected our operating areas, see page 30.

Tougher requirements will eventually benefit customers

Regulatory changes that are planned or already implemented are affecting everything from our daily operations to the pricing of our products. For Swedbank it is important to live up to these requirements to ensure that our businesses continue to function well, that we maintain confidence in the bank and that we have access to cost-effective financing, which we need in order to offer competitive products and services.

In 2015 the Swedish Financial Supervisory Authority announced an increase in the countercyclical buffer, while the Basel Committee continued to calibrate capital adequacy rules. At the same time the bank continued to adapt ahead of the implementation of the EU directive on financial instruments, Mifid II, and the Swedish prohibition of commissions.

The increased regulatory burden means higher costs for Swedbank, since the changes require system investments, modifications to existing routines and increased allocation of capital to certain areas. This in turn means price adjustments on some products and services. At the same time many of the revised and new regulations benefit our customers and other stakeholders, since they force us to be more efficient, further strengthen the financial stability of the banking system and increase transparency.

Stakeholder dialogue helps us develop our business

We can only be successful as a company if we are in accord with our stakeholders. An active and continuous dialogue is critical and distinguishes how we work. By listening and learning, we get better and can focus on the right things.

Continuous dialogue and feedback process

We maintain an extensive dialogue with our stakeholders. It happens daily in every part of the business with the millions of customers we meet each year in the bank's branches, the over 6 million calls we get through the Telephone Bank, the hundreds of million visits to our website per year, and through over 75 000 interactions we have monthly through social media. We also dialogue internationally, e.g. on sustainability, nationally with government authorities and civil society, and locally in collaboration with companies. The feedback process is often direct, like in our large corporate business, where we work closely and continuously with customers at around 1 000 investor meetings per year, or in the performance reviews between managers and employees. In addition, we annually conduct large surveys and participate in industry forums on challenges and trends. As a whole, we see the dialogue with our stakeholders as an indication of whether we are heading in the right direction and focusing on the right things. If not, how can we improve?

Feedback affects the way we work

We annually conduct surveys to find out what our stakeholders think of the bank. This includes strategic customer surveys, brand surveys and opinion leader surveys in all our home markets. The customer complaint process is also an important forum, where feedback can be incorporated into the bank's development and improvement work.

To find out whether we have the right priorities, we conducted a major survey of all our stakeholder groups in autumn 2015. They responded to questions on the areas we had identified as the most important to our long-term survival, including social and environmental issues. The results show a general consensus between stakeholders and Swedbank on most key issues. Our customers (consumers as well as businesses) agree with us on the importance of a high service level, availability, individualised advice, competitive prices, and high product and service quality. The survey also showed, however, that we have to do more to live up to this, which is consistent with the results of other customer surveys. Together with our employees, we also agree on the importance of being an employer people want to work for, but here as well more needs to be done, which has been confirmed by other employee surveys. For a further description of the process used in the materiality analysis and our stakeholder dialogue, see the Detailed sustainability report 2015.

Feedback from our stakeholders is valuable to strategy work and business planning. Among the adjustments that have been made as a direct response to demands from our stakeholders is the more modern approach we have taken to developing our digital offering. For instance, we established Swedbank LABS, where teams of professionals from different disciplines work together to foster creativity and innovation. The stakeholder dialogue on sustainability has affected our strategic direction as well as our human rights policy and risk assessments in our business processes.

The conclusion of our dialogue with customers is that we have to do more to increase value and be more customeroriented, which is also a Group-wide priority.

What our stakeholders consider most important for Swedbank to live up to

Customer-oriented model creates value for many

We have to capitalise on the opportunities that open up in a market in constant change. Anticipating new needs and continuously developing our business to meet the expectations of stakeholders and the financial needs of customers are the key to value creation.

Accessible, competitive offerings for 7 million private customers and 600 000 corporate and organisational customers

Good development opportunities for 14 000 employees in a stimulating work environment with competitive compensation A responsible bank that contributes to a sound and sustainable financial situation. One of Europe's most stable banks

Over 300 000 share- and bondholders get a competitive return with low risk

Customer value and sustainability are at the core of our strategy

Stable profitability, high cost efficiency and low risk, together with long-term decisions, enable us to meet customer demand for competitive banking services in both the short and long term. This promotes a sound and sustainable economy.

Customer demand for financial services drives our business. Through our customer relations, but also when developing products and services, we have an opportunity to influence those around us and create long-term value-added for customers, employees, shareholders and society. We therefore integrate sustainability into our business and our decisions. A more long-term approach creates new business opportunities, reduces risks and encourages businesses to act more sustainably, at the same time that we meet the need for competitive products and services.

An available full-service bank in four home markets is what we offer all households, small and large companies, and institutions. We cover everything from basic transaction services to the most advanced advice. A large, modern distribution network makes it easy for a broad base of customers to manage their finances. We provide efficient digital solutions for day-to-day financial needs and more comprehensive advice through contact with our employees.

Available fullservice bank

Offerings based on customer needs and expectations are critical to our success. Digitisation increases opportunities to meet each customer's specific needs with the right offer. By analysing the customer data we have and drawing from our advisors' experience and knowledge, we can create offerings that are more precisely targeted.

Offerings based on customer needs

High cost efficiency is

growing in importance due to changes in the market. Understanding our customers and what affects tied-up capital leads to capital efficiency. We also strive to do things better, simpler and more efficiently – we shall be a market leader in cost efficiency. Product development at

the Group level is one example. Another important factor is a corporate culture where everyone is well aware of and cautious about spending. The more cost-effective we are, the more we can invest and the more customer value we can create.

Low risk is the foundation for sustainable growth. Swedbank's lending is financed through deposits and capital market funding. Low funding costs are achieved through stable profitability in combination with high-quality lending and solid capitalisation. This is a prerequisite for winning the trust

of the capital market and benefits all our stakeholders. Maintaining stable earnings over time requires not only a low risk level, where each borrower's solvency, solidity and collateral are the determining factors, but also the ability to quickly adapt to market factors and changing customer preferences.

SAVE/INVEST

Integrating sustainability into decisions supports value creation

In our work and in our business decisions we take economic, social and environmental aspects into account. We have a framework for integrating issues such as human rights, the environment and anti-corruption into decisions. It supports risk management and creates value for our stakeholders.

Save/invest

Our ability to assess a company's value today and in the future is an important part of our savings offering, which largely consists of funds. In fund management, sustainability risks are seen as financial risks. Our strategy is also to be an active owner that exerts influence.

Sustainability assessments are integrated into asset management in three stages:

1. Risk assessment Sustainability risks are analysed before an investment is approved
1. Exclusion Areas we do not invest in include cluster bombs, mines, chemical or biological weapons, and many nuclear weapons companies
1. Impacts We encourage companies to act more sustainably e.g. by actively participating in annual general meetings and nomination committees

Assets under management with special sustainability criteria: Sustainability assessments 2015:

25 companies excluded

Pay

To ensure that Swedbank complies with laws and regulations, we have to know our customers and understand where their money comes from and what the aim of their relationship with the bank is. This makes it easier to detect abnormal behaviour. Through our system support for monitoring transactions and by checking customer databases against sanctions lists, we reduce the risk that the bankwill be used for money laundering or terrorist financing. With increased digitisation and less use of cash in society, better opportunities also open up for efficient use of resources.

Five stages in our work to counter money laundering:

1. Risk assessment
1. Audits
1. Customer knowledge 3. Continuous monitoring
1. Reporting
Number of payments through the Internet Bank in our home markets:

328 million

Finance

Sound, responsible lending is our core business. A customer's payment ability, solidity and collateral are always the decisive factors in the lending process. This ensures that they can handle economic slowdowns and avoid excessive debt.

Before approving any business loan, an assessment is made of sustainability risks as follows:

1. General sustainability risks are evaluated based on a risk assessment model
1. Industry-specific risks and critical issues are analysed based on industry guidelines
1. If the company has sustainability risks, the case is forwarded to a credit committee for final decision
1. If additional support is needed, the case can be referred to Swedbank's Sustainability and Ethics Council

Sweden: 48 404 Baltics: 1 825

Procure

The central procurement process ensures that all reported purchases exceeding EUR 50 000, aggregated on an annual basis, are managed with the support of the bank's central procurement unit. Sustainability is integrated into the procurement process in agreements, risk assessments and monitoring.

Responsible sourcing comprises the following steps:

1. Code of conduct binding for all suppliers
1. Risk classification of every supplier with invoicing over EUR 50 000
per year done centrally based on country- and industry-specific risks 3. Self-assessments by suppliers based on our code of conduct
1. Supplier audits and monitoring

Share of reported purchases that underwent sustainability assessment:

86 %

Goals and results

Increased customer focus…

Our goals shall contribute to long-term value creation. High customer value is essential to sustainable profitability and value creation for other stakeholders.

Customers SQI Index, Swedish private customers

Employees Employeeship Index

Return on equity ROE compared with industry average, %

GOAL: Increased customer value WHY: Customer value, together with customer satisfaction, trust and a positive brand image, explains why customers choose our products and services. Customer value is essential to sustainable profitability. We track customer value through our own and independent surveys to measure customer satisfaction, among other variables.

RESULT: In Sweden customer satisfaction is measured by two surveys, SQI and CSI, the former comprising around 300 of the bank's customers and the latter just over 5 000. According to SQI, Swedbank's customer satisfaction was below the industry average at 66.2 (64.0) for private customers and 64.4 (66.1) for corporate customers. Customer satisfaction is measured in the Baltic countries by the TRIM survey. In 2015 satisfaction increased in all three of our Baltic home markets with the biggest gain in Latvia.

RESULT: The Employeeship Index, which measures engagement and was introduced in 2015, is at a high level. The recommendation index (likelihood of recommending Swedbank as an employer) fell in 2015, however, after having risen for three con-

RESULT: The return on equity for continuing operations decreased during the year to 13.5 per cent (15.2). The industry average was 12.3 per cent and includes the three other major Swedish banks: Nordea, SEB and Handelsbanken. Swedbank's profit for the year decreased due to one-off tax expenses and lower income. Expenses decreased. Low interest rates, higher capital requirements and market factors will make it more difficult to reach the ROE target going forward. Increased

RESULT: Swedbank's aim is to reduce total expenses to SEK 16bn for 2016. Cost control was good during the year and total expenses amounted to SEK 16.3bn (17.6). One way to compare cost efficiency is the cost/income ratio. Swedbank's C/I ratio fell to 0.43 (0.45) in 2015. This was due to one-off expenses that arose in 2014 in connection with the acquisition of Sparbanken Öresund as well as efficiency improvements. The average for Sweden's three other major banks – Nordea, SEB

RESULT: The Common Equity Tier 1 capital ratio continued to strengthen during the year to 24.1 per cent (21.2) as of 31 December. The increase is due to solid earnings generation and a lower risk exposure amount (REA). Read more on page 42.

and Handelsbanken – was 0.48. Swedbank's C/I ratio was the lowest.

efficiency therefore remains one of our priorities.

secutive years.

GOAL: Increased employee engagement WHY: Engaged and motivated employees help our customers to be successful and are more likely to recommend Swedbank as an employer. This requires that they have the opportunity to develop, feel that they have an inflluence and contribute to the bank's purpose and goals. We track employee engagement through quarterly surveys.

GOAL: Return on equity of at least 15 per cent WHY: Swedbank's shareholders demand a competitive return on the capital they invest. At the same time the bank has to be profitable to stay competitive in the long term and create investment opportunities. We also have to ensure that the bank can withstand periods of major economic stress, which is largely determined by our earning capacity, risk level and capitalisation.

Cost efficiency C/I ratio compared with industry average

GOAL: Market-leading cost efficiency WHY: Digitisation is increasing competition and transparency in parts of the market at the same time that banking products and services are becoming more standardised. As a result, the price of our services is becoming more important. To remain competitive in the long term requires continuous improvements in cost efficiency and internal processes, which creates opportunities to invest in increased customer value.

Capitalisation CET1 capital ratio, %

GOAL: Solid capitalisation WHY: Swedbank's capitalisation should ensure that it can withstand a stressed scenario while still exceeding capital requirements by a safe margin. Strong capitalisation is also necessary to guarantee access to competitive capital market funding. The majority of Swedish capital requirements have been clarified, and Swedbank meets them by a wide margin, at the same time that independent stress tests show that Swedbank is among the banks in Europe with the lowest risks.

…promotes our competitiveness

Cost control and resource efficiency give us the investment capacity needed to remain an attractive bank in the future.

GOAL: Increased customer value WHY: Customer value, together with customer satisfaction, trust and a positive

GOAL: Increased employee engagement WHY: Engaged and motivated employees help our customers to be successful and are

GOAL: Return on equity of at least 15 per cent WHY: Swedbank's shareholders demand a competitive return on the capital they

GOAL: Market-leading cost efficiency WHY: Digitisation is increasing competition and transparency in parts of the market

GOAL: Solid capitalisation WHY: Swedbank's capitalisation should ensure that it can withstand a stressed

ing capacity, risk level and capitalisation.

variables.

brand image, explains why customers choose our products and services. Customer value is essential to sustainable profitability. We track customer value through our own and independent surveys to measure customer satisfaction, among other

more likely to recommend Swedbank as an employer. This requires that they have the opportunity to develop, feel that they have an inflluence and contribute to the bank's purpose and goals. We track employee engagement through quarterly surveys.

invest. At the same time the bank has to be profitable to stay competitive in the long term and create investment opportunities. We also have to ensure that the bank can withstand periods of major economic stress, which is largely determined by our earn-

at the same time that banking products and services are becoming more standardised. As a result, the price of our services is becoming more important. To remain competitive in the long term requires continuous improvements in cost efficiency and internal processes, which creates opportunities to invest in increased customer value.

scenario while still exceeding capital requirements by a safe margin. Strong capitalisation is also necessary to guarantee access to competitive capital market funding. The majority of Swedish capital requirements have been clarified, and Swedbank meets them by a wide margin, at the same time that independent stress tests show

that Swedbank is among the banks in Europe with the lowest risks.

Customers SQI Index, Swedish private customers

and Handelsbanken – was 0.48. Swedbank's C/I ratio was the lowest.

efficiency therefore remains one of our priorities.

Employees Employeeship Index

Return on equity ROE compared with industry average, %

Cost efficiency C/I ratio compared with industry average

Swedbank Industry average

Capitalisation CET1 capital ratio, %

Efficient use of resources enables investment in customer offerings

Swedbank's priorities are focused on long-term competitiveness and are continuously adapted to a changing business environment. We prioritise the areas we feel contribute the most to sustainable value creation.

Improve customer value

Invest in our digital offering
Stay competitive through simpler, clearer offerings
Strengthen advisory services

Improving customer value will always be one of our highest priorities. In an environment where transparency is increasing and where it is easy to switch banking providers, we are constantly being compared. We have to stay open to and see opportunities for improvement. We will meet the competition through the availability and stability of our systems and with products and services that are easy to understand and use. Investments in the development of digital services will increase customer value. This is true of those we serve digitally, but also those we meet in physical locations, where our employees can concentrate more on value-added advice. By integrating sustainability into more business decisions and products, we build long-term customer relationships, strengthen confidence in Swedbank and stay competitive. In Sweden we want public opinion of, and confidence in, Swedbank to be better. Greater transparency is an important parameter to enable customers to compare and understand, and most importantly to choose the right products and services based on their needs and requirements. As a whole, this will help us to be more competitive and maintain long-term profitability, but most importantly to increase customer value and satisfaction.

Increase efficiency

Increase internal coordination
Simplify internal processes and increase automation
Centralise procurement and reallocate services internally

Banking products and services are becoming more standardised and similar. Our customers require continuous accessibility, easy-to-use products and services, and competitive prices. At the same time niche players and digital challengers, with no outdated infrastructure, are offering attractive, competitive

products. Increased efficiency is crucial to meet the competition and maintain profitability and market share over time. Efficiency improvements also leave us more room to invest in improving our offerings and processes. Cost consciousness is an important part of our corporate culture. Efficiency work includes coordination of IT infrastructure, the product and service range, governance and monitoring, but also centralised procurement. This is in addition to nearshoring, which involves assessing each business in our four home markets in terms of expenses, competence and customer value.

Strengthen employee engagement

Strengthen corporate culture
Increase investment in our employees
Develop our leaders

Our employees' service mindedness, commitment and competence make a difference for customers and contribute to customer value. Because of the many changes happening in our business environment and the speed this requires to adapt and innovate, our employees' commitment and willingness to change are essential if we are to reach our goals. To attract the right talents and retain and develop those we already have, we have to do more. After the turbulent time we recently experienced and the rapid changes we had gone through, the level of engagement in the bank has declined. Because of this, we are now investing more in our employees and creating a corporate culture that engages and that we can all be proud of.

An important element in our success is the ability of our managers to explain the changes we have to go through and to inspire and encourage engagement and shared goals. Our leaders have to be able to see the potential in their employees and promote their development, even outside their own department. Increased internal mobility is an important tool for redistributing resources, but also to create opportunities for skills development and the exchang of experience.

Engagement rubs off on customers and colleagues

Employee value and strong performance are created through opportunities for development, professional leaders and an inspiring work environment. The emphasis is also on creating a work-life balance, so that our employees thrive at work.

Engaged, competent employees are the key to building valueadded relationships and developing services that meet our customers' needs. To help our employees address future challenges, we have focused on three key areas:

Skills development lays the groundwork for competitive offerings
High engagement for increased customer satisfaction and new business
Professional leaders develop employees and our customer relations

Skills development to meet future customer needs

Digitisation is revolutionising our market. The rapid pace of change is creating greater expectations in terms of availability and changing the skills needed of our employees. Being able to quickly adapt to change is crucial in order to remain an attractive bank and employer with stable profitability.

We believe that the biggest potential for developing skills is through daily work. Employees who continuously develop, with skills and experience from different parts of the bank, can better understand our customers and their needs. This lays the groundwork for competitive offerings. We therefore encourage internal mobility. For our employees, it provides more career opportunities in a large, exciting job market at the same time that it makes them more marketable both internally and externally. For Swedbank, internal mobility is a resource-efficient way to utilise our employees' competence and potential. We primarily invest in our current employees and recruit externally only for specialists we cannot find in-house. In 2015 the number of positions filled internally rose, while the number of external hirings fell by over 75 per cent. This enabled us to reduce the number of employees in Sweden by 600–800 during the year, a goal originally set for 2017.

Diversity and gender equality are important to skills development, work environments and the corporate culture. By embracing differences, we create a dynamic workplace with greater opportunity for skills transfer and understanding others, while encouraging a creative dialogue between employees and with customers. The long-term goal is that staffing will reflect our home markets in terms of gender, age and ethnic background. We are convinced this will generate more business through a bigger network and a better understanding of each individual's specific needs.

Engaged, proud employees increase customer value

Engagement and pride among our employees makes us more competitive. It has a positive effect on the business and contributes to an inspiring work environment. Strong employee engagement is therefore one of the Group's overarching goals.

To support this, the bank has introduced Engagement Pulse, a brief, quarterly questionnaire to identify any underlying causes that may be preventing a high level of engagement and a positive work environment. As part of the survey we monitor the likelihood that employees would recommend the bank as a place to work. Questionnaires during the year showed that we have a high level of engagement, but that the likelihood of recommending the bank has declined. We see this as an early indicator, which if left unchecked could affect employee engagement. Every team, at every level of the bank, is therefore working actively through an open, continuous dialogue on what we can do better to make everyone feel engaged and proud of the bank.

Professional leaders develop employees

Our goal is to have the industry's best managers, who strengthen the business by developing and helping their employees to meet our challenges and aligning the role each of them plays with the bank's overall purpose and goals. Our leaders foster a culture based on the values of openness, simplicity and caring, where feedback is a key to spur on higher performance and long-term profitability. Other important tasks are to ensure that employees are able to balance work with their private lives and to encourage and create opportunities for internal mobility. The bank has clearly defined leadership criteria, like being visible and working to benefit the bank as a whole. On an annual basis we track how well our leaders meet these criteria. In general, they perform well, but could be clearer and more visible.

Focus areas for 2016

To meet future customer needs, we will continue to emphasise skills development, create opportunities for internal mobility and promote diversity and gender equality. We will invest in employee development, simplify internal communication and conduct quarterly follow-ups with the goal of strengthening employee engagement. Our managers will adopt a values-based approach to leadership, where coaching is critical to successfully and effectively lead employees through change and development.

Sustainable business creates social value

As a major player in the financial market, we can play a part in financing future sustainable innovations. At the same time, by factoring sustainability risks into our decisions, we can reduce social and ecological risks and contribute to a more sustainable business community.

In a world with population growth, finite resources and climate change, the business community is under growing pressure to contribute to responsible growth.

Sustainability integrated in our business

As a financial player, we have the opportunity to promote and support long-term development by helping to finance sustainable innovations and services. We also have an important role to play by factoring sustainability risks into our financing and investment decisions. We therefore integrate key sustainability aspects into our daily work. For more information, see also page 17.

To us, responsible lending means promoting a sound financial situation and taking responsibility for reducing indirect impact on people and the environment that can arise through our customers' businesses. Sustainability risks can rarely be separated from financial risks, so we conduct a sustainability analysis in connection with all business loan applications over SEK 5m. In the analysis we discuss general sustainability risks with the customer based on a risk assessment model with questions on human rights, the environment and climate change, taxes and corruption.

If the company is considered to have significant sustainability risks, and/or the amount applied for is too high for the employee in charge to grant, the case is forwarded to a credit committee for final decision.

Swedbank's Sustainability and Ethics Council handles cases from the entire Group and gives recommendations on issues involving sustainability and ethics. In this way, every business area, by escalating cases to the Council, can receive support on issues involving the environment, business ethics, human rights and taxes.

As Sweden's largest fund manager, we are in a position to influence the companies we invest in. We have chosen to advocate for sustainability and corporate governance issues on behalf of our investors. We invest in a large number of companies in Sweden and abroad. As part of our financial analysis, we identify their sustainability risks and opportunities for improvement. Certain companies are excluded for sustainability reasons, but our main principle is to remain an owner and try to have an influence.

Climate change affects our product and service development. Our Ethica sustainability funds do not invest in companies that produce coal, oil and gas. Moreover, we have signed the Montreal Carbon Pledge and committed to disclose the carbon footprint of our equity funds. This provides a level of carbon footprint transparency on the companies that our funds invest in. Green bonds, which are earmarked for sustainable development, have grown strongly in Sweden and internationally in recent years. We work with several independent institutions

specialised in analysing and classifying green bonds. Through green bonds we have been issuing institute for financing international environmental projects with an aggregate value of nearly SEK 3.2bn in 2015.

Swedbank has zero tolerance for financial services that support nuclear weapons. Swedbank has adopted a Group-level policy on defence materiel that prohibits investment in and financing of nuclear weapons and applies to all markets where we operate. In addition, Swedbank never finances or facilitates exports of materiel or services to any country subject to the EU's or UN's sanctions.

Anti-corruption work is an important part of our commitment to financial stability and a sound financial market. Given the nature of our business, we face a number of corruption risks, for which we maintain a Group-wide anti-corruption programme. All employees receive mandatory training to learn to recognise transaction patterns, behaviours and situations that constitute or are associated with money laundering. Suspicions of bribes or corruption are reported directly to the compliance department through a whistleblower system that guarantees anonymity. Further more, Swedbank has signed the UN Global Compact, which includes a commitment to participate in the fight against corruption.

The financial industry plays a central role in stopping payments for child pornography. To prevent financial systems from being exploited for such purposes, Swedbank has been collaborating with other banks since 2009 in the Financial Coalition Against Child Pornography.

Internal sustainability work

Our goal, based on the 2010 emissions level, is to reduce our greenhouse gas emissions with 60 per cent by 2018. The main ways we are trying to achieve this are to increase the amount of renewable energy we purchase, reduce our air travel, cash handling and security transports, and promote digitisation through projects that focus on electronic storage and digital distribution of information.

Our new head office is built with the very latest environmental technology and has received the Sweden Green Building Council's highest certification. Sedum has been planted on the roof to soak up rainwater and clean the air of pollutants. By using geothermal heating and cooling, the building is extremely energy efficient. Some of the surplus heat generated by our computers is also utilised for heating purposes. To further reduce energy consumption, automatic lighting and ventilation, which turn on when movement is detected, are used in the building.

As far back as 2003 Swedbank in Sweden became the first publicly listed bank in the Nordic region to receive international environmental management certification according to the ISO 14001:2004 standard.

Local commitment to integration and growth

Swedbank has a tradition of educating the public. We have 200 employees who lecture high school students on personal finances. In Estonia we were a partner in starting the portal "Back to School", which encourages Estonians to donate their time and knowledge as guest lecturers in schools for a period of one year. Over 1 200 lectures have been held for 39 000 students throughout the country. Swedbank also actively participates in similar projects to promote education in Latvia and Lithuania.

Together with the Swedish Public Employment Service and the savings banks, we are working on a project called Young Jobs to help the unemployed break into the job market. In collaboration with our business network in Sweden we have created over 10 000 trainee positions for young people aged 18–24, which have given them valuable experience, references and internal training. Around 40 per cent of the over 1 000 young people who have completed a three-month traineeship within Swedbank and the savings banks have been offered some form of employment.

The "A Job at Last" initiative together with the Swedish Public Employment Service and the savings banks has provided over 150 people with a six-month traineeship at the bank, including validating their qualifications to match them with the right positions. The collaboration was expanded last autumn when several leading industrial companies adopted the "A Job at Last" model.

During the year Swedbank committed to helping those who have fled to Sweden. An important aspect for those persons is access to a bank account and banking services. Today a majority of those who receive introduction benefits are in our customer base. We therefore worked during the year with industry colleagues and authorities to make it easier for new arrivals to obtain information. Among the challenges are a lack of ID papers and laws that require us to know our customers. Collaboration is therefore in place between the authorities and local branches to resolve these issues. We provide information on banking services in 20 languages at swedbank.se and at our branches. Many of those who come to Sweden have experience running businesses, and we as a bank can play a crucial role in financing good business ideas.

Focus areas for 2016–2018

For us, sustainability is about building a sustainable banking business by factoring economic, environmental and social concerns into our business decisions. Our focus areas going forward are to reduce our direct CO2 emissions by 60 per cent compared with the emissions level in 2010, reduce our indirect climate impacts, support our customers in making sustainable choices, and continue to integrate sustainability in our business decisions.

Distribution of financial value creation 2015

Customers and employees generate earnings

Together with other banks, Swedbank plays an important role in society to create growth and prosperity by ensuring an efficient flow of capital, goods and services. Through valuecreating banking services, companies can grow, jobs are created and housing is financed.

Save/invest

Savings are converted to investments and provide an opportunity to spread risks between companies, sectors and time horizons. Savings are used to finance part of the bank's lending and are therefore an important part of Swedbank's core business.

18% higher premium income in Baltic insurance business
SEK 738bn in fund and insurance assets under management
Private and corporate deposits of SEK 744bn

Finance

Efficient funding and competitive lending to businesses and private customers lay the groundwork for attractive investment opportunities and secure housing. Lending to private customers and companies is Swedbank's core business.

Mortgage lending of SEK 733bn
Bond issues in SEK, NOK and EUR totalling SEK 147bn
Corporate lending of SEK502bn

Pay

Effective, technologically advanced payment solutions with a high level of security make day-to-day banking easier for many.

The banks have over 3.8 million Swish users among private customers and around 49 000 among corporate customers
SEK 559bn in acquired transactions
85 per cent of retail payments in Sweden and up to 50 per cent of those in the Baltic countries are made conveniently by card. 1 450 million card purchases were made by Swedbank card in 2015

Stability creates value for owners and society

Low lending risk thanks to a broad and diversified customer base, together with market leading cost efficiency, generate stable profitability and a competitive return on our owners' capital. Moreover, Swedbank is one of the best capitalised banks in Europe.

Simplified income statement

+ Our income	SEKm
Net interest income (interest income – interest expenses) Lending generates interest income. Interest expenses are incurred for deposits (savings) and the bank's capital market funding.	22 993
Net commission income Fees charged for services such as cards and payments, asset management, loan commissions, equity trading, insurance and corporate finance.	11 199
Net gains and losses on financial transactions Result of the market valuation of lending, funding, currencies and securities held by the bank. Arises through trading in financial instruments by customers and the bank itself and as a result of valuation effects in the accounts, primarily from interest and exchange rate movements.	571
Other income Share of result from associated companies, services sold to cooperating savings banks, net insurance, capital gains.	2 861
Total income	37 624

– Our expenses	SEKm
Staff costs To develop the best services and give professional advice, we have to be	9 395

a relatively personnel-intensive business dependent on attracting and developing people with the right skills as customer needs change.

Other expenses 6 938

An effective customer offering generates development, production and distribution expenses. IT expenses are incurred for development, systems and licences. Production expenses are to develop new and existing products and maintain product platforms. Distribution expenses through the retail network are significantly higher than when transactions are executed through digital channels.

Credit impairments 594

Credit impairments are natural for a bank and arise, for example, when a borrower cannot pay the interest or principal on their loan. All lending carries a risk. Assessing, monitoring and working proactively with credit risks are critical to minimise impairments.

Tax 4 625 Swedbank is one of the biggest corporate taxpayers in Sweden. Together with the country's other banks, we account for about 10 per cent of total corporate income tax collected.

Total expenses including impairments	21 878

= Our profit attributable to shareholders	15 727

Simplified balance sheet

Our assets	SEKbn
Cash and bonds Swedbank maintains a liquidity buffer in the form of cash and liquid securities to meet its commitments even if access to financing is closed for an extended period.	351
Loans to the public About half of Swedbank's lending to the public consists of mortgages in Sweden. Swedbank is one of the biggest lenders to private and corporate customers in its four home markets.	1 414
Loans to credit institutions As part of the financial system, Swedbank also offers lending and deposits to other banks and credit institutions.	86
Derivatives To protect the bank and its customers against unwanted movements in interest or exchange rates, for example, the bank uses and offers various types of derivatives, mainly swaps, which are reported on both the asset and liability sides of the balance sheet.	86
Total assets	2 149

Our liabilities and equity	SEKbn
Deposits Customer deposits finance a significant share of lending. Swedbank has a large, stable base of deposits in its home markets.	748
Capital market funding Lending not financed with deposits is funded through the capital markets. Swedbank's market financing is almost exclusively long-term and mainly consists of covered bonds.	827
Derivatives See comment under assets above.	69
Equity The rules on how much capital a bank must maintain have been tightened to ensure that it can continue to operate even under unfavourable conditions.	123
Total liabilities & equity	2 149
Earnings distribution
75 per cent of profit is distributed as a dividend to shareholders, who demand a competitive return on the capital they invest. The remaining 25 per cent is allocated to an equity buffer in the balance sheet to handle economic slowdowns and to finance future investments to increase customer value and create opportunities for growth.

Dividend Equity

Board of Directors' Report Financial analysis

Stable result in volatile market

Our focus on improving customer value, increasing efficiency and integrating Sparbanken Öresund produced results during the year. Despite a challenging operating environment, we exhibited stability in our earnings, while continuing to build capital, positioning us well to take on a world in change.

The result for the year decreased by 4 per cent to SEK 15 727m (16 447), mainly due to lower net gains and losses on financial items at fair value and a one-off tax expense in the second quarter 2015. Income and expenses both decreased. Changes in exchange rates raised profit by SEK 16m, mainly because the Swedish krona depreciated on average against the euro during the year. The return on equity fell to 13.5 per cent (15.0), affected equally by a lower result and a larger capital base. The cost/income ratio improved to 0.43 (0.45). Profit before impairments decreased by 2 per cent to SEK 21 291m (21 702). Profit rose in Swedish Banking and Baltic Banking. Profit in LC&I and Group Treasury within Group Functions & Other fell.

Income decreased by 4 per cent to SEK 37 624m (39 304), mainly in Group Treasury within Group Functions & Other due to lower net gains and losses on financial items at fair value. Income increased in Baltic Banking and was stable in Swedish Banking. In 2014 Swedish Banking had one-off income mainly related to the acquisition of Sparbanken Öresund. Income decreased in LC&I. Net interest income and commission income were stable. Net gains and losses on financial items at fair value and other income fell. Changes in exchange rates increased income by SEK 135m.

Profit before impairments by business segment excl. FX effects

SEKm	2015 Full-year	2014 Full-year	∆ SEKm
Swedish Banking	12 564	11 933	631
Baltic Banking	3 806	3 693	113
Large Corporates & Institutions	4 141	4 337	–196
Group Functions & Other	780	1 780	–1 000
Total excl. FX effects	21 291	21 743	–452
FX effects		–41	41
Total	21 291	21 702	–411

Net interest income positively affected by higher lending volumes

Net interest income rose by 2 per cent to SEK 22 993m (22 642). Group Treasury's net interest income improved, benefiting from falling market interest rates. Net interest income increased somewhat within Swedish Banking. Lower market interest rates adversely affected deposit margins, while increased lending volumes and higher mortgage margins contributed positively. Net interest income increased within Baltic Banking. Net interest income decreased within LC&I due to lower deposit margins. Higher stability fund fees reduced net interest income by SEK 64m. Changes in exchange rates raised net interest income by SEK 81m.

Profit before impairments decreased by 2 per cent to SEK 21.3bn. The decrease was mainly due to lower net gains and losses on financial items at fair value.

Profit before impairments, SEKm Profit for the year attributable to the shareholders, SEKm

Swedbanks' profit from continuing operations amounted to SEK 15.7bn, a decrease of 6 per cent.

Net interest income, SEKm

Net interest income increased by 2 per cent. Increased volumes and improved margins on mortgage lending contributed positively, while deposit margins were pressured by falling market interest rates.

Increased income from cards and insurance

Net commission income was stable at SEK 11 199m (11 204). Insurance related income and card and lending commissions contributed positively, while income from corporate finance and payment commissions fell, the latter due to Lithuania's euro transition and a positive one-off item of SEK 35m in 2014. Asset management commissions were stable. Higher average assets under management due to higher share prices during the year contributed positively, while price cuts on fund fees had a negative effect.

Negative revaluations effects due to repurchases

Net gains and losses on financial items at fair value fell to SEK 571m (1 986). The decrease is mainly due to a lower result in Group Treasury within Group Functions & Other caused by negative valuation effects from covered bond repurchases and increased credit spreads. Net gains and losses on financial items within LC&I were stable.

The sale of the property portfolio continues

Other income decreased by 18 per cent to SEK 2 861m (3 472). Income decreased in Swedish Banking and Group Functions & Other, but increased in other business segments. Swedish Banking recognised one-off income of SEK 461m in 2014 related to the acquisition of Sparbanken Öresund. Within Group Functions & Other income from repossessed assets decreased as the property portfolio was sold off.

Lower costs on the back of increased efficiency

Expenses decreased by 7 per cent to SEK 16 333m (17 602). The biggest decrease was in Swedish Banking. The decrease was due to one-off expenses of SEK 615m that were recognised in connection with the acquisition of Sparbanken Öresund in 2014, but also due to efficiencies. Expenses decreased in Group Functions & Other mainly as a result of efficiency improvements, but also because of one-off expenses in 2014 related to the move of the head office. Expenses decreased within Baltic Banking and LC&I. Changes in exchange rates increased expenses by SEK 94m. The number of full-time employees decreased. The biggest decrease was in Swedish Banking due to increased efficiencies and digitised processes, as well as the integration of Sparbanken Öresund. The number of employees also decreased within Baltic Banking and Group Products within Group Functions & Other. The number of full-time employees rose somewhat in LC&I. 1.00 K/I-tal27

Impairments for IT weighed on yearly result

Impairment of intangible assets increased to SEK 254m (1) and consisted of an IT system writedown within Group Products and the writedown of a previously acquired asset management assignment. Impairment of tangible assets decreased to SEK 72m (256) as a result of a smaller property portfolio.

Net commission income, SEKm Expenses, SEKm Loans to the public, SEKbn

Net commission income was stable during the year. Higher average assets under management due to higher share prices during the year contributed positively, while price cuts on fund fees had a negative effect.

Other expenses Cost/income ratio

Total expenses fell by 7 per cent to SEK 16.3bn due to efficiency improvements and oneoff expenses related to the acquisition of Sparbanken Öresund in 2014.

Lending increased by 3 per cent to SEK 1 371bn. Lending to mortgage customers in Sweden contributed the most.

Företag

Board of Directors' Report Financial analysis

Asset quality remained good

Credit impairments increased to SEK 594m (419) mainly as a result of a large provision for a single commitment within Swedish Banking in the fourth quarter. LC&I reported lower credit impairments, while Baltic Banking reported additional recoveries.

Higher tax due to one-offs

The tax expense amounted to SEK 4 625m (4 301), corresponding to an effective tax rate of 22.7 per cent (20.5). During the second quarter the effective tax rate was affected by one-off items in the Estonian and US operations. During the fourth quarter the effective tax rate was affected by a pending reduction in the corporate tax rate in Norway. Excluding these items, the effective tax rate would have been 20.6 per cent. As previously estimated, the effective tax rate is expected to be 19–21 per cent in the medium term. The result from discontinued operations amounted to SEK –6m (–262). A reclassification of SEK –223m was recognised in 2014 to wind down the Russian operations.

Increased capital

The Common Equity Tier 1 capital ratio strengthened during the year to 24.1 per cent (21.2). The increase was the result of solid earnings generation and a reduced risk exposure amount (REA).

The dividend proposed is SEK 10.70

The dividend proposed by the Board of Directors is SEK 10.70 (11.35) per share for the financial year 2015. This corresponds to a dividend ratio of 75 per cent.

Other events

Swedbank Franchise's previous acquisition of Svensk Fastighetsförmedling from DnB Bank was unwound in March, after which most of the franchisees in Svensk Fastighetsförmedling acquired the company. At the same time Swedbank AB signed a cooperation agreement with Svensk Fastighetsförmedling. The agreement broadens Swedbank's network of real estate brokers. During the first quarter Swedbank divested the subsidiary Juristbyrån AB to Familjens jurist AB. Through a cooperation agreement with Familjens jurist, Swedbank will continue to offer advisory services in private and family law, now with a wider offering and a broader geographic reach. The acquisition is approved by the Swedish Competition Authority (Konkurrensverket).

In December 2014 the Swedish Shareholders' Association (Aktiespararna) submitted a claim to the National Board for Consumer Disputes (ARN) against Swedbank Robur. Aktiespararna claimed that two funds, Allemansfond Komplett and Kapitalinvest, were not actively managed for an extended period and that Swedbank Robur therefore should repay a portion of the management fee. Swedbank countered that it has been an active manager and has been clear in explaining its management approach and the fees it charged. On 1 July ARN rejected the

Change in Common Equity Tier 1 capital, 2014, Swedbank consolidated situation, SEKbn

Increase Decrease

Credit impairment ratio, %

claim, stating that the dispute is not suitable for ARN to try. The funds have previously been investigated by the Swedish Financial Supervisory Authority and the Swedish Consumer Agency, which dropped the cases.

In September Swedbank agreed to acquire Danske Bank's retail banking business in Lithuania and Latvia. The agreement, which requires the approval of regulatory authorities in Lithuania and Latvia, strengthens Swedbank's presence in the Baltic countries, mainly in Lithuania.

On 1 October Sparbanken Öresund AB and Swedbank AB (publ) were merged. As a result, Swedbank took over Sparbanken Öresund AB's role as issuer of outstanding bond and subordinated loans.

On 14 December the head of the LC&I business segment, Magnus Gagner Geeber, left Swedbank. Björn Meltzer was appointed acting head of LC&I. Recruitment of a new head of the business segment has begun.

On 2 November Visa Inc. announced its intention to acquire Visa Europe Limited, conditional on regulatory approval, which is expected at the earliest in the second quarter of 2016. Swedbank is a member of Visa Europe and part-owner of Visa Sweden Ekonomisk Förening. Visa Sweden Ekonomisk Förening in turn is a group member of Visa Europe. Through its membership, Swedbank would receive a portion of the proceeds from the anticipated acquisition, consisting of cash and preference shares in Visa Inc. In addition, Swedbank could receive an additional purchase price consideration. Swedbank currently estimates its income at EUR 140m – EUR 180m, based on a preliminary calculation of the cash proceeds and preference shares. There is still uncertainty how high the amount could eventually be depending on, among other factors, allocation calculations and the value of the preference shares. Moreover, Swedbank's shares in Visa Sweden Ekonomisk Förening are not transferable. Due to the many uncertainties surrounding the transaction, the limits associated with the holding and the amount it could receive, Swedbank's right to a portion of the proceeds from the transaction was not recognised as a receivable or an increase in the value of the shares in Visa Sweden Ekonomisk Förening in 2015. Provided that regulatory approval is received, Swedbank will post a positive one-off effect in 2016 as a result of the acquisition.

On 21 December the Norwegian media group Schibsted announced that it was acquiring the housing site Hemnet. An agreement was signed by all the owners, whereby Schibsted will buy 80 per cent of Hemnet, based on a company value of SEK 1.5bn. Fastighetsbyrån currently owns 34 per cent of the shares in Hemnet and through an option will acquire an additional 8 per cent of the shares. Fastighetsbyrån will sell all these shares. For Fastighetsbyrån's owner, Swedbank, the sale will result in a capital gain of about SEK 500m in 2016, after the

acquisition has been approved by the Swedish Competition Authority.

Events after December 31 2015

On February 9 2016, the Board of Directors of Swedbank and Michael Wolf have reached an agreement that Mr Wolf will step down as President and CEO. The change was made on the Board's initiative. Swedbank's Board has appointed Birgitte Bonnesen as Acting CEO. She will also remain in her position as Head of Swedish Banking. A recruitment process has been initiative and a new CEO will be presented as soon as possible. Under the terms of his contract Michael Wolf will receive 75 per cent of his salary during the 12-month notice period and a severance payment of an additional 75 per cent of his salary for 12 months. Michaels Wolf's current annual salary is SEK 13m. A deduction against salary and severance pay is made for income earned from new employment.

On February 12 2016, Swedbank confirmed that the bank has submitted a report to the Swedish Financial Supervisory Authority under the reporting obligation rules in the Swedish Market Abuse Act. The reason for this is that the bank has identified transactions which "may be assumed" to constitute a criminal offence. The person who has carried out the transactions is the bank's former CEO Michael Wolf. The report has been forwarded by the Financial Supervisory Authority to the Swedish Economic Crime Authority, which is the authority that has decided to initiate a preliminary investigation. The bank will fully cooperate with the authorities concerned. The reporting obligation rules include a prohibition on disclosure, meaning that the bank cannot disclose to the individual in question or any third party that reporting has taken place. The bank has concluded, however, that the confirmation now made by the bank, due to statements in media, does not harm the investigation and the confirmation has been preceded by contact with the authorities concerned.

On February 15 2016, Swedbank has closed an agreement with Pembroke Real Estate on a lease of 800 workplaces on Sveavägen 14 in central Stockholm for LC&I. The move is planned for Q1 2017 and means that the planned move of employees from Essingen to the headquarters in Sundbyberg takes a step forward. The signing follows the decision taken by the General Executive Committee (GEC) to move employees within IT currently working from offices on Stora Essingen to the headquarters in Sundbyberg as their current lease expires. To create room at the headquarters and moving IT closer to the business operations, the larger part of Large Corporates & Institutions (LC&I) will move in to new premises in the centre of Stockholm.

Well-positioned for the future

Many new customers gained access during the year to Swedbank's broad product range and popular Mobile and Internet Bank. By investing more in interactions with customers, we are shaping the bank of the future.

Digitisation increases the need for availability

Low interest rates and demographic changes were critical factors in 2015. Swedish Banking was mainly affected, however, by rapid digitisation, which has led to changing customer needs, greater demands on availability and cost pressure.

At the same time this development offers economies of scale and the possibility of better targeted offerings through the analysis of customer data. Digitisation also allows us to interact with customers more often. Considerably fewer customers – individuals and businesses – visit a branch today, instead preferring to bank digitally. The further digitisation progresses in various industries, the higher the demands will be on digital banking. This is positive for us, since it means that we are constantly move forward. Our goal is to make it easy to be a Swedbank customer. This is why we are modifying processes, making sure that we have the right competencies in place and working the right way when meeting customers in various channels. Branches will continue to play an important role, including as a branding vehicle in the local community, but also to provide customers with advice. This is especially true of our corporate business, where the requirements are usually more complex.

"Being a bank for everyone has never been more right than now. Our large, broad customer base uniquely positions us in the paradigm shift we are in and makes it easier to meet the needs of many customers at the same time."

Birgitte Bonnesen, Acting CEO and Head of Swedish Banking

Stronger offering for private and corporate customers To strengthen our offering for private and corporate customers, we have established customer committees. Their purpose is to draw attention to changes in customers' financial needs and ensure that development potential is being tapped. Expectations from customers are driving continuous development and improvements to our digital offering. For example, we have improved the Mobile Bank for corporate customers, who can now obtain information on incoming bank giro payments and access IBAN and BIC (international identification code) numbers, making it easier to manage foreign payments. For private customers, we have released a beta version of our new digital bank, to which we will be adding new functions in 2016. Digitisation at the same time gives us new opportunities to analyse customer preferences and needs, which makes it easier to create relevant and individualised offerings.

The number of Mobile Bank users increased to 2.5 million, or by 24 per cent, in 2015. Customer satisfaction with our digital channels remains high, and Swedbank was ranked as the world's best bank in terms of customer service in social media in 2015, according to Social Bankers.

The growing debt burden among Swedish households was again an issue in 2015. To help our customers stay financially sound, we introduced stricter lending requirements and tightened amortisation guidelines during the year. Pricing was reviewed as well to make sure it is risk adjusted and based on each customer's personal situation. In consumer finance we try to help customers reduce interest expenses by consolidating their loans in one place, which also gives them greater control over their finances. A key reason for the increased indebtedness is the housing shortage in many growing areas. In these locations we have brought together municipal leaders, construction and real estate companies, academia and other local businesses to roundtable discussions on what can be done together to increase the housing stock and expand infrastructure.

During the year Swedbank reduced its fund fees to create a more attractive offering, partly in reaction to the low interest rate environment. Customers' risk appetite dropped during the year, and our advice under the circumstances was more focused on savings with lower risk. One result has been increased sales of structured products, where we are the market leader in SPAX equity-linked bonds in Sweden.

24% Increase in number of Mobile Bank users in 2015

Targeted measures to automate processes

A challenge for our retail business is that customers often have more than one bank. This is currently true of nearly half of all Swedes. Major resources are therefore being devoted to further improving our offering. More functions and services are being launched digitally, and we offer attractive pricing that is among the best in every area.

Increased competition from new digital players also requires a greater focus on cost efficiency in order to maintain competitive offerings.

We are automating processes and creating economies of scale as well. One example is the work we have begun to digitalise the mortgage lending process, which will initially reduce the manual labour involved in mortgage conversions, at the same time that customers will notice that it is easier and more convenient to lock in mortgages using our mobile app or by computer.

Successful integration of Sparbanken Öresund

After its acquisition in 2014, the integration of Sparbanken Öresund with our other operations has been a key to building a stronger position in southern Sweden, an important growth region. Last autumn 100 000 customers were transferred from Sparbanken Öresund to Swedbank's system and another 100 000 to partly owned Sparbanken Skåne. Our new customers now have access to a broader product range, a better Mobile and Internet Bank, and increased availability thanks to added customer support and more generous opening hours.

Financial overview

The result improved to SEK 9 521m, compared with SEK 9 280m in 2014. Income was pressured by lower deposit margins and because 2014 included one-off income related to the acquisition of Sparbanken Öresund. Expenses fell due to lower staff costs and because 2014 included large one-off items.

Net interest income increased by 1 per cent compared with 2014. Higher lending volumes and increased mortgage margins on both new lending and the portfolio as a whole increased net interest income. This was offset by lower market interest rates, which adversely affected deposit margins. In total, household mortgage volumes increased by 6 per cent, from SEK 640bn to SEK 675bn during the year. Corporate lending rose by 1 per cent or SEK 3bn during the year. Household deposit volumes increased by SEK 24bn from the beginning of the year. Corporate deposits within Swedish Banking increased by SEK 17bn.

Net commission income rose by 3 per cent in 2015 compared with the same period in 2014. The increase was mainly due to higher income from equity trading and structured products as well as card and payment commissions resulting from higher volumes. Asset management commissions decreased, mainly affected by price cuts on fund fees.

The share of associates' profit decreased compared with the previous year, mainly due to one-off income in 2014 of SEK 230m related to Entercard.

Other income was lower than in the previous year due to one-off income in connection with the acquisition of Sparbanken Öresund.

Expenses decreased in 2015 mainly due to lower staff costs and one-off items related to the acquisition of Sparbanken Öresund, which contributed to higher expenses in 2014. The increased focus on cost efficiencies also reduced expenses, mainly related to staff.

Credit impairments remained low but increased compared with 2014 and amounted to SEK 482m, corresponding to a credit impairment ratio of 0.05 per cent. The share of impaired loans was 0.17 per cent (0.15) as of 31 December.

Focus areas 2016

Efforts to increase customer value, employee engagement and efficiency will continue in 2016. The focus will mainly be on improvements in customer meetings and services for both private and corporate customers. We will continue to incorporate the same range of services in all our channels, so that customers can choose wherever they want to bank digitally, by phone or at a branch. To support this, we are improving access to the Telephone Bank through extended hours. The goal to be a fullservice bank for private customers and companies remains unchanged. In 2016 we will further increase transparency in our pricing and improve our offerings in insurance, consumer finance, savings and pensions.

Total income 2015 by source of income

Our Baltic customers demand availability and modern banking services

Led by a comprehensive digital offering, Swedbank has built a strong position in the Baltic countries. To be even more competitive, we are now improving our customer analysis capabilities through smart, efficient data management.

Positive economic trends

The Baltic economies continued to grow in 2015 at the same time that customers strengthened their financial situation. Exporters have successfully found new markets in Europe and their economic ties to Russia have loosened.

Demand for retail banking services grew in 2015 thanks to an improved job market and low inflation. Despite this, income levels are still lower in the region than the rest of Europe and the market for banking products has a lower level of maturity.

Among other things, most savings today are in savings accounts, while card usage and demand for insurance products are on the rise. This creates good opportunities to further develop our business and our offering of modern banking services.

The negative interest rate environment creates challenges for our business model, however, putting pressure on earnings. In addition, new regulations require further IT investments and create greater complexity. Increased regulatory requirements also raise the costs of traditional banking services, while companies from outside financial services are becoming more active in some of our product areas.

"In the Baltic region we have been successful in analysing customer data, so that we can create better offerings and be more proactive in the dialogue with customers."

Birgitte Bonnesesn, Acting CEO and Head of Swedish Banking

Increased customer value

As a result of digitisation, branches are being used more for advanced advice, and basic banking transactions are being handled more conveniently through digital solutions in the Mobile and Internet Bank. In 2015, for example, the number of Mobile Bank logins rose by 54 per cent and around 40 per cent of new sales to private customers were digital.

We are therefore transforming our retail network and moving to locations with higher customer traffic, at the same time that a new type of advisory office is being developed. To meet customers' needs, we have strengthened our presence in rural areas. We also offer easily accessible, modern solutions for the Mobile Bank, internet Bank and our advisory centres, including advice by phone and chat. Customers now can get small loans with preset

limits directly through the Mobile Bank, and corporate customers are able to use digital signatures. We have begun developing a solution for mobile identification and signatures as well.

We are applying a structured approach to analysing and utilising customer data in order to provide each customer with the best relevant offer. In addition, customer records are analysed to see when and why they contact the bank during various periods and stages of life.

A new service model for small businesses, with advisory centres instead of physical meetings as the primary means of contact, allows us to reach more customers than before while also improving availability. We can therefore proactively assist twice as many customers at the same time that product sales have increased. Moreover, access to financing for small companies has improved through more efficient decision-making processes.

Because customers increasingly use our digital services , they require a different skill set from the bank's employees. Many, for example, need support when they begin using the digital self-service tools at our branches. We are therefore broadening employees' digital and teaching skills and learning them how to provide advice in channels other than the traditional branch. Advice is often more complex when customers expect both their personal and business banking needs to be met at the same time.

In an annual survey of "Most Loved Brands", Swedbank ranked fourth in the Baltic countries. We received the highest score among financial institutions and maintained the same strong position as last year.

Increased efficiency

We work continuously to improve efficiency. The priority during the year was to increase sales with the same amount of resources. Sales of our core products such as mortgages, credit cards, insurance and consumer loans rose by 24 per cent at the same time that teller transactions in branches fell by 32 per cent. Interaction with customers increased despite a decrease in branch visits of 21 per cent, as customers transitioned to a greater degree to our digital solutions. To increase efficiency, we are also replacing our ATMs with new , more efficient models that accept both deposits and withdrawals.

ranked 4th in a survey of "Most

In 2015 we implemented an organisational change to further improve coordination and cooperation between the three Baltic countries. The aim is to strengthen oversight and monitoring by creating two distinct segments for private and corporate customers as well as a separate organisation to manage our various meeting places (digital solutions, branches and advisory centres), which serve both private customers and businesses.

"The acquisition further strengthens Swedbank's position as the largest universal bank in the Baltic countries."

Priit Perens, Head of Baltic Banking

Stronger market position through acquisition of Danske Bank's retail banking business

During the year Swedbank agreed to acquire Danske Bank's retail banking business in Lithuania and Latvia. The acquisition comprises around 120 000 private customers in Lithuania and 7 000 in Latvia, who will have access to Swedbank's broad-based offering. The deal requires the approval of regulatory authorities in Lithuania and Latvia.

Financial overview

Profit amounted to SEK 2 460m, a decrease of 23 per cent compared with 2014. The decline is due to a higher tax expense caused by an extra dividend from the Estonian sub-group in the second quarter.

Net interest income in local currency decreased by 1 per cent during the year. Lower market interest rates put pressure on deposit margins. Margins were stable in the mortgage portfolio, but slightly higher on new lending. Higher consumer finance volumes contributed positively at the same time that tight competition and better credit quality squeezed margins in corporate lending. Resolution fees for 2015 reduced net interest income by SEK 64m. Lending volumes increased by 2 per cent in local currency compared with 31 December 2014, driven by higher consumer confidence. Deposit volumes increased by 8 per cent in local currency during the year.

Net commission income in local currency increased by 2 per cent during the year. Higher customer activity strengthened card-related commissions, and the number of card transactions rose by 12 per cent. At the same time net commission income was negatively affected by the new regulation on interchange fees that took effect in December. Payment commissions were negatively affected during the year by Lithuania's transition to the euro and the reversal of a previous fine (SEK 35m) in 2014.

Net gains and losses on financial items at fair value decreased by 18 per cent in local currency during the year. The decrease was mainly due to lower income from the Lithuanian FX trading business as a result of the euro adoption.

Other income increased by 11 per cent in local currency compared with 2014. Income increased due to higher insurancerelated income.

Total expenses decreased by 4 per cent in local currency during the year, mainly as a result of lower expenses for premises, consultancy and IT. Staff costs rose due to wage inflation, as it has become more difficult to find qualified staff.

Credit quality remained stable despite market uncertainty. Swedbank continued to focus on stable customers with low risk. Baltic banking reported net recoveries of SEK 172m during the year. The situation in Russia has not had a financial impact. The sectors most affected by the Russian recession are agriculture and transport. Swedbank's direct or indirect exposures to these sectors are limited. Swedbank continues to take preventive measures to help customers who could be affected by the situation in Russia.

The tax expense increased during the year to SEK 1 510m (565), mainly due to an extra dividend from the Estonian subgroup in the second quarter, which resulted in an extra tax expense of SEK 929m.

Focus areas for 2016

In order to offer better targeted, value-added services to private customers, we will improve our analysis and use of customer data in 2016. At the same time we are developing new offerings and solutions. For small and medium-sized corporate customers, the focus is on digitising our offerings, while improving service and advice is the priority for larger customers. We will also continue to work with local authorities to increase financial transparency among small and medium-sized businesses to better support their investment needs and help both companies and the national economies to grow.

Total income 2015 by source of income

A sustainable large corporate business

Despite a challenging macroeconomic environment, LC&I strengthened its position in 2015. By combining a customer-centric strategy with improvements to our IT infrastructure, we are growing as a modern commercial bank.

A market in change

Volatility in the financial markets was again high in 2015. Commodity prices fell during the year, affecting Norway's oildependent sectors in particular. In Sweden the Riksbank maintained its expansionary monetary policy with record-low interest rates affecting customer behaviour and market movements. Digitisation is also changing how customers behave, at the same time that new regulations are speeding up the banking market's transformation. One example is the directive on markets in financial instruments (Mifid II), which includes new reporting requirements on customer trading and financial advice.

For LC&I, macroeconomic conditions and digitisation create a number of opportunities, but also introduce higher demands in terms of efficiency and innovation. We are working to ensure that we remain competitive in both the short and long term.

Improved customer value

Deposit volumes increased during the year despite low market interest rates, which reflects relatively good liquidity and low investor appetite in several sectors. Deposit demand was stable with the highest growth in the retail and energy sectors.

"In a highly competitive market we continue to grow our corporate business. The strategy to specialise in prioritised sectors has produced results, and we are continuing to develop the strategy to further build our business."

Björn Meltzer, Acting Head of Large Corporates & Institutions

Closer customer relationships were a priority during the year and much of the work was focused on proactively dialoguing with customers. In a low interest rate environment customers and investors tend to chase higher returns and new investment alternatives, which has benefitted the stock market. Business with the bank's retail customers grew significantly, especially the share through digital channels. We continue to develop our digital offering, an example of which is the bank's online platform for equity trading, which has been expanded with more product information and new functionality. The number of transactions through this service reached a record high, up

39 per cent from the previous year. To meet growing demand for digital services from corporate customers, several popular services are being adapted from the private customer business, such as Swish. A key component in our corporate business is cash management. In the Swedish market Swedbank is the leader in payments, and we are currently expanding our offering to include standardised cash management for customers with multinational operations.

Concerns about weaker macroeconomic performance led during the second half-year to a lower risk appetite, higher interest rate differentials and lower liquidity in the bond market. The increasing volatility contributed to higher customer activity in the fixed income and FX markets. The negative repo rate also contributed to a high level of customer activity in fixed income trading, where many investors chose to hedge rates.

Swedbank remains a leader in capital issuance in Sweden and the third largest player in Norway. To meet demand for diversified financing, the bank has also tapped the euro market, where growth has been rapid and Swedbank today is one of the leading issuers in Finland. One result is an increase in customer satisfaction, as reflected by Swedbank's stronger position in Prospera's customer survey on bond issues and FX trading.

The Norwegian economy was marked by uncertainty about commodity prices, which contributed to lower issuance volumes. M&A and corporate restructuring activity was higher.

"We can transition more of our business to customer groups with more complex needs, especially on the corporate side, where our advice and expertise have a big impact on the end result."

Birgitte Bonnesen, Acting CEO and Head of Swedish Banking

By offering a broad range of services to meet customer needs and demand for diversified financing and financial products, Swedbank reduces its exposure to individual sectors. The real estate sector represents the biggest commitment, but the business is well diversified and includes advice on funding and M&A as well as transaction services and traditional financing.

Increased efficiency

LC&I's business is built on advice, where the strategy to grow with existing customers and only selectively expand the customer base has reduced sensitivity to competition. At the same time the trend towards greater complexity, along with rapid IT transformation and new regulations, has created more cost pressure. During the year we improved efficiency in part by transferring processes and units that do not have customer contact from Sweden to the Baltic countries.

Financial overview 2015

Profit amounted to SEK 3 227m for the full-year, an increase of 3 per cent compared with 2014. The improved result is mainly due to lower credit impairments compared with the previous year as well as a positive tax effect.

Net interest income decreased by 2 per cent in 2015 to SEK 3 428m. Lower deposit margins were partly offset by higher average lending volumes and origination fees. Margins in the lending portfolio were stable. Lending volumes increased by 4 per cent in 2015 to SEK 182bn (175). Credit demand was low during the second half-year due to continued good liquidity among large corporate customers, coupled with relatively low investments. Deposit volumes increased by 14 per cent during the year to SEK 121bn as a result of higher on-demand deposits in the fourth quarter. Due to the negative interest rates, Swedbank charges financial institutions for deposits in a few currencies.

Net commission income decreased by 9 per cent in 2015 to SEK 2 025m. The decrease mainly related to lower income from bond issues in Norway and from fewer IPOs and preference share issues in Sweden. Net gains and losses on financial items at fair value decreased by 2 per cent compared with the previous year. Total expenses decreased by 1 per cent compared with 2014. Staff costs increased as a result of additional hirings.

The tax expense amounted to SEK 630m for 2015. The second quarter was positively affected by a one-off item of SEK 230m related to the US operations.

Credit impairments amounted to SEK 284m in 2015 (381). The year's credit impairments were primarily attributable to increased provisions during the second half-year for a small number commitments. The share of impaired loans was 0.37 per cent (0.22). Credit quality in the loan portfolio is good. At the end of the fourth quarter oil prices fell to historically low levels, and the investment level in the sector is expected to remain low for some time. Since Swedbank expects weakness in the market to continue in 2016, it is likely to lead to the need for provisions. Companies in oil-related sectors continue to take measures to adjust to the low prices and lower investment level in the oil sector. Swedbank is closely dialoguing with customers in these sectors, which mainly consist of listed companies with high credit ratings and long-term customer contracts

Focus areas 2016

To ensure the sustainability of the business, we will focus on the large corporate segment and on supporting the bank's offering for private customers and small businesses. At the same time we will continue to apply a customer-centric approach, including through better process control. When operations are tracked based on processes rather than organisational units, more attention is given to what we deliver to the customer, which often involves multiple product and service areas. This makes it easier to deliver the highest possible quality to each customer. We will also modify our systems to more extensive regulatory requirements and at the same time build a modern IT infrastructure that facilitates even better product delivery in the future.

Total income 2015 by source of income

Digitisation and regulation require new product solutions

Group Functions & Other consists of the product organisation Group Products and business support units.

Group Products

Group Products was established to increase efficiency in the development and maintenance of Swedbank's products and to ensure that the customer offering is relevant, competitive and of high quality. The focus is on harmonising and digitising the processes for every product and making them more efficient. Among other things, the number of products is being reduced to make it easier for customers as well as to increase cost efficiency.

Wider fund selection and increased availability

Increased digitisation and regulatory changes have contributed to greater transparency and competition in the areas of lending, savings and payments. As a result, savings, for example, have become easier to transfer between providers, and customers are now reacting faster to market changes than ever before. Many savings products are becoming more standardised as well, which is causing price pressure.

To strengthen the savings offering, management fees were reduced on 23 actively managed equity funds and 11 mixed funds in 2015. Management performance improved as well. In addition, a new policy on responsible investments was adopted, which began to be implemented by the funds last autumn. First and foremost it encourages companies to act sustainably, but also excludes those that do not meet sustainability criteria.

In 2015 Swedbank continued to make its payment products available digitally. The aim is to give companies and private customers more ways to benefit from the mobility that digitisation offers.

To simplify for retailers, we launched an e-trading portal in 2015 that allows them to accept various payment methods through a single administrative process. We have also begun to launch Masterpass, which allows consumers to shop online in a simple, secure way by mobile phone.

The development of Swish, whose success is largely due to its simplicity, is also part of the work.

During the year a card acquiring agreement was signed with S Group, Finland's largest network of retail and service companies, making Swedbank the acquiring bank for a large number of Finnish stores and giving us a platform for further expansion in the Finnish market.

Increased efficiency

To increase cost efficiency between our four home markets, we launched a process during the year to transfer services from Sweden to the Baltic countries, so-called nearshoring, in our asset management operations. We also reduced the number of available funds, making it easier for customers while improving administrative efficiency.

In payments and cards we continued to make our products more widely available digitally. We also improved efficiency in our data processing routines, which led to a reduction in IT costs of more than 10 per cent per card payment at the same time that our system handles a much higher volume of transactions than in 2014. A new computer system was installed as well to automatically add new stores that want to accept our cards. This reduces administrative time for new customers and relieves staff of routine tasks.

In lending a central unit took over a majority of administration in the loan approval process. Through improved system support, specialisation and systematic improvements, the cost per transaction has gone down. In addition, quality has improved significantly.

We have also established a team with overarching responsibility for creating simple, consistent product and process descriptions for all of the bank's products. The aim is to make it easier for employees to add new customers to the bank's services. During the year we published new product and process documentation for our e-invoicing services.

Focus areas 2016

We will continue to improve efficiencies and simplify our product portfolio. Reducing the number of products makes it easier for customers to understand our offering. At the same time it reduces the number of IT systems needed by the bank, facilitating further digitisation of our product range.

In 2016 the focus will also be on improving efficiencies and digitising lending processes. These activities are necessary to increase cost efficiency and create more satisfied customers through a more attractive offering. A digital loan offering also reduces the need for paper and postage.

Centralised business support units

The Group Functions comprise Group Finance (including Group Treasury and Investor Relations) Communication , Risk, IT, Compliance, Public Affairs, HR and Legal. The Group Functions operate across business areas to provide strategic and administrative support.

HR is responsible for encouraging excellence and providing employees with opportunities for development. Its responsibility also includes developing strong leaders and creating a valuesdriven corporate culture where diversity and gender equality are embraced as well as maintaining effective remuneration systems based on employee performance.

Group Treasury is responsible for the bank's funding, liquidity and capital planning, as well as for pricing all funding and liquidity through internal rates of interest, where the most important parameters are maturity, fixed interest period, currency and need for liquidity reserves.

Changing needs and preferences, together with regulatory requirements, are increasing the need for competence support and reporting. This places greater demands on the Group Functions in their work assisting the business operations.

All internal services are open to competitive bidding, so that units that directly interact with customers decide whether the services from the bank's support functions are worth the price. This is driving efficiency improvements at the staff level. The Group Functions play a critical role in improving the bank's productivity by reducing complexity, shortening lead times and better utilising available competence. To increase efficiency, work has also begun to optimise the bank's procurement processes. This will be intensified in 2016.

Financial overview

The result for continuing operations fell to SEK 525m during the year (1 088), mainly due to a lower result within Group Treasury. The result for Group Treasury decreased to SEK 778m (1 620).

Net interest income rose to SEK 2 572m (2 302). This is mainly due to Group Treasury, where net interest income rose to SEK 2 637m (2 431) as a result of falling market interest rates in the first half-year.

Net gains and losses on financial items at fair value decreased to SEK –1 785m (–413). Net gains and losses on financial items within Group Treasury decreased to SEK –1 799m (–341). The reasons were negative valuation effects from covered bond repurchases and increased credit spreads.

Other income fell year-on-year due to lower income from repossessed assets as a result of a significantly reduced property portfolio.

Expenses decreased as a result of efficiency improvements as well as one-off expenses of SEK 136m in the previous year in connection with the move to a new head office. Expenses for repossessed assets have decreased as the property portfolio is sold off.

Impairment of intangible assets increased to SEK 254m (0) and consisted of a writedown of IT systems within Group Products and a writedown of a previously acquired asset management assignment in the third quarter.

Impairment of tangible assets decreased to SEK 64m (246). Ektornet's property holdings were written down by SEK 243m in 2014.

The result for discontinued operations amounted to SEK –6m (–262). In 2014 expenses of SEK 223m to wind down the Russian operations were reclassified.

"Sustainability is important to us and for some time we have discussed the opportunities that green bonds offer with Swedbank."

Hans Wallenstam, CEO of Wallenstam

Growing demand for green bonds

Since the first green bond was issued in 2008, the market has grown significantly. In 2015 green bonds were issued in Sweden worth SEK 11.9bn, with especially strong growth in the corporate business. To be considered green, bonds must meet a number of criteria according to a special industry standard.

Swedbank was the issuer in 2015 when the real estate company Wallenstam AB, a customer for many years, floated its first green bonds for a nominal value of SEK 500m and a four-year maturity.

"The bond loan broadens our funding base and optimises our capital structure. The proceeds of the green bonds are being used exclusively to refinance loans in the subsidiary Svensk NaturEnergi, where we today are currently self-sufficient in CO² free wind power," says Hans Wallenstam, CEO of Wallenstam.

Green bonds help companies and organisations to finance their operations through the credit market. Unlike conventional bonds, they are earmarked for environmental investments and projects.

Marika Dimming, a green bond specialist at Swedbank and advisor to Wallenstam, explains, "Green bonds create value for the company, for investors and for society as a whole. For the company, the earmarked financing raises awareness of its sustainability work, strengthens the brand and diversifies its funding base. Since many large asset managers and investors place high demands on sustainable investments, green bonds can also open opportunities for the company to broaden its investor base."

Low risk and strong capitalisation in a challenging market

All financial operations entail risks. Finding the right level and price of risk is crucial for Swedbank and benefits all our stakeholders.

Stable home markets in a turbulent Europe

Managing risk is central to Swedbank operations. 2015 was another strong year, with exceptionally low credit impairments and continued high quality in the bank's lending portfolio. All four home markets demonstrated resilience despite a challenging global environment.

Household debt in Sweden continued to concern politicians, the authorities and banks in 2015. There is a systemic risk in this debt, since consumer sensitivity to higher rates or sudden price declines could adversely affect consumption and growth. To slow this trend, Swedbank tightened lending requirements in 2015 and introduced stricter amortisation principles that require mortgages to be amortised down to a 50 per cent loanto-value ratio. The stricter requirements relate to, among other things, the loan's size in relation to income and a higher interest rate that a mortgage borrower must be able to meet according to our lending calculations. Stress tests of the credit portfolio show that Swedbank's customers have good resilience should economic conditions worsen significantly.

Prices of commodities and agricultural products remained under pressure during the year. Milk prices were especially low. The bank therefore worked with vulnerable farmers to address the consequences of weak pricing.

Oil prices fell during the year due to oversupply and uncertainty about future demand. Major oil producers significantly revised their investment plans downwards for the coming year. Swedbank's customers in oil-related sectors managed the situation well in 2015, mainly thanks to long-term contracts, which mitigate the effect of falling contract rates and lower investor appetite in the market. The bank did not suffer any credit impairments in the sector in 2015. In our analysis, however, market weakness will continue in 2016. Swedbank maintains a close dialogue with customers in the sector, who are actively taking measures to adapt their operations to prevailing conditions.

Climate change is one of the world's greatest challenges and is therefore part of our risk analysis. If global greenhouse gas emissions are to be reduced and if the global temperature increase is to be limited to 2 degrees Celsius a large share of known fossil fuel reserves will need to remain in the ground. The global reserves that will still be available for consumption are called the carbon budget. The financial sector faces an inherent risk in the financing of and investment in companies that derive a significant proportion of their revenue from coal extraction or production. To manage both the climate risk and the financial risk, Swedbank conducted an audit and impact assessment of these exposures in 2015 to gradually reduce our carbon exposure in both asset management and financing.

Political turmoil related to the crisis in Greece and sanctions against Russia affected growth in Europe and dampered the bank's home markets. The sanctions against Russia have not had a marked impact on the bank or on the credit quality.

Increasing digitisation is driving a structural change that requires business models to be re-evaluated and adapted in order to stay competitive and profitable. Online shopping, for example, has changed the pre-conditions for brick-and-mortar stores. Swedbank reassesses all its large corporate commitments at least once a year. This includes an analysis of the customer's business model, positioning and competitive strength. Significant emphasis is placed on the company's executive management and its ability to handle new conditions. Here, tools and support for future development are discussed. Digitisation also entails an increased need for information security. In recent years daily procedures and controls have been developed and implemented, and both employees and customers have received training aimed at raising awareness of IT and information security.

Swedbank has been one of Europe's best capitalised banks for several years. This strong capital position was confirmed by the annual Internal Capital Adequacy Assessment Process (ICAAP), the most comprehensive of the bank's internal stress tests, and by stress tests conducted by the Riksbank and the Swedish Financial Supervisory Authority (SFSA) during the year. Liquidity is also strong given proactive and conservative funding activities.

Credit portfolio growing and strong resilience confirmed

Growth was relatively strong in our home markets despite weak demand from major export markets. Baltic exports to Russia fell, but the effects of the Russian embargo were limited to a few sectors. To date the lost exports have been offset by lower production, but mainly through increased exports to other markets.

"Internal and external stress tests reaffirm Swedbank's strong resilience."

Anders Karlsson, Chief Risk Officer

The bank's total lending to the public increased by SEK 45bn or 3.4 per cent to SEK 1 371bn. Growth in the Swedish corporate portfolio was good while maintaining low risk. Corporate lending in Swedish Banking and LC&I increased by a total of SEK 10bn. The bank's Swedish private mortgages increased by SEK 36bn or 5.7 per cent. In the Baltic region the mortgage portfolio

Board of Directors' Report Risk management

increased somewhat in local currency in Estonia and Lithuania, but was unchanged in Latvia.

The stress tests of major Swedish banks conducted annually by the Riksbank and SFSA reaffirmed Swedbank's resilience. Stress tests are done at a European level by the European Banking Authority (EBA) and the European Central Bank (ECB); since November 2014 the ECB has been responsible for the oversight of banks in the eurozone. In 2015, the EBA did not conduct a pan-European stress test, and instead continued to work with banks that did not meet the requirements in 2014. The next major European stress test will be conducted in 2016. The 2014 results reaffirmed Swedbank's strong resilience and capital base, even in highly stressed economic conditions.

Impaired loans continued to decrease and at year-end amounted to SEK 6.0bn (7.5), corresponding to 0.40 per cent (0.41) of total lending. The total provision ratio was 56 per cent (53). Repossessed assets were cut by more than half to SEK 441m. The share of Swedish mortgages that were past due more than 60 days was stable at 0.05 per cent of the portfolio (0.07). In Baltic Banking the share decreased, mainly in Latvia.

The credit impairment ratio remained historically low at 0.04 per cent (0.03), with credit impairments of SEK 594m (419). The Baltic countries again reported recoveries, although at a lower level.

Low market risks despite an uncertain global economy

Increased geopolitical risks and rate cuts created greater volatility in several asset classes. Market risks were still relatively stable and remained at low levels.

Growing importance of managing operational risks in an increasingly digital world

Swedbank is exposed to operational risks in all its businesses. Managing these risks is becoming more complex in pace with increased regulation and digitisation, not least because the number of places and ways in which the bank interacts with customers is growing. The aim is to minimise operational risks to the largest extent possible.

Operational risks are managed through self-assessments, incident management, and continuity and crisis management. When new products, services and IT systems are introduced or significant changes are made, risk assessments are conducted. During the year Swedbank also continued to analyse and document the bank's processes.

Consistent daily work with operational risks is critical to maintaining low credit impairment levels. Losses related to operational risk events remain low in relation to anticipated losses and in comparison with other European banks.

"In today's digital society, where much of the bank's business and interactions are handled online, protecting information has grown in importance."

Anders Karlsson, Chief Risk Officer

Digital developments, together with Swedbank's size and market share, make it an attractive target for cyber crime. The cost of cyber crime has risen substantially in Europe, although the pace of increase has been lower in the Nordic region, and in recent years Swedbank has been relatively spared from Trojan – and distributed denial-of-service attacks and has had comparatively low card losses.

Swedbank works with security in a structured fashion to protect the bank and its customers against cyber crime and other information risks. We take preventive measures in terms of risk management, business intelligence and threat analysis to put the appropriate security mechanisms in place. We also maintain an active dialogue with customers and employees to increase their awareness of the importance of protecting their own information as well as the bank's. Internally, the emphasis is on integrating information security as a natural part of internal processes and incorporating security into new products from the start. The incidents that nevertheless occur are managed within the bank's security process, which includes investigators and technical competence.

Growing digitisation has also facilitated a faster and more extensive spread of information. This can in turn increase the risk of income loss and value depreciation if customers, investors or other stakeholders lose confidence in the bank or the industry due to negative publicity or rumours. Brand and reputational risks differ from other risks in terms of how they arise and their consequences. Moreover, they are difficult to quantify. The management of these risks is largely based on continuing to create confidence in the bank and industry by acting clearly and transparently, in accordance with the bank's values and internal guidelines, by consistently managing other types of risks and by strengthening our customer relations.

Low risks in insurance operations

The risk entailed in the majority of Swedbank's life insurance operations is borne by the customer. Few products offer guarantees.

For more information on insurance risk, see note G3.

Increased funding pace reduced liquidity risk

Low interest rates and shrinking credit spreads distinguished the first half of 2015, and the introduction of new capital adequacy rules led to increased issues of additional Tier 1 (AT1) capital by European banks. Swedbank issued USD 750m in AT1 instruments at the beginning of the year to optimise the capital structure. During the second half-year uncertainty grew in the

Financing strategy

In addition to borrowings from the public, Swedbank's covered bonds, which are secured by low-risk Swedish mortgage loans, are its most important financing source. The bank's financing strategy is strongly linked to the credit quality of the assets, since a perceived decline in credit quality, all else being equal, increases investor risk and hence investors' yield requirements. Consequently, the key element in the bank's financing strategy to limit and control liquidity risk is the survival horizon, which shows how long the bank can manage long periods of stress with limited access to financing. One of Swedbank's focus areas is to manage liquidity risk and ensure that lending quality is very high.

capital market due to the crisis in Greece and China's devaluation, among other factors. This contributed to higher credit spreads and volatility. In 2015 Swedbank issued larger volumes of long-term bonds than previously to capitalise on favourable market conditions and prefinance upcoming maturities, as well as to match mortgage growth. Swedbank's improved rating contributed to high demand for our debt instruments and further reduced funding costs. In total, Swedbank issued SEK 229bn (115) in long-term debt instruments, the majority of which (SEK 158bn) was covered bonds. In 2016 we plan to issue around SEK 179bn to meet maturing funding and increased credit demand, mainly in Swedish mortgages.

Short-term funding is mainly used as a cash management tool. At year-end 2015 outstanding short-term funding amounted to SEK 108bn, of which SEK 75bn was placed with central banks.

The main liquidity measure used by the Board of Directors and executive management is the survival horizon. As of 31 December 2015 the bank would be able to survive for more than 12 months with the capital markets completely shut down.

The liquidity reserve amounted to SEK 314bn (224). In addition, liquid securities in other parts of the Group amounted to SEK 50bn (76). The liquidity reserve and the Liquidity Coverage Ratio (LCR) fluctuate over time depending on factors such as the maturity structure of the bank's issued securities. The Group's LCR was 159 per cent (120), 363 per cent for USD and 638 per cent for EUR.

According to our interpretation of the Basel Committee's latest net stable funding ratio proposal, Swedbank's NSFR was 107 per cent (98). The improvement in the NSFR during the year was driven by increased long-term funding, which also reduced the bank's structural liquidity risk sensitivity. For more information on Swedbank's funding and liquidity, see the bank's report on "Risk and Capital Adequacy 2015".

Continued relative rating improvements

We are working to further improve Swedbank's relative ratings by credit rating agencies. The aim is to maintain ratings in line with the highest rated banks in the Nordic region. During the year, Swedbank's position strengthened.

Moody's upgraded Swedbank's rating by one step to Aa3 with a stable outlook. Swedbank's individual rating was upgraded as well, from baa1 to a3. The upgrade was due to Swedbank's strong earnings ability and high asset quality, which is underpinned by the bank's long-term strategy and strong brand.

S&P also upgraded Swedbank's rating by one step during the year, to AA-. Its individual rating was also upgraded from a to a+. The upgrade was due to Swedbank's governance continuity

Board of Directors' Report Risk management

improvement, stable profitability and high efficiency. The outlook for Swedbank's rating, like that of most Swedish banks, is negative. This is due to S&P's view of house prices and household debt in Sweden, which it feels increases economic risk for the banks.

The bank's high credit quality, stable earnings and strong capitalisation were also why Fitch affirmed a positive outlook for Swedbank's rating in June.

Capital planning

To ensure that it can function well even under unfavourable conditions, Swedbank maintains an extra capital buffer in addition to the capital required by law. Stress tests are conducted to ensure that the buffer is satisfactory in the possible though unlikely event of negative scenarios. Solid capitalisation is crucial to maintain the market's confidence in Swedbank and ensure access to cost-effective capital market funding.

Swedbank's capital situation was further strengthened in 2015 as a result of solid earnings and a reduced risk exposure amount (REA). As of September 2015 a contracyclical buffer value of 1 per cent is applied to Swedish credit exposures, which also affects Swedbank's capital requirement through the risk weight floor of 25 per cent within Pillar 2 for the Swedish mortgage portfolio. In September the SFSA completed its Supervisory Review and Evaluation Process (SREP) for Swedbank. Its requirement for Swedbank is 19.0 per cent. In our own calculations, however, we have taken into account the upcoming increase in the contracyclical buffer value to 1.5 per cent (June 2016). This makes the total Common Equity Tier 1 capital requirement 19.9 per cent, which compares with Swedbank's Common Equity Tier 1 capital ratio of 24.1 per cent as of 31 December. In its SREP decision, the SFSA used the new methods announced in May to assess capital requirements within Pillar 2 for credit related concentration risk, interest rate risk in the banking book and pension risk. Based on this and REA at yearend, Swedbank's Common Equity Tier 1 capital requirement for individual Pillar 2 risks is estimated at 0.9 per cent.

Continued uncertainty about capital rules – Swedbank well-positioned

The SFSA has announced a further review of Swedish banks' internal risk-based models, especially with regard to corporate risk weights, in order to improve the models. The SFSA expects that its work will be completed in 2016 and will lead to an increase in the capital requirement for corporate exposures.

International work on capital requirements includes the Basel Committee's work to improve the comparability of banks' capital ratios. This covers, among other things,revised standard methods to calculate capital requirements for credit, market and operational risks, where the possibility of a capital floor is being discussed for banks that use internal models. Due to uncertainty surrounding the new rules and how and when they will be implemented, it is still too early to draw any conclusions about their potential impact on Swedbank. However, Swedbank's robust profitability and strong capitalisation position it well to meet future changes in capital requirements.

Internationally, an evaluation is also being done of leverage ratios ahead of the possible introduction of a minimum requirement in 2018. The purpose of the minimum requirement is to ensure a minimum level of capital in relation to the size of the balance sheet. Swedbank's leverage ratio was 5.0 per cent as of 31 December 2015 (4.5 per cent as of 31 December 2014).

The Bank Recovery and Resolution Directive, which enables authorities to manage failing banks, was adopted by the EU in 2014. Implementation into Swedish law had been scheduled no later than 1 January 2015, but was delayed until February 2016. The directive will prevent crisis situations and improve the ability to manage any crisis that arises, while reducing the risk that taxpayers will be left to cover the costs. This will be achieved partly through bail-ins, whereby shareholders and lenders bear more of the costs. As a result, banks will have to maintain a minimum requirement for own funds and eligible liabilities (MREL). A similar international requirement called Total loss-absorbing Capacity (TLAC) will be introduced for global systemically important banks. While there is still uncertainty about the wording and level of the MREL requirements, Swedbank is confident that it will meet them.

Swedbank Annual Report 2015

Swedbank's risk profile

bidity or claim frequency.

Swedbank defines risk as a potentially negative impact on the Group's value which can arise due to internal processes or future internal or external events. The concept of risk includes the probability that an event will occur and the impact it could have on the bank's results, equity or value.

Description	Risk profile	Risk management
Credit risk The risk that a borrower will fail to meet their contractual obligations to Swedbank and the risk that pledged collateral will not cover the claim. Credit risk also includes counterparty risk, concentration risk and settlement risk.	Swedbank's customer base, dominated by private individuals and small and medium-sized companies in Sweden, is designed such that credit risk is low. Swed bank's lending to the public is well diversified and in Sweden consists largely of mortgages and loans to small and medium-sized companies with a low risk level. The risk in lending to the Baltic countries is slightly higher than in the Swedish portfolio and accounts for about 12 per cent of the total portfolio.	Responsible lending is essential to a well-func tioning bank. This means taking into considera tion each customer's long-term finances, ability to repay and resilience. We work proactively with customers who are facing financial diffi culties. Corporate customers undergo a special assessment of sustainability risks, including risks related to corruption and the environment.
Market risk
The risk that the bank's results, equity or value will decrease due to changes in risk factors in finan cial markets. Market risk includes interest rate risk, currency risk, share price risk and commodity risk as well as risks from changes in volatility and correlations.	Swedbank's market risks are low. The main market risks are of a structural or strategic nature and relate to the interest rate risk that arises as a natural part of the Group's operations e.g. when customers demand different fixed interest terms on deposits and loans. In addition, market risks arise when the bank offers its customers various types of financial products.	Swedbank centralises all interest rate risk to a few risk-taking units with risk mandates from the CEO and Board of Directors. Effective risk management is achieved by matching maturi ties and with the help of derivatives.
Liquidity risk
The risk that the bank cannot fulfil its payment commitments at maturity or when they fall due. Liquidity risks arise because the maturity structures on the asset and liability sides of the balance sheet do not coincide.	Swedbank's liquidity risk is low. The bank maintains a liquidity reserve to ensure its resilience in the event of disruptions in the capital markets. The reserve consists of securities with a high level of creditwor thiness which can be pledged to central banks or divested at short notice. Swedbank tries to match the maturities in its funding with the corresponding maturities in its assets.	Access to long-term financing is imperative in order to adequately manage liquidity risk. Swedbank has therefore diversified its funding through short- and long-term programmes in various capital markets and in various curren cies. Liquidity risk is limited in terms of survival horizon.
Operational risk
The risk of losses resulting from inadequate or failed internal pro cesses or routines, human error, system error or external events. Operational risk also includes legal risk and information risk (i.e. the risk of losses due to insufficient protection of information in terms of confidentiality, accuracy and accessibility).	Operational risks occur in all businesses. It is not possi ble or cost effective to try to eliminate all of them. However, Swedbank's goal is to minimise operational risks given the nature of its operations, strategy, risk appetite and market. Minor losses are a normal part of the bank's operations. Because the bank works actively to avoid larger losses and incidents that affect many of its customers, such events are rare. To minimise information risk, it is critical that the bank's employees are aware and prepared. Measures involving IT, processes and routines are also important complements to reduce intentional or unintentional access to or changes in information. Security policies are updated as threat scenarios change.	Swedbank has internal regulations to manage operational risks and works diligently to pre vent incidents and losses from occurring. Risk analysis and risk-reducing measures are used continuously and in connection with signifi cant changes in operations and offerings. Through continuity planning the bank is pre pared to minimise the effects of incidents as quickly as possible if they do occur. Swedbank also has internal rules to describe how information is protected. To strengthen work in the risk area, processes and procedures are under review with the aim of improving and complementing the bank's information secu rity management system. The system is a tool to manage and coordinate the Group's long term efforts in a structured and methodical manner.
Insurance risk
The risk of a change in value due to a deviation between actual and anticipated insurance costs, which may be due, for example, to pro jected longevity, mortality, mor	Swedbank conducts insurance operations in Sweden, Estonia, Latvia and Lithuania. Swedbank offers risk insurance and savings products, including endow ment insurance, variable universal life insurance and pension products. The largest risks in these opera	Insurance risk is managed by basing premiums on statistical assumptions and close monitoring e.g. to identify new trends. To further limit risk exposure, some insurance risks are reinsured.

tions are market risk and insurance risk. Market risk is limited since the large part of the portfolio consists of products where the risk is borne by customers.

Board of Directors' Report The share, owners and important events

Shareholder value through sustainability

Many people are dependent on Swedbank's success. Pension savers, insurance policyholders and hundreds of thousands of shareholders have entrusted us to manage valuable assets. We earn their trust through responsibility.

Macroeconomic conditions, regulatory changes, technological developments and increased competition from new players are challenging the banking sector while also creating opportunities. The ability to quickly adapt and embrace these changes is critical to our continued profitability. Increased competition and margin pressure in parts of the business place high demands on cost efficiency, not only in order to set the right prices but to leave room for investments that increase customer value and pave the way for new business. Market-leading cost efficiency, high-quality lending, a broad, diversified customer base and solid capitalisation will produce a profitable, stable bank with a competitive return.

One of Swedbank's goals is a return on equity of at least 15 per cent. This goal is adapted to Swedbank's market position, risk profile and conditions in our home markets. For 2015 the return on continuing operations was 13.5 per cent (15.2). Against the backdrop of a robust earning capacity and low risk, coupled with limited credit demand for the foreseeable future, Swedbank's dividend policy is to distribute 75 per cent of profit for the year to shareholders. This policy allows Swedbank to grow long-term while at the same time promoting efficient use of capital. The proposed dividend for 2015 is SEK 10.70 (11.35) per share, corresponding to a dividend ratio of 75 per cent of profit. All dividends are contingent on the approval of the Annual General Meeting and require that distributable funds are available.

Share performance during the year

In 2015 the OMX Stockholm 30 Index fell by 1.2 per cent and OMX Stockholm Banks Index by 3.7 per cent. Swedbank's A share fell by 4.3 per cent during the year, producing a total return including the dividend of 1.5 per cent (13.6). At year-end 2015 Swedbank's market capitalisation had decreased to SEK 212bn (221). Swedbank's shares are traded on several marketplaces. In 2015 NASDAQ OMX Stockholm, Boat, BATS ChiX and Turquoise were among those with the highest turnover. Total turnover in the Swedbank share was SEK 313bn (310) and the share capital amounted to SEK 24 904bn as of 31 December 2015. Swedbank has one class of share, ordinary shares (A shares), which have been listed on NASDAQ OMX Stockholm's Large Cap list since 1995. The bank also has an American Depositary Receipt (ADR) programme, which enables US investors to invest in Swedbank's share on the US OTC market via depository receipts without having to register with Euroclear, the Swedish central securities depository, or buy SEK.

Together with other banks, Swedbank is an engine in the financial system. Many people are dependent on an efficient flow of capital, goods and services in society. With the help of banks, businesses can grow, jobs can be created and housing can be financed. This is a great responsibility. We therefore integrate sustainability work into our day-to-day operations. Today there are a number of mutual funds and stock indices for companies that meet sustainability criteria. Two such indices where Swed-

Swedbank's share performance compared with indices

Shareholder categories, % as of 31 December 2015, figures in brackets refer to 2014

Turnover of ordinary shares* Ordinary share* OMX Stockholm 30 OMX Stockholm Banks

* Refers to the average of the share price and the aggregate volume in the Swedbank ordinary share on NASDAQ OMX, BATS Chi-X and Burgundy.

Source: Euroclear Sweden AB

bank is included are STOXX ESG Leaders and FTSE 4Good. The latter was created to facilitate investments in companies that demonstrate globally recognised levels of responsibility. Other examples can be found on the website under Investor Relations/ Swedbank shares.

Holding of own shares

Swedbank held 26 601 972 of its own shares as of 31 December 2015 to secure the commitments in its performance and sharebased remuneration programmes. Remuneration is paid in the form of deferred shares with the purpose of building long-term commitment among employees through share ownership. The first transfer of deferred shares related to Swedbank's remuneration programmes was in 2014, when 3 249 423 shares were transferred to employees. The second transfer of deferred shares began in February 2015, when shares for programme were transferred to employees, In total, 3 148 605 shares were transferred in 2015, resulting in a dilution effect of about 0.3 per cent based on the number of shares outstanding and votes as of 31 December 2014. The 2015 AGM resolved to adopt new performance and share-based remuneration programmes for 2015 and to transfer shares under these and previously approved programmes. The programmes call for the transfer of up to 33 million shares (including the shares transferred in 2014 and 2015), corresponding to a total dilution effect of about 3 per cent based on the number of shares outstanding and votes as 31 December 2014.

To continuously adapt the bank's capital structure to prevailing capital requirements, the Board was authorised by the 2015 AGM to resolve to repurchase up to 10 per cent of the total number of shares (including shares repurchased by the securities operations – see below). The Board was also authorised to issue promissory notes that can be converted to shares. In early 2015 the bank utilised the Board's mandate and issued promissory notes that can be converted to shares in the event that the bank's Tier 1 capital falls below a certain level. The issue was part of the capital requirements set by the Swedish Financial Supervisory Authority.

In its capacity as a securities institution, Swedbank engages in securities operations, including trading in financial instruments on its own account. As such, it needs to acquire its own shares. Accordingly, the 2015 AGM resolved that the bank, until the 2016 AGM, may acquire its own shares on an ongoing basis such that the total holding does not exceed 1 per cent of shares outstanding, and that this is done at the prevailing market price.

Ownership and information

As of 31 December 2015 Swedbank had 300 607 shareholders (307 974), 93 per cent of whom had holdings of 1 000 shares or less. Nearly 0.4 per cent together owned over 90 per cent of the company. Swedbank's largest shareholder as of 31 December 2015 was an ownership group consisting of Folksam, KPA and Förenade Liv. International ownership in Swedbank increased during the year to 42.1 per cent (39.6), of which the US and the UK represent the largest holdings at 15.2 and 12.1 per cent, respectively.

Swedbank provides shareholders, analysts and other stakeholders with prompt, clear, consistent and simultaneous information on the bank's operations and financial position. Transparency and openness produce a better understanding of the financial reporting and decisions made as well as of the sector as a whole. Swedbank's annual report is distributed to shareholders upon request. The interim reports are not printed, but are available at www.swedbank.com/ir together with other information released in connection with the quarterly reporting. The annual report can also be ordered from this site.

Important events 2015

FIRST QUARTER

3 Feb 2015		2014 year-end report

13 Feb 2015 Swedbank issues Additional Tier 1 Capital
20 Feb 2015 Annual report for 2014 published
25 Mar 2015 Swedbank signs acquiring agreement in Finland 26 Mar 2015 Swedbank's 2015 AGM. Anders Sundström
- re-elected as Chair

SECOND QUARTER

1 Apr 2015	Swedbank sells Juristbyrån
28 Apr 2015	Interim report January–March

THIRD QUARTER

8 Jul 2015	Swedbank decides to take extra dividend from
	Estonian sub-group
16 Jul 2015	Interim report January–June
15 Sep 2015	Nomination committee for 2016 AGM
	announced
23 Sep 2015	Swedbank acquires Danske Bank's retail
	business in Lithuania and Latvia

FOURTH QUARTER
1 Oct 2015	Sparbanken Öresund AB merged with

Swedbank AB

20 Oct 2015	Interim report January–September
9 Dec 2015	Swedbank publishes indicative financial effects
	from Visa's intended acquisition of Visa Europe
21 Dec 2015	Fastighetsbyrån sells its holding in Hemnet

Value creation and trust through sound corporate governance

Our corporate governance is designed to create a sound and effective corporate culture that fosters trust as well as customer and shareholder value. Our governance is based on employees being familiar with and working together to achieve Swedbank's common goals.

Foundation for corporate governance at Swedbank

Swedbank's governance model and operational structure are designed to ensure that all employees work towards common goals and support the bank's purpose: a sound and sustainable financial situation for the many households and businesses. Strategies, goals, policies, instructions and guidelines clarify how the bank and its employees should respond to various issues and in various situations. Transparency and openness are key aspects in this respect.

Swedbank plays a significant part in the financial systems of Sweden and the Baltic countries. Our main role is to convert savings into financing, to contribute to a functioning payment system and to manage risks. As one of Sweden's largest banks, we contribute to society's growth and development. Meeting our stakeholders' expectations and our customers' financial needs is the key to creating value and thereby contributing to well-functioning local communities. Sustainability aspects are integrated in our operations, allowing us to also contribute outside our own markets to a sound and sustainable financial situation for the bank and its customers and for society as a whole. We are and will remain a secure bank with controlled risk taking that does not compromise the stability of the financial market or society's sustainable development. Sustainability issues are driven from a business perspective and are seen as a way to attract customers, employees and investors.

Good corporate governance, risk management and internal control are key elements in a successful business and a prerequisite to maintain the trust of customers, owners, authorities and other stakeholders. Swedbank defines corporate governance as the relationship between shareholders, executive management, other employees, Group companies and other stakeholders. In a broader sense, it also encompasses:

how the vision, purpose and strategy are designed and communicated
how the values are complied with
how goals are set and followed up
how remuneration systems are designed
how risks are managed
how future leaders are encouraged and developed
how a corporate culture that supports the bank's commitment to customers and builds shareholder value is created
how transparency is promoted
how we manage operations in a sustainable way

The principles of Swedbank's corporate governance are described in internal rules at the board and CEO level. The principles are based on external regulations and recommendations published by international bodies as well as on Swedbank's internal view of governance and control.

Swedbank's corporate governance structure

The internal and external rules regulate the delegation of responsibility for governance, control and monitoring of operations between the shareholders, the Board of Directors and the CEO. No deviations from the Swedish Code of Corporate Governance (the Code) or the rules of the stock exchange (NASDAQ OMX Stockholm) were reported in 2015.

The governance model describes the delegation of responsibilities within the Group, where role descriptions create the conditions for strong and efficient processes. In accordance with the model, authority and responsibilities are delegated based on Group-wide principles. Business decisions are made close to customers, which places high demands on risk control and monitoring. Abiding by the bank's vision, purpose and values is also a requirement for employees to qualify for the Group-level remuneration programme.

The Group structure provides a framework for roles, functions and reporting channels. Swedbank is organised in three business areas supported by Group Functions and Group Products. The Group Functions serve as strategic and administrative support, with responsibility for maintaining effective standards and routines. Group Products is responsible for providing competitive products and services as well as business support for employees who interact with customers. The diagram on the next page shows the formal corporate governance structure. The number in each box refers to the corresponding section in the corporate governance report.

Governance of the bank's subsidiaries is exercised operationally through the business areas. Board members of major subsidiaries are appointed through a process where nominees are approved by the bank's Board.

Swedbank's corporate governance structure

1 The shareholders in corporate governance

The shareholders exercise their influence through active participation in the resolutions of the general meeting. This includes resolutions that set the direction for the bank's operations. The shareholders also appoint the bank's Board of Directors and Auditors.

According to the Articles of Association, the AGM must be held before the end of April, or under special circumstances not later than 30 June. The date and location are published in Swedbank's year-end report and on the website. The notice of the AGM is usually published five weeks in advance in Post and Inrikes Tidningar (official gazette of Sweden) and on the bank's website. An announcement that the notice has been posted is also placed in several large Swedish dailies.

Swedbank is a Euroclear registered company and its shares are recorded by Euroclear Sweden AB. All shareholders directly recorded in the register five working days prior to the AGM and who have notified Swedbank in time of their intention to participate are entitled to attend the AGM. They may attend in person or by proxy and may be accompanied. Registration is permitted by telephone, letter or email. We encourage shareholders to attend the AGM.

Shareholders wishing to have an item brought before the AGM must submit a written request to the Board not later than seven weeks prior to the AGM for the item to be included in the notice. Shareholders with a total of at least one tenth of the votes in the bank may request an extraordinary general meeting. The Board or the bank's Auditor can, on their own initiative, call an extraordinary general meeting as well.

Shareholders' power of decision

The AGM's resolutions include:

election of the Board of Directors and remuneration for Board members, including for committee work
discharge from liability for Board members and the CEO
amendments to the Articles of Association
election of the Auditor
adoption of the income statement and balance sheet
allocation of the bank's profit or loss
remuneration principles and guidelines for the CEO and certain other senior executives

AGM resolutions are normally decided by vote and require a special majority. Swedbank has one class of share, ordinary shares (also called A shares). The shares carry one vote each. All material for the meetings, as well as the minutes, is made available on the website in both Swedish and English. The general meetings are held in Swedish and interpreted to English.

Information on Swedbank's shareholders can be found on the bank's website under the heading "Investor relations/Swedbank shares".

2015 Annual General Meeting

The 2015 AGM was held in Stockholm on Thursday, 26 March. A total of 1 337 shareholders attended personally or by proxy. They represented about 57 per cent of the votes in the bank. All Board members who were nominated for re-election except for one attended the AGM, as did the majority of the Group Executive Committee and the Chief Auditor.

Among the 2015 AGM resolutions were the following:

adoption of the annual report
dividend for the 2014 financial year of SEK 11.35 per share
decision to elect nine Board members, all of whom were re-elected. Anders Sundström was elected as Chair
remuneration to the Board members and the Auditor
repurchase of shares by the securities operations and authorisation of the Board to resolve to repurchase additional shares to adjust the bank's capital structure to prevailing capital needs
mandate to issue convertibles that can be converted to shares, so-called cocos
remuneration guidelines for senior executives
Group-level performance- and share-based remuneration programme for 2015. As a result of this and previously approved programmes, it was resolved to transfer ordinary shares (or other financial instruments in the bank) to employees covered by the programmes
principles for appointing the Nomination Committee

2 Nomination Committee

The basic assumption in the Nomination Committee's work is that the Board should be composed of members with a diversity and range of competencies, experience and backgrounds. An even gender distribution is desirable. The bank's operations, stage of development and future direction are also taken into account. While it is important that the Board has the support of shareholders, it also has to be independent in relation to the bank and its executive management as well as the bank's major shareholders.

The 2015 AGM decided on the principles for the appointment of the Nomination Committee prior to the 2016 AGM. They include that the committee comprise five members: the Chair of the Board and representatives of the four largest shareholders (based on known data on the last business day in August 2015), on the condition that they wish to appoint a member. Under certain circumstances a member may also represent a group of shareholders. Swedbank's Nomination Committee represents the shareholders, and normally only one person from the Board participates in the committee. If a member leaves the Nomination Committee before its work is completed, the committee may decide to replace them with another person representing the same shareholder or with a person representing the next largest shareholder that has not already appointed a member to the committee. If a new shareholder becomes one of the bank's four largest after the Nomination Committee has been constituted, the committee has the right to co-opt a member appointed by that shareholder. A co-opted member cannot participate in the Nomination Committee's decisions. The Nomination Committee appoints a Chair from among its members,

though not including the Chair of the Board. The committee's mandate extends until a new Nomination Committee has been constituted. Members of the Nomination Committee are not remunerated for their work or costs incurred. However, the Nomination Committee has the right, at the bank's expense, to engage a recruitment consultant or other external consultants as deemed necessary to fulfil its assignment.

The duties of the Nomination Committee, where applicable, are to submit proposals prior to the next AGM on the following:

election of a Chair of the AGM
number of Board members
remuneration to Board members elected by the AGM, including for committee work
remuneration to the Auditor
election of the Board members and Chair
election of the Auditor
principles for appointing the Nomination Committee

The Nomination Committee's other work during its term:

continued to create a resource bank of potential Board candidates
evaluated the Board's work (see section 4 below) and members' views of the bank's operations (which was done on an individual basis without the Chair)
noted the Chair's and the CEO's views of the bank's operations and the challenges it faces in the next few years
noted the Chief Auditor's view of the bank, the Board and the executive management
reviewed competence needs and discussed the Board's composition in view of Swedbank's strategies, future challenges and the requirements of the Companies Act
considered the rules limiting the number of directorships a member of a bank board may hold
verified the candidates' independence
conducted a suitability assessment of the candidates based on the European Banking Authority's guidelines, including an evaluation of their experience, reputation, conflicts of interest and suitability in other respects. The Nomination Committee also evaluated whether the candidates were able to devote sufficient time to board work
evaluated the collective knowledge and expertise of the Board

Current composition of Nomination Committee prior to 2016 AGM (announced on 15 September 2015)

Member	Representing
Lennart Anderberg, Chair of Nomination Committee	ownership group Föreningen Sparbanksintressenter
Ramsay Brufer	Alecta
Jens Henriksson	ownership group Folksam
Peter Karlström	ownership group Sparbanks stiftelserna
Anders Sundström, Chair of the Board	Swedbank AB

3 External Auditor

The external Auditor is an independent reviewer of the bank's financial accounts who determines whether they are essentially accurate and complete and provide a fair portrayal of the bank and its financial position and results. The Auditor also ensures that they conform to current laws and recommendations. Moreover, the Auditor reviews the administration of the Board of Directors and the CEO.

At the AGM the Auditor presents the Auditors' report and describes the audit work. The Auditor presented its review and comments to the Board five times in 2015. On one of these occasions no one from the executive management was present. The Auditor regularly meets the Chair of the Board, the Chair of the Audit Committee, the executive management and other operating managers. The Auditor normally also meets representatives of the Swedish Financial Supervisory Authority (SFSA) during the financial year.

Swedbank's interim reports are reviewed by the Auditor. Sustainability information in this annual report was reviewed as well, together with the report pursuant to the GRI G4 Sustainability Reporting Guidelines, which is included as an appendix to the integrated annual report on the bank's website. In accordance with the Articles of Association, the bank shall have no less than one and no more than two authorised public accountants. Deloitte AB is the only accounting firm. The Chief Auditor is Authorised Public Accountant Svante Forsberg, who has been in charge of auditing duties for Swedbank since 2010. Aside from Swedbank, he has significant auditing assignments with the following companies: Anticimex, Cinnober, Diös, Lannebo Fonder and Skandia liv. Svante Forsberg has no assignments with other companies that affect his independence as an auditor of Swedbank. The Auditor's term is normally four years, and at the 2014 AGM Deloitte AB was re-elected with Svante Forsberg as Chief Auditor. A decision to replace the Auditor can be made before the four-year period expires. Remuneration for the Group's Auditor is reported in note G14. The SFSA is entitled to appoint an auditor of the bank, but has not exercised this right in several years and did not do so in 2015. Aside from its assignment as elected auditor, Deloitte has also performed audit-related services involving acquisition and accounting issues. Assignments closely associated with the audit normally do not pose a risk to the Auditor's independence. In accordance with the bank's policy, other consulting services by the Auditor are greatly restricted. To minimise the risk of situations that could compromise the Auditor's independence, consulting services must be approved by the Audit Committee and may not commence until approval has been received. The Audit Committee annually evaluates the Auditor to ensure its objectivity and independence.

4 Board of Directors

The Board of Directors has overarching responsibility for managing Swedbank's affairs in the interests of the bank and the shareholders. This shall be done in a sustainable way with a focus on the customer and sound risk taking to ensure the bank's long-term survival and instil confidence.

The Board consists of nine members elected by the AGM for one year. It also includes two employee representatives and two deputies in accordance with special agreements with the Financial Sector Union of Sweden and Akademikerföreningen. The Board meets the requirements of the Code with respect to its members' independence. All members except Göran Hedman are considered independent in relation to the bank, its executive management and its major shareholders.

An even gender distribution on the Board is desirable. The current distribution is 44 per cent women and 56 per cent men.

The 2015 AGM re-elected all the Board members. Anders Sundström was elected as Chair. The CEO, the CFO and the Company Secretary are not members of the Board. They attend Board meetings, however, except when issues are discussed where they could have a vested interest or it is otherwise inappropriate. The deputy employee representatives normally do not attend Board meetings. The Board's composition is presented on pages 58–61.

The Board's responsibilities and their delegation

The Board sets financial goals and strategies; appoints, dismisses and evaluates the CEO; ensures that effective systems are in place to monitor and control operations and that laws and regulations are followed; and ensures that the information released is transparent and accurate.

The Board appoints/dismisses the head of Internal Audit and makes the final decision on the appointment/dismissal of the CFO and the CRO. Internal Audit is directly subordinate to the Board.

The Chair of the Board has specific responsibilities, that include the following:

lead Board meetings and work and encourage an open and constructive debate
monitor and evaluate the competence, work and contributions to the Board of individual members
oversee the CEO's work, serve as a discussion partner and support, and monitor that the Board's decisions and instructions are implemented
represent the bank on ownership and other important issues

The Board's overarching responsibility cannot be delegated. The Board has appointed committees to monitor, prepare and evaluate issues within their respective areas for resolution by the Board. Members of the committees can be changed at any time during the year. The Board also has the opportunity, at the bank's expense, to engage outside experts if deemed necessary to fulfil their assignment or to obtain information on market practices.

The division of work between the Board, the Chair of the Board and the CEO is determined annually through the Board's rules of procedure, corporate governance policy and instruction for the CEO, among other things. Instructions are also in place for the Board's committees. Each year the Chair of the Board initiates an evaluation of the Board's work. This was done in 2015 through a written questionnaire and in-depth interview with each Board member without hiring an outside consultant. A summary of the results was presented to and discussed with the Board and reported to the Nomination Committee. In addition, the Nomination Committee normally meets with two individual Board members without the Chair present to obtain input on how the Board and the Chair are performing.

The Board's work

In 2015 the Board held 16 meetings, 3 of which were per capsulam. All face-to-face meetings were held in Sundbyberg. The Board was unanimous in its decisions, and no dissenting opinions were noted on any issue during the year. Each year the Board establishes a plan for its work, where it decides which issues to treat in depth. This is based on the processes used in the bank as shown in the diagram on page 51.

Other major issues in 2015 included the following:

greater focus on customers and digital channels
macroeconomic developments and their impact on the bank and its limits and exposures
capital and liquidity issues
implementation of sustainability issues such as anti-corruption and human rights in the bank's main processes: fund management, payments, lending and sourcing
liquidity strategies and funding issues
current risk and capital situation, including the Internal Capital Adequacy Assessment Process (ICAAP) and other stress tests
information risk (secure systems and accessibility)
credit decisions where the total Group credit limit exceeds 10 per cent of the capital base (SEK 118bn as of 31 December 2015) for the Swedbank financial companies group as well as limits for credit risk concentrations
evaluation of the CEO
major projects ongoing within the bank
competition and business intelligence
succession planning for senior executives
regulatory issues
anti-money laundering

Prior to each Board meeting the documents are distributed to the members through an electronic data room. The Chief Auditor also has access to the system, which has mail, chat, and voting functions, if needed. In addition, the system shows when the documents were accessed on an individual basis. The material from each meeting is saved electronically, including documents not enclosed with the minutes. The minutes from committee meetings are distributed to the all Board members, the CEO, the head of Internal Audit and the external auditor.

The following points are usually brought up at every Board meeting:

minutes from previous meeting
conflicts of interest disclosure
information on issues dealt with by the Board's committees
report from the Chief Executive Officer
report from the Chief Financial Officer
report from the Chief Risk Officer
report from the Chief Compliance Officer (quarterly)
report on Internal Audit's review and any action plans (quarterly)
strategic issues
decisions on special cases
training needs

The Board's competence development

The Board made a study trip in autumn 2015 to gain better insight into innovation, digitisation, new players in the market and related issues. In accordance with the 2015 training plan, the Board also conducted training in corporate governance, ethics, conflicts of interest and information security, among other areas. In addition, individual Board members undertake study trips on their own initiative within various parts of the bank to stay informed on specific areas of operations. On a number of occasions during the year the Chair accompanied investor trips in Europe and Asia and met shareholders and debt investors. This gives the Board deeper insight into topical issues being discussed by the bank's owners and investors at the same time that the Board, through a direct dialogue, gets feedback on the bank's operations and the direction it is taking.

New Board members attend the bank's introductory training, which is designed to quickly familiarise them with the organisation and operations and help them better understand Swedbank's values and culture. Members are also informed of their legal responsibility as directors and their roles on the various committees. Each year the Board establishes a training plan, and at every Board meeting any need for further training is also discussed.

Board work 2015

4.1 Risk and Capital Committee

The Board's Risk and Capital Committee supports the Board in ensuring that routines are in place to identify and define risks relating to business activities as well as to measure and control risk-taking.

Each month the committee receives a special risk report from Group Risk. A more detailed description of the Group's risk areas can be found in the risk section on pages 39–43 and in note G3.

The CEO is not a member of the committee but normally attends its meetings, as do the CFO and CRO. The members of the committee have special competence and experience working with risks.

The work of the Risk and Capital committee also includes:

Internal Capital Adequacy Assessment Process (ICAAP) and the bank's capitalisation
The bank's limits and exposures, including its largest exposures and provisions
Stress tests of various credit portfolios and other analyses of the credit portfolios, especially the Swedish mortgage portfolio's composition and its importance to the bank's funding
The size of the bank's liquidity portfolio and other liquidity issues
Funding-related issues and strategies, especially with respect to covered bonds

4.2 Remuneration Committee

The Board's Remuneration Committee verifies that remuneration systems in the bank conform to effective risk management and are designed to reduce the risk of excessive risk-taking.

Remuneration systems must comply with all applicable rules, such as those of the Code and the SFSA.

The committee's chair and members must have the knowledge and experience in risk analysis necessary to make an independent evaluation of the suitability of the bank's remuneration policy. The members must be independent in relation to the bank and its executive management. Since the bank launched its new remuneration programme in 2011, the Remuneration Committee's work has focused on ongoing issues. For information on remuneration at Swedbank, see the corporate governance report and note G13.

The work of the Remuneration Committee also includes:

salary, pension, variable remuneration and other benefits for the Group Executive Committee (in accordance with the guidelines adopted by the AGM) and the head of Internal Audit
the Board's proposal to the AGM regarding remuneration guidelines for senior executives
allocation and evaluation of the bank's performance and share-based remuneration programmes and other issues associated with the programmes
Swedbank's remuneration policy
decisions pursuant to or deviations from policies in the remuneration area
annual review and evaluation of the effectiveness of the remuneration instructions
preparation and recommendation to the Board on remuneration to consultants where total remuneration exceeds SEK 20m
review of wage differences to ensure they are not arbitrary • succession planning

4.3 Audit Committee

The Audit Committee, through its work and in consultation with the external Auditor, the head of Internal Audit and the Group Executive Committee, provides the Board with access to information on business activities. Its purpose is to identify any deficiencies in routines and the organisation in terms of governance, risk management and control.

The purpose of the Audit Committee's work is to ensure that the bank's executive management establishes and maintains effective routines for internal governance, risk management and control. They should be designed to provide reasonable assurance with respect to reporting (financial reporting, operational risk) and compliance (laws, regulations and internal rules) and ensure appropriateness and efficiency in administrative processes and protection of the bank's assets. The Audit Committee also reviews the work of the internal and external auditors to ensure that it has been conducted effectively, impartially and satisfactorily. The committee proposes measures that are decided on by the Board as needed.

The head of Internal Audit is a co-opted member of the committee. The majority of the members must be independent in relation to the bank and its executive management. At least one member must also be independent in relation to the bank's major shareholders. At least one member must have special competence in accounting or auditing.

The work of the Audit Committee also includes:

reviewing and evaluating the Group's financial reporting process
responsibility for the quality of the company's reporting
responsibility for ensuring that interim and year-end reports are audited or reviewed by the external Auditor
meeting the external Auditor on each reporting date
approving consulting services by the external Auditor that exceed a certain amount
staying informed of accounting standards
evaluating the head of Internal Audit
reviewing and approving Internal Audit's budget, instruction and annual plan
reviewing Internal Audit's quarterly reports and suggested improvements
following up Internal Audit's annual plan and strategic priorities
following up External Audit's plan and risks in financial reporting

5 Internal control and risk management

The Board is responsible for ensuring that routines are in place to identify and define operational risks and that risk-taking is measured and monitored. The basis for well-functioning risk work is a strong, shared risk culture.

5.1 First line of defence – risk management by business operations

Swedbank's business units bear full responsibility for risks that arise in their operations. Their employees have the best understanding of the customer and specific insight into the local market. The bank's risk classification tools serve as support for all business processes.

5.2 Second line of defence – independent control functions

The Bank has established central, independent control functions for risk and compliance that conduct activities on behalf of business units. The control functions identify, monitor and report on risk management, including operational risks and compliancerelated risks.

Compliance

Swedbank has an overarching Compliance Function led by the Chief Compliance Officer who reports directly to the CEO. The Compliance Function's responsibilities include advising and supporting management and operating units, reviewing compliance and informing employees of regulatory requirements.

The Compliance Function focuses on risk and prioritises the riskiest compliance areas in terms of resources. The Compliance Function's work is governed by the Policy for the Compliance Function adopted by the Board.

Risk control

The independent risk organisation is responsible for identification, quantification, analysis and reporting of all material risks with the exception of compliance risks as well as conducting independent analyses and stress tests of how outside events impact Swedbank. In addition, the risk organisation provides expert advice and serves as an advisor to ensure that decisions are consistent with the bank's risk appetite and risk tolerance. Accordingly, it issues internal lending guidelines and lending mandates at various levels.

The Board's Policy on Enterprise Risk Management (ERM) describes frameworks, roles and responsibilities pertaining to risk management and control. It also contains guidelines on the size of the capital buffer maintained as protection against major economic slowdowns.

5.3 Third line of defence – Internal Audit

The purpose of Internal Audit's work is to create improvements in operations by evaluating risk management, governance and internal control.

Internal Audit is directly subordinate to the Board and thus serves as a review function independent of the executive management.

All of the bank's activities and Group companies are the purview of Internal Audit, which evaluates whether the executive management, through the internal controls and governance structures it has implemented, has ensured that (1) the controls in business operations are effective, (2) risk management processes are effective, and (3) governance processes and the organisation are appropriate, functional and support the purpose of the business. It also works proactively to suggest improvements in internal control.

In its work, Internal Audit follows professional guidelines on internal audits and the Institute of Internal Auditors' Code of Ethics as established in the International Professional Practices Framework.

Swedbank's risk management

Swedbank's risk management is built on a well developed risk process with three lines of defence.

Board of Directors

CEO

Risk management (operational)

Owns and manages risks

Business and operations (line)
Support function

First line of defence Second line of defence Third line of defence Control (operational) Evaluation (not operational)

Establishes infrastructure and

monitors risks
Risk
Compliance

Evaluates and validates the effect of the first and second lines of defence

• Internal Audit

6 CEO

The President and CEO is the officer ultimately responsible for ensuring that the Board's strategic direction and other decisions are implemented and adhered to by the business areas and subsidiaries, and that risk management, governance, IT systems, the organisation and processes are satisfactory. The CEO represents the bank externally on various matters, leads the work of the Group Executive Committee and makes decisions after consulting its members.

The CEO is permitted to delegate duties to subordinates or Group committees, although ultimate responsibility is retained by the CEO. The committees do not constitute a quorum among their own members; instead, decisions are always made by the CEO. The Board's view of the CEO's special areas of responsibility is set out in, among other places, its corporate governance policy and instruction for the CEO. The CEO is responsible for ensuring that the Board's decisions, policies and instructions are followed by the businesses and that they are reviewed and evaluated annually.

The CEO establishes Group-wide rules on internal control. To support internal control, the CEO has a number of monitoring units within the Group, primarily Group Finance, Group Risk, and Group Compliance. Follow-ups are done regularly through written reports and in-depth reviews with the heads of the various Group Functions and with the business areas. For more information, see the Board of Directors' report on internal control over financial reporting on page 57. The CEO is also responsible for ensuring that the Group has a strategy for competence management.

Group Executive Committee, other committees and forums

The Group Executive Committee (GEC) is the CEO's decision management forum and consists of 19 members: the Chief Executive Officer, the Chief Financial Officer, the Chief Risk Officer, the Chief Legal Officer, the Chief Compliance Officer, and the heads of Human Resources, the business areas Swedish Banking, Baltic Banking and LC&I, the six regions in Sweden, Group Products, Group IT, Group Treasury, Strategic Analysis and M&A. A majority of the members have direct business responsibility, and the GEC plays an important role as a forum for exchanging information and ideas. The GEC normally meets every three weeks.

In addition to the GEC, the CEO has established the following committees: the Group Asset Allocation Committee (GAAC), the Group Risk and Compliance Committee (GRCC), GEC Remuneration Committee (GEC Remco) and the Group Investment Committee (GIC).

GAAC and GRCC are led by the CFO and CRO, respectively, who report directly to the CEO. One of GAAC's goals is to

consolidate financial control of capital, liquidity, financing and tax issues as well as management and governance issues. Corresponding operational committees can be found in every business area. Their dialogue with GAAC provides an understanding of the bank's performance and contributes to consistent and harmonious governance. After consulting GRCC's members, the CRO and the CCO submit their recommendations to the Board and the CEO and support senior-level managers on central risk and compliance issues. Their evaluations are based on information and reports from risk and compliance managers as well as from operational managers and Internal Audit. GRCC contributes to the strategic planning of the Group's risk appetite to ensure harmonisation from a risk perspective. GEC Remco drafts proposals for remuneration systems and recommends variable remuneration for employees to the Board's Remuneration Committee. Swedbank's view is that remuneration should be individually based as far as possible to inspire employees to live up to its goals, strategy and vision. It must also contribute to sound risk-taking. GIC plans and prioritises the Group's IT investments in keeping with the bank's strategy. All IT investments exceeding SEK 6m must be approved by the CEO after consulting the members of GIC.

The CEO has also established a Senior Management Forum (SMF), an information and discussion forum of senior executives in the bank. This ensures implementation and coordination of strategically important issues. The CEO evaluates SMF's composition to ensure it has the right combination of competence and experience.

Focus areas in 2015:

Improved customer value through increased availability, quality and user friendliness
Improved customer offering through development of digital channels and improved advisory skills
Review of product offerings in Sweden in view of increasing digitisation
Channel strategy
Savings product strategy
IT development and security in view of increased digitisation
Integration of Sparbanken Öresund
More efficient processes, including synergies from the acquisition of Sparbanken Öresund, modified distribution forms and personnel reductions
Internal mobility as well as professional development and succession planning
Gender equality
Simplified performance assessment
Anti-money laundering
Implementation of strategic decisions and projects
Purchasing process

7 Business areas

An effective operating structure is important to the governance of the bank. The Group structure provides a framework for various roles, functions and reporting channels within the bank.

The bank's operations are conducted in three business areas: Swedish Banking, Baltic Banking and Large Corporates & Institutions.

Every business area manager is directly subordinate to the CEO. They have overarching responsibility for their operations and report continuously to the CEO. The business area managers' responsibilities include:

developing the business area's strategy and business plans and ensuring that they are implemented and reported to the CEO
creating and maintaining reporting and communication channels as a means to raise issues of material importance that must be addressed at the CEO or Board level. All these issues are set out in a written report with recommended actions
ensuring that policies and instructions are followed within the business area
customer offering and product development
integrating sustainability aspects in business decisions and procedures
profitability and financial stability in the business area
monitoring, supervising and managing the business area's assets, liabilities and profitability
maintaining a sound internal control system to mitigate, detect and quickly respond to risks and ensure compliance with laws and regulations
effective implementation of the bank's governance model within the business area

8 Group Functions and Group Products

The Group Functions support the CEO and the Group's business operations while creating consistent routines, ensuring governance and monitoring within the Group, and clarifying Swedbank's vision and strategy.

The Group Functions, which are mainly staffs operating across business areas, consist of Group Finance (including Group Treasury and Investor Relations), Communication, Risk, IT, Compliance, Public Affairs, HR and Legal. Responsibility for products and product development is consolidated in a single unit, Group Products.

Among the roles of the functions is to develop Group-wide policies and instructions for the Board and CEO to adopt. They also propose other Group-wide internal rules, which are approved by the manager of each Group Function. The Group Functions are also responsible for monitoring implementation of internal rules and governance in the Group. The purpose of these Group-wide rules and processes is to support the CEO and the Group's business operations and to clarify Swedbank's vision, purpose, values and strategy. Additionally, the Group Functions create and monitor Group-wide procedures, which support business operations and facilitate an exchange of experience between the bank's various markets. They are responsible for compiling and analysing reports for the CEO and the Board as well as proposing solutions to issues that require immediate action within each area and thereby creating an effective solution to the problem. The head of each Group Function is entitled to unrestricted insight into business operations in order to fulfil their obligations.

9 Corporate culture based on simplicity, openness and caring

A critical element for success and satisfied customers is employees who have clear goals and an understanding of the bank's purpose, values and overarching goals.

Swedbank's operations and values-based culture are founded on motivated and engaged employees who are attentive to customers' needs and wishes. We strive to develop close, long-term customer relationships built on trust. To contribute to greater customer value and meet our customers' expectations, it is critical that the bank quickly adapts to market conditions. Other important prerequisites for increased customer value are competent employees who meet the demands and diversity of our customer base. Diversity and gender equality are important to the bank's work environment and corporate culture. The work is based on a central diversity and gender equality plan, and every manager is graded based on diversity and equality goals as part of their performance. Our managers are responsible for guiding their businesses toward the bank's shared goals, supporting our employees in their development, monitoring performance and fostering a positive work environment.

The bank's code of conduct describes how we shall work and act towards customers, suppliers, competitors and authorities as well as society at large. The Sustainability and Ethics Council provides guidance for the organisation on complex issues regarding business ethics and sustainability. The aim is to reduce risks and support implementation in business decisions and processes.

An important gauge to monitor performance and give our employees the skills they need to achieve the bank's overarching goals, purpose and vision is the Performance Development (PD) process. To reach these targets, it is crucial that managers and employees make continuous monitoring a natural part of their day.

10 Information to capital markets

Swedbank provides shareholders, analysts, debt investors and other stakeholders prompt, accurate, consistent and simultaneous information on the Group's operations and financial position.

Transparency fosters an understanding of the financial reporting and the decisions that are made, as well as of the sector as a whole.

Swedbank's external reports should reflect the progress in achieving the bank's goals and priorities as well as other important changes required to monitor and evaluate the bank's financial position. The financial information should also create good insight into the bank's track record and current and future development, and be in line with the executive management,s and Board's perception of the bank.

The Group's information policy, which is included in the internal control environment, is designed to ensure that Swedbank meets the requirements for publicly listed companies. Swedbank's annual report is distributed in printed form to those who request it. The annual report, interim reports, year-end reports, press releases and other relevant information on the bank are available on the website, which is updated continuously.

Further information on Swedbank's corporate governance

On Swedbank's website, www.swedbank.com, under the tab "About Swedbank", is a special section on corporate governance issues, which contains, among other things:

Swedbank's Articles of Association
the Nomination Committee's principles and work
information on Swedbank's Annual General Meetings since 2002
information on remuneration in Swedbank and an evaluation of the remuneration guidelines for Swedbank's senior executives
the bank's code of conduct

The Board of Directors' report on internal control over financial reporting

The Board of Directors is ultimately responsible for ensuring that financial reporting complies with external regulations, and is also responsible for internal control over financial reporting (ICFR) being monitored. Swedbank's ICFR is based on the COSO model 2013 (The Committee of Sponsoring Organisations of the Treadway Commission), and consists of the following five internal control components.

Control environment: The Board of Directors and executive management establish the foundation for internal control

To support reliable reporting, internal control is based on Swedbank's organisational structure and the policies and instructions established by the Board. Furthermore, a directive has been prepared for ICFR by the CFO.

A Group-wide ICFR framework was implemented in the bank in 2015. The framework is based on the bank's vision, purpose and values (see the first spread of the annual report), and identifies risks and key controls. The framework creates a transparent control environment with clearly defined roles and responsibilities.

Risk analysis: Risk assessment based on essentiality and complexity

Risk management is an integral part of business activities. Every unit manager has primary responsibility for risk management and risk assessment in their operations and in the financial reporting process. Self-assessments of risks and controls are conducted annually, as are risk and vulnerability analyses in the event of changes.

Risk analysis within the ICFR framework is conducted at the Group level to identify and create an understanding of the risks in financial reporting with regard to both essentiality and complexity. The risk analysis is then used as a basis for deciding which areas should be covered by the framework.

Control activities: Controls at different levels

Controls are performed at various levels in the bank to ensure reliable financial reporting. The ICFR framework's controls are structured as follows: Group-level controls, controls at the process/transaction level, and general IT controls.

To ensure the application of control activities, internal rules are in place with accounting policies, planning and monitoring processes, and reporting routines. Swedbank also has a central valuation group to ensure the accurate valuation of assets and liabilities. Analyses of financial results are presented monthly to Swedbank's executive management. The Board's Audit Committee monitors the financial reporting and the effectiveness of the internal control and internal audit.

Information and communication

Group Finance ensures that accounting instructions are updated, communicated and available to the reporting units. Policies, instructions, directives and manuals on financial reporting are published on Swedbank's intranet. Moreover, national intranets are updated with national reporting routines to ensure uniform application of the principles for financial reporting and internal controls.

Monitoring

Group Finance monitors the financial reporting, which internal audit then reviews on behalf of the Board with regard to how governance, risk management and internal control are organised, and complied with.

All business areas and the largest business support units undergo performance reviews, in which the CEO, CFO, CRO and respective manager participate. The meetings cover financial performance as well as strategic and operational considerations in operating plans.

Annual monitoring and reviews of significant controls are also performed on businesses that serve the savings banks. This results in an annual third party verification, where the internal control of the services provided to the savings banks is evaluated and tested by an independent party.

Monitoring of whether or not there are any errors in the financial reporting is performed regularly through the ICFR framework. This is done by evaluating controls that are considered significant to ensure the reliability of the reporting. Executive management is kept informed of the evaluation through periodic reporting sessions.

Board of Directors

Anders Sundström Lars Idermark Ulrika Francke

Year of birth	Born 1952 Chair since 2013, Board member since 2009	Born 1957 Deputy Chair since 2013, Chair 2010–2013	Born 1956
Shareholdings in Swedbank1	Own and closely related parties: 30 000	Own and closely related parties: 143	14 350
In Swedbank as	■ Board of Directors, Chair ■ Remuneration Committee, Chair ■ Risk and Capital Committee, member ■ Audit Committee, member Attendance:■ 16/16 ■ 8/8 ■ 11/12 ■ 5/5 Total annual fees: ■ 2 390 000 ■ 100 000 ■ 205 000 ■ 205 000	■ Board of Directors, Deputy Chair ■ Remuneration Committee, member ■ Risk and Capital Committee, member Attendance: ■ 16/16 ■ 6/8 ■ 10/12 Total annual fees: ■ 815 000 ■ 100 000 ■ 205 000	■ 255 000
	Anders Sundström brings to the Board extensive experience and a wide-ranging network of contacts in political and busi ness circles through his previous positions as municipal commissioner, several minis terial posts, CEO of a savings bank and insurance company.	In addition to banking expertise, including from his time at FöreningsSparbanken, Lars Idermark has experience from a num ber of other industries at both an opera tional and strategic level. As former chair, he also provides continuity and support to others who participate in the Board's work.
Board member's independence	Independent in relation to the bank and executive management and independent in relation to the bank's major shareholders.	Independent in relation to the bank and executive management and independent in relation to the bank's major shareholders.
Education	Studies in social sciences	Master of Business Administration	University studies
Bank specific	Operational: 4 years. Board: 13 years	Operational: 9 years. Board: 15 years	Board: 21 years

experience

Work experience

President and CEO, Folksam • Minister for Employment, Minister for Enterprise and Energy, and Minister for Social Affairs • Local Government Commissioner, Piteå municipality • Member of Parliament • Sparbanken Nord (Savings Bank Nord), Chair • CEO, Sparbanken Nord (Savings Bank Nord)

Full-time board member

Other significant assignments European Savings Banks Group, Deputy Chair • ICMIF, Chair • Kooperativa Förbundet, KF, Chair • NMI Group AB, Chair

President and CEO, Södra Skogsägarna President and CEO, PostNord AB • President and CEO, KF/Coop • President, Second Swedish National Pension Fund • Deputy President and CEO, Capio AB • Executive Vice President, Deputy President and CEO, FöreningsSparbanken (Swedbank) • CFO and Executive Vice President, Föreningsbanken AB • President and CEO, LRF Holding AB

Born 1956 Board member since 2002

Own and closely related parties: 14 350

■ Board of Directors, member ■ Risk and Capital Committee, member

■ Audit Committee, Chair Attendance: ■ 16/16 ■ 11/12 ■ 5/5 Total annual fees: ■ 510 000 ■ 205 000 ■ 255 000

Ulrika Francke provides expertise in real estate and development as well as considerable experience from the bank's board. In her current role as president and CEO of one of Sweden's leading consulting firms, she also adds knowledge in urban planning.

Independent in relation to the bank and executive management and independent in relation to the bank's major shareholders.

President and CEO, Tyréns AB President and CEO, SBC Sveriges Bostadsrättscentrum AB • Head of Administration, City of Stockholm • President and CEO, Fastighets AB Brommastaden

Aleris AB, Chair Almega trade organisation, Board member • Hexagon AB, Board member • IQ Samhällsbyggnad, Board member • BIM Alliance, Chair

1) Holdings as of 31 December 2015.

Göran Hedman Anders Igel Camilla Linder

Born 1954 Board member since 2010

Own and closely related parties: 1 109

■ Board of Directors, member ■ Risk and Capital Committee, Chair Attendance: ■ 16/16 ■ 12/12 Total annual fees: ■ 510 000 ■ 255 000

Göran Hedman has held a number of executive positions at FöreningsSparbanken and brings to the Board a wealth of experience and know-how in the areas of credit and risk, as well as extensive knowledge of, and contacts in, the savings bank movement through his current position as CEO of Sparbanken in Enköping.

Göran Hedman is CEO of Sparbanken in Enköping. All aspects considered, Göran Hedman is not independent in relation to Swedbank when taking into account the cooperation agreement between Swedbank and Sparbanken in Enköping. Göran Hedman is considered independent in relation to the bank's executive management and major shareholders.

Operational: 41 years, Board: 14 years Board: 7 years Operational: 21 years Bank specific

President, Sparbanken in Enköping

Head of Research at Group Credit, FöreningsSparbanken AB (Swedbank) • Deputy Chief Credit Officer, Föreningsbanken AB • Executive positions, Föreningsbanken AB

Born 1951 Board member since 2009

Own and closely related parties: 7 500

■ Board of Directors, member ■ Remuneration Committee, member Attendance: ■ 15/16 ■ 7/8 Total annual fees: ■ 510 000 ■ 100 000

Anders Igel brings to the Board industrial, technological and financial experience after having held senior positions at Telia Sonera, Esselte and Ericsson. He provides expertise in strategic issues, restructurings and online services.

Independent in relation to the bank and executive management and independent in relation to the bank's major shareholders.

Upper secondary school M. Sc. Electrical Engineering and B. Sc. Business and Economics

Full-time board member President and CEO, Telia Sonera AB • President and CEO, Esselte AB • Executive Vice President, Telefonaktiebolaget LM Ericsson

Born 1968

deputy since 2013

representative Total annual fees: No fees

Employee representative since 2015 and

■ Board of Directors, member, employee

Camilla Linder is employee representative with long experience from banking from retail operations among other.

Own and closely related parties: 437 Shareholdings

Not applicable. Board

member's independence

Year of birth

in Swedbank1

In Swedbank as

Upper secondary school Education

Employee, Swedbank AB • Sparbanken Alfa • Föreningssparbanken • Sparbanken Sverige

experience

Work experience

Uppsala Chamber of Commerce, Board member • Sparbanken i Enköping, Board member

1) Holdings as of 31 December 2015.

Finewineandtable Sweden • Igel Insight AB, Chair • Industrial advisor to EQT

Finansförbundets koncernklubb Swedbank, Chair • SPK, Board member

Other significant assignments

Board of Directors

Year of birth Born 1967 Employee representative since 2015 Own and closely related parties: 0 Own and closely related parties:

■ Board of Directors, member, employee representative Total annual fees: No fees

Roger Ljung is employee representative and has broad experience within Swedbank.

Not applicable. Independent in relation to the bank and

Born 1965 Board member since 2009

1 000

■ Board of Directors, member ■ Risk and Capital Committee, member Attendance: ■ 15/16 ■ 10/12 Total annual fees: ■ 510 000 ■ 205 000

Pia Rudengren has broad financial knowledge and board experience through her previous role as CFO of Investor.

executive management and independent in relation to the bank's major shareholders.

Board member's

independence

Shareholdings in Swedbank1

In Swedbank as

Education Uppersecondary school B. Sc. Business and Economics B. Sc. Business Administration

Bank specific experience

Work

experience

Other significant assignments Finansförbundets förbundsstyrelse, Board member• Finansförbundets koncernklubb Swedbank, deputy chair • Finans och försäkringsbranschens A-kassa, Board member • SPK, deputy chair

Business advisor, Swedbank AB • Retail advisor, branch manager, business advisor in Swedish Banking, Swedbank

Duni AB, Board member • Kappahl AB, Board member • Social Initiative AB, Chair • Tikkurila Oyj, Board member

Vice President, W Capital Management AB

Full-time board member

• CFO, Investor AB

Roger Ljung PiaRudengren Karl-Henrik Sundström

Born 1960 Board member since 2009

Own and closely related parties: 9 750 through Alma Patria AB

■ Board of Directors, member ■ Audit Committee, member Attendance: ■ 15/16 ■ 5/5 Total annual fees: ■ 510 000 ■ 205 000

Karl-Henrik Sundström's extensive professional experience, largely from his time at Ericsson, provides the Board with valuable expertise in strategy, IT, financial markets and business development.

Independent in relation to the bank and executive management and independent in relation to the bank's major shareholders.

Operational: 29 years Board: 7 years Board: 7 years

CEO, Stora Enso AB

CFO and EVP, Stora Enso • CFO and EVP, NXP Semiconductors • CFO and deputy CEO, Telefonaktiebolaget LM Ericsson • Head of Global Services, Telefonaktiebolaget LM Ericsson • Head of Australia and New Zealand, Telefonaktiebolaget LM Ericsson

Swedish Securities Council, Board member

Born 1957 Board member since 2010

Own and closely related parties: 1 500

■ Board of Directors, member ■ Audit Committee, member Attendance: ■ 15/16 ■ 5/5 Total annual fees:■ 510 000 ■ 205 000

Siv Svensson has broad experience in the banking and financial sector, both strategic and operational, and provides insight into customer relationship management and HR issues as well as experience from Nordic business.

Independent in relation to the bank and executive management and independent in relation to the bank's major shareholders.

Operational: 27 years, Board: 6 years Operational: 20 years. Board: 1 year Bank specific

Full-time board member

CEO, Sefina Finance AB • CEO, Sefina Svensk Pantbelåning AB • Executive Vice President and Regional Head, Nordea AB • Group Controller and Nordic Head of Global Operation Services, Nordea AB • Group Controller, Merita Nordbanken AB • Administrative Head, PK Fondkommission AB

SJ AB, Board member • Allba Holding AB, Board member • InlandsInnovation AB, Board member • Karolinska University Hospital, Board member • Forum Syd, Board member

Siv Svensson Maj-Charlotte Wallin

Born 1953 Board member since 2014

Own and closely related parties: 750

■ Board of Directors, member ■ Audit Committee, member Attendance: ■ 15/16 ■ 5/5 Total annual fees: ■ 510 000 ■ 205 000

Maj-Charlotte Wallin has extensive experience with a financial background from Swedish business, including the insurance and real estate sectors.

Independent in relation to the bank and executive management and independent in relation to the bank's major shareholders.

B. Sc. International Economics B. Sc. Business and Economics Education

Full-time board member

CEO, AFA Försäkring • CFO and EVP, Alecta pensionsförsäkring • CEO, Jones Lang LaSalle Asset Management Services AB • Head of Business Area Management, Skandia Fastighet • CEO, CFO and EVP, Nordbanken Fastigheter AB • Executive positions at Nordbanken Finans AB

Kammarkollegiets fonddelegation, Board member • Swedish Heart-Lung Foundation, Board member • Fourth Swedish National Pension Fund (AP4), Board member

Year of birth

Shareholdings in Swedbank1

In Swedbank as

Board member's independence

experience

Work experience

Other significant assignments CORPORATE GOVERNANCE REPORT Group Executive Committee

Group Executive Committee

Michael Wolf

President and CEO until 9 February 2016 Born 1963. Employed since 2008 Shareholdings in Swedbank:1 83 500. Does not otherwise own any shares and is not a partner in any companies with significant business relationships with the bank

Education: M. Sc. Business and Economics Work experience: CEO of Intrum Justitia • Vice President, CFO and various positions within Skandia • various positions within SEB Major assignments outside Swedbank: Stockholm Chamber of Commerce, Chair • Anna Lindh Academy, Chair

Mikael Björknert Head of Strategic Analysis and M&A Born 1966. Employed since 2010 Shareholdings in Swedbank:1 4 392 Education: M. Sc. Business and Economics Major assignments outside Swedbank: NASDAQ OMX Nordic Ltd., Board member • UC, Board member

Birgitte Bonnesen Acting President and CEO since 9 February 2016 • Head of Swedish Banking Born 1956. Employed since 1987 Shareholdings in Swedbank:1 3 702 Education: MA Economics and Modern Languages

Göran Bronner Group Chief Financial Officer (CFO) Born 1962. Employed since 2009 Shareholdings in Swedbank:1 25 000 through companies Education: M. Sc. Business and Economics

Major assignments outside Swedbank: CTT Systems AB, Board member

Ulf Ejelöv Head of Northern Region Born 1959. Employed since 2009 Shareholdings in Swedbank:1 7 060 Education: LL.M.

Anders Ekedahl Group Chief Information Officer (CIO) Born 1960. Employed since 1987 Shareholdings in Swedbank:1 4 564 Education: M. Sc. Business and Economics

Björn Elfstrand Head of Stockholm Region Born 1964. Employed since 1989 Shareholdings in Swedbank:1 26 300 Education: M. Sc. Business and Economics.

Jonas Erikson Head of Group Products Born 1974. Employed since 2009 Shareholdings in Swedbank:1 0 Education: Studies in economics

1) Holdings as of 31 December 2015.

CORPORATE GOVERNANCE REPORT Group Executive Committee

Lars Friberg Head of Group Human Resources Born 1962. Employed since 2009 Shareholdings in Swedbank:1 1 808 Education: M. Sc. Business and Economics

Cecilia Hernqvist General Counsel and Head of Communications Born 1960. Employed since 1990 Shareholdings in Swedbank:1 7 795 Education: LL.M.

Annika Hellström Head of Central Region Born 1965. Employed since 1991 Shareholdings in Swedbank:1 200 Education: Upper secondary school

Anders Karlsson Group Chief Risk Officer (CRO) Born 1966. Employed since 2010 Shareholdings in Swedbank:1 500 Education: M. Sc. Business and Economics

Lars Ljungälv Head of Southern Region Born 1969. Employed since 2014 Shareholdings in Swedbank:1 500 Education: M. Sc. Business and Economics Major assignments outside Swedbank: Intersport AB, Chair • Bergendahl & Son, Board member • Lund University, Deputy Chair • Malmö FF, Board member

Helo Meigas Head of Group Treasury Born 1965. Employed since 2004 Shareholdings in Swedbank:1 5 114 Education: M.A.L.D. with an emphasis on International Business Law and Finance

Björn Meltzer Head of Large Corporates & Institutions (acting)² Born 1961. Employed since 2010 Shareholdings in Swedbank:1 0 Education: Studies in economics Major assignments outside Swedbank: Middlepoint AB, Board member

Priit Perens Head of Baltic Banking Born 1964. Employed since 2003 Shareholdings in Swedbank:1 5 312 Education: MA Economics

Lena Smeby-Udesen Head of Western Region Born 1961. Employed since 2012 Shareholdings in Swedbank:1 0 Education: M. Sc. Business and Economics, Executive MBA

Major assignments outside Swedbank: IVA, Board member • Connect Väst, Board member • West Sweden Chamber of Commerce, Board member

Viveka Strangert Head of Compliance Born 1967. Employed since 2010 Shareholdings in Swedbank:1 0 Education: LL.M.

Christer Trägårdh

Head of Eastern Region Born 1963 . Employed since 2014 Shareholdings in Swedbank:1 600 Education: M. Sc. Business and Economics, Executive MBA Major assignments outside Swedbank: Wilzens Förvaltnings AB, Chair • Svensk Handel Försäkring, Board member • Sebbot Invest AB, Bord member

1) Holdings as of 31 December 2015. Own and closely related parties. 2) Björn Meltzer is acting Head of LC&I since 14 December 2015. He succeeded Magnus Gagner Geeber, who left his position at Swedbank.

Proposed disposition of earnings and statement of the Board of Directors

In accordance with the balance sheet of Swedbank AB, SEK 46 510m is at the disposal of the Annual General Meeting:

The Board of Directors recommends that the earnings be disposed as follows (SEKm):

A cash dividend of SEK 10.70 per ordinary share	11 880
To be carried forward to next year	34 630
Total disposed	46 510

The proposed total amounts to be distributed and carried forward to next year have been calculated on all 1 105 403 750 outstanding ordinary shares at 31 December of 2015, plus 4 916 619 outstanding ordinary shares entitled to dividends that have been exercised by employees between 1 January and 25 February 2016 relating to remuneration programs. The proposed total amounts to be distributed and carried forward to next year are ultimately calculated on the number shares entitled to dividends on the record day. The amounts could change in the event of additional share repurchases or sales of treasury shares before the record day.

Unrealised changes in the value of assets and liabilities at fair value have had a net effect on equity of SEK 1 010m.

The proposed record day for the dividend is 7 April 2016. The last day for trading in Swedbank's shares including the right to the dividend is 5 April 2016. If the Annual General Meeting adopts the Board's proposal, the dividend is expected to be paid by Euroclear on 12 April 2016. The financial companies group's capital base surpassed the statutory capital requirement as of year-end by SEK 50 331m. Surplus capital in Swedbank AB amounted to SEK 66 517m.

The business conducted in the parent company and the Group involves no risks beyond what occur and can be assumed will occur in the industry or the risks associated with conducting business activities. The Board of Directors has considered the parent company's and the Group's consolidation needs through a comprehensive assessment of the parent company's and the Group's financial position and the parent company's and the Group's ability to meet their obligations. The assessment has also been done based on currently expected regulatory changes. Given the financial position of the parent company and the Group, there can be no assessment other than that the parent company and the Group can continue their business and that the parent company and the Group can be expected to meet their liabilities in both the short and long term and have the ability to make the necessary investments. It is the assessment of the Board of Directors that the size of the equity, even after the proposed dividend, is reasonable in proportion to the scope of the parent company's and the Group's business and the risks associated with conducting the business.

The assessment of the Board of Directors is thatthe proposed dividend is justifiable given the demands that are imposed due to the nature, scope and risks associated with the business and the Group's business on the size of the parent company's and the Group's equity as well as on the parent company's and the Group's balance sheets, liquidity and financial positions.

Financial statements and notes – Group

Income statement

Statement of comprehensive income
Balance sheet
Statement of changes in equity
Statement of cash flow

Initial notes

71	Note G1		Corporate information	Balance sheet
71	Note G2		Accounting policies	119	Note G21	Treasury bills and other bills eligible for refinancing
79	Note G3		Risks			with central banks etc.
79			Credit risks	119	Note G22	Loans to credit institutions
87			Assets taken over for protection of claims	120	Note G23	Loans to the public
			and cancelled leases	121	Note G24	Bonds and other interest-bearing securities
88			Liquidity risk	121	Note G25	Financial assets for which the customers bear
93			Market risk			the investment risk
94			Interest rate risk	121	Note G26	Shares and participating interests
95			Currency risk	122	Note G27	Investments in associates and joint ventures
96			Share price risk	123	Note G28	Derivatives
96			Trading operations	124	Note G29	Intangible fixed assets
97			Operational risks	126	Note G30	Tangible assets
97			Insurance risks	127	Note G31	Investment properties
98	Note G4		Capital	128	Note G32	Other assets
98			Internal capital assessment	128	Note G33	Prepaid expenses and accrued income
100			Capital adequacy analysis	128	Note G34	Amounts owed to credit institutions
103	Note G5		Operating segments	128	Note G35	Deposits and borrowings from the public
105	Note G6		Products	128	Note G36	Financial liabilities for which the customers bear the investment risk
106	Note G7		Geographical distribution	128	Note G37	Debt securities in issue
				128	Note G38	Short positions in securities
	Income statement			129	Note G39	Pensions
108	Note G8		Net interest income
109	Note G9		Net commission income	131	Note G40	Insurance provisions
109		Note G10	Net gains and losses on financial items at fair value	131	Note G41	Other liabilities and provisions
110		Note G11	Net insurance	131	Note G42	Accrued expenses and prepaid income
110		Note G12	Other income	131	Note G43	Subordinated liabilities
110		Note G13	Staff costs and other staff-related key ratios	132	Note G44	Equity
115		Note G14	Other general administrative expenses	132	Note G45	Fair value of financial instruments
115		Note G15	Depreciation/amortisation of tangible and	136	Note G46	Reclassification of financial assets
			intangible fixed assets	137	Note G47	Financial assets and liabilities which have been offset or are subject to netting agreements or similar agreements
115		Note G16	Impairments of tangible assets including
			repossessed lease assets
115		Note G17	Credit impairments	Statement of cash flow
115		Note G18	Tax	138	Note G48	Specification of adjustments for non-cash items in operating activities
118		Note G19	Earnings per share
				Other notes
			Statement of comprehensive income

Note G20 Tax for each component in other comprehensive income

Note G53 Business combinations Note G54 Discontinued operations Note G55 Related parties and other significant relationships Note G56 Interests in unconsolidated structured entities Note G57 Sensitivity analysis Note G58 Other information

Note G50 Assets pledged, contingent liabilities and commitments

Swedbank Annual Report 2015

Financial statements, Group

Note G59 Events after 31 December 2015

Note G49 Dividend paid and proposed

Note G51 Transferred financial assets Note G52 Operational leasing

Income statement, Group

SEKm	Note	2015	2014
Interest income		34 983	41 052
Interest expenses		–11 990	–18 410
Net interest income	G8	22 993	22 642
Commission income		16 583	16 252
Commission expenses		–5 384	–5 048
Net commission income	G9	11 199	11 204
Net gains and losses on financial items at fair value	G10	571	1 986
Insurance premiums		2 001	1 889
Insurance provisions		–1 293	–1 308
Net insurance	G11	708	581
Share of profit or loss of associates	G27	863	980
Other income	G12	1 290	1 911
Total income		37 624	39 304
Staff costs	G13	9 395	10 259
Other general administrative expenses	G14	6 266	6 625
Total general administrative expenses		15 661	16 884
Depreciation/amortisation of tangible and intangible fixed assets	G15	672	718
Total expenses		16 333	17 602
Profit before impairments		21 291	21 702
Impairments of intangible assets	G29	254	1
Impairments of tangible assets	G16	72	256
Credit impairments	G17	594	419
Operating profit		20 371	21 026
Tax expense	G18	4 625	4 301
Profit for the year from continuing operations		15 746	16 725
Loss for the year from discontinued operations, after tax	G54	–6	–262
Profit for the year		15 740	16 463
Profit for the year attributable to:
Shareholders of Swedbank AB		15 727	16 447
Profit for the year from continuing operations		15 733	16 709
Loss for the year from discontinued operations	G54	–6	–262
Non-controlling interests		13	16
Profit for the year from continuing operations		13	16
SEK
Earnings per share, total operations	G19	14.23	14.93

after dilution	G19	14.13	14.81
Earnings per share, continuing operations	G19	14.24	15.17
after dilution	G19	14.14	15.05
Earnings per share, discontinued operations	G19	–0.01	–0.24
after dilution	G19	–0.01	–0.24

Statement of comprehensive income, Group

SEKm	Note	2015	2014
Profit for the year reported via income statement		15 740	16 463
Items that will not be reclassified to the income statement
Remeasurements of defined benefit pension plans	G39	3 539	463
Share related to associates		88	–9
Income tax	G20	–798	–101
Total		2 829	353
Items that may be reclassified to the income statement
Exchange differences, foreign operations
Gains/losses arising during the year		–1 678	2 917
Reclassification adjustments to income statement, profit for the year from discontinued operation	G54	87	508
Hedging of net investments in foreign operations:
Gains/losses arising during the year		1 489	–2 320
Reclassification adjustments to income statement, profit for the year from discontinued operation	G54	–91	–365
Cash flow hedges:
Gains/losses arising during the year		145	26
Reclassification adjustments to income statement,net interest income		7	17
Share of other comprehensive income of associates:
Exchange differences, foreign operations		–136	–30
Cash flow hedges		1	1
Income tax:	G20
Income tax		–358	505
Reclassification adjustments to income statement, income tax		–2	–4
Reclassification adjustments to income statement, profit for the year from discontinued operation, income tax	G54	28	80
Total		–508	1 335
Other comprehensive income for the year net of tax		2 321	1 688
Total comprehensive income for the year		18 061	18 151
Total comprehensive income for the year attributable to:
Shareholders of Swedbank AB		18 047	18 137
Non-controlling interests		14	14

Balance sheet, Group

SEKm	Note	2015	2014	1/1/2014
Assets
Cash and balances with central banks		186 312	113 768	59 382
Treasury bills and other bills eligible for refinancing with central banks, etc.	G21	76 552	46 225	56 814
Loans to credit institutions	G22	86 418	113 820	82 278
Loans to the public	G23	1 413 955	1 404 507	1 264 910
Value change of interest hedged item in portfolio hedge		1 009	1 291	62
Bonds and other interest-bearing securities	G24	88 610	124 455	125 585
Financial assets for which the customers bear the investment risk	G25	153 442	143 319	122 743
Shares and participating interests	G26	11 074	9 931	7 109
Investments in associates	G27	5 382	4 924	3 640
Derivatives	G28	86 107	123 202	64 352
Intangible fixed assets	G29	13 690	14 319	13 658
Investment properties	G31	8	97	685
Tangible assets	G30	1 981	2 653	3 140
Current tax assets		1 662	1 304	895
Deferred tax assets	G18	192	638	417
Pension assets	G39	1 274
Other assets	G32	14 677	10 103	9 578
Prepaid expenses and accrued income	G33	6 362	6 126	6 992
Group of assets classified as held for sale		148	615	1 862
Total assets		2 148 855	2 121 297	1 824 102

Liabilities and equity
Liabilities
Amounts owed to credit institutions	G34	150 493	171 453	121 621
Deposits and borrowings from the public	G35	748 271	676 679	620 608
Financial liabilities for which the customers bear the investment risk	G36	157 836	146 177	125 548
Debt securites in issue	G37	826 535	835 012	726 275
Short positions securities	G38	8 191	27 058	17 519
Derivatives	G28	68 681	85 694	55 011
Current tax liabilities		105	1 477	1 893
Deferred tax liabilities	G18	3 071	1 684	2 383
Pension provisions	G39	17	2 548	2 925
Insurance provisions	G40	1 728	1 745	1 645
Other liabilities and provisions	G41	22 715	22 330	14 397
Accrued expenses and prepaid income	G42	13 243	13 071	14 194
Subordinated liabilities	G43	24 613	18 957	10 159
Liabilities directly associated with group of assets classified as held for sale		14	39	219
Total liabilities		2 025 513	2 003 924	1 714 397
Equity	G44
Non-controlling interests		179	170	165
Equity attributable to shareholders of the parent company		123 163	117 203	109 540
Total equity		123 342	117 373	109 705
Total liabilities and equity		2 148 855	2 121 297	1 824 102

Total assets increased by SEK 28bn from 1 January 2015. Assets increased mainly due to higher cash and balances with central banks, which rose by SEK 73bn. The increase is mainly attributable to higher deposits in the US Federal Reserve and the Central Banks within the Eurosystem. Deposits and borrowings from the public rose by a total of SEK 72bn, mainly corporate deposits. Lending to credit institutions decreased by SEK 27bn at the same time that amounts owed to them decreased by SEK 21bn. Balance sheet items related to credit institutions fluctuate over time depending on repos, among other things. The market value of derivatives decreased on both the asset and liability sides, mainly due to large movements in interest rates and currencies.

Excluding the National Debt Office and repos, lending volumes increased by SEK 45n. The increase related to all home markets in local currency; SEK 37bn of the increase is attributable to mortgages in Sweden. Short positions in equities decreased due to lower trading volumes at year-end compared with the previous year. The increase in subordinated liabilities was due to an issuance of USD 750m in Additional Tier 1 capital to optimise the capital structure in accordance with the new European capital requirements. The change in equity was the net of the profit for the year and a dividend of SEK 12.5bn for 2014.

Statement of changes in equity, Group

	Equity attributable to shareholders of Swedbank AB							Non–con trolling interests	Total equity
SEKm	Share capital	Other contributed equity1	Exchange differences. subsidiaries and associates	Hedging of net investments in foreign operations	Cash flow hedges	Retained earnings	Total
Opening balance 1 January 2014	24 904	17 275	–833	293	–139	68 040	109 540	165	109 705
Dividends						–11 133	–11 133	–9	–11 142
Share based payments to employees						459	459		459
Deferred tax related to share based payments to employees						16	16		16
Current tax related to share based payments to employees						50	50		50
Repurchase of own shares for trading purposes						–32	–32		–32
Associates' disposal of shares in Swedbank AB						166	166		166
Total comprehensive income for the year			3 397	–2 094	34	16 800	18 137	14	18 151
of which reported through profit or loss						16 447	16 447	16	16 463
of which reported through other comprehensive income, before tax			3 397	–2 685	44	454	1 210	–2	1 208
of which income tax reported through other comprehensive income				591	–10	–101	480		480
Closing balance 31 December 2014	24 904	17 275	2 564	–1 801	–105	74 366	117 203	170	117 373
Opening balance 1 January 2015	24 904	17 275	2 564	–1 801	–105	74 366	117 203	170	117 373
Dividends						–12 539	–12 539	–5	–12 544
Share based payments to employees						413	413		413
Deferred tax related to share based payments to employees						–42	–42		–42
Current tax related to share based payments to employees						63	63		63
Disposal of own shares for trading purposes						33	33		33
Acquired non-controlling interest						–8	–8		–8
Associates' disposal of shares in Swedbank AB						–7	–7		–7
Total comprehensive income for the year			–1 728	1 097	122	18 556	18 047	14	18 061
of which reported through profit or loss						15 727	15 727	13	15 740
of which reported through other comprehensive income, before tax			–1 728	1 398	153	3 627	3 450	1	3 451
of which income tax reported through other comprehensive income				–301	–31	–798	–1 130		–1 130
Closing balance 31 December 2015	24 904	17 275	836	–704	17	80 835	123 163	179	123 342

1) Other contributed equity consists mainly of share premiums.

Statement of cash flow, Group

SEKm Note	2015	2014
Operating activities
Operating profit	20 371	21 026
Loss for the period from discontinuing operations	–6	–262
Adjustments for non-cash items in operating activities G48	74	–555
Income taxes paid	–4 660	–5 494
Increase/decrease in loans to credit institution	27 173	–26 662
Increase/decrease in loans to the public	–17 976	–115 813
Increase/decrease in holdings of securities for trading	4 820	12 925
Increase/decrease in deposits and borrowings from the public including retail bonds	76 381	34 957
Increase/decrease in amounts owed to credit institutions	–19 342	45 468
Increase/decrease in other assets	30 492	–41 353
Increase/decrease in other liabilities	–46 395	84 693
Cash flow from operating activities	70 932	8 930
Investing activities
Business combinations		–2 918
Business disposals	245	–590
Acquisitions of and contributions to associates	–10	–814
Acquisition of other fixed assets and strategic financial assets	–4 075	–1 111
Disposals of/matured other fixed assets and strategic financial assets	1 570	362
Cash flow from investing activities	–2 270	–5 071
Financing activities
Issuance of interest-bearing securities	229 220	114 936
Redemption of interest-bearing securities	–132 963	–139 976
Issuance of commercial paper	941 257	730 879
Redemption of commercial paper	–1 019 742	–646 040
Dividends paid	–12 544	–11 138
Cash flow from financing activities	5 228	48 661
Cash flow for the year	73 890	52 520
Cash and cash equivalents at the beginning of the year	113 768	59 382
Cash flow for the year	73 890	52 520
Exchange rate differences on cash and cash equivalents	–1 346	1 866
Cash and cash equivalents at end of the year	186 312	113 768

Comments on the consolidated cash flow statement

The cash flow statement shows receipts and payments during the year as well as cash and cash equivalents at the beginning and end of the year. The cash flow statement is reported using the indirect method and is divided into payments from operating activities, investing activities and financing activities.

Operating activities

Cash flow from operating activities is based on operating profit for the year. Adjustments are made for items not included in cash flow from operating activities. Changes in assets and liabilities from operating activities consist of items which are part of normal business activities, such as loans to and deposits and borrowings from the public and credit institutions, and which are not attributable to investing and financing activities. Cash flow includes interest receipts of SEK 35 870 m (42 445) and interest payments of SEK 11 964 m (16 773). Capitalised interest is included.

Investing activities

Investing activities consist of purchases and sales of businesses and other fixed assets such as owner-occupied properties, investment properties and equipment, and strategic financial assets. The latter refers to holdings of interest-bearing securities held to maturity and strategic shareholdings in companies other than subsidiaries and associates.

In 2015 Svensk Fastighetsförmedling AB was divested for SEK 245m and Swedbank Juristbyrån AB for SEK 1. Capital contributions of SEK 10m were paid to Getswish AB. In addition, bonds were acquired in 2015 for SEK 3 629m (500) and bonds holdings matured for SEK 1 054m (169). During the year other tangible assets were acquired for SEK 446m (611) and other tangible assets were divested for SEK 516m (913).

In 2014 Sparbanken Öresund AB was acquired for SEK 2 918m, including acquired cash and cash equivalents of SEK 20m. Moreover, Färs och Frosta Sparbank AB was converted during the year to Sparbanken Skåne AB. The new Sparbanken Skåne includes the former Sparbanken 1826 and branches acquired from Sparbanken Öresund AB. In connection with the conversion, Swedbank AB invested SEK 265m in a new share issue and acquired shares for SEK 549m. Swedbank AB's ownership interest in the new Sparbanken Skåne AB is 22 per cent. In 2014 SIA Ektornet Kr Valdemara 27/29 was sold for SEK 140m, Imoniy grupé ALITA for SEK 184m, Inedahl HB and condominium certificates of title for SEK 13m and branches from Sparbanken Öresund AB to Sparbanken Skåne AB for SEK –913m.

Cash and cash equivalents

Cash and cash equivalents consist of cash and balances with central banks, which correspond to the balance sheet item Cash and balances with central banks. Cash and cash equivalents in the statement of cash flow are defined according to IAS 7 and do not correspond to what the Group considers liquidity.

Notes

All amounts in the notes are in millions of Swedish kronor (SEKm) and represent carrying amounts unless indicated otherwise. Figures in parentheses refer to the previous year.

G1 Corporate information

The consolidated financial statements and the annual report for Swedbank AB (publ) for the financial year 2015 were approved by the Board of Directors and the CEO for publication on 25 February 2016. The parent company, Swedbank AB, maintains its registered office in Stockholm at the following address: Landsvägen 40, 172 63 Stockholm, Sweden. The company's shares are traded on the NASDAQ OMX Nordic Exchange in Stockholm in the Nordic Large Cap segment. The Group offers financial services and products in its home markets of Sweden, Estonia, Latvia and Lithuania. The operations are described more extensively in the Board of Directors' report.

The consolidated financial statements and the annual report will ultimately be adopted by the parent company's Annual General Meeting on 5 April 2016.

G2 Accounting policies

1	BASIS OF ACCOUNTING	71
2	CHANGES IN ACCOUNTING POLICIES	71
3	SIGNIFICANT ACCOUNTING POLICIES	71
3.1	Presentation of financial statements (IAS 1)	71
3.2	Consolidated financial statements (IFRS 3, IFRS 10)	71
3.3	Assets and liabilities in foreign currency (IAS 21)	72
3.4	Financial instruments (IAS 32, IAS 39)	72
3.5	Financial instruments, measurement (IAS 39)	72
3.6	Leases (IAS 17)	74
3.7	Associates and joint ventures (IAS 28, IFRS 11)	74
3.8	Intangible assets (IAS 38)	74
3.9	Investment properties (IAS 40)	75
3.10	Tangible assets (IAS 2, 16)	75
3.11	Borrowing costs (IAS 23)	75
3.12	Provisions (IAS 37)	75
3.13	Pensions (IAS 19)	75
3.14	Insurance contracts (IFRS 4)	75
3.15	Revenues (IAS 18)	75
3.16	Share-based payment (IFRS 2)	75
3.17	Impairment (IAS 36)	76
3.18	Tax (IAS 12)	76
3.19	Non-current assets held for sale and discontinued operations (IFRS 5)	76
3.20	Cash and cash equivalents (IAS 7)	76
3.21	Operating segments (IFRS 8)	76
4	NEW STANDARDS AND INTERPRETATIONS	76
5	CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES	77
5.1	Judgments	77
5.2	Estimates	77

1 BASIS OF ACCOUNTING

The financial reports and the consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the EU, and interpretations of them. The standards are issued by the International Accounting Standards Board (IASB) and the interpretations by the IFRS Interpretations Committee. The standards and interpretations become mandatory for Swedbank's consolidated financial statements concurrently with their approval by the EU. Complete financial reports refer to:

balance sheet as at the end of the period,
statement of comprehensive income for the period,
statement of changes in equity for the period,
cash flow statement for the period, and
notes, comprising a summary of significant accounting policies and other explanatory information.

The consolidated financial statements are also prepared according to the Swedish Financial Reporting Board's recommendation RFR 1 Complementary accounting rules for groups and pronouncements, certain complementary rules in the Annual Accounts Act for Credit Institutions and Securities Companies and the regulations and general advice of the Swedish Financial Supervisory Authority, FFFS 2008:25.

The financial statements are based on the historical cost basis. Subsequent measurements of financial instruments are to a large extent at fair value. The carrying amounts of financial assets and liabilities subject to hedge accounting at fair value have been adjusted for changes in fair value attributable to the hedged risk. The financial statements are presented in Swedish kronor and all figures are rounded to millions of kronor (SEKm) unless indicated otherwise.

2 CHANGES IN ACCOUNTING POLICIES

The following adoption of accounting pronouncements and changes are applied in the 2015 financial reports.

Annual Improvements 2011–2013

On 1 January 2015, the Group adopted amendments to several IFRS standards, resulting from the 2011–2013 Annual Improvements. This comprises amendments to a number of current IFRS standards for changes in presentation, recognition or measurement and terminology or editorial. The amendments did not have a material impact on the Group's financial position, results or cash flows.

Other IFRS changes

Other than those above, no new or amended standards or interpretations have been applied or have had an impact on the Group's financial position, results, cash flows or disclosures.

3 SIGNIFICANT ACCOUNTING POLICIES

3.1 Presentation of financial statements (IAS 1)

Financial statements provide a structured representation of a company's financial position and financial results. The purpose is to provide information on the company's financial position, financial results and cash flows useful in connection with financial decisions. The financial statements also indicate the results of the executive management's administration of the resources entrusted to them. Complete financial statements consist of a balance sheet, statement of comprehensive income, statement of changes in equity, cash flow statement and notes. Swedbank presents the statement of comprehensive income in the form of two statements. A separate income statement contains all revenue and expense items, provided that a special IFRS does not require or allow otherwise. Other revenue and expense items are recognised in other comprehensive income. The statement of comprehensive income contains the profit or loss recognised in the income statement as well as the components included in other comprehensive income.

3.2 Consolidated financial statements (IFRS 3, IFRS 10)

The consolidated financial statements comprise the parent company and those entities (including special purpose vehicles) over which the parent company has control. The parent company has control when it has power and is capable of managing the relevant activities of another entity, is exposed to a variable return and is able to us its power to affect that return. These entities, subsidiaries, are included in the consolidated financial statements in accordance with the acquisition method from the day that control is

obtained and are excluded from the day that control ceases. According to the acquisition method, the acquired unit's identifiable assets, liabilities and contingent liabilities that satisfy the recognition criteria are recognised and measured at fair value upon acquisition. The surplus between the cost of the business combination, transferred consideration measured at fair value on the acquisition date and the fair value of the acquired share of identifiable assets, liabilities and reported contingent liabilities is recognised as goodwill. If the amount is less than the fair value of the acquired company's net assets, the difference is recognised directly in the income statement as bargain purchase within Other income. The transferred consideration (purchase price) includes the fair value of transferred assets, liabilities and shares which, in applicable cases, have been issued by the Group as well as the fair value of all assets or liabilities that are the result of an agreement on contingent consideration. Acquisition-related costs are recognised when they arise. For each acquisition, the Group determines whether all non-controlling holdings in the acquired company should be recognised at fair value or at the holding's proportionate share of the acquired subsidiary's net assets. A subsidiary's contribution to equity includes only the equity that arises between acquisition and disposal. All intra-Group transactions and intra-Group gains are eliminated.

Transactions with non-controlling owners are recognised as equity transactions with the Group's shareholders in their capacity as owners. In the case of acquisitions of interests from non-controlling owners, the difference between the price paid for the interests and the acquired share of the carrying amount of the subsidiary's net assets is recognised in equity attributable to the parent company's shareholders as retained earnings. The carrying amounts of holdings with and without control are adjusted to reflect the changes in their relative holdings. Gains and losses on the sale of interests to non-controlling owners are also recognised in equity. If, following a sale of its interests, the Group no longer has control, its remaining holding is remeasured at fair value and the change is recognised in its entirety in the income statement. This fair value subsequently serves as the cost of the remaining holding in the former subsidiary for reporting purposes. All amounts related to the divested unit that were previously recognised in other comprehensive income are recognised as if the Group directly divested the related assets or liabilities, due to which amounts previously recognised in other comprehensive income may be reclassified as profit or loss. If the interest in an associate is reduced but a significant influence is retained, the proportionate share of the amount previously recognised in other comprehensive income is reclassified to profit or loss.

3.3 Assets and liabilities in foreign currency (IAS 21)

The consolidated financial statements are presented in SEK, which is also the parent company's functional currency and presentation currency. Functional currency refers to the main currency used in an entity's cash flows. Each entity within the Group determines its own functional currency according to its primary economic environment. Transactions in a currency other than the functional currency (foreign currency) are initially recorded at the exchange rate prevailing at the transaction day. Monetary assets and liabilities in foreign currency and non-monetary assets in foreign currency measured at fair value are translated at the rates prevailing at the closing day. Outstanding forward exchange contracts are translated at closing day forward rates. Holdings of foreign bank notes are translated at the buying rates for the notes as of the closing day. All gains and losses on the translation of monetary items, including the currency component in forward exchange contracts, and non-monetary items measured at fair value are recognised in the income statement in net gains and losses on financial items at fair value as changes in exchange rates. Assets and liabilities in subsidiaries and associates with a functional currency other than SEK are translated to the presentation currency at the closing day exchange rate. The income statement is translated at the exchange rate for each transaction. For practical purposes, the average rate for the period is generally used. Exchange rate differences that arise are recognised in other comprehensive income. As a result, exchange rate differences attributable to currency hedges of investments in foreign operations are also recognised in other comprehensive income, taking into account deferred tax. This is applied when the requirements for hedge accounting are met. Ineffectiveness in hedges is recognised directly in the income statement in net gains and losses on financial items at fair value. When subsidiaries and associates are divested, cumulative translation differences and exchange rate differences are recognised in the income statement.

3.4 Financial instruments (IAS 32, IAS 39)

A large part of the Group's balance sheet items represents financial instruments. A financial instrument is any form of agreement which gives rise to a financial asset in one company and a financial liability or equity instrument in another. Cash is an example of

a financial asset, while financial liabilities might include an agreement to pay or receive cash or other financial assets. Financial instruments are classified on relevant lines of the balance sheet depending on the nature of the instrument and the counterparty. If a financial instrument does not have a specific counterparty or it is listed on the market, the instrument is classified on the balance sheet among various types of securities. Financial liabilities where the creditor has a lower priority than others are classified on the balance sheet as Subordinated liabilities. A derivative is a financial instrument that is distinguished by the fact that its value changes, for example, due to exchange rates, interest rates or share prices, it requires little or no initial net investment and it is settled on a future date. Derivatives are reported on separate lines of the balance sheet as assets or liabilities depending on whether the contract has a positive or negative fair value. Contractually accrued interest is recognised among prepaid or accrued income or expenses in the balance sheet. Financial assets are recognised on the balance sheet on the trade day when an acquisition agreement has been entered into, with the exception of loans and receivables, which are recognised on the settlement day. Financial assets are derecognised when the right to obtain the cash flows from a financial instrument has expired or has been transferred to another party. Financial liabilities are removed from the balance sheet when the obligation in the agreement has been discharged, cancelled or expired.

Embedded derivatives

An embedded derivative is a component of a hybrid instrument that includes a nonderivative host contract, with the effect that some of the cash flows varies in a manner similar to a stand-alone derivative. An embedded derivative is separated from the host contract and recognised separately within derivatives on the balance sheet when its financial features are not closely related to the host contract's, provided that the combined financial instrument is not recognised at fair value in the income statement. Repos

A genuine repurchase transaction (repo) is defined as a contract where the parties have agreed on the sale of securities and the subsequent repurchase of corresponding assets at a predetermined price. In a repo, the sold security remains on the balance sheet, since the Group is exposed to the risk that the security will fluctuate in value before the repo expires. The payment received is recognised as a financial liability on the balance sheet based on the respective counterparty. The securities sold are also recognised as a pledged asset. The proceeds received for acquired securities, so-called reverse repos, are recognised on the balance sheet as a loan to the selling party.

Securities loans

Securities that have been lent remain on the balance sheet, since the Group remains exposed to the risk that they will fluctuate in value. Securities that have been lent out are recognised on the trade day as assets pledged, while borrowed securities are not reported as assets. Securities that are lent out are carried in the same way as other security holdings of the same type. In cases where borrowed securities are sold, so-called short-selling, an amount corresponding to the fair value of the securities is recognised in Other liabilities on the balance sheet.

Offsetting

Financial assets and financial liabilities are offset and recognised net in the balance sheet if there is a legal right of set-off both in the normal course of business and in the event of bankruptcy, and if the intent is to settle the items with a net amount or simultaneously realise the asset and settle the liability.

3.5 Financial instruments, measurement (IAS 39)

The Group's financial instruments are divided into the following valuation categories: • financial instruments at fair value through profit or loss,

loans and receivables,
held-to-maturity investments, and
other financial liabilities.

Certain individual holdings of insignificant value have been classified in the valuation category available-for-sale. All financial instruments are initially recognised at fair value. The best evidence of fair value at initial recognition is the transaction price. For financial instruments that are not subsequently measured at fair value through profit or loss, supplementary entries are also made for additions or deductions of direct transaction expenses to acquire or issue the financial instrument. Subsequent measurement of financial instruments depends on the valuation category to which the financial instrument is attributed. Notes to items in the balance sheet with financial instruments indicate how the carrying amount is divided between valuation categories. The categorisation is shown in the table below.

Valuation category, fair value through profit or loss

Financial instruments at fair value through profit or loss comprise instruments held for trading and all derivatives, excluding those designated for hedge accounting. Financial instruments held for trading are acquired for the purpose of selling or repurchasing in the near term or are part of a portfolio for which there is evidence of a pattern of shortterm profit-taking. In the notes to the balance sheet, these financial instruments are classified at fair value through profit or loss, trading. This category also includes other financial instruments that upon initial recognition have irrevocably been designated as at fair value, the so-called fair value option. The option to irrevocably measure financial instruments at fair value is used in the Group for individual portfolios of loans, securities in issue and deposits, when the instruments, together with derivatives, essentially eliminate the portfolio's aggregate interest rate risk.

Typically these financial instruments have a fixed contractual interest rate. The fair value option is used to eliminate the accounting volatility that would otherwise arise because of the different measurement principles that are normally used for derivatives compared with other financial instruments. Financial liabilities in insurance operations, where the customer bears the investment risk, are categorised in the same way when corresponding assets are also measured at fair value. The Group has chosen to categorise holdings of shares and participating interests that are not associates or intended for trading at fair value through profit or loss, since they are managed and evaluated based on fair value. In the notes to the balance sheet, these financial instruments are classified at fair value through profit or loss, other.

The fair value of financial instruments is determined based on quoted prices on active markets. When such market prices are not available, generally accepted valuation models such as discounted future cash flows are used. The valuation models are based on observable market data, such as quoted prices on active markets for similar instruments or quoted prices for identical instruments on inactive markets. Differences that arise at initial recognition between the transaction price and the fair value according to a valuation model, so called day 1-profits or losses, are recognised in the income statement only when the valuation model entirely has been based on observable market data. In all other cases the difference is amortised during the financial instrument's remaining maturity. For loans measured at fair value where observable market data on the credit margin are not available at the time of measurement, the credit margin

for the most recent transaction with the same counterparty is used. Changes in value are recognised through profit or loss in net gains and losses on financial items at fair value. For financial instruments in trading operations, the Group's profit or loss item also includes share dividends. Changes in value owing to changes in exchange rates are recognised as changes in exchange rates in the same profit or loss item. Changes in the value of financial liabilities owing to changes in the Group's credit worthiness are also recognised separately when they arise. Decreases in value attributable to debtor insolvency are attributed to credit impairments.

Valuation category, loans and receivables

Loans to credit institutions and the public, categorised as loans and receivables, are recognised on the balance sheet on the settlement day. These loans are measured at amortised cost as long as there is no objective evidence indicating that a loan or group of loans is impaired. Loans are initially recognised at cost, which consists of the loan amount paid out less fees received and any costs that constitute an integral part of the return. The interest rate that produces the loan's cost as a result of the calculation of the present value of future payments is considered the effective interest rate. The loan's amortised cost is calculated by discounting the remaining future payments by the effective interest rate. Interest income includes interest payments received and the change in the loan's amortised cost during the period, which produces a consistent return. On the closing day, it is determined whether there is objective evidence to indicate an impairment need for a loan or group of loans. If, after the loan is initially recognised, one or more events have occurred that negatively impact the estimated future cash flows, and the impact can be estimated reliably, impairment is made. The impairment is calculated as the difference between the loan's carrying amount and the present value of estimated future cash flows, discounted by the loan's original effective interest rate. The Group determines first whether there is objective evidence for impairment of each individual loan. Loans for which such evidence is lacking are included in portfolios with similar credit risk characteristics. These portfolios are subsequently measured for impairment on a collective basis, in the event that objective evidence of impairment exists. Any impairment is calculated for the portfolio as a whole. Homogenous groups of loans with limited value and similar credit risk that have been individually identified as having objective evidence of impairment are meas-

Financial assets

Valuation categories	instruments	Hedging			Fair value through profit or loss		Loans and receivables		Held to maturity		Total
SEKbn	Derivatives		Trading		Other
	2015	2014	2015	2014	2015	2014	2015	2014	2015	2014	2015	2014
Cash and balances with central banks							186	114			186	114
Treasury bills and other bills eligible for refinancing with central banks			76	46					0	0	76	46
Loans to credit institutions			2	18			85	96			87	114
Loans to the public			35	63	196	278	1 183	1 064			1 414	1 405
Bonds and other interest-bearing securities			85	123					4	1	89	124
Financial assets for which customers bear the investment risk					153	143					153	143
Shares and participating interests			11	9		1					11	10
Derivatives	18	23	68	100							86	123
Other financial assets							18	15			18	15
Total	18	23	473	359	153	422	1 472	1 289	4	1	2 120	2 094

Financial liabilities

Valuation categories		Hedging instruments		Fair value through profit or loss				Other financial liabilities		Total
SEKbn	Derivatives Trading Other
	2015	2014	2015	2014	2015	2014	2015	2014	2015	2014
Amounts owed to credit institutions			1	6			150	166	151	172
Deposits and borrowings from the public			4	16	0	0	744	661	748	677
Financial liabilities for which customers bear the investment risk					158	146			158	146
Debt securites in issue			14	13	6	37	806	785	826	835
Short position securities			8	27					8	27
Derivatives	4	4	65	82					69	86
Subordinated liabilities							25	19	25	19
Other financial liabilities							32	30	32	30
Total	4	4	98	144	158	183	1 757	1 661	2 017	1 992

ured individually based on the loss risk in the portfolio as a whole. If the impairment decreases in subsequent periods, previously recognised impairment losses are reversed. However, loans are never recognised at a value higher than what the amortised cost would have been if the write-down had not occurred. Loan impairments are recognised in profit or loss as credit impairments. Credit impairments include provisions for individually impaired loans, portfolio provisions and write-offs of impaired loans. Write-offs are recognised as credit impairments when the amount of loss is ultimately determined and represent the amount before the utilisation of any previous provisions. Provisions utilised in connection with write-offs are recognised on a separate line within credit impairments. Repayments of write-offs and recovery of provisions are recognised within credit impairments. The carrying amount of loans is the amortised cost less write-offs and provisions. Individual provisions and portfolio provisions are recognised in a separate provision account in the balance sheet, while write-offs reduce the amount of outstanding loans. Provisions for assumed losses on guarantees and other contingent liabilities are recognised on the liability side. Impaired loans are those for which it is likely that payment will not be received in accordance with the contract terms. A loan is not impaired if there is collateral that covers the principal, unpaid interest and any late fees by a satisfactory margin.

Valuation category, held-to-maturity

Certain financial assets are categorised as held-to-maturity investments where the intention is to hold them until the maturity date. Such instruments have fixed maturities, are not derivatives and are quoted on an active market. These investments are initially recognised on their trade day at cost and subsequently at amortised cost less any impairment, in the same way as for loans and receivables.

Reclassification of financial assets

Financial assets, excluding derivatives, which no longer meet the criteria for trading, may be reclassified from the valuation category financial instruments at fair value, provided that rare circumstances exist. A reclassification to the valuation category Held-to-maturity investments also requires an intention and ability to hold the investment until maturity. The fair value of the assets at the time of reclassification is considered to be their acquisition cost.

Valuation category, other financial liabilities

Financial liabilities that are not recognised as financial instruments at fair value through profit or loss are initially recognised on the trade day at cost and subsequently at amortised cost. Amortised cost is calculated in the same way as for loans and receivables.

Hedge accounting at fair value

Hedge accounting at fair value is applied in certain cases when the interest rate exposure in a recognised financial asset or financial liability or loan portfolios is hedged with derivatives. Where hedge accounting is applied, the hedged risk in the hedged instrument or the hedged portfolio is also measured at fair value. The value of the hedged risk in the hedged portfolio is recognised on a separate line in the balance sheet as Value change of interest hedged item in portfolio hedge. The item is recognised in connection with Loans to the public. The value of the hedged risk in an individual financial asset or financial liability is recognised on the same line in the balance sheet as the financial instrument. Both the change in the value of the hedging instrument, the derivative, and the change in the value of the hedged risk are recognised through profit or loss in net gains and losses on financial items at fair value. In order to apply hedge accounting, the hedge has been formally identified and documented. The hedge's effectiveness must be measurable in a reliable way and must proven to remain very effective, both prospectively and retrospectively, in offsetting changes in value of the hedged risk.

Cash flow hedges

Derivative transactions are sometimes entered into to hedge the exposure to variations in future cash flows resulting from changes in interest rates and currency. These hedges can be recognised as cash flow hedges, whereby the effective portion of the change in the value of the derivative, the hedging instrument, is recognised directly in other comprehensive income. Any ineffective portion is recognised through profit or loss in net gains and losses on financial items at fair value. When future cash flows lead to the recognition of a financial asset or a financial liability, any gains or losses on the hedging instrument are eliminated from other comprehensive income and recognised in profit or loss in the same periods that the hedged item affects profit or loss. In order to apply hedge accounting, the hedge has been formally identified and documented. The hedge's effectiveness must be measurable in a reliable way and must be proven to remain very effective, both prospectively and retrospectively, in offsetting changes in value of the hedged risk.

Hedging of net investments in foreign operations

Hedges of net investments in foreign operations are applied to protect the Group from translation differences that arise from the translation of operations in a functional currency other than the presentation currency. Financial liabilities reported in the foreign operation's functional currency are translated at the closing-day exchange rate. The portion of the exchange rate result from hedging instruments that are effective is recognised in other comprehensive income. Any ineffective portion is recognised in profit or loss in net gains and losses on financial items at fair value. When a foreign operation is divested, the gain or loss from the hedging instrument is reclassified from other comprehensive income and recognised in profit or loss. In order to apply hedge accounting, the hedge has been formally identified and documented. The hedge's effectiveness must be measurable in a reliable way and must be proven to remain very effective, both prospectively and retrospectively, in offsetting changes in value of the hedged risk.

3.6 Leases (IAS 17)

The Group's leasing operations consist of finance leases and are therefore recognised as loans and receivables. The carrying amount corresponds to the present value of future leasing payments. The difference between all future leasing payments, the gross receivable, and the present value of future leasing payments constitutes unearned income. Consequently, lease payments received are recognised in part in profit or loss as interest income and in part in the balance sheet as instalments, such that the financial income corresponds to an even return on the net investment. In a finance lease, the economic risks and benefits associated with ownership of an asset are essentially transferred from the lessor to the lessee. The Group acts both as the lessor and the lessee for operating leases, which are those leases where the lessor bears the economic risks and benefits. Lease payments where the Group acts as lessee are expensed linearly over the lease term.

3.7 Associates and joint ventures (IAS 28, IFRS 11)

Associates and joint ventures are entities where the Group has significant influence or joint control, but not sole control, of another entity and are accounted for according to the equity method. The equity method means that the participating interests in an entity are recognised at cost at the time of acquisition and subsequently adjusted for the owned share of the change in the associate's net assets. Goodwill attributable to the associate or the joint venture is included in the carrying amount of the participating interests and is not amortised.

The carrying amount of the participating interests is subsequently compared with the recoverable amount of the net investment in the associate or the joint venture to determine whether an impairment need exists. The owned share of the associate's or the joint venture's profit according to the associate's or the joint venture's income statement, together with any impairment, is recognised on a separate line. The share of the associate's or the joint venture's tax is recognised in the income statement as Tax.

The associates' and joint venture's reporting dates and accounting policies conform to the Group's.

3.8 Intangible assets (IAS 38)

Goodwill

Goodwill acquired through a business combination is initially measured at cost and subsequently at cost less accumulated impairment. Goodwill is tested annually for impairment or more frequently if events or circumstances indicate a decrease in value. In order to test goodwill from business combinations for impairment, it is allocated upon acquisition to the cash generating unit or units that are expected to benefit from the acquisition. Identified cash generating units correspond to the lowest level in the entity for which the goodwill is monitored in the internal control of the entity. A cash generating unit is not larger than a business segment in the segment reporting. Impairment is determined and recognised when the recoverable amount of the cash generating unit to which the goodwill is allocated is lower than the carrying amount. Recognised impairment is not reversed.

Other intangible assets

Intangible assets are initially measured at cost and subsequently at cost less accumulated amortisation and accumulated impairment. The cost of intangible assets in a business combination corresponds to fair value upon acquisition. The useful life of an intangible asset is considered either finite or indefinite. Intangible assets with a finite useful life are amortised over their useful life and tested for impairment when impairment needs are indicated. Useful lives and amortisation methods are reassessed and adapted when needed in connection with each closing day. Development expenses are capitalised and recognised in the balance sheet when such costs can be calculated in a reliable way and for which it is likely that future economic benefits attributable to the assets will accrue to the Group. In other cases, development is expensed when it arises.

3.9 Investment properties (IAS 40)

For protection of claims

Investment properties are properties held to generate rental income or appreciation in value, or a combination of the two, rather than being held for the Group's own use or for sale in day-to-day operations. The investment properties have been taken over to protect claims. Investment properties are initially recognised at cost and are are subsequently measured at cost less accumulated depreciation and impairment. The cost consists of the purchase price, or the fair value if a purchase price is unavailable, as well as expenses directly attributable to the purchase. Depreciation begins when an asset is ready for use and is reported systematically over each component's useful life down to its estimated residual value. The depreciation method reflects how the asset's value is gradually consumed. Useful lives, residual values and depreciation methods are reassessed and changed when necessary in connection with each closing day. The carrying amount is tested for impairment when events or circumstances indicate a lower recoverable amount. The recoverable amount represents the higher of the asset's sales value less selling expenses and its value in use. If the carrying amount exceeds the recoverable amount, the asset is reduced to its recoverable amount. See also section 3.17 Impairment of assets (IAS 36).

3.10 Tangible assets (IAS 2, 16)

For protection of claims

Tangible assets acquired or recovered to protect claims are recognised as inventory, provided they do not relate to investment properties. Inventories are measured at the lower of cost and net realisable value. The cost includes all expenses for purchasing, manufacturing and to otherwise bring the goods to their current location and condition. The net realisable value represents the amount that is expected to be realised from a sale.

For own use

Tangible fixed assets, such as equipment and owner-occupied properties, are initially recognised at cost and subsequently measured at cost less accumulated depreciation and impairments. Such recognition is consistent with that used for investment properties, see section 3.9 Investment propoerties (IAS 40).

3.11 Borrowing costs (IAS 23)

Borrowing costs are capitalised when they are directly attributable to the purchase, construction or production of a qualified asset. Borrowing costs refer to interest and other costs that arise in obtaining a loan. A qualified asset is one that takes considerable time to finish and is intended for use or sale, such as intangible assets or investment properties. Other borrowing costs are expensed in the period in which they arise.

3.12 Provisions (IAS 37)

A provision is recognised in the balance sheet when the Group has a legal or constructive obligation arising from past events and it is likely that an outflow of resources will be required to settle the obligation. Additionally, a reliable estimation of the amount must be made. Estimated outflows are calculated at present value. Provisions are tested on each closing day and adjusted when needed, so that they correspond to the current estimate of the value of the obligations.

Provisions are recognised for restructurings. Restructurings are extensive organisational changes which may require the payment of employee severance for early termination or branches to be shut down. For a provision to be recognised, a restructuring plan must be in place and announced, so that it has created a valid expectation among those affected that the company will implement a restructuring.

A provision for restructuring includes only direct expenses related to the restructuring and not to future operations, such as of the cost of severance.

3.13 Pensions (IAS 19)

The Group's post-employment benefits, which consist of pension obligations, are classified as either defined contribution plans or defined benefit plans. In defined contribution plans, the Group pays contributions to separate legal entities, and the risk of a change in value until the funds are paid out rests with the employee. Thus, the Group has no further obligations once the fees are paid. Other pension obligations are classified as defined benefit plans. Premiums for defined contribution plans are expensed when an employee has rendered his/her services. in defined benefit plans, the present value of pension obligations is calculated and recognised as a provision. Both legal and constructive obligations that arise as a result of informal practices are taken into account. The calculation is made according to the Projected Unit Credit Method and also comprises payroll tax. As such, future benefits are attributed to periods of service. The fair value of the assets (plan assets) that are allocated to cover obligations is deducted from the provision. The income statement, staff costs, is charged with the

net of service costs, interest on obligations and the anticipated return on plan assets. The calculations are based on the Group's actuarial assumptions, i.e. the Group's best estimate of future developments. The same interest rate is used to calculate both interest expense and interest income. If the actual outcome deviates or assumptions change, so-called actuarial gains and losses arise. The net of actuarial gains and losses is recognised as Revaluations of defined benefit pension plans in other comprehensive income, where the difference between the actual return and estimated interest income on plan assets is recognised as well.

3.14 Insurance contracts (IFRS 4)

In the financial statements, insurance policies refer to policies where significant insurance risk is transferred from insured to insurer. The majority of the Group's insurance policies do not transfer significant insurance risk; therefore they are recognised as financial instruments in the balance sheet line Financial liabilities where the customers bear the investment risk. For insurance policies with significant insurance risk, actuarial provisions are allocated corresponding to pledged obligations. In the income statement, premiums received and provisions are reported on separate lines.

3.15 Revenues (IAS 18)

The principles of revenue recognition for financial instruments are described in section 3.5 Financial instruments, recognition (IAS 39). Interest income and interest expense on financial instruments calculated according to the effective interest method are recognised as Net interest income, with the exception of interest income and interest expense on financial instruments and related interests that are classified as held for trading within the Large Corporates & Institutions ("LC&I") segment which are reported as Net gains and losses on financial items at fair value. Changes in fair value and dividends on shares in the valuation category financial instruments at fair value through profit or loss, as well as changes in the exchange rates between functional and other currencies are recognised in Net gains and losses on financial items at fair value. Service fees are recognised as income when the services are rendered as Commission income orOther income. Commission income includes payment processing, asset management and brokerage commissions. Commission expenses are transactiondependent and are directly related to the transactions for which income is recognised in Commission income. Other income includes capital gains and losses on the sale of ownership interests in subsidiaries and associates, to the extent they do not represent an independent service line or a significant business conducted within a geographical area. Other income also includes capital gains and losses on the sale of tangible assets.

3.16 Share-based payment (IFRS 2)

Since the Group receives services from its employees and assumes an obligation to settle the transactions with equity instruments, this is recognised as share-based payment. The fair value of the services that entitle the employees to an allotment of equity instruments is expensed at the time the services are rendered and, at the same time, a corresponding increase in equity is recognised as Retained earnings.

For share-based payment to employees settled with equity instruments, the services rendered are measured with reference to the fair value of the granted equity instruments. The fair value of the equity instruments is calculated as per the grant date for accounting purposes i.e. the measurement date. The measurement date refers to the date when a contract was entered into and the parties agreed on the terms of the share-based payment. On the grant date, the employees are granted rights to share-based payment. Since the granted equity instruments are not vested until the employees have fulfilled a period of service, it is assumed that the services are rendered during the vesting period. This means that the cost and corresponding increase in equity are recognised over the entire vesting period. Non market based vesting terms, such as a requirement that a person remain employed, are taken into account in the assumption of how many equity instruments are expected to be vested. At the end of each report period the Group reassesses its judgments of how many shares it expects to be vested based on the non market based vesting terms. Any deviation from the original judgment is recognised in profit or loss and a corresponding adjustment is recognised in Retained earnings within equity. Related social insurance charges are recognised as cash-settled share-based payment i.e. as a cost during the corresponding period, but based on the fair value that at any given time serves as the basis for a payment of social insurance charges.

3.17 Impairment (IAS 36)

For assets that are not tested for impairment according to other standards, the Group periodically determines whether there are indications of diminished value. If such indications exist, the asset is tested for impairment by estimating its recoverable amount. An asset's recoverable amount is the higher of its selling price less costs to sell and its value in use. If the carrying amount exceeds the recoverable amount, the asset is reduced to its recoverable amount. When estimating value in use, estimated future cash flows are discounted using a discount rate before tax that includes the market's estimate of the time value of money and other risks associated with the specific asset. An assessment is also made on each reporting date whether there are indications that the need for previous impairments has decreased or no longer exists. If such indications exist, the recoverable amount is determined. Previous impairment losses are reversed only if there were changes in the estimates made when the impairment was recognised. Goodwill impairment is not reversed. Impairments are recognised separately in the income statement for tangible or intangible assets.

3.18 Tax (IAS 12)

Current tax assets and tax liabilities for current and previous periods are measured at the amount expected to be obtained from or paid to tax authorities. Deferred taxes refer to tax on differences between the carrying amount and the tax base, which in the future serves as the basis for current tax. Deferred tax liabilities are the tax attributable to taxable temporary differences and are expected to be paid in the future. Deferred tax liabilities are recognised on all taxable temporary differences, with the exception of the portion of tax liabilities attributable to the initial recognition of goodwill or to certain taxable differences owing to holdings in subsidiaries. Deferred tax assets represent a reduction in the future tax attributable to deductible temporary differences, tax loss carry-forwards or other future taxable deductions. Deferred tax assets are tested on each closing day and recognised to the extent it is likely on each closing day that they can be utilised. As a result, a previously unrecognised deferred tax asset is recognised when it is considered likely that a sufficient surplus will be available in the future. Tax rates which have been enacted or substantively enacted as of the reporting date are used in the calculations. The Group's deferred tax assets and tax liabilities are estimated at nominal value using each country's tax rate in effect in subsequent years. Deferred tax assets are netted against deferred tax liabilities for Group entities that have offsetting rights. All current and deferred taxes are recognised in profit or loss as Tax, with the exception of tax attributable to items that are recognised directly in other comprehensive income or equity.

3.19 Non-current assets held for sale and discontinued operations (IFRS 5)

A non-current asset (or a disposal group) is classified as held for sale if its carrying amount will be recovered primarily through a sale. The asset (or disposal group) must be available for immediate sale in its current condition. It must be highly probable that a sale will take place and a finalised sale should be expected within one year. Subsidiaries acquired exclusively for resale are recognised as discontinued operations. Non-current assets held for sale are reported on a separate line in the balance sheet and measured at the lower of the carrying amount and fair value less costs to sell. Liabilities related to non-current assets are also recognised on a separate line in the balance sheet. The profit or loss from discontinued operations is recognised on a separate line in the income statement after the result for continuing operations.

3.20 Cash and cash equivalents (IAS 7)

Cash and cash equivalents consist of cash and balances with central banks, when the central bank is domiciled in a country where Swedbank has a valid banking licence. Balances refer to funds that are available at any time. This means that all cash and cash equivalents are immediately available.

3.21 Operating segments (IFRS 8)

Segment reporting is presented on the basis of the executive management's perspective and relates to the parts of the Group that are defined as operating segments. Operating segments are identified on the basis of internal reports to the company's chief operating decision maker. The Group has identified the Chief Executive Officer as its chief operating decision maker and the internal reports used by the CEO to oversee operations and make decisions on allocating resources serve as the basis of the information presented.

The accounting policies for an operating segment consist of the above accounting policies and policies that specifically refer to segment reporting. Market-based compensation is applied between operating segments, while all costs for IT, other shared services and Group Staffs are transferred at full cost-based internal prices to the operating segments. Group Executive Management expenses are not distributed. Crossborder services are invoiced according to the OECD's guidelines on internal pricing. The Group's equity attributable to the shareholders is allocated to each operating segment based on the capital adequacy rules according to Basel 2 and estimated utilised capital.

The return on equity for the business segments is based on operating profit less estimated tax and non-controlling interests in relation to average allocated equity.

4 NEW STANDARDS AND INTERPRETATIONS

The International Accounting Standards Board (IASB) and IFRS Interpretations Committee (IFRIC) have issued the following standards, amendments to standards and interpretations that apply in or after 2015. The IASB permits earlier application. For Swedbank to apply them also requires that they have been approved by the EU if the amendments are not consistent with previous IFRS rules. Consequently, Swedbank has not applied the following amendments in the 2015 annual report.

Annual improvements 2010–2012 and 2012–2014

The annual improvements amend the current standards for presentation, recognition or measurement and other editorial corrections. The EU has approved the 2010–2012 and 2012–2014 improvements for application to the financial year beginning on 1 January 2016. Adoption is not expected to have a significant effect on the Group's financial position, results or cash flows.

Revenue from Contracts with Customers (IFRS 15)

IFRS 15 was issued in May 2014 and establishes the principles for reporting useful information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer. The standard introduces a five-step model to determine how and when to recognise revenue, but it does not impact the recognition of income from financial instruments in the scope of IAS 39. The standard also establishes new disclosures to provide more relevant information. The standard is applicable from 1 January 2018 and has not yet been approved by the EU. The impacts on the Group's financial reports are still being assessed by the Group.

Financial instruments (IFRS 9)

IFRS 9 is the replacement of IAS 39 Financial Instruments: Recognition and Measurement and was issued on 24 July 2014. The standard includes requirements for recognition, classification and measurement, impairment, derecognition and general hedge accounting. The major changes from IAS 39 relate to classification and measurement, impairment and general hedge accounting. IFRS 9 is applicable from 1 January 2018 and has not yet been approved by the EU. The impacts on the Group's financial reports are still being assessed by the Group but are expected to be significant, particularly from adopting the new impairment requirements.

Classification and measurement

At initial recognition, financial assets will be classified as fair value through profit or loss, amortised cost or fair value through other comprehensive income. The classification assessment for debt instruments will be based on two criteria: (a) an entity's business model for managing a financial asset and (b) whether the contractual cash flows of the instrument represent solely payments of principal and interest. The introduction of the contractual cash flow assessment in IFRS 9 also resulted in removal of the embedded derivative separaition requirements where the instrument is a financial asset. The classification of equity instruments is fair value through profit or loss, except where an entity elects to present such instruments as fair value through other comprehensive income. Such an election results in only dividends from such investments recognised in profit or loss and no recycling of fair value gains or losses to profit or loss.

The classification and measurement requirements for financial liabilities remain largely unchanged from IAS 39. The primary change permits the presentation of fair value changes due to own credit risk on financial liabilities designated as at fair value through profit or loss in other comprehensive income, rather than in profit or loss.

Impairment

IFRS 9 introduces an expected credit loss model for the measurement of impairment on financial assets measured at amortised cost and fair value through other comprehensive income. IFRS 9 removes the requirement is IAS 39 to identify an incurred loss event. The new impairment model establishes a three stage approach based on whether there have been significant increases in credit risk from initial recognition of the instrument. For financial assets with no significant increase in credit risk since initial recognition, impairment provisions reflect a 12-month expected credit loss. For financial assets with a significant increase in credit risk and those which are credit impaired, impairment provisions reflect a lifetime expected credit loss.

Hedge accounting

The IFRS 9 hedge accounting requirements allow entities to better reflect their risk management activities in the financial statements and introduce a less rules-based approach to assessing hedge effectiveness.

Amendments to IAS 1: Disclosure Initiative

The amendments to IAS 1 Presentation of Financial Statements were issued in December 2014 as part of an initiative to improve the presentation and disclosures in financial reports. The amendments clarify that materiality is applicable to the entire financial statements and that the inclusion of immaterial information reduces the effectiveness of disclosures. The amendments will be applicable for annual periods beginning on or after 1 January 2016 and were endorsed by the EU on 19 December 2015. The amendments will only have a disclosure impact on the Group.

Leases (IFRS 16)

IFRS 16 was issued in January 2016 and replaces IAS 17 Leases. The new standard significantly changes the way lessee entities should account for leases. For lessees, the standard eliminates the distinction between finance and operating leases and requires entities to recognise assets and liabilities arising from most leases on the balance sheet. For lessors, the requirements remain largely unchanged and maintain the distinction between finance and operating leases. IFRS 16 is applicable from 1 January 2019, with early adoption permitted if IFRS 15 has been applied, and has not yet been approved by the EU. The impacts on the Group's financial reports are still being assessed by the Group.

5 CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES

The presentation of consolidated financial statements in conformity with IFRS requires the executive management to make judgments and estimates that affect the recognised amounts for assets, liabilities and disclosures of contingent assets and liabilities as of the closing day as well as recognised income and expenses during the report period. The executive management continuously evaluates these judgments and estimates, including those that affect the fair value of financial instruments, provisions for impaired loans, impairment of intangible assets, deferred taxes, pension provisions and share based payments. The executive management bases its judgments and assumptions on previous experience and several other factors that are considered reasonable under the circumstances. Actual results may deviate from judgments and estimates.

5.1 Judgments

Investment funds

Entities in the Group have established investment funds for their customers' savings needs. The Group manages the assets of these funds on behalf of customers in accordance with predetermined provisions approved by the Swedish Financial Supervisory Authority. The return generated by these assets, as well as the risk of a change in value, accrues to customers. Within the framework of the approved fund provisions, the Group receives management fees as well as, in certain cases, application and withdrawal fees for the management duties it performs. The decisions regarding the management of an investment fund are governed by the fund's provisions; however the Group has power over the decision making of the relevant activities of the investment funds. The Group's exposure to variable returns from its involvement with those funds is primarily related to the fees charged and therefore the Group is considered to act as agent on behalf of the investment funds' investors. In certain cases, Group entities also invest in the investment funds to fulfil their obligations to customers. The Group's holdings in the investment funds represent an additional variable exposure in the investment funds. The Group's interests in total are seen as principal activity for the Group's own benefit where such interests exceed 35 per cent and, consequently, the investment fund would be controlled and consolidated. The Group considers that holdings in investment funds through unit-linked mutual insurance contracts do not result in a variable exposure and therefore are excluded from the assessment of control over such investment funds. Holdings in investment funds through unit-linked mutual

insurance contracts of SEK 102bn (121) are recognised as Financial assets for which the customer bears the investment risk and the corresponding liabilities of SEK 102bn (121) are recognised as Financial liabilities for which the customer bears the investment risk. If the Group had considered such holdings to be a variable exposure and that it had control over such investment funds, additional financial assets and financial liabilities corresponding to SEK 62bn (61) respectively would have been recognised in the Group's balance sheet.

Financial instruments

When determining the fair values of financial instruments, the Group uses various methods depending on the degree of available observable market data and the level of activity in the market. Quoted prices on active markets are primarily used. When financial assets and financial liabilities in active markets have offsetting market risks, the average of bid and sell prices is used as a basis for determining the fair value of the offsetting risk positions. For any open net positions, bid or sell prices are applied as appropriate, i.e. bid prices for long positions and sell prices for short positions. The Group's executive management has determined the method for which market risks offset each other and how the net positions are calculated. When quoted prices on active markets are not available, the Group instead uses valuation models. The Group's executive management determines when the markets are considered inactive and when quoted prices no longer correspond to fair value, therefore requiring that valuation models are used. An active market is considered a regulated marketplace where quoted prices are easily accessible and which demonstrates regularity. Activity is evaluated continuously by analysing factors such as trading volumes and differences between bid and sell prices. When certain criteria are not met, the market or markets are considered inactive. The Group's executive management determines which valuation model and which pricing parameters are most appropriate for the individual instrument. Swedbank uses valuation models that are generally accepted and are subject to independent risk control.

The executive management has determined that the option to measure financial instruments at fair value provides the fairest view for certain portions of the Group's loan portfolios with fixed interest rates, since the interest rate risk is hedged with the help of securities in issue and derivatives. A determination is also made for the financial instruments to which hedge accounting will be applied. In both cases the determination is made to reduce accounting volatility as far as possible. Accounting volatility lacks economic relevance and arises when financial instruments are measured with different measurement principles despite that they financially hedge each other.

Tax

For the parent company's Estonian subsidiary, Swedbank AS, income taxation is triggered only if dividends are paid. The parent company determines the dividend payment and has established a specific dividend policy that a portion of the profit will be distributed; therefore a deferred tax liability is recognised based on this dividend policy. To the extent dividends are not expected to the paid in the foreseeable future, the Group continues to not recognise a deferred tax liability. If the largest possible dividend was to be distributed, the Group would face an estimated tax charge of SEK 2 589m (3 268).

5.2 Estimates

The Group uses various estimates and assumptions about the future to determine the value of certain assets and liabilities.

Provisions for credit impairments

Loans and receivables measured at amortised cost are tested if loss events have occurred. Individual loans are tested initially, followed by groups of loans with similar credit terms and which are not identified individually. A loss event refers to an event that occurred after the loan was paid out and which has a negative effect on projected future cash flows. Determining loss events for a group of loans carries greater uncertainty, since a number of different events, such as macroeconomic factors, may have had an impact. Loss events include late or non-payments, concessions granted due to the borrower's financial difficulties, bankruptcy or other financial restructures, and local economic developments linked to non-payments, such as an increase in unemployment or decreases in real estate or commodity prices. Where a loss event has occurred, individual loans are classified as impaired loans. The executive management considers that loans whose terms have been significantly changed due to the borrower's economic difficulties and loans that have been non-performing for more than 90 days should automatically be treated as impaired. Such a loan is not considered impaired if there is collateral which covers the capital, accrued and future interest and fees by a satisfactory margin. When a loss event has occurred, a determination is made when in the future the loan's cash flows will be received and the estimated size. For impaired loans, interest is not considered to be received, only capital or portions thereof. For groups of loans, estimates are based on historical values and experiencebased adjustments to the current situation. Provisions for impaired loans are made on the difference between estimated value, i.e. estimated future cash flows discounted by the loan's original effective interest rate, and amortised cost. Amortised cost refers to contractual cash flows discounted by the loan's original effective interest rate. Assumptions about when in time a cash flow will be received as well as its size determine the size of the provisions. Decisions on provisions are therefore based on various calculations and the executive management's assumptions of current market conditions. The executive management is of the opinion that provision estimates are important because of their significant size as well as the complexity of making these estimates. The Group's total provisions for credit impairments amounted to SEK 3 381m (3 330) at year-end. An overall decrease in borrowers' payment ability of an additional 10 per cent would have increased provisions by SEK 338m (333).

Impairment testing of goodwill

Goodwill is tested at least annually for impairment. Testing is conducted by calculating the recoverable amount i.e. the highest of value in use or the selling price less costs to sell. If the recoverable amount is lower than the carrying amount, the asset is reduced to its recoverable amount. Goodwill impairment does not affect either cash flow or the capital adequacy ratio, since goodwill is a deduction in the calculation of the capital base. The executive management's tests are done by calculating value in use. The calculation is based on estimated future cash flows from the cash generating unit that the goodwill relates to and has been allocated to as well as when the cash flows are received. The first three years' cash flows are determined on the basis of the financial plans the executive management has established. Subsequent determinations of the size of future cash flows require more subjective estimates of future growth, margins and profitability levels. The Group estimates perpetual cash flows, since all cash generating units are part of the Group's home markets, which it has no intention of leaving. In addition, a discount rate is determined that in addition to reflecting the time value of money also reflects the risk that the asset is associated with. Different discounting factors are used for different time periods. As far as possible, the discount rate and assumptions, or portions of the assumptions, are based on external sources. Nevertheless, a large part of the calculation is dependent on the executive management's own assumptions. The executive management considers the assumptions to be significant to the Group's results and financial position. The Group's goodwill amounted to SEK 12 010m (12 344) at year-end, of which SEK 9 303m (9 618) relates to the investment in the Baltic banking operations. The executive management's assumptions in the calculation of value in use as of year-end 2015 did not lead to any impairment losses. Until 2001, 60 per cent of the Baltic banking operations had been acquired. In 2005 the remaining 40 per cent was acquired. The majority, or SEK 10 012m (10 352) of the goodwill before impairments arose through the acquisition of the remaining noncontrolling interest and at the time corresponded to 40 per cent of the operation's total value. If the discount rate had been increased by one percentage point or the growth assumption had been reduced by one percentage point, it would not have created any impairment losses for the investments in the Baltic operations except for the banking operations in Lithuania.

Financial instruments at fair value

When financial instruments are measured at fair value according to valuation models, a determination is made on which observable market data should be used in those models. The assumption is that quoted prices for financial instruments with similar activity will be used. When such prices or components of prices cannot be identified, the executive management must make its own assumptions. Note G45 shows financial instruments at fair value divided into three valuation levels: quoted prices, valuation models with observable market inputs and valuation models with significant assumptions. As of year-end the value of financial instruments measured with significant assumptions amounted to SEK 187m (158). An estimate of valuation parameters has to be made, for example, for volatilities for certain illiquid options.

Defined benefit pensions

For pension provisions for defined benefit obligations, the executive management uses a number of actuarial assumptions to estimate future cash flows. The assumptions are assessed and updated, if necessary, at each reporting date. Changes in assumptions are described in Note G39. Important estimates are made with regard to the final salary the employee has at the time of retirement, the size of the benefit when it relates to the income base amount and the payment period and economic life. Estimated future cash flows are projected at present value using an assumed discount rate. When actual outcomes deviate from the assumptions made, an experience-based actuarial gain or loss arises. Actuarial gains or losses also arise when assumptions change. In total, the Group's actuarial gains and losses for 2015 amounted to a gain of SEK 2 947m (186). The result is recognised as Remeasurements of defined benefit pension plans within other comprehensive income. The gain was mainly due to the fact that the discount rate was raised during the year, from 2.29 per cent to 3.53 per cent. The fair value of the assets managed by the Swedish defined benefit pension plans exceeded the pension liability by SEK 1 274m. The net asset is recognised as an asset in the balance sheet. The Group has determined that the entire amount is available in the form of a repayment or reduction in future fees to secure pensions.

G3 Risks

Swedbank defines risk as a potentially negative impact on a company that can arise due to current internal processes or future internal or external events. The concept of risk comprises the probability that an event will occur and the impact it would have on the Group's earnings, equity or value. The Board of Directors has adopted an Enterprise Risk Management (ERM) policy detailing the risk framework, risk management process, and roles and responsibilities in risk management. Swedbank continuously identifies the risks its operations generate and has designed a process to manage them.

The risk management process includes eight steps: prevent risks, identify risks, quantify risks, analyse risks, suggest measures, control and monitor, report risks, and, lastly, follow-up risk management. The process encompasses all types of risk and results in a description of Swedbank's risk profile, which in turn serves as the basis of the internal capital adequacy assessment process.

To ensure that Swedbank retains a low long-term risk profile, the Board has set an overall risk appetite. In line with this appetite, individual CEO limits have been established for the types of risks the bank is exposed to. The CEO limits restrict exposures and performance in the portfolio. Additionally, the Board has decided on a system of signals whose purpose is to give early warning if conditions change.

The capital adequacy assessment process evaluates capital needs based on Swedbank's overall risk level and business strategy. The aim is to ensure efficient use of capital and at the same time that Swedbank meets the minimum legal capital requirement and maintains access to domestic and international capital markets even under adverse market conditions.

Risk	Description
Credit risk	The risk that a counterparty or borrower fails to meet contrac tual obligations to Swedbank and the risk that collateral will not cover the claim. Credit risk also includes counterparty risk, concentration risk and settlement risk.
Market risk	The risk that the Group's results, equity or value will decease due to changes in risk factors in financial markets. Market risk includes interest rate risk, currency risk, share price risk, com modity risk and risks from changes in volatilities or correlations.
Liquidity risk	The risk that Swedbank cannot fulfil its payment commitments at maturity or when they fall due.
Operational risk	The risk of losses resulting from inadequate or failed internal processes, human and system errors or from external events. The definition includes legal risk, compliance risk and information risk.
Insurance risk	The risk of a change in value due to a deviation between actual insurance costs and anticipated insurance costs.
Other risks	Include business risk, pension risk, strategic risk, and reputational risk.

Credit risks

DEFINITION

Credit risk refers to the risk that a counterparty or borrower will fail to meet their contractual obligations towards Swedbank and the risk that pledged collateral will not cover the claim. Credit risk also includes counterparty risk, concentration risk and settlement risk.

Counterparty risk is the risk that a counterparty in a trading transaction will fail to meet its financial obligations towards Swedbank and that the collateral which has been received is insufficient to cover the claim against the counterparty. Trading transactions refer here to repos, derivatives, security financing transactions and money market transactions.

Concentration risk comprises, among other things, large exposures or concentrations in the credit portfolio to specific counterparties, sectors or geographies.

Settlement risk is the risk that a counterparty will fail to meet their obligations before Swedbank fulfils its when a transaction is executed (delivery/payment).

Risk management

A central principle in Swedbank's lending is that each business unit within the Group has full responsibility for its credit risks and that credit decisions adhere to the credit process, are made in accordance with applicable rules, and are in line with the bank's

business and credit strategies. Depending on the size and nature of each credit, a lending decision can be made, for example, by an officer with help from system support or by a credit committee. The business unit has full commercial responsibility regardless of who makes the ultimate decision, including responsibility for internal credit control. The duality principle provides guidance for all credit and credit risk management within the Group. The principle is reflected in the independent credit organisation, decisionmaking bodies and credit processes. Each business unit is responsible for ensuring that internal control is integrated in the relevant parts of the credit process.

The risk classification system is a key part of the credit process; it comprises work and decision-making processes for lending, credit monitoring, and quantification of credit risk. The decision to grant credit requires that there are good grounds to expect that the borrower can fulfil his or her commitment to the Group. In addition, adequate and sufficient collateral must be pledged for the credit.

Lending that is sound, robust and balanced in terms of risks requires that each credit transaction, is viewed in relation to relevant factors in the marketplace and takes into account what the Group and the market know about anticipated local, regional and global changes and developments that could impact the business and its risks. Credit exposures are systematically analysed by continuously monitoring individual commitments. Moreover, exposures to corporate customers, financial institutions and sovereign states are assessed at least once a year.

Risk measurement

Swedbank's internal risk classification system is the basis for:

Risk assessment and credit decisions
Calculating risk-adjusted returns (including RAROC)
Calculating portfolio provisions
Monitoring and managing credit risks (including migrations)
Reporting credit risks to the Board, CEO and Group Executive Management
Developing credit strategies and associated risk management activities
Calculating capital requirements and capital allocation

Risk class is assessed and decided on as part of credit decisions. The class also affects requirements on the scope of the analysis and documentation and governs how customers are monitored. In this way, low-risk transactions can be approved through a simpler and faster credit process.

Swedbank has received approval from the Swedish Financial Supervisory Authority to apply the IRB approach, which is used to calculate the majority of the capital requirement for credit risks. The bank applies the IRB approach to most of its lending to the public, with the exception of lending to sovereign states. For exposures where the IRB approach is not applied, the SFSA's standard method is used instead.

The goal of the risk classification is to predict defaults within one year. It is expressed on a scale of 23 classes, where 0 represents the greatest risk and 21 represents the lowest risk of default, with one class for defaulted loans. The table below describes the Group's risk classification and how it relates to the probability of default within 12 months (PD) as well as an indicative rating from Standard & Poor's. Of the total IRB-assessed exposures, 81 (80) per cent fall in the risk classes 13–21, investment grade, where the risk of default is considered low. Of the exposures, 47 per cent (45) have been assigned a risk class of 18 or higher, which corresponds to a rating of A from the major rating agencies. The exposures relate to the consolidated situation.

Risk grade according to IRB methodology

Internal rating		PD (%)	Indicative rating Standard & Poor's
Default	Default	100	D
High risk	0–5	>5.7	C to B
Augmented risk	6–8	2.0–5.7	B+
Normal risk	9–12	0.5–2.0	BB- to BB+
Low risk	13–21	<0.5	BBB- to AAA

To achieve maximum precision in measurement, the bank has developed a number of different risk classification models. There are primarily two types of models; one is based on a statistical method, which requires access to a large amount of information on counterparties, and enough information on those counterparties who have defaulted. In cases where the statistical method is not applied, models are created where evaluation criteria are based on expert opinions.

The models are validated when introduced in connection with significant changes and periodically (at least annually). The validation is designed to ensure that each model measures risk satisfactorily. In addition, the models are monitored to ensure that they function well in daily credit operations. The models indicate the likelihood of default normally over a one-year horizon.

				Risk grade according to the IRB methodology
Maximum credit risk exposure distributed by rating 2015			Low risk PD <0,5	Normal risk PD 0,5–2,0		Augmented risk PD 2,0–5,7	High risk PD >5,7	Default PD 100,0	Non-rated exposures		Standardised methodology	EAD
Total exposure			1 264 537		200 833	57 319	23 606	6 014	64 627		371 639 1 988 575

	Swedish Banking	%	Large corporates & Institutions	%	Baltic Banking	%	Other	%	Total	%
EAD
Low risk	898 432	45.2	229 523	11.5	62 092	3.1	74 490	3.7	1 264 537	63.6
Normal risk	130 239	6.5	31 530	1.6	38 735	1.9	329	0.0	200 833	10.1
Augmented risk	38 947	2.0	5 399	0.3	12 895	0.6	78	0.0	57 319	2.9
High risk	12 135	0.6	1 241	0.1	10 185	0.5	45	0.0	23 606	1.2
Defaults	2 213	0.1	905	0.0	2 896	0.1			6 014	0.3
Non-rated exposures	4 034	0.2	4 135	0.2	4 841	0.2	51 617	2.6	64 627	3.2
Standardised method	55 674	2.8	32 632	1.6	64 950	3.3	218 383	11.0	371 639	18.7
Total	1 141 674	57.4	305 365	15.4	196 594	9.9	344 942		17.3 1 988 575	100.0

	Public	%	Corporates	%	Institutions	%	States	%	Other	%	Total	%
EAD
Low risk	832 867	41.9	324 161	16.3	107 510	5.4					1 264 538	63.6
Normal risk	92 451	4.6	108 021	5.4	361	0.0					200 833	10.1
Augmented risk	31 624	1.6	25 548	1.3	147	0.0					57 319	2.9
High risk	14 734	0.7	8 870	0.4	1	0.0					23 605	1.2
Defaults	3 232	0.2	2 782	0.1							6 014	0.3
Non-rated exposures			1 781	0.1					62 846	3.2	64 627	3.2
Standardised method	23 213	1.2	9 580	0.5	5 049	0.3	302 032	15.2	31 765	1.6	371 639	18.7
Total	998 121	50.2	480 743	24.2	113 068	5.7	302 032	15.2	94 611		4.8 1 988 575	100.0

The above table refers to Swedbank's consolidated situation.

			Risk grade according to the IRB methodology
Maximum credit risk exposure distributed by rating 2014	Low risk PD <0,5	Normal risk PD 0,5–2,0	Augmented risk PD 2,0–5,7	High risk PD >5,7	Default PD 100,0	Non-rated exposures	Standardised methodology	EAD
Total exposure	1 227 295	206 665	60 305	26 311	7 079	77 900		286 227 1 891 782

	Swedish		Large corporates
	Banking	%	& Institutions		% Baltic Banking	%	Other	%	Total	%
EAD
Low risk	844 645	44.6	236 681	12.5	55 137	2.9	90 833	4.8	1 227 295	64.9
Normal risk	135 474	7.2	28 627	1.5	42 500	2.2	65	0.0	206 665	10.9
Augmented risk	41 024	2.2	3 565	0.2	15 400	0.8	316	0.0	60 305	3.2
High risk	13 445	0.7	612	0.0	12 251	0.6	2	0.0	26 311	1.4
Defaults	2 775	0.1	783	0.0	3 521	0.2			7 079	0.4
Non-rated exposures	4 106	0.2	4 269	0.2	5 582	0.3	63 943	3.4	77 900	4.1
Standardised method	63 558	3.4	33 551	1.8	28 991	1.5	160 127	8.5	286 227	15.1
Total	1 105 027	58.4	308 088	16.3	163 382	8.6	315 286	16.7	1 891 782	100.0

	Public	%	Corporates	%	Institutions	%	States	%	Other	%	Total	%
EAD
Low risk	774 506	40.9	319 099	16.9	133 690	7.1					1 227 295	64.9
Normal risk	100 607	5.3	104 521	5.5	1 537	0.1					206 665	10.9
Augmented risk	35 226	1.9	24 417	1.3	662	0.0					60 305	3.2
High risk	17 409	0.9	8 587	0.5	315	0.0					26 311	1.4
Defaults	4 135	0.2	2 885	0.2	59	0.0					7 079	0.4
Non-rated exposures			2 058	0.1					75 842	4.0	77 900	4.1
Standardised method	20 384	1.1	14 651	0.8	6 470	0.3	208 799	11.0	35 923	1.9	286 227	15.1
Total	952 267	50.3	476 218	25.2	142 733	7.5	208 799	11.0	111 765		5.9 1 891 782	100.0

The above table refers to Swedbank's consolidated situation.

Maximum credit risk exposure, geographical distribution 2015

	Sweden	Estonia	Latvia	Lithuania	Norway	Denmark	Finland	USA	Other	Total
Assets
Cash and balances with central banks	252	21 330	16 155	16 903	4 704	307	13 874	112 735	52	186 312
Treasury bills and other bills eligible for refinancing with central banks	65 063		1 441	1 670	1 973	210	1 862		4 333	76 552
States	61 421		1 441	1 670	29				2 899	67 460
Municipalities	3 642				1 944	210	1 862		1 434	9 092
Other
Loans to credit institutions	80 513	1 250	1 319	662	713	139	–151	165	1 808	86 418
Repurchase agreements1	1 740									1 740
Loans to the public	1 229 352	59 254	28 509	36 624	43 503	1 742	10 622	1 937	2 412	1 413 955
Swedish National Debt Office	8 726									8 726
Repurchase agreements1	34 640	4	1	20						34 665
RE Residential	820 095	26 804	11 443	15 156	2 331	899		52		876 780
RE Commercial	142 125	13 989	5 927	7 268	4 296	607		284		174 496
Guarantees	27 293	3 269	310	325	954		193		523	32 867
Cash	11 770	21	594	317						12 702
Other	107 840	11 094	7 168	6 000	11 172	209		728		144 211
Unsecured	76 863	4 073	3 066	7 538	24 750	27	10 429	873	1 889	129 508
Bonds and other interest-bearing securities	60 121	18	18	9	6 284	1 207	2 235	3 717	15 001	88 610
Housing finance institution	37 412								164	37 576
Banks	12 037				4 850	485	1 560	3 693	7 802	30 427
Other financial companies	8 718							9	1 413	10 140
Non-financial companies	1 954	18	18	9	1 434	722	675	15	5 622	10 467
Derivatives	24 669	313	63	103	6 452	1 509	6 677	690	45 631	86 107
Other financial assets	15 646	570	698	261	489		470	34	256	18 424

Contingent liabilities and commitments
Guarantees	25 652	1 977	1 110	1 014	3 119	121	122	2 629	214	35 958
Commitments	180 196	10 115	4 513	7 014	16 083		15 452	1 629	310	235 312

1) Fair value of received securities in repurchase agreements covers the carrying amount of the repurchase agreements.

Derivatives, netting gains and collateral held 2015

	Sweden	Estonia	Latvia	Lithuania	Norway	Denmark	Finland	USA	Other	Total
Positive fair value of contracts, balance sheet	24 669	313	63	103	6 452	1 509	6 677	690	45 631	86 107
Netting agreements, related amount not offset in the
balance sheet	9 486				2 238	760	4 870	534	21 726	39 613
Credit exposure, after offset of netting agreements	15 183	313	63	103	4 214	749	1 807	157	23 905	46 494
Collateral held1	1 024				954	354	1 457		17 345	21 135
Net credit exposures after cpllateral held	14 159	313	63	103	3 259	395	350	157	6 560	25 359

Total 1 681 464 94 826 53 826 64 261 83 320 5 235 51 163 123 536 70 017 2 227 648 % of total 75 4 2 3 4 0 2 6 3 100

1) Collateral consists of cash 94.2 per cent and AAA rated bonds by Standard & Poor's 5.8 per cent.

Credit derivatives	2015	2014
Credit derivatives, nominal amounts	5 263	12 362

Credit derivatives are used in customer trading but also to optimise the credit risk in trading portfolios with interest-bearing securities.

Maximum credit risk exposure, geographical distribution 2014

	Sweden	Estonia	Latvia	Lithuania		Norway Denmark	Finland	USA	Other	Total
Assets
Cash and balances with central banks	370	16 641	9 125	14 106	4 310	318	1	68 434	463	113 768
Treasury bills and other bills eligible for refinancing with
central banks	35 694		435	2 074	1 601	513	1 888		4 020	46 225
States	31 235		435	2 074	35	513	1 787		4 020	40 099
Municipalities	2 904						101			3 005
Other	1 555				1 566					3 121
Loans to credit institutions	104 432	2 472	4 297	1 076	–76	36	–22	183	1 424	113 820
Repurchase agreements1	17 468									17 468
Loans to the public	1 220 468	58 854	29 457	38 110	39 935	1 703	9 949	3 836	2 194	1 404 507
Swedish National Debt Office	16 556									16 556
Repurchase agreements1	62 590	3		18						62 612
RE Residential	780 377	26 472	11 610	14 353	2 391	869		139		836 211
RE Commercial	137 890	13 792	6 694	7 998	4 272	553	773	2 114		174 086
Guarantees	30 396	3 339	352	226	1 066		82		511	35 972
Cash	13 731	29	874	958						15 592
Other	99 597	11 152	6 701	5 579	12 058	258		576		135 921
Unsecured	79 331	4 067	3 226	8 978	20 148	23	9 094	1 007	1 683	127 557
Bonds and other interest-bearing securities	77 846	29	9		8 904	2 088	4 797	7 122	23 660	124 455
Housing finance institution	47 131								731	47 862
Banks	18 410				5 428	2 008	2 493		13 051	41 390
Other financial companies	7 926						1 869	7 026	3 133	19 954
Non-financial companies	4 379	29	9		3 476	80	435	96	6 745	15 249
Derivatives	39 104	275	104	145	7 937	2 120	10 540	954	62 023	123 202
Other financial assets	10 937	1 150	1 281	201	659		157	129	198	14 712

Contingent liabilities and commitments

% of total	77	4	2	3	3		2	4	4	100
Total	1 696 003	91 109	50 891	66 566	75 762	6 829	41 031	82 762		94 004 2 204 955
Commitments	188 547	9 441	4 823	9 782	9 879		12 409	2 104	22	237 007
Guarantees	18 605	2 247	1 359	1 072	2 614	51	1 311			27 259

1) Fair value of received securities in repurchase agreements covers the carrying amount of the repurchase agreements.

Derivatives, netting gains and collateral held 2014

	Sweden	Estonia	Latvia	Lithuania		Norway Denmark	Finland	USA	Other	Total
Positive fair value of contracts, balance sheet	39 104	275	104	145	7 937	2 120	10 540	954	62 023	123 202
Netting agreements, related amount not offset
in the balance sheet	14 678				3 334	1 227	7 094	822	36 240	63 394
Credit exposure, after offset of netting agreements	24 426	275	104	145	4 603	894	3 447	132	25 783	59 808
Collateral held1	4 066				673	894	2 934	32	23 295	31 894
Net credit exposures after cpllateral held	20 360	275	104	145	3 930	0	512	100	2 488	27 914

1) Collateral consists of cash 93.2 per cent and AAA rated bonds by Standard & Poor's 6.8 per cent.

GIIPS exposure, carrying amount			2014
	Greece	Ireland		Italy Portugal	Spain	Total	Greece	Ireland		Italy Portugal	Spain	Total
Loans (money market and certificates)			18			18			19	7		26
Loans (committed credit facilities)
Derivatives net1		10	1	14	86	111		11	22		86	118
Other2		5	11	16	17	49		9	8		31	49
Total		15	30	30	103	178	0	20	49	7	117	193

1) Derivatives at market value taking into account netting and collateral agreements. Considering the bank's internal risk add-ons for counterparty risk at potential future change in prices, the derivative exposures amount to: Ireland SEK 15m (18), Italy SEK 431m (437), Portugal 40 (0), and Spain SEK 238m (228). Total SEK 724m (683). 2) Includes trade finance and mortgage loans.

Swedbank Annual Report 2015

Loans to the public and credit institutions, carrying amount 2015

		Loans individually assessed as not impaired			Loans individually assessed as impaired	Total
			Portfolio	After portfolio	Before		After
	Before portfolio provisions Performing	Past due	provisions	provisions	provisions	Provisions	provisions
Geographical distribution
Sweden	1 186 460	1 296	471	1 187 285	2 617	1 222	1 395	1 188 680
Estonia	57 940	687	154	58 473	1 196	419	777	59 250
Latvia	27 241	827	154	27 914	1 034	440	594	28 508
Lithuania	35 317	705	82	35 940	968	304	664	36 604
Norway	40 008	11	52	39 967	191	13	178	40 145
Denmark	1 705	3		1 708	14	12	2	1 710
Finland	10 918		5	10 913				10 913
USA	2 134	52		2 186				2 186
Other	2 607		39	2 568				2 568
Loans to the public excluding
the Swedish National Debt Office
and repurchase agreements	1 364 330	3 581	957	1 366 954	6 020	2 410	3 610	1 370 564

Sector/industry
Private customers	865 692	2 073	274	867 491	2 085	705	1 380	868 871
Mortgage loans, private	729 930	1 696	161	731 465	1 756	518	1 238	732 703
Housing cooperatives	101 173	76	35	101 214	36	1	35	101 249
Other, private	34 589	301	78	34 812	293	186	107	34 919
Corporate customers	498 638	1 508	683	499 463	3 935	1 705	2 230	501 693
Agriculture, forestry, fishing	73 294	141	52	73 383	322	79	243	73 626
Manufacturing	40 617	206	129	40 694	1 529	894	635	41 329
Public sector and utilities	24 511	14	30	24 495	43	6	37	24 532
Construction	17 450	78	38	17 490	121	45	76	17 566
Retail	29 721	115	92	29 744	305	161	144	29 888
Transportation	11 835	401	27	12 209	25	12	13	12 222
Shipping and offshore	29 556		39	29 517	247	25	222	29 739
Hotels och restaurants	6 829	38	20	6 847	91	23	68	6 915
Information and communications	5 550	42	11	5 581	4	2	2	5 583
Finance and insurance	12 425	3	29	12 399	41	25	16	12 415
Property management	210 355	263	139	210 479	636	198	438	210 917
Residential properties	56 172	105	32	56 245	154	42	112	56 357
Commercial	88 532	78	57	88 553	113	32	81	88 634
Industrial and warehouse	44 252	39	24	44 267	143	32	111	44 378
Other property management	21 399	41	26	21 414	226	92	134	21 548
Professional services	18 999	93	49	19 043	396	147	249	19 292
Other corporate lending	17 496	114	28	17 582	175	88	87	17 669
Loans to the public excluding
the Swedish National Debt Office
and repurchase agreements	1 364 330	3 581	957	1 366 954	6 020	2 410	3 610	1 370 564
Loans to credit institutions excluding
the Swedish National Debt Office
and repurchase agreements	129 808			129 808	15	14	1	129 809
Loans to the public and credit institutions	1 494 138	3 581	957	1 496 762	6 035	2 424	3 611	1 500 373

Loans to the public and credit institutions, carrying amount 2014

	Loans individually assessed as not impaired			Loans individually assessed as impaired	Total
		Before portfolio provisions	Portfolio provisions	After portfolio provisions	Before provisions	Provisions	After provisions
	Performing	Past due
Geographical distribution
Sweden	1 138 890	1 608	511	1 139 987	2 011	676	1 335	1 141 322
Estonia	57 151	925	170	57 906	1 312	367	945	58 851
Latvia	28 264	650	240	28 674	1 465	682	783	29 457
Lithuania	36 352	997	124	37 225	1 214	347	867	38 092
Norway	39 782	43	42	39 783	207	55	152	39 935
Denmark	1 701			1 701	8	6	2	1 703
Finland	9 953		4	9 949				9 949
USA	3 701	139	4	3 836				3 836
Other	2 232		38	2 194				2 194
Loans to the public excluding the Swedish National
Debt Office and repurchase agreements	1 318 026	4 362	1 133	1 321 255	6 217	2 133	4 084	1 325 339

Sector/industry
Private customers	825 951	2 691	317	828 325	2 800	967	1 833	830 158
Mortgage loans, private	692 784	2 201	178	694 807	2 323	732	1 591	696 398
Housing cooperatives	98 182	114	39	98 257	2	1	1	98 258
Other, private	34 985	376	100	35 261	475	234	241	35 502
Corporate customers	492 075	1 671	816	492 930	3 417	1 166	2 251	495 181
Agriculture, forestry, fishing	72 337	144	70	72 411	274	62	212	72 623
Manufacturing	41 708	411	188	41 931	614	210	404	42 335
Public sector and utilities	21 946	24	27	21 943	10	2	8	21 951
Construction	16 196	75	40	16 231	127	33	94	16 325
Retail	30 447	131	104	30 474	469	184	285	30 759
Transportation	11 695	194	39	11 850	114	38	76	11 926
Shipping and offshore	30 261		32	30 229	159	86	73	30 302
Hotels and restaurants	6 635	38	24	6 649	109	19	90	6 739
Information and communications	5 551	16	11	5 556	8	2	6	5 562
Finance and insurance	10 263	7	10	10 260	14	10	4	10 264
Property management	204 554	300	177	204 677	847	229	618	205 295
Residential properties	52 652	176	21	52 807	260	64	196	53 003
Commercial	89 026	108	47	89 087	88	31	57	89 144
Industrial and warehouse	40 820	2	14	40 808	127	16	111	40 919
Other property management	22 056	14	95	21 975	372	118	254	22 229
Professional services	16 568	87	53	16 602	428	163	265	16 867
Other corporate lending	23 914	244	41	24 117	244	128	116	24 233
Loans to the public excluding the Swedish National
Debt Office and repurchase agreements	1 318 026	4 362	1 133	1 321 255	6 217	2 133	4 084	1 325 339
Loans to credit institutions excluding the Swedish National Debt Office and repurchase agreements	192 988			192 988	64	64		192 988
Loans to the public and credit institutions	1 511 014	4 362	1 133	1 514 243	6 281	2 197	4 084	1 518 327

Impaired, past due and forborne loans 2015

	Sweden	Estonia	Latvia	Lithuania	Norway	Denmark	USA	Total
Impaired loans
Carrying amount before provisions	2 632	1 196	1 034	968	191	14		6 035
Provisions	1 236	419	440	304	13	12		2 424
Carrying amount after provisions	1 396	777	594	664	178	2		3 611
Share of impaired loans, net, %	0.10	1.32	2.07	1.71	0.44	0.12		0.24
Share of impaired loans, gross, %	0.20	2.02	3.51	2.46	0.48	0.81		0.40

Past due loans that are not impaired
Valuation category, loans and receivables
Loans with past due amount,	683	687	827	705	11	3	52	2 968
5–30 days	193	566	725	472	9			1 965
31–60 days	243	104	76	120				543
61–90 days	235	16	21	70				342
more than 90 days	12	1	5	43	2	3	52	118
Valuation category, fair value through profit or loss
Loans with past due amount,	613							613
5–30 days	162							162
31–60 days	276							276

61–90 days	82							82
more than 90 days	93							93
Total	1 296	687	827	705	11	3	52	3 581

Forborne loans
Performing	2 615	664	646	327	2 161			6 413
Non-performing	1 093	849	789	553		2	52	3 338
Fully collateralized loans with incurred loss event Carrying amount	101		9	46	2	3	52	213
Impaired, past due and forborne loans 2014
	Sweden	Estonia	Latvia	Lithuania	Norway	Denmark	USA	Total
Impaired loans
Carrying amount before provisions	2 075	1 312	1 465	1 214	207	8		6 281
Provisions	740	367	682	347	55	6		2 197
Carrying amount after provisions	1 335	945	783	867	152	2		4 084
Share of impaired loans, net, %	0.10	1.60	2.66	2.28	0.38	0.14		0.27
Share of impaired loans, gross, %	0.16	2.20	4.82	3.15	0.52	0.48		0.41

Past due loans that are not impaired
Valuation category, loans and receivables
Loans with past due amount,	860	925	650	997	43		139	3 614
5–30 days	294	739	491	558	19			2 101
31–60 days	301	143	124	251				819
61–90 days
more than 90 days	265	43	35	188	24		139	694
Valuation category, fair value through profit or loss
Loans with past due amount,	748							748
5–30 days	308							308
31–60 days	281							281
61–90 days
more than 90 days	159							159
Total	1 608	925	650	997	43		139	4 362

Fully collateralized loans with incurred loss event
Carrying amount	428		13	61	19		139	660

Impaired loans

Impaired loans are those for which it is likely that payment will not be received in accordance with the contractual terms. A loan is considered impaired when there is objective proof that a loss event has occurred at an individual level after the loan's first reporting date and a loss arises when the loan's anticipated future cash flows differ from the contractual cash flows (both discounted by the loan's original effective interest rate). Loss events on an individual level include when a borrower incurs significant financial difficulties, when it is likely that the borrower will file for bankruptcy or liquidation, when the borrower is facing a financial reconstruction, a breach of contract such as late or nonpayment of interest or principal, or various concessions due to the borrower's financial difficulties. Exposures overdue by more than 90 days or those for which the terms have changed in a significant manner due to the borrower's financial difficulties are automatically considered impaired loans. A loan is not impaired if there is collateral that covers the principal, unpaid interest and any late fees by a satisfactory margin. Specified above are the reserves allocated for impaired loans as well as for other lending where loss events have occurred but where individual loans have not yet been identified.

Forborne loans

Forborne loans refer to loans whose contractual terms have been amended due to the customer's financial difficulties. The purpose of the forbearance measure is to get the borrower current on their payments again, or when this is not considered possible to maximise the repayment of outstanding loans. Changes in contractual terms include various forms of concessions such as amortisation suspensions, reductions in interest

rates to below market rate, forgiveness of all or part of the loan, or issuance of new loans to pay overdue amounts or avoid default. Changes in contractual terms may be so significant that the loan is also considered impaired, which is the case if the forbearance measure reduces the original loan's carrying amount regardless of concessions. The forborne loan's carrying amount is determined by discounting future anticipated cash flows by the original loans's effective interest rate. Before a forborne loan ceases being reported as forborne all the criteria set by the European Banking Authority must be met.

Loan write-offs

Loans are written off when the loss amount is ultimately determined. Write-offs are not included in impaired loans or foreborne loans. Remaining loans that are partially written off are still included after the write-off in impaired loans or foreborne loans. The loss amount is ultimately determined when a receiver has presented a bankruptcy distribution, when a bankruptcy composition has been adopted, when a concession has been granted or when the Swedish Enforcement Agency or a collection agency which the Group works with has reported that an individual has no distrainable assets. When a loan is written off, the claim against the borrower normally is not forgiven. In general, a proof of claim is filed against the borrower or guarantor after the write-off. A proof of claim is not filed when a legal entity has ceased to exist due to a bankruptcy, when a bankruptcy composition has been adopted or when receivables have been completely forgiven. Loans are also written off after the disposal of impaired loans. Previous provisions are utilised in connection with the write-off.

Loans provisions 2015

	Sweden	Estonia	Latvia	Lithuania		Norway Denmark	Finland	USA	Other	Total
Opening balance	1 251	537	922	471	97	6	4	4	38	3 330
New provisions	734	52	23	89		7				905
Utilisation of previous provisions	–171	–25	–218	–76	–10	–1				–501
Reversal of previous provisions	–99	–37	5	–49	–24					–204
Portfolio provisions for loans that are not impaired	–30	59	–115	–44			1	–4	1	–132
Change in exchange rates	21	–13	–23	–5	3					–17
Closing balance	1 706	573	594	386	66	12	5	0	39	3 381
Total provision ratio for impaired loans, % (Including portfolio provi sion in relation to loans that individually are assessed as impaired)	65	48	57	40	34	85				56
Provision ratio for individually assessed impaired loans, %	47	35	43	31	7	83				40

Loans provisions 2014

	Sweden	Estonia	Latvia	Lithuania		Norway Denmark	Finland	USA	Other	Total
Opening balance	1 412	581	1 326	657	54	3	2	9	30	4 074
New provisions	253	–30	–77	28	73	2				249
Utilisation of previous provisions	–166	–86	–20	–72						–344
Reversal of previous provisions	–312	–29	–355	–125						–821
Portfolio provisions for loans that are not impaired	–58	60	–30	–57					8	–77
Change in exchange rates	122	41	78	40	–30		2	–5		249
Closing balance	1 251	537	922	471	97	6	4	4	38	3 330
Total provision ratio for impaired loans, % (Including portfolio provi sion in relation to loans that individually are assessed as impaired)	62	41	63	39	47	72				53
Provision ratio for individually assessed impaired loans, %	34	28	47	29	27	72				35

Concentration risk, customer exposure

At end of 2015 the Group did not have any exposures against single counterparties that exceeded 10 per cent of the capital base.

Collateral that can be sold or pledged even if the counterparty fulfils its contractual obligations

When it grants repos, the Group receives securities that can be sold or pledged. The fair value of these securities covers the carrying amount of the repos. The Group also receives collateral in the form of securities that can be sold or pledged for derivatives and other exposures. The fair value of such collateral as of year-end amounted to SEK 1 989m (1 829). None of this collateral had been sold or repledged as of year-end.

Assets taken over for protection of claims and cancelled leases

The Group takes over properties to recover as much lost cash flow as possible from defaulted loans, thereby minimising credit impairments. This is expected to be done through active asset management and other value-creation measures. Another aim is to minimise the cost of ownership while the repossessed property is held. The Group's holding of investment properties, which have been acquired to protect receivables, are reported in note G31 Investment properties. The majority of other repossessed property is immediately divested.

The fair values of the investment properties have been determined mainly by a cash flow analysis of each asset. Each property is measured individually. Fair values are primarily determined by internal appraisers with extensive knowledge of the properties and the relevant market. The internal assumptions in the appraisal are considered so significant that the appraisal is attributed to level 3 in the fair value hierarchy. Impaired properties are measured at value in use. Certain individual properties whose sale is imminent have been measured at their anticipated sales price, however. In those cases the appraisal is attributed to level 2 in the fair value hierarchy.

2015	Operating income	Operating expenses	Depreciation	Impairment	Gains at disposal	Net profit
Properties recognised as inventory	7	2		62	46	–11
Investment properties, with rent income	9	15	3	8	1	–17
Other		4		2	21	14
Total	16	21	3	72	68	–13

		Operating ex
2014	Operating income	penses	Depreciation	Impairment	Gains at disposal	Net profit
Properties recognised as inventory				206	102	–104
Investment properties, with rent income	30	35	10	46	101	41
Other	45	50		4	17	8
Total	75	84	10	256	220	–55

		2015				2014
	Number	Carrying amount, overtaken during 2015	Carrying amount	Fair value	Number	Carrying amount, overtaken during 2014	Carrying amount	Fair value
Total
Properties recognised as inventory	102	110	400	460	877		777	951
Investment properties	1		8	16	13		97	138
Vehicles	17	4	10	14	46		34	46
Shares and other participating interests	2		17	17	2		13	13
Other	3		6	6	13		13	15
Total	125	114	441	513	951		934	1 163

Capital requirement for credit risks

The capital requirement for credit risks for Swedbank (consolidated situation) on 31 December 2015 totalled SEK 20 801m (21 988). For more information, see note G4 Capital.

Liquidity risk

DEFINITION

Liquidity risk refers to the risk that the Group will not be able to meet its payment obligations at maturity.

The Board of Directors decides the Group's overarching risk appetite for liquidity and has therefore set limits for the survival horizon and the minimum unused room in the cover pool for issuance of covered bonds (Over Collateralisation, OC). The CEO is responsible for ensuring that operations stay within the risk appetite, due to which more granular CEO limits have been defined and established. To ensure that operations can be monitored on a daily basis in terms of the risk appetite and CEO limits, the limits are complemented with limits set by the Chief Risk Officer.

Responsibility for managing and controlling the Group's liquidity rests with Group Treasury. Group Risk works independently to identify all relevant aspects of liquidity risk and is responsible for independent control, measurement and monitoring.

Financing and liquidity strategy

Swedbank's funding strategy is primarily based on asset composition. More than half of lending consists of Swedish mortgages, which are primarily funded with covered bonds. Swedbank is the savings leader in its home markets. Deposit volumes, together with covered bonds and shareholders' equity, cover nearly all its funding requirements. As a result, Swedbank has limited structural need for senior unsecured funding. The financing strategy is also closely linked to the credit quality of the assets in the balance sheet. Swedbank tries to match unsecured funding against assets with corresponding amounts and maturities.

The percentage of senior funding is determined mainly by the bank's liquidity needs and the buffer it wants to keep in its collateral pool in the form of surplus values (so-called over collateralisation) to withstand fluctuations in housing prices.

Swedbank uses a number of different funding programmes to meet its short- and long-term needs e.g. commercial paper, certificates of deposit, covered bonds and unsecured funding.

For information about Swedbank's distribution of liabilities and encumbered assets, see the Pillar 3 report or Factbook.

Liquidity reserve

The reason why Swedbank has established and maintains a liquidity reserve is to reduce the Group's liquidity risk. When future refinancing needs are high, the liquidity reserve must be adjusted to meet maturities in various types of stressed scenarios where, for instance, markets are fully or partly closed for new issues over an extended time period. This also means that when Swedbank's maturities are lower, the liquidity reserve can be reduced, since liquidity risk decreases.

Liquidity reserve1

According to the templated defined by the Swedish Bankers association

Total	314 004
Securities issued by financial corporates (excl. Covered bonds)	735
Issued by other institutions	44 830
Covered bonds	44 830
Securities issued or guaranteed by municipalities och Public sector entities	4 146
Securities issued or guaranteed by sovereigns, central banks or multinational development banks	77 731
Deposits in other banks, available over night	249
Cash and balances with central banks	186 313

1) 95 per cent of the securities in the liquidity reserver per December 31 2015 are rated AAA

Additional liquid assets, Group2

Securities issued or guaranteed by sovereigns, central banks or multinational development banks	13 967
Securities issued or guaranteed by municipalities och Public sector entities	5
Covered bonds	31 598
Issued by other institutions	27 460
Own issued	4 137
Securities issued by non-financial corporated	970
Securities issued by financial corporates (excl. Covered bonds)	3 959
Total	50 499

2) 89 per cent of the additionally liquid assets fulfill the requirements of the Swedish Banking Association's template, except that they are held outside Treasury.

Summary of maturities

earliest date on which repayment can be demanded. The difference between the nominal amount and carrying amount, the discount effect, is reported in the column No maturity date/discount effect" This column also includes items without an agreed maturity date and where the anticipated repayment date has not been determined.

	Undiscounted contractual cash flows
Remaining maturity 2015	Payable on demand	< 3 mths.	3 mths.—1 yr	1—5 yrs	5—10 yrs	> 10 yrs	No maturity/ discount effect	Total
Assets
Cash and balances with central banks	186 312							186 312
Treasury bills and other bills eligible for refinancing with central banks		48 118	8 489	14 317	287	2 445	2 896	76 552
Loans to credit institutions	5 979	70 947	3 043	5 443	960	46		86 418
Loans to the public		74 777	118 593	308 624	104 554	790 584	16 823	1 413 955
Bonds and other interest-bearing securities		6 467	36 893	42 259	623	221	2 147	88 610
Financial assets for which the customers bear the invest ment risk		33 704	2 153	13 033	15 380	55 801	33 371	153 442
Shares and participating interests							16 456	16 456
Derivatives		18 820	23 634	31 332	5 158		7 163	86 107
Intangible fixed assets							13 690	13 690
Tangible assets							1 989	1 989
Other assets		20 427	2 607	6			2 284	25 324
Total	192 291	273 260	195 412	415 014	126 962	849 097	96 819	2 148 855
Liabilities
Amounts owed to credit institutions	29 041	110 972	9 573	882	23		2	150 493
Deposits and borrowings from the public	648 521	67 081	29 560	2 903	148	58		748 271
Debt securities in issue		124 435	90 351	506 695	55 487	14 829	34 738	826 535
Financial liabilities where customers bear the investment risk		56 919	2 312	13 652	16 147	57 560	11 246	157 836
Derivatives		13 915	10 845	20 321	5 513	1 251	16 836	68 681
Other liabilities		36 823	7 381	3 564	870	446		49 084
Subordinated liabilities					12 411	11 653	549	24 613
Equity							123 342	123 342
Total	677 562	410 145	150 022	548 017	90 599	85 797	186 713	2 148 855

The large part of deposits from the public is contractually payable on demand. Despite the contractual terms, the deposits are essentially a stable and a long-term source of funding.

Remaining maturity 2014	Payable on demand	< 3 mths.	3 mths.—1 yr	1—5 yrs	5—10 yrs	> 10 yrs	No maturity/ discount effect	Total
Assets
Cash and balances with central banks	113 768							113 768
Treasury bills and other bills eligible for refinancing with
central banks		15 245	5 308	14 376	3 441	3 848	4 007	46 225
Loans to credit institutions	5 203	100 084	550	7 385	526	72	0	113 820
Loans to the public		146 895	111 488	254 822	101 566	773 575	16 161	1 404 507
Bonds and other interest-bearing securities		14 634	34 391	67 951	2 992	484	4 003	124 455
Financial assets for which the customers bear the invest
ment risk		32 924	2 001	11 822	14 021	53 118	29 433	143 319
Shares and participating interests							14 855	14 855
Derivatives		30 449	27 517	56 200	9 875	1 991	–2 830	123 202
Intangible fixed assets							14 319	14 319
Tangible assets							2 750	2 750
Other assets		15 900	2 873	14			1 290	20 077
Total	118 971	356 131	184 128	412 570	132 421	833 088	83 988	2 121 297
Liabilities
Amounts owed to credit institutions	41 824	123 200	5 604	759	62		4	171 453
Deposits and borrowings from the public	563 049	79 929	29 739	3 587	267	108		676 679
Debt securities in issue		160 365	141 576	439 970	46 406	16 637	30 058	835 012
Financial liabilities where customers bear the investment risk		61 994	1 961	11 563	13 447	48 719	8 493	146 177
Derivatives		17 149	20 152	46 197	8 150	1 639	–7 593	85 694
Other liabilities		53 961	10 063	2 470	1 270	2 188		69 952
Subordinated liabilities					12 914	5 297	746	18 957
Equity							117 373	117 373
Total	604 873	496 598	209 095	504 546	82 516	74 588	149 081	2 121 297

The large part of deposits from the public is contractually payable on demand. Despite the contractual terms, the deposits are essentially a stable and a long-term source of funding.

Risk measurement

Group Risk is responsible for defining independent methods to measure the Group's liquidity risk as well as for reviewing and approving methods defined by Group Treasury. All liquidity risk is identified and measured. The calculation of Swedbank's liquidity risk is based on the Group's future contracted net cash flows, which are accumulated over time and generate a survival horizon. Moreover, Group Treasury calculates and monitors the Group's liquidity risks with a number of different risk measures such as Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR).

A survival horizon limit is set as part of the Group's ERM policy. The limit represents the number of days with a positive cumulative net cash flow, taking into account future contracted cash flows. Cash flows from liquid assets are modelled based on conservative estimates of when, at the earliest, they could occur. In addition to the survival horizon, Swedbank analyses liquidity risk based on the effect of non-contracted flows through simulations and various stress tests. The model is conservative in that it assumes there is no access to credit markets or support from other outside parties such as credit facilities from central banks.

A number of methods and systems are used to ensure that Swedbank can meet its payment obligations and commitments every day, under normal as well as stressed conditions. Managing intra-day payments includes monitoring and verifying that payment obligations are executed punctually and that any financing needs are identified.

The purpose of LCR is to ensure that Swedbank has unpledged assets of high quality (a liquidity reserve) to meet its liquidity needs in stressed situations in the next 30 days. As of 1 January 2013 Sweden mandates a minimum level of 100 per cent in total and for USD and EUR individually. Besides the Swedish regulation, Swedbank reports LCR according to current EU regulations.

NSFR indicates a bank's ability to manage stressed situations over a one-year horizon. NFSR ensures that a bank's illiquid long-term assets are financed with a minimum level of stable long-term funding. A ratio of over 100 per cent means that long-term illiquid assets are financed to a satisfactory degree by stable long-term funding.

Moreover, Swedbank publishes a ratio of the size of its liquid assets to maturing funding given various maturities as a complement to regulatory measures. A ratio of over 100% indicates that the liquid assets exceed the coming maturities during a given time period.

To identify and act on increased liquidity risks as early as possible, Swedbank uses a number of forward-looking risk indicators, such as volatilities in selected market prices and price discrepancies between various financial instruments. These indicators can signal increased stress in the financial markets and hence increased liquidity risks. Swedbank has developed special continuity plans to manage the effects that would arise in case of serious market disruptions. These plans exist for the Group level and for the local level in the countries where Swedbank operates.

Stress tests

Stress tests are conducted regularly to increase readiness for possible disruptions in the market. The stress tests focus on Swedbank-specific as well as market-related disruptions; these analyses also take into account the combined effects that would occur if both kinds of issues arise simultaneously.

In the scenarios a number of the risk drivers underlying the Survival Horizon are stressed to levels that are unlikely, but not inconceivable. Examples include large-scale withdrawals from deposit accounts, high utilisation of credit facilities and increased collateral requirements for various purposes. In addition, the scenario assumes that Swedbank's liquidity reserve will fall in value, as will the properties that serve as collateral for the loans in the mortgage operations. The latter risk driver impacts Swedbank's ability to issue covered bonds, which are of strategic importance to its funding. Finally, it assumes that access to capital markets dries up, but that Swedbank's liquid assets can still generate liquidity.

The table on next page provides a snapshot of the cover pool as of 31 December 2015 ("Current") and illustrates the effects on Swedbank mortgage's OC given various price declines for the mortgages in the pool which could occur over a time period. The more prices fall, the more difficult it becomes to issue bonds. Swedbank's ERM policy stipulates that the cover pool must have an OC level which ensures that the highest rating from at least one ratings agency is maintained in a scenario where house prices fall by 20 per cent. The purpose of the level is to ensure that there is sufficient cover to protect investors even if house prices should fall substantially.

Cover pool sensitivity analysis, house price decline

31 December 2015

House price decline	Current	–5%	–10%	–15%	–20%	–25%	–30%	–35%	–40%
Total assets in the cover pool, SEKbn	817,9	815,1	809,5	799,6	785,1	765,6	740,9	711,5	678,0
Total outstanding covered bonds, SEKbn	517,9	517,9	517,9	517,9	517,9	517,9	517,9	517,9	517,9
Over collateralisation level, %	57,9	57,4	56,3	54,4	51,6	47,8	43,1	37,4	30,9

LCR, new regulation FFFS 2012:6 from 2013-01-01	31 Dec	31 Dec
%	2015	2014
Liquidity coverage ratio (LCR), Total	159	120
Liquidity coverage ratio (LCR), EUR	638	332
Liquidity coverage ratio (LCR), USD	363	217
Liquidity coverage ratio (LCR), SEK1	71	45

1) For LCR in SEK there is no explicit regulation to fullfil 100%, which is the case for total LCR and in USD and EUR

Liquidity coverage ratio (LCR), FFFS 2012:6, Total	31 Dec	31 Dec
SEKbn	2015	2014
Liquid assets level 1	207	140
Liquid assets level 2	62	79
Liquidity reserve	269	219
Customer deposits	126	98
Market borrowing	153	193
Other cash outflows	42	40
Cash outflows	321	331
Inflow from maturing lending to non-financial customers	8	9
Other cash inflow	144	140
Cash inflows	152	149

(LCR = Liquid assets / (total outflows – total inflows)

LCR, according Regulation (EU) 575/2013 (CRR) issued 26 June 2013	31 Dec	31 Dec
%	2015	2014
LCR, total	142

Liquidity and funding ratios	31 Dec	31 Dec
%	2015	2014
Net stable funding ratio (NSFR)2	107	98
Available stable funding (ASF), SEKbn	1 350	1 217
Required stable funding (RSF), SEKbn	1 263	1 247

Liquid assets in relation to maturing funding during next 3, 6 and 12 month3

Liquidityreserve3months	167	102
Liquidityreserve6months	127	72
Liquidityreserve12months	110	61
Liquidityreserve+additionalliquidassets3months	194	136
Liquidityreserve+additionalliquidassets6months	148	96
Liquidityreserve+additionalliquidassets12months	128	82

1) Liquidity reserve according to FFFS 2012:6 definition

2) NSFR – calculated in accordance with Swedbank's interpretation of the current proposal for regulation

3) Liquidity reserve according to definition by the Swedish Bankers' Association. Additional liquid assets:

Assets, pledgeable in central banks, held by the group outside of Group Treasury. Maturing funding: maturing short-term CP/CD's, and net of lending and borrowing to/ from credit institutions (net Interbank)

Debt securities issuance

In 2015 Swedbank issued a total of SEK 229bn (115) in long-term debt instruments. Swedbank has remained active in several capital markets to diversify its funding. The majority of the issues were covered bonds, though also in the form of uncovered bonds, where a new funding programme was introduced primarily for US investors (under rule 144a of the US Securities Act).

Debt securities in issue

Turnover during the year	2015	2014
Commercial papers
Opening balance	195 191	100 170
Issued	934 962	724 042
Repurchased	–200	–22
Repaid	–1 019 540	–646 017
Change in market values	26	–3
Change in exchange rates	–3 393	17 021
Closing balance	107 046	195 191
Covered bond loans
Opening balance	511 666	510 930
Issued	157 728	91 600
Repurchased	–38 820	–43 599
Repaid	–65 591	–75 470
Change in market values or hedged item in hedge accounting at fair value	–13 625	23 756
Change in exchange rates	–689
Closing balance	550 669	511 666
Bond loans with state guarantee
Opening balance		8 578
Repaid		–8 089
Change in market values		–617
Change in exchange rates		128
Closing balance		0

Turnover during the year	2015	2014
Other interest-bearing bond loans
Opening balance	114 840	92 898
Issued	64 804	18 535
Business combinations		2 028
Repurchased	–837	–1 303
Repaid	–23 861	–6 398
Change in market values	1 821	–837
Change in exchange rates	–2 523	9 917
Closing balance	154 244	114 840
Structured products
Opening balance	13 315	13 699
Issued	6 687	4 804
Repaid	–3 855	–5 114
Change in market values	–1 571	–75
Change in exchange rates		1
Closing balance	14 576	13 315
Total debt securities in issue	826 535	835 012

Capital requirement for liquidity risk

Banks and financial institutions currently are not subject to capital requirements for liquidity risk. Disruptions to liquidity can arise, however, due to an imbalance between risk and capital. The purpose of the internal capital adequacy assessment process is to prevent this type of imbalance.

Market risk

Definition

Market risk refers to the risk that the Group's results, equity or value will decrease due to changes in risk factors in financial markets. Market risk includes interest rate risk, currency risk, share price risk and commodity risk, as well as risks from changes in volatilities and correlations.

Risk management

The Group's total risk-taking is governed by the risk appetites decided by the Board, which limit the nature and size of financial risk-taking. Only so-called risk-taking units, i.e. units assigned a risk mandate by the CEO, are permitted to take market risks. To monitor the limits allocated by the CEO, the Group's Chief Risk Officer has established limits as well as other indicators that indicate an elevated risk in particular activities. when they reach certain levels, In addition to the Chief Risk Officer's limits and selected indicators, local business area limits serve as important tools in the risk-taking units' daily activities. The Group's market risk analysis department is responsible, on a daily basis, for measuring, monitoring and reporting market risks within Swedbank.

The majority of the Group's market risks are of a structural or strategic nature and are managed primarily by Group Treasury. Structural interest rate risks are natural in a bank that handles deposits and loans. Interest rate risk arises primarily when there is a difference in maturity between the Group's assets and liabilities. This risk is managed by Group Treasury, within given mandates. Interest rate risk is managed primarily by matching maturities, either directly or through the use of various derivatives such as interest rate swaps. Strategic interest rate risks usually arise through risks tied to holdings in foreign operations as well as when deposits and lending are in different currencies. These risks are managed, within given mandates, with for example forward contracts, among other things.

Risk measurement

Swedbank uses a number of different risk measures, both statistical and non-statistical, to guide the Group's risk-taking units and ensure strict compliance. Statistical measures such as Value-at-Risk (VaR) and Stressed Value-at-Risk (SVaR) are important tools in Swedbank's risk management processes and are used to, among other things, calculate the Group's capital requirement.

VaR uses a model to estimate a probability distribution for the change in value of Swedbank's portfolios. This is based on the last year's movements in various market risk factors such as interest rates and equity prices. The estimation is based on the hypothetical assumption that the portfolios will remain unchanged over a specific time horizon. The Group uses a VaR model with a confidence interval of 99 per cent and a time horizon of one trading day. Statistically, this means that the potential loss of a portfolio will exceed the VaR amount one day out of 100. VaR is a useful tool not only to determine the risk level for an individual security or asset class, but mainly to compare levels between various risk factors.

Since VaR is a model based on a number of assumptions, Swedbank evaluates the VaR model's reliability on a daily basis with backtesting. Ordinary VaR and Stressed VaR (SVaR) differ slightly in that the stressed model applies market data from a one-year period of considerable stress. The period selected by Swedbank covers from spring 2008 and one year forward.

Non-statistical measures such as sensitivity analyses are an important complement to VaR and SVaR, in some cases they provide a deeper understanding of the market risk factors being measured.

In addition to VaR and various types of sensitivity analyses, Swedbank conducts an extensive array of stress tests. These tests can be divided into three groups: historical, forward-looking and method and model stress scenarios. The purpose of these stress tests, and the scenarios that serve as a basis for them, is to further identify significant movements in risk factors or losses that could arise due to exceptional market disruptions.

Risk exposure

Swedbank's market risks primarily arise in trading operations, which are conducted in the Large Corporates & Institutions (LC&I) business area or within the Group's banking operations (managed by Group Treasury).

Value-at-Risk (VaR)

During the year Swedbank was well-positioned for volatility in the financial markets and the Group's VaR was maintained at stable, low level. The Group's total VaR does not include strategic currency risks, since a VaR measure based on one trading day is irrelevant for positions the Group intends to hold for longer periods.

			Jan–Dec 2015 (2014)	2015	2014
SEKm	Max	Min	Average	31 Dec	31 Dec
Interest rate risk	112 (129)	53 (65)	81(101)	82	73
Currency risk	15 (16)	3 (3)	7 (7)	7	8
Share price risk	24 (12)	4 (1)	7 (4)	5	7
Diversification			–15 (–12)	–14	–13
Total	113 (126)	56 (65)	80 (100)	80	75

Interest rate risk

Interest rate risk refers to the risk that the value of the Group's assets, liabilities and interest-related derivatives will be negatively affected by changes in interest rates or other relevant risk factors.

The majority of the Group's interest rate risks are structural and arise within the banking operations when there is a mismatch between the interest fixing periods of assets and liabilities, including derivatives. The interest rate risk in fixed rate assets, primarily customer loans, accounts for the large part of this risk and is hedged through fixed-rate funding or by entering into various types of swap agreements. Interest rate risk also arises within trading operations through customer-related activities.

An increase in all market interest rates of one percentage point (including real interest rates) would have reduced the value of the Group's assets and liabilities, including derivatives, by SEK –25m (–1 574) as of 31 December 2015. The effect on positions in SEK would have been a reduction of SEK –1 103m (–1 502), while positions in foreign currency would have been an increase by SEK 1 078m (–72).

The Group's net gains and losses on financial items at fair value would have been affected by SEK 954m (–523) as of 31 December 2015. The Group uses derivatives for so-called cash flow hedges. A change in market interest rates as above would affect the Group's other comprehensive income by SEK 60m (75).

Credit spread risk

Credit spread risk refers to the risk that the value of the Group's assets and liabilities, including derivatives, may fluctuate due to changes in the issuer-specific interest markup (the credit spread). The Group's credit spread risks are concentrated in customerrelated businesses and other types of mandates (managed by the trading operations) as well as in the liquidity portfolio consisting of interest-bearing assets.

An increase in all issuer-specific spreads of 1bp as of 31 December 2015 would have reduced the value of the Group's interest-bearing assets, including derivatives, by SEK 12m (20).

Change in value if the market interest rate rises by one percentage point

The impact on the net value of assets and liabilities, including derivatives, (SEKm) when market interest rates rise by one percentage point.

2015	< 3 mths.	3—6 mths.	6—12 mths.	1—2 yrs	2—3 yrs	3—4 yrs	4—5 yrs	5—10 yrs	> 10 yrs	Total
SEK	–499	–221	197	–343	–177	35	4	–119	21	–1 103
Foreign currency	765	238	70	–85	–0	–42	171	–80	42	1 078
Total	266	17	267	–429	–178	–7	175	–199	63	–25

of which financial instruments measured at fair value through profit or loss.

2015	< 3 mths.	3—6 mths.	6—12 mths.	1—2 yrs	2—3 yrs	3—4 yrs	4—5 yrs	5—10 yrs	> 10 yrs	Total
SEK	–81	–173	91	–81	–16	2	3	45	–29	–238
Foreign currency	600	286	58	–37	40	12	203	–42	72	1 192
Total	519	113	149	–118	25	14	206	3	43	954

The impact on the net value of assets and liabilities, including derivatives, (SEKm) when market interest rates rise by one percentage point.

2014	< 3 mths.	3—6 mths.	6—12 mths.	1—2 yrs	2—3 yrs	3—4 yrs	4—5 yrs	5—10 yrs	> 10 yrs	Total
SEK	–401	119	–662	–390	42	186	–374	47	–69	–1 502
Foreign currency	–11	–4	25	–45	–38	16	2	8	–25	–72
Total	–412	115	–637	–435	4	202	–372	55	–94	–1 574

of which financial instruments measured at fair value through profit or loss.

2014	< 3 mths.	3—6 mths.	6—12 mths.	1—2 yrs	2—3 yrs	3—4 yrs	4—5 yrs	5—10 yrs	> 10 yrs	Total
SEK	–1 524	914	–1 274	68	796	1 039	–44	–1 545	967	–603
Foreign currency	–5	22	23	–9	–2	19	7	27	–2	80
Total	–1 529	936	–1 251	59	794	1 058	–37	–1 518	965	–523

Currency risk

Currency risk refers to the risk that the value of the Group's assets and liabilities, including derivatives, may fluctuate due to changes in exchange rates or other relevant risk factors. The predominant share of Swedbank's currency risk is of a structural or strategic nature. Strategic currency risk mainly arises in connection with investments in foreign operations. These exposures are currency hedged, with the exception of goodwill and other intangible assets. The currency risks arising in other parts of the Group, e.g. in trading, are low compared with the risks arising in connection with investments in foreign operations. Currency risks arising in the banking operations or that are strategic in nature are managed by Group Treasury by limiting the total value of assets and liabilities, including derivatives, in the same currency to the desired level using derivatives, such as cross currency swaps and forward exchange agreements.

The Group's exposure to currency risks with the potential to affect earnings, i.e. excluding exposures related to investments in foreign operations and related hedges, is limited. A shift in exchange rates between foreign currencies and the Swedish krona of +5 per cent at year-end would have a direct effect on the Group's reported profit of SEK 17m (–54). Moreover, a shift in exchange rates between foreign currencies and the Swedish krona of –5 per cent at year-end would have a direct effect on the Group's reported profit of SEK 77m (12).

A shift in exchange rates between the Swedish krona and foreign currencies of +/–5 per cent with respect to net investments in foreign operations and related hedges would have a direct effect on other comprehensive income of SEK +/– 876m after tax (+/– 921).

The Group recognises certain currency derivatives as cash flow hedges. An increase in the basis spread, the price to swap cash flows in one currency for another, of one basis point would have had a positive effect on certain derivatives in other comprehensive income of SEK 8m (10) after tax as of 31 December 2015.

Currency distribution

2015	SEK	EUR	USD	GBP	DKK	NOK	Other	Total
Assets
Cash and balances with central banks	262	68 085	112 814	35	315	4 717	84	186 312
Loans to credit institutions	51 067	18 925	5 418	250	489	2 991	7 278	86 418
Loans to the public	1 190 620	148 518	36 850	1 572	4 771	27 069	4 555	1 413 955
Interest-bearing securities	124 376	18 066	13 639	427		8 654		165 162
Assets held for sale	12		119				17	148
Other assets, not distributed	296 860							296 860
Total	1 663 197	253 594	168 840	2 284	5 575	43 431	11 934	2 148 855
Liabilities
Amounts owed to credit institutions	86 052	14 857	34 293	2 175	1 236	9 227	2 653	150 493
Deposits and borrowings from the public	539 798	143 806	55 763	1 837	1 375	3 684	2 008	748 271
Debt securities in issue etc.	398 232	204 210	194 578	27 717		10 615	15 796	851 148
Liabilities held for sale	14							14
Other liabilities, not distributed	275 587							275 587
Equity	123 342							123 342
Total	1 423 025	362 873	284 634	31 729	2 611	23 526	20 457	2 148 855
Other assets and liabilities,
including positions in derivatives		118 611	115 752	29 421	–2 955	–19 719	8 588
Net position in currency		9 332	–42	–24	9	186	65	9 526

Net funding in foreign currency with a corresponding recognised amount of SEK 36 590m (38 912) is used as a hedging instrument to hedge the net investment in foreign operations. The above net position in currencies pertains mainly to parts of net investments in foreign operations that are not hedged. Exchange rate changes on this position are recognised in other comprehensive income as translation difference.

Currency distribution
2014	SEK	EUR	USD	GBP	LTL	RUB	NOK	Other	Total
Assets
Cash and balances with central banks	379	26 282	68 546	43	13 366	320	4 126	706	113 768
Loans to credit institutions	79 860	25 056	5 936	607	93	118	1 998	152	113 820
Loans to the public	1 177 181	134 883	41 831	1 504	14 381	4 628	24 412	5 687	1 404 507
Interest-bearing securities	111 478	29 262	18 274	158	912		10 594	2	170 680
Assets held for sale	75	56	469					15	615
Other assets, not distributed	317 907								317 907
Total	1 686 880	215 539	135 056	2 312	28 752	5 066	41 130	6 562	2 121 297
Liabilities
Amounts owed to credit institutions	109 193	19 651	34 610	3 853	79	1 245	2 789	33	171 453
Deposits and borrowings from the public	496 416	101 613	32 607	935	37 534	1 037	3 922	2 615	676 679
Debt securities in issue etc.	379 629	200 449	232 941	17 029	221		11 216	12 484	853 969
Liabilities held for sale	39								39
Other liabilities, not distributed	301 784								301 784
Equity	117 373								117 373
Total	1 404 434	321 713	300 158	21 817	37 834	2 282	17 927	15 132	2 121 297
Other assets and liabilities,
including positions in derivatives		121 432	165 107	19 482	3 691	–2 789	–22 754	8 629
Net position in currency		15 258	5	–23	–5 391	–5	449	59	10 352

Share price risk

Share price risk refers to the risk that the value of the Group's holdings of shares and share-related derivatives may be negatively affected by changes in share prices or other relevant risk factors.

Share price risks arise in the trading operations due to holdings in equities and equity-related derivatives. The main purpose of Swedbank's equity trading is to create liquidity for the Group's customers. Share price risk is measured and limited in the Group e.g. for the worst possible outcomes in 80 different scenarios where share prices and implicit volatility change. In these scenarios share prices change by a maximum of +/– 20 per cent and the implicit volatility by a maximum of +/– 30 per cent. The outcomes for the various combinations form a risk matrix for share price risk, and the worst-case scenario is limited.

As of year-end the worst-case scenario conceivably would have affected the value of the trading operations' positions by SEK 11m (–83).

Commodity risk

Commodity risk refers to the risk that the value of the Group's holdings of commodityrelated derivatives will be negatively affected by a change in asset prices. The exposure to commodity risks arises in the Group only in exceptional cases as part of customerrelated products. All positions with a commodity exposure must always be hedged with another party so that no open exposure remains. As of 31 December 2015 Swedbank had no open commodity exposures.

Trading operations

Market risks in trading operations

Trading operations at Swedbank are conducted in the Large Corporates & Institutions (LC&I) business area for the primary purpose of assisting customers to execute transactions in the financial market. Positioning occurs only to a limited extent, and the risk level (measured in VaR) in this operation is low.

	Jan–Dec 2015 (2014)	2015	2014
SEKm	Max	Min	Average	31 Dec	31 Dec
Value-at-Risk	29 (29)	11 (11)	18 (18)	20	22
Stressed Value-at-Risk	82 (74)	28 (29)	47 (46)	30	46

Swedbank evaluates the VaR model's reliability on a daily basis with actual and hypothetical backtesting. Actual backtesting uses the trading operations' actual daily results to determine the accuracy of the VaR model, while hypothetical backtesting compares the portfolio's value at the end of the day with its value at the end of the subsequent day. The comparison takes into account any market movements during the day on which the test is conducted, but with the assumption that the positions in the portfolio remain unchanged during this time period. By indicating only three days of loss, the hypothetical backtesting conducted by the Group in 2015 shows that the model serves its purpose well.

In addition to the VaR model applied in the calculation of Swedbank's capital requirement, the Group uses a VaR model in its internal risk management that also captures specific interest rate risk.

		Jan–Dec 2015 (2014)	2015	2014
SEKm	Max	Min	Average	31 dec	31 dec
Credit spread risk	11 (19)	6 (9)	9 (13)	6	9
Share price risk	20 (12)	4 (1)	7 (4)	5	8
Currency risk	15 (16)	3 (2)	7 (7)	8	9
Interest rate risk	29 (28)	9 (10)	16 (17)	20	20
Diversification			–19 (–19)	–17	–22
Total	33 (31)	13 (15)	20 (22)	22	23

The trading operations' total VaR averaged SEK 20m in 2015, which compares with total VaR of SEK 22m for 2014. The risk (measured in VaR) remained well-balanced during the year between different asset classes, and were, on an aggregate level is well-diversified.

Data in the table are compiled using the VaR model that the Group applies to internal risk management and therefore differs from the values generated using the VaR model for capital requirements.

Capital requirement for market risks

The capital requirement for market risks in Swedbank totalled SEK 858 m (1 525) and is presented by risk type in note G4 under Capital adequacy.

Operational risks

DEFINITION

Operational risk refers to the risk of losses resulting from inadequate or failed internal processes or procedures, human error, faulty systems or external events. The definition includes legal risk, compliance risk and information risk.

Risk management

Group Risk Control is responsible for uniform, Group-wide operational risk measurement and reporting. An analysis of the risk level in all large business units is performed at least quarterly and reported to each local management as well as to the Board of Directors, the CEO and the Group Executive Committee.

Self assessments

All business areas apply common methods to self-assess operational risks e.g. Risk and Control Self Assessments (RCSA) and Risk Vulnerability Assessments (RVA). These methods, which are used on an ongoing basis to cover all key processes in the Group, include risk identification, action planning and monitoring to manage any risks that arise.

Incident management

Swedbank has established procedures and systems support to facilitate reporting and following up incidents. Group Risk supports the business areas in reporting, analysing and drafting action plans to ensure that the underlying causes are identified and suitable actions are taken. Incidents and related operational risk losses are reported in a central database for further analysis.

New Product Approval Processes (NPAP)

Swedbank has a Group-wide process for New Product Approval (NPA) covering all new and/or revised products, services, activities, processes and/or systems as well as major operational and/or organisational changes. The purpose is to ensure that the Group does not enter into activities which entail unintended risks or risks that are not immediately managed and controlled as part of the process. In addition, the Group is able to assure quality when launching new and/or revised products and services.

Continuity, crisis management and security

Swedbank works proactively to prevent and/or strengthen its ability to manage serious incidents, such as IT disruptions, natural disasters, financial market disturbances and pandemics, which may affect Swedbank's ability to maintain services and offerings.

The principles for security, continuity, incident and crisis management are defined in a Group-level framework. A Group-level crisis management team is responsible for management, coordination and communication in collaboration with local crisis management teams. Continuity plans are in place for business-critical operations and services that are critical for the nation and society. The plans describe how Swedbank will operate in the event of a serious disruption. Swedbank's models for continuity and crisis management are based on the international standard ISO/IEC 22301:2012 – Societal security – Business continuity management systems. Swedbank also has insurance protection, with an emphasis on catastrophe protection, for significant parts of its operations.

Process and control management

Swedbank is developing a Group-wide framework and approach to managing processes and controls as well as monitoring. Swedbank has established a process universe and governance model for its management and support processes. In addition, work is being done to establish a process universe and governance model for the bank's business processes. They are designed to define responsibilities for the Group's key processes as well as for controls in the processes and for ensuring that they are effective and adequate. To create a process-based method for risk management, the process universe will be used as a basis for all risk management within the Group. Documentation of processes and controls is underway in parts of the Group.

Special frameworks for internal control over financial reporting (ICFR) and credit process control (CPC) are currently applied for affected processes.

Information risk

Swedbank has internal rules describing how it protects information. To strengthen these efforts, a review is being conducted of processes and approaches to improve and complement the bank's management system for information security.

Capital requirements for operational risks

Swedbank applies the standardised approach to calculate the capital requirement for operational risks. Swedbank's capital requirement for operational risk amounted to SEK 5 071m (4 745).

Insurance risks

DEFINITION

Insurance risk refers to the risk of a change in value due to a deviation between actual and anticipated insurance costs. In other words, the risk that an actual outcome will deviate from projections e.g. in terms of longevity, mortality, morbidity or claim frequency. This includes cost risk i.e. the risk that administrative costs and sales commissions will exceed the cost estimates that served as the basis for the premiums.

The life insurance operations incur mortality risk, morbidity risk, longevity risk, cost risk and cancellation risk i.e. the risk that contracts will be terminated in advance to a higher degree than anticipated.

Property and casualty insurance risk comprises the risk that the insurance result will be unusually unfavourable in the year ahead and that the final payment for past claims will be more expensive than anticipated.

Risk management

Before a life insurance policy is approved, the insured must pass a risk assessment. The purpose is to determine whether the insured can be approved for insurance based on his or her health. The desired insurance must also meet the policyholder's insurance needs. To further limit risk exposure, the company reinsures parts of its insurance risks.

Swedbank's insurance operations offer a broad range of products and are active in the entire Swedish market as well as in the three Baltic countries, which diversifies insurance risk by market, product, age and gender.

Insurance contracts are designed so that the premium and assumptions can be changed annually, which means that the company can quickly balance its premiums and terms to rapid changes in morbidity, for example.

The pricing of premiums is based on assumptions about longevity, mortality, morbidity and claim frequency as well as the estimated cost of insurance events. Experience in the form of statistical material and expectations about future developments are critical factors in the choice of assumptions.

Risk exposure and risk measurement

Actual outcomes compared with the above-mentioned assumptions give rise to a risk result in the life insurance operations. Insurance risks in the life insurance operations are measured by stressing the insurance company's balance sheet, income statement and shareholders' equity over a one-year horizon with a given level of confidence.

According to the latest risk assessment, the most important risks are cancellation, cost and catastrophic risk i.e. the risk of major damage due to a single event.

Property and casualty insurance today represents a smaller part of Swedbank's total insurance operations. Since contracts are issued on an annual basis, insurance risks are limited because pricing can be changed for the following year. For the property and casualty insurance operations, insurance risks are measured by calculating the claim ratio i.e. claims in relation to premiums, by product and country.

Capital requirement for insurance risk

Solvency is a measure of the insurance company's financial position and strength. The purpose is to show how large a capital buffer the company has to fulfil its commitments to customers in accordance with the terms and guarantees in its insurance contracts. The insurance companies also incur market risk. Their capital buffer is designed to cover all risks.

The capital base in Swedbank's Swedish insurance operations amounted to SEK 2 739m (2 725) on 31 December 2015. This compares with a required solvency of SEK 2 124m (2 028). The solvency ratio was 1.29 (1.34).

The capital base in the Baltic life insurance operations amounted to SEK 228m (346) as of 31 December 2015. The solvency ratio was 1.56 (2.50). The capital base in the Baltic property and casualty insurance operations amounted to SEK 177m (294) as of 31 December 2015. The solvency ratio was 1.91 (3.56).

The figures above refer to rules that applied through 31 December 2015 (Solvency I). As of 1 January 2016 the capital requirement for insurance companies will be calculated according to new rules (Solvency II).

The traffic light model is a methodology developed by the SFSA to supervise Swedish life insurance companies and measure their exposure to various types of risks. The result is a total capital adequacy requirement for the company, which for Swedbank Insurance AB was satisfactory as of 31 December 2015.

G4 Capital

Internal capital assessment

Purpose

The Internal Capital Adequacy Assessment Process (ICAAP) aims to ensure that the Group is adequately capitalised to cover its risks, current and future, and to operate and develop the business.

Measurement

Swedbank prepares and documents its own methods and processes to evaluate its capital requirement. The internal capital adequacy assessment takes into account all relevant risks that arise within the Group. In addition to Pillar 1 risks, risks for which no capital is allocated are monitored as well, such as business risk, liquidity risk and strategic risk. Significant risks that have been identified within the Group include:

Risk types according to the ICAAP process

Pillar 1	Pillar 2
	Contributes to calculated capital need?
Yes	Yes
Yes1	Yes
Yes	Yes, plus additional tests
No	Yes, plus additional tests
Yes	Yes
Yes2	Yes3
No	Yes
No	Yes
No	Yes, as a one-off sum added

No specific capital is allocated	Identified and mitigated?

Reputational risk	No	Yes
Liquidity risk	No	Yes, stress tests

1) The Basel formula is calibrated to include sector and geographical concentration risk i.e. the Pillar 1 measure implicitly includes a large share of concentration risk.

Strategic risk: Decision risk No Yes

2) Holdings in insurance business are deducted from capital, and an assessment is made to determine whether the invested capital amount is adequate considering the adverse scenario applied in the Group's ICAAP. The assessment is made in accordance with the current as well as future solvency regulations.

3) The insurance companies within Swedbank Group perform an Own Risk and Solvency Assessment (ORSA). The aim of the ORSA process is to assess (qualitatively and quan titatively) risks and solvency position over the business planning period of the next three years by projecting the risk metrics under the base and adverse scenarios.

To ensure efficient use of capital and predict capital adequacy even under exceptionally adverse market conditions, the Group conducts scenario-based simulations and stress tests at least once a year. The analyses provide an overview of the most important risks the Group is exposed to by quantifying the impact on the income statement and balance sheet as well as the capital base and risk weighted assets. The method serves as a foundation for a proactive risk and capital management.

ICAAP 2015

Since 2009 Swedbank has worked actively to reduce risk in the balance sheet in all its home markets. The Baltic countries today have a much better macroeconomic balance and resilience than a few years ago at the same time that good growth prospects pave the way for even higher credit quality. The work done in 2009–2013 to improve credit quality in the loan portfolios and strengthen own funds in the Baltic subsidiaries made them more resilient, as indicated in the 2015 ICAAP. This is one of the reasons why Swedbank's 2015 ICAAP shows that the bank is exposed to limited risks and is expected to remain well capitalised even in the event of unfavourable macroeconomic development.

Description of 2015 adverse scenario

The 2015 ICAAP, which starts with actual outcomes for 31 December 2014, evaluated the impact on Swedbank's balance sheet of a major recession in its home markets and globally. In the three-year scenario all of Swedbank's home markets see substantially slower growth, a decline in housing prices and higher unemployment.

The high unemployment, coupled with lower property prices, reinforces the economic slowdown as households reduce their spending. This in turn impacts domestically oriented, consumer sensitive sectors at the same time that the Swedish krona weakens against the euro. Further, the global slowdown in demand leaves the export sector especially exposed.

Stress test ICAAP-scenario - parameters

Sweden	2014	2015	2016	2017
GDP-growth, %	1.6	–4.6	0.8	2.2
Unemployment, %	7.9	9.6	11.3	10.7
Inflation %	–0.2	–1.0	0.2	1.7
Residential real estate price %	9.3	–18.7	0.0	6.1
Estonia	2014	2015	2016	2017
GDP-growth, %	2.1	–9.0	–1.0	4.0
Unemployment, %	8.2	11.0	16.5	14.5
Inflation %	–0.6	–0.5	–0.3	2.0
Residential real estate price %	10.0	–18.7	0.0	6.1
Latvia	2014	2015	2016	2017
GDP-growth, %	1.5	–8.7	–0.8	4.2
Unemployment, %	10.3	12.5	17.5	15.0
Inflation %	0.5	0.0	–0.5	2.0
Residential real estate price %	9.0	–18.7	0.0	6.1
Lithuania	2014	2015	2016	2017
GDP-growth, %	2.2	–8.5	–0.6	4.4
Unemployment, %	10.1	12.4	17.3	14.8
Inflation %	0.0	0.2	–0.3	2.0
Residential real estate price %	10.0	–18.7	0.0	6.1
Interest Rates	2014	2015	2016	2017
Stibor 3m, %	0.09	–0.11	0.10	0.70
Euribor 3m, %	–0.25	–0.16	–0.01	0.54
FX	2014	2015	2016	2017
USD/SEK	7.24	11.47	10.77	9.77
EUR/SEK	9.18	10.77	10.41	9.78

Triggers Outcome in Swedbank´s home markets

In Sweden GDP falls by a maximum of 4.6 per cent, unemployment increases to a maximum of 11.3 per cent and house prices fall by a maximum of 18.7 per cent.

Debts and austerity continue to weigh on European economies. Negative consequences for the entire global economy. In Estonia GDP falls by a maximum of 9.0 per cent, unemployment increases to a maximum of 16.5 per cent and house prices fall by a maximum of 18.7 per cent.

Stress test ICAAP scenario

The Baltic economies see a significant decline in external demand and the export house prices fall by a maximum of 18.7 per cent,

A greatly weakened European banking system causes problems in the form of credit contraction and credibility problems for banks and financial institutions.

Strong EUR weak SEK. In Latvia GDP falls by a maximum of 8.7 per cent, unemployment increases to a maximum of 17.5 per cent and

sector suffers. In Lithuania GDP falls by a maximum of 8.5 per cent, unemployment increases to a maximum of 17.3 per cent and house prices fall by a maximum of 18.7 per cent.

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Income statement under ICAAP-Scenario1

SEKbn	2014	2015	2016	2017
Net interest income	24.1	21.8	22.7	24.5
Total income	41.7	35.0	35.8	37.9
Total expenses	18.8	19.1	19.1	19.5
Profit before impairments	23.0	16.0	16.6	18.4
Credit impairments	0.6	5.2	7.9	3.6
Operating profit	22.4	10.8	8.7	14.8
Tax expense	4.9	2.4	1.9	3.3
Profit for the period	17.1	8.3	6.7	11.3
Profit for the period attributable to:
Shareholders of Swedbank AB	12.8	6.2	5.0	8.5
Non-controlling interests	0.4	0.2	0.1	0.2

1) ICAAP calculations are based on the consolidated situation, which in several respects differs from the Swedbank Group. For example, insurance operations are not included in the consolidated situation.

Swedbank in the scenario

In the scenario net interest income falls by 9.4 per cent in 2015, mainly reflecting the low interest rate environment that the scenario plays out in. In the following years net interest income rises and in 2016 surpasses the 2014 base level. Credit impairments total SEK 16.6bn, of which the LC&I and Swedish Banking business areas account for 78 per cent.

Credit Impairments per Business area1		Credit Impairment ratio. %
	EAD2 SEKbn 2014	2015	2016	2017
Swedish Banking	1 034.3	2.4	4.5	2.0
Large Corporates & Institutions	269.5	1.3	1.7	0.9
Estonia	61.2	0.6	0.6	0.2
Latvia	32.8	0.5	0.7	0.2
Lithuania	40.3	0.4	0.4	0.2
Other	91.2
Total	1 529.3	5.2	7.9	3.6

1) ICAAP calculations are based on the consolidated situation, which in several respects differs from the Swedbank Group. For example, insurance operations are not

included in the consolidated situation.

2) Exposure at Default.

Internal capital requirement

In its ICAAP, Swedbank takes into account the regulatory changes it knows with certainty will enter into force during the simulation period. Consequently, Basel 3/ CRD IV, in which regulatory changes include CVA adjustments of SEK 11.3bn, has been discounted to the start, so that the result fully reflects the scenario effects.

RWA and Capital

SEKbn	2014	2015	2016	2017
RWA	414.2	457.6	437.4	410.7
Common Equity Tier 1	87.1	88.9	89.4	91.7

In the stress test Swedbank's Common Equity Tier 1 capital improves throughout the scenario horizon. The scenario result ignores possible interventions Swedbank's executive management might reasonably make under negative circumstances. If possible interventions are included in the stressed scenario, the Common Equity Tier 1 capital ratio would improve slightly. The effect is limited, however, since the scenario outcome produces an annual profit, from which tax and dividends are deducted in order to maintain a conservative approach.

Risk weighted assets (RWA) increase by a maximum of 11.2 per cent over the scenario horizon, driven by migration effects in the credit portfolio. This is offset at the same time by credit impairments, which reduce the credit portfolio. The scenario-based simulations and stress tests are complemented by a calculation of the capital requirement using internal methods. The models that serve as the basis of the internal capital assessment measure the need for economic capital over a one year horizon with a 99.9 per cent confidence interval for each risk type. Diversification effects between risk types are not taken into consideration in the calculation of economic capital.

As of 31 December 2015 the internally measured internal capital requirement for Swedbank's consolidated situation amounted to SEK 30.8bn. The capital that meets the internal capital requirement, i.e. the capital base, amounted to SEK 117.8bn.

Capital assessment

%	2014	2015	2016	2017
Common Equity Tier 1 ratio	21.0	19.4	20.4	22.3

The Riksbank

The Riksbank's stress test, which is conducted twice a year, is based on a macro scenario with a probability of "once every 25 years" and from that perspective is comparable with Swedbank's ICAAP. The macro scenario includes lower GDP, high unemployment, a house price drop and high three-month interbank rates. The Riksbank's latest stress test uses a scenario in which global financial stress increases, which has real economic consequences. The scenario assumes a series of rate hikes in the US, which creates volatility in asset prices and reduces US domestic demand. This presumably also leads to a decline in global demand, which in turn causes rising market interest rates, falling GDP growth and a decrease in European asset prices.

In the Riksbank's latest stress test, which was also published in the Swedish Financial Supervisory Authority's stability report for 2015, the Q3 figures for 2015 serve as initial values i.e. Swedbank's initial value is a 23.0 per cent Common Equity Tier 1 capital ratio. During the three-year scenario Swedbank's Common Equity Tier 1 capital ratio falls by 110 points and after three years of stress the Common Equity Tier 1 capital ratio is measured as 21.9 per cent. The reason for the marginal decrease in the Common Equity Tier 1 capital ratio is that Swedbank is considered to have a high earning capacity and can manage most of the credit impairments that the scenario stipulates.

Swedish Financial Supervisory Authority

The Swedish Financial Supervisory Authority (SFSA) conducts annual stress tests to assess the stability of the financial system. The tests are also part of SFSA's supervision, where it assesses the ability of Swedish banks to withstand adverse scenarios. SFSA's stress test is based on a number of assumptions that adversely affect the banks' possible earnings, but more importantly test how well they can handle large credit impairments in every segment of their lending over a three-year period.

In SFSA's latest stress test, which was published in January 2015, the Q3 figures for 2014 serve as initial values i.e. Swedbank's initial value is a 20.7 per cent Common Equity Tier 1 capital ratio. SFSA's stress test proves that Swedbank can handle this type of stress in a satisfactory manner. During the three-year scenario the Common Equity Tier 1 capital ratio falls by 120 points between the start and the scenario's worst year, but Swedbank recovers the loss and ends up at the same level where the stress test started i.e. with a Common Equity Tier 1 capital ratio of 20.7 per cent.

The SFSA has clarified that the capital conservation buffer's 250 points should be seen as the margin necessary in a stress test with a severity of "once every 25 years". Swedbank met this criterion in all major external and internal stress tests in 2015.

Capital adequacy analysis

The capital adequacy regulation is the legislator's requirement of how much capital, designated as the capital base, a bank must have in relation to the size of the risks it faces. The rules strengthen the connection between risk taking and required capital in the Group's operations. Swedbank's legal requirement is based on CRR, but more specifically limited by the Basel 1 floor within CRR. The SFSA has clarified that the Basel 1 floor, i.e. 80 per cent of the capital requirement according to the Basel 1 rules, will remain for Swedish banks. The consolidated situation on 31 December 2015 included

Consolidated situation
Capital adequacy	2015	2014
Common Equity Tier 1 capital	93 926	87 916
Additional Tier 1 capital	10 624	4 998
Tier 1 capital	104 550	92 914
Tier 2 capital	13 269	12 674
Total capital base	117 819	105 588
Risk exposure amount	389 098	414 214
Common Equity Tier 1, capital ratio, %	24.1	21.2
Tier 1 capital ratio, %	26.9	22.4
Total capital ratio, %	30.3	25.5

	Consolidated situation
Capital adequacy	2015	2014
Shareholders' equity according to the Group's
balance sheet	123 163	117 203
Non-controlling interests	54	46
Anticipated dividend	–11 828	–12 511
Deconsolidation of insurance companies	–1 249	–692
Value changes in own financial liabilities
including derivatives	31	74
Cash flow hedges	–17	103
Additional value adjustments1	–474
Goodwill	–11 387	–11 724
Goodwill in significant investments	–710	–710
Deferred tax assets	–95	–166
Intangible assets after deferred tax liabilities	–1 438	–1 698
Net provisions for reported IRB credit exposures	–1 089	–1 599
Shares deducted from CET1 capital	–42	–410
Defined benefit pension fund assets2	–993
Common Equity Tier 1 capital	93 926	87 916
Additional Tier 1 capital	10 624	4 998
Total Tier 1 capital	104 550	92 914
Tier 2 capital	13 269	12 674
Total capital base	117 819	105 588
Minimum capital requirement for credit risks,
standardised approach	3 823	4 295
Minimum capital requirement for credit risks, IRB	20 801	21 988
Minimum capital requirement for credit risk,
default fund contribution	4	3
Minimum capital requirement for settlement risks	1	2
Minimum capital requirement for market risks	858	1 525
Trading book	848	1 335
of which VaR and SVaR	525	711
of which risks outside VaR and SVaR	323	624
FX risk other operations	10	190
Minimum capital requirement for credit value adjustment	594	579
Minimum capital requirement for operational risks	5 047	4 745
Minimum capital requirement 3	31 128	33 137

the Swedbank Group with the exception of insurance companies. In addition, Entercard Group was included through the proportional consolidation method.

The table below contains the information that must be published according to the SFSA's regulations (FFFS 2014:12), chapter 8. Additional periodic information according to the European Parliament's and the Council's regulation (EU) No 575/2013 on prudential requirements for credit institutions and the Commission's implementing regulation EU) No 1423/2013 can be found on Swedbank's website at http://www. swedbank.com/investor-relations/risk-and-capital-adequacy/risk-report/index.htm

2015	2014
307 856	328 574
7	30
10 730	19 059
7 422	7 241
63 083	59 310
389 098	414 214

Common Equity Tier 1 capital ratio, %	24.1	21.2
Tier 1 capital ratio, %	26.9	22.4
Total capital ratio, %	30.3	25.5

Consolidated situation
Capital buffer requirement4, %	2015	2014
CET1 capital requirement including buffer requirements	10.7	7.0
of which minimum CET1 requirement	4.5	4.5
of which capital conservation buffer	2.5	2.5
of which countercyclical capital buffer	0.7
of which systemic risk buffer	3.0
CET 1 capital available to meet buffer requirement5	19.6	16.4

	Consolidated situation
Capital adequacy Basel 1 floor	2015	2014
Capital requirement Basel 1 floor	68 577	69 557
Own funds Basel 3 adjusted according
to rules for Basel 1 floor	118 908	107 187
Surplus of capital according to Basel 1 floor	50 331	37 630

	Consolidated situation
Leverage ratio6	2015	2014
Tier 1 Capital, SEKm	104 550	92 914
Leverage ratio exposure, SEKm	2 102 284	2 066 385
Leverage ratio, %	5.0	4.5

1) Adjustment due to the implementation of EBA's technical standards on prudent valuation. The objective of these standards is to determine prudent values of fair value positions.

2) Net pension assets.

3) Total minimum capital requirement under Pillar 1 i.e. 8 per cent of total risk weighted exposure amount.

4) Buffer requirement according to Swedish implementation of CRD IV.

5) CET1 capital ratio as reported less minimum requirement of 4.5 per cent (excluding buffer requirements) and less any CET1 items used to meet the Tier 1 and total capital requirements.

6) Calculated according to applicable regulation at each reporting date.

		2015
Minimum capital requirement for credit risks, IRB1	Exposure value	Average risk weight, %	Minimum capital requirement
Institutional exposures	108 019	15	1 305
Corporate exposures	471 163	35	13 213
Retail exposures	974 908	7	5 739
of which mortgage lending	882 979	5	3 673
of which other lending	91 929	28	2 066
Securitisation	160	8	1
Non credit obligation	62 686	11	543
Total credit risks, IRB	1 616 936	16	20 801

Minimum capital requirements for credit risks, IRB1		2014
	Exposure value	Average risk weight, %	Minimum capital requirement
Institutional exposures	136 263	15	1 666
Corporate exposures	461 567	37	13 616
Retail exposures	931 884	8	6 110
of which mortgage lending	839 420	6	4 001
of which other lending	92 464	29	2 109
Securitisation	763	11	7
Non credit obligation	75 078	10	589
Total credit risks, IRB	1 605 555	17	21 988

1) Total minimum capital requirement under Pillar 1 i.e. 8 per cent of total risk weighted exposure amount.

	Consolidated situation
Minimum capital requirements for market risks1)	2015	2014
Interest rate risk	811	1 282
of which for specific risk	286	571
of which for general risk	525	711
Equity risk	204	132
of which for specific risk	4	1
of which for general risk	200	127
of which positions in CIU's		4
Currency risk in trading book	199	171
Commodity risk	33	46
Total minimum capital requirement for risks in trad
ing book 2)	848	1 335
of which stressed VaR	350	506
Currency risk outside trading book	10	190
Total	858	1 525

	Consolidated situation
Minimum capital requirement for operational risks1)	2015	2014
Standardised approach	5 047	4 630
of which trading and sales	693	591
of which retail banking	2 876	2 685
of which commercial banking	843	826
of which payment and settlement	262	248
of which retail brokerage	5	7
of which agency services	33	24
of which asset management	286	216
of which corporate finance	49	33
Basic indicator approach		115
Total	5 047	4 745

1) Total minimum capital requirement under Pillar 1 i.e. 8 per cent of total risk weighted exposure amount.

2) The parent company's capital requirement for general interest rate risk, share price risk and currency risk in the trading book as well as Swedbank Estonia AS', Swedbank Latvia AS' and Swedbank Lithuania AB's capital requirements for general interest rate risk and currency risk in the trading book are calculated according to the VaR model.

Notes, Group

		Consolidated situation 2015
Risk exposure amount and minimum capital requirement1	Risk exposure amount	Minimum capital requirement
Credit risks, STD	47 786	3 823
Central government or central banks exposures	379	30
Regional governments or local authorities exposures	274	22
Public sector entities exposures	56	4
Institutional exposures	803	64
Corporate exposures	9 041	723
Retail exposures	16 854	1 348
Exposures secured by mortgages on immovable property	834	67
Exposures in default	420	34
Exposures in the form of covered bonds	7	1
Equity exposures	14 808	1 185
Other items	4 310	345
Credit risks, IRB	260 018	20 801
Institutional exposures	16 312	1 305
Corporate exposures	165 160	13 213
of which specialized lending in category 1	18	1
of which specialized lending in category 2	429	34
of which specialized lending in category 3	752	60
of which specialized lending in category 4	682	55
Retail exposures	71 735	5 739
of which mortgage lending	45 912	3 673
of which other lending	25 824	2 066
Securitisation	12	1
Non-credit obligation	6 799	543
Credit risks, Default fund contribution	53	4
Settlement risks	7	1
Market risks	10 730	858
Trading book	10 608	848
of which VaR and SVaR	6 566	525
of which risks outside VaR and SVaR	4 042	323
FX risk other operations	122	10
Credit value adjustment	7 422	594
Operational risks	63 083	5 047
of which Standardised approach	63 083	5 047
Total	389 098	31 128

1) Total minimum capital requirement under Pillar 1 i.e. 8 per cent of total risk weighted exposure amount.

G5 Operating segments

2015	Swedish Banking	Baltic Banking	Large corpo rates & Institutions	Group Functions & Other	Eliminations	Total
Income statement
Net interest income	13 435	3 558	3 428	2 572		22 993
Net commissions	7 176	2 052	2 025	–134	80	11 199
Net gains and losses on financial items at fair value	264	202	1 891	–1 785	–1	571
Share of the profit or loss of associates	862			1		863
Other income	814	476	143	759	–194	1 998
Total income	22 551	6 288	7 487	1 413	–115	37 624
of which internal income	175		116	358	–649
Staff costs	3 487	845	1 425	2 964		8 721
Variable staff costs	157	75	228	214		674
Other expenses	6 237	1 426	1 629	–2 911	–115	6 266
Depreciation/amortisation	106	136	64	366		672
Total expenses	9 987	2 482	3 346	633	–115	16 333
Profit before impairments	12 564	3 806	4 141	780		21 291
Impairment of intangible assets				254		254
Impairment of tangible assets		8		64		72
Credit impairments	482	–172	284			594
Operating profit	12 082	3 970	3 857	462		20 371
Tax expense	2 548	1 510	630	–63		4 625
Profit for the year from continuing operations	9 534	2 460	3 227	525		15 746
Profit for the year from discontinued operations, after tax				–6		–6
Profit for the year	9 534	2 460	3 227	519		15 740
Profit for the year attributable to the
shareholders of Swedbank AB	9 521	2 460	3 227	519		15 727
Non-controlling interests	13					13
Balance sheet
Cash and balances with central banks		2 422	4 968	178 922		186 312
Loans to credit institutions	41 996	32	277 037	10 480	–243 127	86 418
Loans to the public	1 064 046	124 562	218 441	6 906		1 413 955
Bonds and other interest-bearing securities	241	1 243	33 743	132 808	–2 873	165 162
Financial assets for which customers bear inv. risk	153 374	2 952			–2 884	153 442
Investments in associates	3 353			2 029		5 382
Derivatives			91 991	44 578	–50 462	86 107
Total tangible and intangible assests	2 458	10 500	452	2 269		15 679
Other assets	4 371	26 704	26 054	687 370	–708 101	36 398
Total assets	1 269 839	168 415	652 686	1 065 362	–1 007 447	2 148 855
Amounts owed to credit institutions	87 316		199 515	100 302	–236 640	150 493
Deposits and borrowings from the public	457 846	145 106	121 618	29 870	–6 169	748 271
Debt securities in issue			16 570	819 388	–9 423	826 535
Financial liabilities for which customers bear inv. risk	154 576	3 260				157 836
Derivatives			88 230	30 913	–50 462	68 681
Other liabilities	519 443	70	207 538	26 786	–704 753	49 084
Subordinated liabilities				24 613		24 613
Total liabilities	1 219 181	148 436	633 471	1 031 872	–1 007 447	2 025 513
Allocated equity	50 658	19 979	19 215	33 490		123 342
Total liabilities and equity	1 269 839	168 415	652 686	1 065 362	–1 007 447	2 148 855
Key figures
Return on allocated equity, continuing operations, %	18.5	12.3	16.2	2.1		13.5
Return on allocated equity, total operations, %	18.5	12.3	16.2	2.1		13.5
Cost/income ratio	0.44	0.39	0.45	0.45		0.43
Credit impairment ratio, %	0.05	–0.14	0.16	0.00		0.04
Loans/deposits	235	86	150			184
Loans, SEKbn	1 064 086	124 362	182 076	40		1 370 564
Deposits, SEKbn	452 810	145 119	121 467	24 590		743 986
Risk exposure amount	182 662	73 954	112 508	19 974		389 098
Full-time employees	4 469	3 853	1 195	4 376		13 893

The operating segment report is based on Swedbank's accounting policies, organisation and management accounts. Market-based transfer prices are applied between operating segments, while all expenses for IT, other Group functions and Group staffs are transfer priced at cost to the operating segments. Executive management expenses are not distributed. Cross-border transfer pricing is applied according to OECD transfer pricing guidelines.

The Group's equity attributable to shareholders is allocated to each operating segment based on capital adequacy rules and estimated capital requirements based on the bank's internal Capital Adequacy Assessment Process (ICAAP).

Swedish Banking, Swedbank's dominant operating segment, is responsible for all Swedish customers except for large corporates and financial institutions. The operating segment's services are sold through Swedbank's own branch network, the Telephone Bank, the Internet Bank and the distribution network of the independent savings banks. The operating segment also includes a number of subsidiaries as well as the retail operations in branch offices in Denmark and Luxembourg.

Large Corporates & Institutions is responsible for large corporates, financial institutions and banks as well as for trading and capital market products. Operations are carried out by the parent bank in Sweden, branch offices in Norway, Finland, the US and China, and through the trading and capital market operations in subsidiary banks in Estonia, Latvia and Lithuania. Baltic Banking operates in Estonia, Latvia and Lithuania. Its services are sold through its own branch network, the Telephone Bank and the Internet Bank. The effects of Swedbank's ownership interests in the Baltic companies Swedbank AS (Estonia), Swedbank AS (Latvia) and Swedbank AB (Lithuania) are also reported in Baltic Banking in the form of financing costs, Group goodwill and Group amortisation on surplus values in the lending and deposit

portfolios identified at the time of acquisition in 2005. Group Functions & Other comprise, in addition to the Group Functions, Russia, Ukraine and Ektornet. The Group Functions operate across the business areas and serve as strategic and administrative support for them. The Group Functions are Group Products, Group IT, Accounting & Finance (including Group Treasury), Risk, Compliance, Corporate Affairs, HR and Legal. The Group Executive Committee and Internal Audit are also included in Group Functions.

During 2015 Swedbank's operating segments were changed slightly to coincide with the organisational changes made in Swedbank's business area organisation. Comparative figures have been restated.

			Large
2014	Swedish Banking	Baltic Banking	corporates & Institutions	Group Functions & Other	Eliminations	Total

Income statement
Net interest income	13 350	3 496	3 485	2 302	9	22 642
Net commissions	6 939	1 956	2 233		76	11 204
Net gains and losses on financial items at fair value	230	239	1 929	–413	1	1 986
Share of the profit or loss of associates	980					980
Other income	1 179	416	121	1 072	–296	2 492
Total income	22 678	6 107	7 768	2 961	–210	39 304
of which internal income	188		113	–510	209
Staff costs	4 034	783	1 364	3 272	–1	9 452
Variable staff costs	211	78	288	230		807
Other expenses	6 410	1 512	1 644	–2 727	–214	6 625
Depreciation/amortisation	91	144	68	410	5	718
Total expenses	10 746	2 517	3 364	1 185	–210	17 602
Profit before impairments	11 932	3 590	4 404	1 776		21 702
Impairment of intangible assets		1				1
Impairment of tangible assets		10		246		256
Credit impairments	246	–186	381	–22		419
Operating profit	11 686	3 765	4 023	1 552		21 026
Tax expense	2 392	565	880	464		4 301
Profit for the year from continuing operations	9 294	3 200	3 143	1 088		16 725
Profit for the year from discontinued operations, after tax				–262		–262
Profit for the year	9 294	3 200	3 143	826		16 463
Profit for the year attributable to the
shareholders of Swedbank AB	9 280	3 200	3 143	824		16 447
Non-controlling interests	14			2		16
Balance sheet
Cash and balances with central banks		2 786	5 052	105 930		113 768
Loans to credit institutions	57 920	129	300 056	161 775	–406 060	113 820
Loans to the public	1 023 300	126 400	240 012	15 269	–474	1 404 507
Bonds and other interest-bearing securities	306	1 368	59 467	114 595	–5 056	170 680
Financial assets for which customers bear inv. risk	142 353	2 629				143 319
Investments in associates	2 911			2 013		4 924
Derivatives			123 241	67 792	–67 831	123 202
Total tangible and intangible assests	2 848	10 998	277	2 946		17 069
Other assets	5 831	19 280	19 178	672 615	–686 896	30 008
Total assets	1 235 469	163 590	747 283	1 142 935	–1 167 980	2 121 297
Amounts owed to credit institutions	93 068		234 040	215 394	–371 049	171 453
Deposits and borrowings from the public	415 582	138 632	118 211	14 995	–10 741	676 679
Debt securities in issue	1 919	641	15 165	826 395	–9 108	835 012
Financial liabilities for which customers bear inv. risk	143 218	2 959				146 177
Derivatives			119 041	34 584	–67 931	85 694
Other liabilities	528 879	482	241 245	8 667	–709 151	70 122
Subordinated liabilities				18 010		18 957
Total liabilities	1 183 613	142 714	727 702	1 118 045	–1 167 980	2 004 094
Allocated equity	51 856	20 876	19 581	24 890		117 203
Total liabilities and equity	1 235 469	163 590	747 283	1 142 935	–1 167 980	2 121 297

Key figures
Return on allocated equity, continuing operations, %	25.5	14.6	19.3	3.1		15.2
Return on allocated equity, total operations, %	25.5	14.6	19.3	2.3		15.0
Cost/income ratio	0.47	0.41	0.43	0.40		0.45
Credit impairment ratio, %	0.03	–0.16	0.18	–0.47		0.03
Loans/deposits	249	91	165	4		201
Loans, SEKbn	1 023 344	126 400	175 344	251		1 325 339
Deposits, SEKbn	411 450	138 355	106 065	5 041		660 911
Risk exposure amount	184 700	80 916	123 955	24 643		414 214
Full-time employees	5 008	3 920	1 193	4 462		14 583

G6 Products

2015	Financing	Savings & Investments	Payments & Cards	Trading & Capital markets	Other	Total
Net interest income	17 707	517	1 794	27	2 948	22 993
Net commissions	771	4 985	4 088	701	654	11 199
Net gains and losses on financial items at fair value	2	3	21	2 269	–1 724	571
Share of the profit or loss of associates			614		249	863
Other income	53	760	269	29	887	1 998
Total income	18 533	6 265	6 786	3 026	3 014	37 624

2014	Financing	Savings & Investments	Payments & Cards	Trading & Capi tal markets	Other	Total
Net interest income	15 501	1 464	2 660	51	2 966	22 642
Net commissions	798	4 921	3 911	1 017	557	11 204
Net gains and losses on financial items at fair value	–47	28	25	2 279	–299	1 986
Share of the profit or loss of associates			724		256	980
Other income	60	722	290	13	1 406	2 492
Total income	16 312	7 135	7 610	3 361	4 886	39 304

In the product area report income has been distributed among five principal product areas. The Group does not have a single customer which accounts for more than 10 per cent of its total income.

private residential lending equity trading consumer financing structured products corporate lending corporate finance leasing custody services other financing products fixed income trading (2) Savings & Investments currency trading savings accounts other capital market products mutual funds and insurance savings (5) Other pension savings administrative services institutional asset management treasury operations other savings and investment products Ektornet (3) Payments & Cards real estate brokerage current accounts (incl. cash management) real estate management cash handling legal services domestic payments safe deposit boxes international payments other mobile payments debit cards Sweden, Baltics and Norway credit cards (incl. EnterCard) card acquiring

other payment products

(1) Financing: (4) Trading & Capital Market Products

document payments (5) Other also includes income from all countries apart from

G7 Geographical distribution

The geographical distribution is primarily based on where the business is carried out and is not comparable to the operating segment reporting. In the geographical distribution intangible assets, mainly goodwill related to acquisitions, has been allocated to the country where the operations were acquired. The column Other includes operations in Russia, Ukraine, Finland, Denmark, Luxembourg and China.

2015	Sweden	Estonia	Latvia	Lithuania	Norway	USA	Other	Eliminations	Total
Income statement
Net interest income	17 767	1 713	1 067	885	797	417	346	1	22 993
Net commissions	8 376	755	680	695	504	5	165	19	11 199
Net gains and losses on financial items at fair value	250	122	66	76	105	6	–54		571
Share of the profit or loss of associates	553	1			309				863
Other income	1 512	645	68	76	10	1	5	–319	1 998
Total income	28 458	3 236	1 881	1 732	1 725	429	462	–299	37 624
Staff costs	6 853	630	351	411	306	46	127	–3	8 721
Variable staff costs	482	51	38	33	57	6	7		674
Other expenses	5 025	432	305	298	357	18	127	–296	6 266
Depreciation/amortisation	433	110	58	50	16		5		672
Total expenses	12 793	1 223	752	792	736	70	266	–299	16 333
Profit before impairments	15 665	2 013	1 129	940	989	359	196		21 291
Impairment of intangible fixed assets	254								254
Impairment of tangible fixed assets		2	38	23			9		72
Credit impairments	762	37	–228	22	–8	1	8		594
Operating profit	14 649	1 974	1 319	895	997	358	179		20 371
Tax expense	3 145	1 197	211	116	261	–369	64		4 625
of which current tax	2 757	1 206	114	119	264	92	64		4 616
of which paid tax	3 336	1 188	18	230	82	40	19		4 913
Profit for the year from continuing operations	11 504	777	1 108	779	736	727	115		15 746
Profit for the year from discontinued operations, after tax							–6		–6
Profit for the period	11 504	777	1 108	779	736	727	109		15 740
Profit for the year attributable to the
shareholders of Swedbank AB	11 491	777	1 108	779	736	727	109		15 727
Non-controlling interests	13								13
Balance sheet
Cash and balances with central banks	294	21 331	16 155	16 903	4 662	112 735	14 232		186 312
Loans to credit institutions	79 921	1 138	1 251	626	691	18 127	3 179	–18 515	86 418
Loans to the public	1 229 568	59 284	28 511	36 626	43 506	1 933	15 331	–804	1 413 955
Bonds and other interest-bearing securities	142 183	2 926	2 815	4 629	8 579	3 693	337		165 162
Financial assets for which customers bear inv. risk	150 490	2 952							153 442
Investments in associates	4 196	7			1 179				5 382
Derivatives	68 214	330	80	115	23 696		1 073	–7 401	86 107
Tangible and intangible fixed assets	3 302	4 216	2 630	4 047	1 468	1	15		15 679
Other assets	31 240	984	794	1 668	764	59	962	–73	36 398
Total assets	1 709 408	93 168	52 236	64 614		84 545 136 548	35 129		–26 793 2 148 855
Amounts owed to credit institutions	13 898	1 484	193	138	48 494	72 496	29 884	–16 094	150 493
Deposits and borrowings from the public	557 416	67 142	37 365	49 486	5 238	29 932	2 256	–564	748 271
Debt securities in issue	793 404	12		236	98	32 785			826 535
Financial liabilities for which customers bear inv. risk	154 576	3 260							157 836
Derivatives	54 977	354	72	85	19 390		1 055	–7 252	68 681
Other liabilities	15 626	12 411	9 086	8 111	5 642	842	428	–2 883	49 263
Subordinated liabilities	24 613								24 613
Total liabilities	1 614 510	84 663	46 716	58 056		78 862 136 055	33 623		–26 793 2 025 692
Allocated equity	94 898	8 505	5 520	6 558	5 683	493	1 506		123 163
Total liabilities and equity	1 709 408	93 168	52 236	64 614		84 545 136 548	35 129		–26 793 2 148 855

Key figures
Return on allocated equity, %	13.1	9.2	19.7	11.5	13.7	107.5	7.0		13.5
Loans/deposits	214	88	76	74	831	6	806		184
Credit impairment ratio, %	0.06	0.06	–0.79	0.07	–0.01	–0.17	0.05		0.04
Share of impaired loans, %	0.16	2.20	4.82	3.15	0.52		0.07		0.41
Cost/income ratio	0.45	0.38	0.40	0.46	0.43	0.16	0.58		0.43
Risk exposure amount	270 631	30 890	23 238	22 068	28 089	3 670	10 513		389 098
Full-time employees	7 789	2 303	1 570	1 880	214	22	115		13 893

Swedbank Annual Report 2015

2014	Sweden	Estonia	Latvia	Lithuania	Norway	USA		Other Eliminations	Total
Income statement
Net interest income	17 456	1 606	1 017	936	875	384	367	1	22 642
Net commissions	8 446	662	620	719	557	13	162	25	11 204
Net gains and losses on financial items at fair value	1 354	201	93	121	276	–3	–56		1 986
Share of the profit or loss of associates	490				490				980
Other income	1 984	619	187	129	–1	47	19	–492	2 492
Total income	29 730	3 088	1 917	1 905	2 197	441	492	–466	39 304
Staff costs	7 693	577	331	379	320	37	115		9 452
Variable staff costs	529	51	36	32	149	4	6		807
Other expenses	5 293	481	364	443	305	76	129	–466	6 625
Depreciation/amortisation	453	120	62	49	22	4	8		718
Total expenses	13 968	1 229	793	903	796	121	258	–466	17 602
Profit before impairments	15 762	1 859	1 124	1 002	1 401	320	234		21 702
Impairment of intangible fixed assets	–10			2			9		1
Impairment of tangible fixed assets	29	2	8	28		159	30		256
Credit impairments	211	–29	–106	–49	382	1	9		419
Operating profit	15 532	1 886	1 222	1 021	1 019	160	186		21 026
Tax expense	3 335	262	184	124	241	76	79		4 301
of which current tax	3 987	28	21	146	276	468	65		4 991
Profit for the year from continuing operations	12 197	1 624	1 038	897	778	84	107		16 725
Profit for the year from discontinued operations,
after tax				13			–275		–262
Profit for the period	12 197	1 624	1 038	910	778	84	–168		16 463
Profit for the year attributable to the
shareholders of Swedbank AB	12 183	1 624	1 038	908	778	84	–168		16 447
Non-controlling interests	14			2					16
Balance sheet
Cash and balances with central banks	369	16 641	9 125	14 106	4 312	68 434	781		113 768
Loans to credit institutions	126 947	2 308	4 246	1 050	1 157	29 253	1 442	–52 583	113 820
Loans to the public	1 221 074	58 882	29 465	38 119	39 935	3 836	14 357	–1 161	1 404 507
Bonds and other interest-bearing securities	136 189	6 069	4 137	5 088	10 208	7 026	1 963		170 680
Financial assets for which customers bear inv. risk	140 690	2 629							143 319
Investments in associates	3 894	7			1 023				4 924
Derivatives	101 634	297	97	159	26 560		488	–6 033	123 202
Tangible and intangible fixed assets	3 686	4 544	3 107	4 257	1 397	2	76		17 069
Other assets	24 586	1 531	1 497	549	714	142	1 219	–230	30 008
Total assets	1 759 069	92 908	51 674	63 328	85 306	108 693	20 326	–60 007	2 121 297
Amounts owed to credit institutions	128 090	2 591	223	541	50 016	26 372	16 187	–52 567	171 453
Deposits and borrowings from the public	516 514	60 822	35 985	47 462	3 877	10 407	2 234	–622	676 679
Debt securities in issue	763 808	14		331		70 859			835 012
Financial liabilities for which customers bear inv. risk	143 218	2 959							146 177
Derivatives	66 903	342	77	147	24 055		467	–6 297	85 694
Other liabilities	32 953	17 363	9 445	7 484	3 199	185	14	–521	70 122
Subordinated liabilities	18 957								18 957
Total liabilities	1 670 443	84 091	45 730	55 965	81 147	107 823	18 902	–60 007	2 004 094
Allocated equity	88 626	8 817	5 944	7 363	4 159	870	1 424		117 203
Total liabilities and equity	1 759 069	92 908	51 674	63 328	85 306	108 693	20 326	–60 007	2 121 297

Key figures
Return on allocated equity, %	15.1	17.3	16.4	11.5	26.5	11.1	–9.8		15.0
Loans/deposits	228	97	82	80	1 032	37	717		200
Credit impairment ratio, %	0.02	–0.06	–0.35	–0.14	1.09	0.05	0.07		0.03
Share of impaired loans, %	0.16	2.20	4.82	3.15	0.52		0.07		0.41
Cost/income ratio	0.47	0.40	0.41	0.47	0.36	0.28	0.53		0.45
Risk exposure amount	287 923	32 111	26 524	27 278	23 790	5 537	11 052		414 214
Full-time employees	8 482	2 280	1 521	1 953	218	22	107		14 583

G8 Net interest income

		2015			2014
	Average balance	Interest income/ expense	Average annual inter est rate. %	Average balance	Interest income/ expense	Average annual inter est rate. %
Loans to credit institutions	105 694	329	0.31	96 699	658	0.68
Loans to the public	1 427 467	33 144	2.32	1 314 650	38 741	2.95
Interest-bearing securities	154 321	1 237	0.80	163 632	2 274	1.39
Total interest-bearing assets	1 687 482	34 710	2.06	1 574 981	41 673	2.65
Derivatives	113 836	–27		85 186	–199
Other assets	521 568	925		387 607	764
Total assets	2 322 886	35 608	1.53	2 047 774	42 238	2.06
deduction of interest income reported in net gains/ losses on financial items at fair value		625			1 186
Interest income according to income statement		34 983			41 052
Amounts owed to credit institutions	161 529	325	0.20	143 222	479	0.33
Deposits and borrowings from the public	836 646	1 256	0.15	722 339	3 191	0.44
of which deposit guarantee fees		563			604
Debt securities in issue	889 297	14 369	1.62	801 892	16 901	2.11
of which commissions for funding with state guarantee					31
Subordinated liabilities	24 191	1 041	4.30	17 175	671	3.91
Interest-bearing liabilities	1 911 663	16 991	0.89	1 684 628	21 242	1.26
Derivatives	85 000	–5 688		66 330	–2 866
Other liabilities	209 909	748		186 863	695
of which stability fee		681			616
Total liabilities	2 206 572	12 051	0.55	1 937 821	19 071	0.98
Equity	116 314			109 953
Total liabilities and equity	2 322 886	12 051	0.52	2 047 774	19 071	0.93
deduction of interest income reported in net gains/ losses on financial items at fair value		61			661
Interest expense according to income statement		11 990			18 410
Net interest income		22 993			22 642
Net interest margin before trading interest are deducted			1.01			1.13
Interest income impaired loans		93			132
Interest income on financial assets at amortised cost		28 085			29 910
Interest expenses on financial liabilities at amortised cost		16 848			22 736

Net interest income rose by approximately 2 per cent to SEK 22 993 m (22 642). Group Treasury's net interest income improved due to falling market interest rates. Swedish Banking's net interest income increased where lower market interest rates had an adverse effect, while increased lending volumes and higher mortgage margins contributed positively. Higher lending volumes contributed to the improvement in LC&I. Repricing and increased deposit volumes contributed positively in Baltic Banking, The introduction of the resolution fee in the Baltics reduced net interest income by SEK 76m. Fluctuations in exchange rates increased net interest income within Baltic Banking by SEK 95m.

Commission income
Payment processing	1 729	1 793
Cards	4 861	4 451
Service concepts	498	493
Asset management	5 750	5 683
Life insurance	661	503
Brokerage	556	609
Other securities	65	57
Corporate finance	246	466
Lending	1 020	956
Guarantee	227	218
Deposits	141	154
Real estate brokerage	256	301
Non-life insurance	78	79
Other commission income	495	489
Total	16 583	16 252

	2015	2014
Commission expenses
Payment processing	–1 029	–998
Cards	–2 358	–2 116
Service concepts	–16	–16
Asset management	–1 263	–1 202
Life insurance	–194	–218
Brokerage	–224	–235
Other securities	–55	–44
Lending and guarantees	–78	–63
Non-life insurance	–11	–7
Other commission expenses	–156	–149
Total	–5 384	–5 048

	2015	2014
Net commission income
Payment processing	700	795
Cards	2 503	2 335
Service concepts	482	477
Asset management	4 487	4 481
Life insurance	467	285
Brokerage	332	374
Other securities	10	13
Corporate finance	246	466
Lending	942	893
Guarantee	227	218
Deposits	141	154
Real estate brokerage	256	301
Non-life insurance	67	72
Other commission income	339	340
Total	11 199	11 204

G9 Net commission income G10 Net gains and losses on financial items at fair value ²⁰¹⁵ ²⁰¹⁴

	2015	2014
Valuation category, fair value
through profit or loss
Trading and derivatives
Shares and share related derivatives	340	289
of which dividend	318	302
Interest-bearing instruments and
interest related derivatives	672	–235
Other financial instruments	74	1
Total	1 086	55
Other
Shares	27	98
of which dividend	7	3
Loans to the public	–2 618	1 371
Financial liabilities	977	–1 008
Total	–1 614	461
Hedge accounting at fair value
Hedging instruments	–4 527	8 040
Hedged item	4 470	–8 032
Total	–57	8
Ineffective part in hedging of net
investments in foreign operations		15
Financial liabilities valued at amortised cost	–803	–2
Loan receivables at amortised cost	194	170
Trading related interest
Interest income	625	1 187
Interest exoense	–60	–661
Total trading related interest	565	526
Change in exchange rates	1 200	753
Total	571	1 986

Distribution by business purpose
Financial instruments for trading related business	2 054	2 423
Financial instruments intended to be held
until contractual maturity	–1 483	–437
Total	571	1 986

Net gains and losses on financial items at fair value fell to SEK 571 m (1 986). The decrease is mainly due to a lower result in Group Treasury within Group Functions & Other caused by negative valuation effects from covered bonds and repurchases of and increased credit spreads. Net gains and losses on financial items at fair value within LC&I were stable.

G11 Net insurance

	2015	2014
Insurance premiums
Life insurance	1 498	1 466
of which loan protection	185	182
of which other	1 313	1 284
Non-life insurance	503	423
Total	2 001	1 889

	2015	2014
Insurance provisions
Life insurance	–972	–1 057
of which loan protection	–100	–119
of which other	–872	–938
Non-life insurance	–321	–251
Total	–1 293	–1 308

	2015	2014
Net insurance
Life insurance	526	409
of which loan protection	85	63
of which other	441	346
Non-life insurance	182	172
Total	708	581

G12 Other income

	2015	2014
Profit from sale of subsidiaries and associates	41
Bargain purchase		461
Income from real estate operations	22	85
Profit from sale of properties, equipments etc.	1	101
Sold inventories	67	119
of which revenues	661	894
of which carrying amount	–594	–775
IT services	714	771
Other operating income	446	375
Total	1 290	1 911

In 2015 the divestment of Svenska Fastighetsförmedling AB resulted in a realisation of SEK 41m. In 2014 a bargain price purchase gain of SEK 461m was recognised on the acquisition of Sparbanken Öresund. Profit from sale of properties, equipment etc. in 2014 included a capital gain of SEK 83m on the sale of the subsidiary Ektornet Kr. Valdemara with its property in Moscow, Russia. In 2014 Income from real estate operations amounted to SEK 85 m, of which SEK 75m mainly relates to properties taken over to protect claims in the US and Latvia.

G13 Staff costs and other staff-related key ratios

1 COMPENSATION WITHIN SWEDBANK

The majority of employees at Swedbank have fixed and variable compensation components, which, together with a pension and other benefits, represent their total compensation. Total compensation is market based and designed to achieve a sound balance between the fixed and variable components.

Further information on compensation can be found in section 9 of the Corporate Governance Report and in the employee section on page 21.

Information on compensation according to the SFSA's regulations and general guidelines on compensation policies (FFFS 2011:1) is published on Swedbank's website.

Total staff costs	2015	2014
Salaries and Board fees	5 757	5 952
Compensation through shares in Swedbank AB	413	459
Social insurance charges	1 890	2 129
Pension costs1	937	1 046
Training costs	105	127
Other staff costs	293	546
Total	9 395	10 259
of which variable staff costs	674	807
of which personnel redundancy costs	39	439

1) The Group's pension cost for the year is specified in note G39.

2 VARIABLE COMPENSATION

Swedbank currently has four share-based variable compensation programmes: Programme 2012, Programme 2013, Programme 2014 and Programme 2015. The programmes are considered to have expired when shares have been transferred to employees. In 2015 shares associated with Programme 2011 were transferred.

2.1 Programme 2015

Programme 2015 consists of two parts: a general programme, Eken, and an individual programme.

Further information on Programme 2015 as well as Programmes 2012–2014 can be found in Swedbank's Factbook, which is published on the bank's website in connection with its quarterly reports as well as in the detailed agenda items that serve as a basis for resolutions by the AGM.

2.2 Reporting of share-based compensation

Share-based compensation is allocated in the form of so-called performance rights (future shares in Swedbank) and accrued over the duration of each programme. Delivery of shares is conditional on continued employment.

Each programme comprises i) the initial performance year, followed by ii) allotments and a deferral period before iii) final transfer of the shares to participants in the year after the conclusion of the deferral period and publication of the year-end report. During the initial performance year the compensation is expressed and measured in the form of a monetary value corresponding to the performance amount. Thereafter, the compensation is expressed in terms of the number of performance rights until the delivery date.

Performance rights for each programme are valued in the accounts based on the estimated price of shares in Swedbank on the measurement date i.e. the date when the company and the counterparty agree to the contractual terms and conditions in each programme. Each performance right entitles its holder to one share in Swedbank plus compensation for any dividends distributed that the performance rights did not qualify for during the programme's duration. The reported cost of each programme can change during the period until the delivery date if the performance amount changes or because the performance rights are forfeited. The reported cost excluding social insurance charges does not change when the market value of the performance rights has changed. Social insurance charges are calculated and recognised continuously based on market value and ultimately determined at the time of delivery.

Variable Compensation Programme 2011–2015	2015	2014
Programme 2011
Recognised expense for compensation that is settled with shares in Swedbank AB	7	60
Recognised expense for social insurance charges related to the share settled compensation	5	39
Programme 2012
Recognised expense for compensation that is settled with shares in Swedbank AB	128	148
Recognised expense for social insurance charges related to the share settled compensation	49	67
Programme 2013
Recognised expense for compensation that is settled with shares in Swedbank AB	100	106
Recognised expense for social insurance charges related to the share settled compensation	27	31
Programme 2014
Recognised expense for compensation that is settled with shares in Swedbank AB	109	142
Recognised expense for social insurance charges related to the share settled compensation	24	31
Programme 2015
Recognised expense for compensation that is settled with shares in Swedbank AB	69
Recognised expense for social insurance charges related to the share settled compensation	15
Recognised expense for cash settled compensation	90
Recognised expense for payroll overhead costs related to the cash settled compensation	47
Total recognised expense	670	624

Number of performance rights that establish the recognised share based expense, millions	2015	2014
Outstanding at the beginning of the period	14	15
Allotted	1	3
Forfeited	1	1
Excercised	2	3
Outstanding at the end of the period	13	14
Exercisable at the end of the period	0	0
Weighted average fair value per performance right at measurement date, SEK	142	132
Weighted average remaining contractual life, months	11	16
Weighted average exercise price per performance right, SEK1	0	0

1) Applicable to the following groups: outstanding at the beginning of the period, granted during the period, forfeited during the period, exercised during the period, expired during the period, outstanding at the end of the period, exercisable at the end of the period.

3 COMPENSATION TO THE CEO

Michael Wolf was appointed CEO on 1 March 2009. His employment terms contain no variable compensation. As of 1 June 2014 his annual fixed salary is SEK 13m.

Michael Wolf's ordinary retirement age is 65 and he receives a premium equivalent to 35% of his salary for pension insurance.

If terminated by Swedbank, Michael Wolf will receive 75 per cent of his salary during a 12-month term of notice, in addition to severance pay equivalent to 75% of his salary for 12 months. A deduction against salary and severance pay is made for income

earned from new employment.

If Michael Wolf resigns, the term of notice is six months and no severance pay is paid.

SEK Thousands	2015	2014
Michael Wolf
Fixed compensation, salary	13 000	10 900
Other compensation/benefits	229	214
Total	13 229	11 114
Pension cost, excluding payroll tax	4 550	4 000

4 COMPENSATION TO OTHER SENIOR EXECUTIVES

4.1 General on other senior executives

Members of the Group Executve Committee excluding the CEO are defined in this context as other senior executives. Compensation to other senior executives includes compensation paid by all Group companies during the year, Swedish as well as foreign, and refers to the period during which these individuals were active as senior executives.

As of May 2016 all senior executives are eligible for Eken (except for the CEO and CFO).

A total of 18 individuals were employed as of year-end, 17 of whom were active as senior executives throughout the year: Mikael Björknert, Birgitte Bonnesen, Göran Bronner, Ulf Ejelöv, Anders Ekedahl, Björn Elfstrand, Jonas Erikson, Lars Friberg, Cecilia Hernqvist, Anders Karlsson, Helo Meigas, Lena Smeby-Udesen, Christer Trägårdh, Annika Hellström, Lars Ljungälv, Priit Perens and Viveka Strangert. Magnus Gagner-Geeber and Björn Melzer were included for part of the year.

	2015	2014
Fixed compensation, salary	72	63
Variable compensation, cash	1	1
Variable compensation, share based	7	5
Other compensation/benefits1	5	3
Compensation at terminated contract2	18
Total	103	72
Pension cost, excluding payroll tax	28	24
Number of performance rights regarding share based
compensation	44 491	32 654
No. of persons as of 31 December	18	16

1) Includes holiday pay, employee loan interest benefit, share benefit, lunch subsidy, health insurance benefit, telephone and fund discount.

2) Includes salary during term of notice, severance, pension costs and any benefits.

4.2 Pension and other contractual terms to other senior executives 4.2.1 Pension

Swedbank applies the BTP collective pension for employees in Sweden. The BTP plan is a complement to the national pension for Swedish employees and consists of BTP1, a defined contribution pension, and BTP2, primarily a defined benefit pension. BTP1 applies to all employees hired as of 1 February 2013. The ceiling for pensionable salary is 30 income base amounts (the income base amount for 2015 was SEK 58 100).

In a defined benefit pension the employer promises a future pension, often expressed as a percentage of salary. In a defined contribution pension the employer allocates a specific percentage of the employee's salary to a premium.

Fifteen senior executives are eligible for BTP2, which limits pensionable salary to 30 income base amounts. In addition, an individual defined contribution pension is paid on fixed salaries exceeding 30 income base amounts for 15 senior executives. Three senior executives receive a wholly premium-based pension solution (individual contracts).

The maximum pensionable salary for the defined contribution portion for all senior executives is determined annually by the Board of Directors.

4.2.2 Other contractual terms to other senior executives

	Term of notice	Severance pay	Resignation
15 persons	12 months	12 months	6 months
1 person	6 months	12 months	6 months
1 person	6 months	6 months	6 months
1 person	4 months	Not regulated	3 months

Conditions within the framework of the contractual terms:

• If terminated, salary and benefits are paid during the term of notice

• If terminated by Swedbank, severance is paid

• If new work is found, a deduction is made for salary income during the term of notice and during the period when severance is paid

5 COMPENSATION TO THE BOARD OF DIRECTORS

5.1 General information on remuneration to the entire Board of Directors

Compensation to the members of the Board of Directors, as indicated in the table below, is determined by the AGM and corresponds to annual fees from the AGM 2015 to the AGM 2016. Board compensation consists of fixed compensation for Board work as well as fixed compensation for any committee work. The three committees are the Audit Committee, the Risk and Capital Committee and the Remuneration Committee. During the year no costs were reported for previous Board members beyond what is indicated below. The Group does not have any pension entitlements for Board members.

	2015		2014
Compensation to the Board of Directors, corresponds to the annual fees up to the AGM 2016. SEK thousands	Board fees	Committee work	Total	Board fees	Committee work	Total
Anders Sundström, Chair	2 390	510	2 900	2 350	500	2 850
Lars Idermark, Deputy Chair	815	305	1 120	800	300	1 100
Ulrika Francke, Director	510	460	970	500	450	950
Göran Hedman, Director	510	255	765	500	250	750
Anders Igel, Director	510	100	610	500	100	600
Pia Rudengren, Director	510	205	715	500	200	700
Karl-Henrik Sundström, Director	510	205	715	500	200	700
Siv Svensson, Director	510	205	715	500	200	700
Maj-Charlotte Wallin, Director	510	205	715	500	200	700
Total	6 775	2 450	9 225	6 650	2 400	9 050

5.2 Compensation to the Chair

The current Chair receives fixed compensation for Board work as well as fixed compensation for committee work i.e. no variable compensation, pension or other benefits. The table below shows the costs reported for the years 2015 and 2014.

SEK thousands	2015	2014
Anders Sundström
Within framework of Board fees set by the Board	2 900	2 850
Total	2 900	2 850

6 SUMMARY – COMPENSATION TO THE BOARD OF DIRECTORS, CEO AND OTHERS IN GROUP EXECUTIVE COMMITTEE (KEY MANAGEMENT)

	2015	2014
Short-term employee benefits	100	87
Post employment benefits, pension costs	33	28
Termination benefits, severance pay	18
Share-based payments	7	5
Total	158	120
Amounts of outstanding balances
Granted loans	105	102

7 SUMMARY – PENSIONS AND LOANS TO BOARDS OF DIRECTORS AND EQUIVALENT SENIOR EXECUTIVES IN THE ENTIRE GROUP

Pension costs reported in the table below refer to current Directors, CEOs, Vice Presidents and equivalent senior executives in the Group. The costs exclude social insurance charges and payroll taxes.

	2015	2014
Cost for the year related to pensions and similar
benefits	50	49
No. of persons	60	73
Granted loans	447	482
No. of persons	155	131

Obligations for former CEOs and Vice Presidents have been funded through insurance and pension foundations. The latter's obligations amounted to SEK 340 m (389). The Group has not pledged any assets or other collateral or committed to contingent liabilities on behalf of any of the above-mentioned group of senior executives.

8 SUMMARY – COMPENSATION TO BOARDS OF DIRECTORS AND EQUIVALENT SENIOR EXECUTIVES IN THE ENTIRE GROUP

Shown here are the salaries and other compensation for Boards of Directors, CEOs, Vice Presidents and equivalent senior executives in the Group. This group includes current employees. Fees to CEOs and other senior executives for internal board duties are deducted against their salaries, unless otherwise agreed to.

					2015					2014
			Boards of Directors, CEOs, Vice Presidents and equivalent senior executives	Other	employees All employees		Boards of Directors, CEOs, Vice Presidents and equivalent senior executives		Other	employees All employees
Country	Number of persons	Salaries and Board fees	Variable compensation	Salaries and variable compen sation	Total	Number of persons	Salaries and Board fees	Variable compen sation	Salaries and variable com pensation	Total
Sweden	70	119	8	4 491	4 618	97	145	6	4 705	4 856
Estonia	29	18	3	481	502	28	17	3	443	463
Latvia	16	13	3	287	303	16	13	3	271	287
Lithuania	21	12	1	310	323	23	15	2	287	304
Norway	4	1		281	282	3	1		369	370
USA	2	8	1	33	42	3	8	1	25	34
Other countries	3	1		100	101	13	11		86	97
Total	145	172	16	5 983	6 171	183	210	15	6 186	6 411

9 KEY RATIOS

Average number of employees based on 1 585 hours per
employee	2015	2014
Sweden	8 373	9 058
Estonia	2 681	2 454
Latvia	1 671	1 748
Lithuania	2 162	2 160
Norway	257	274
USA	20	23
Other countries	128	133
Total	15 293	15 850
Number of hours worked (thousands)	24 239	25 120
Number of Group employees at year-end excluding long term absentees in relation to hours worked expressed as
full-time positions	13 893	14 583

Employee turnover excluding retired staff, %	2015	2014
Swedish Banking	4.8	4.6
Large Corporates & Institutions	5.1	5.7
Baltic Banking	11.4	15.0
Group Functions	7.6	8.3
Total	7.6	8.6

Employee turnover including retired staff, %	2015	2014
Swedish Banking	8.7	7.0
Large Corporates & Institutions	5.8	6.9
Baltic Banking	11.4	15.0
Group Functions	9.2	9.8
Total	9.4	10.0

Employee turnover is calculated as the number of employees who terminated their employment during the year divided by the number of employees as of 31December of the previous year.

Other key ratios	2015	2014
Average number of employees	15 293	15 850
Number of employees at year-end	14 732	15 427
Number of full-time positions1	13 893	14 583
Percentage of employees who are unionized, Sweden	64.0%	65.0%
Percentage of employees who are unionized,
total in the Group2	36.0%	37.0%

1) Refers to continuing operations

2) Largest unions in Sweden include Financial Sector Union and Akademikerföreningen. In Lithuania, there is a so-called Work Council, however, not comparable with the Swedish unions. In Estonia and Latvia there are no unions

Sick leave, %	2015	2014
Sick leave Sweden	3.4	3.0
Sick leave Estonia	0.8	0.7
Sick leave Latvia	2.8	1.5
Sick leave Lithuania	1.5	0.8
Long-term healthy employees, %1	76.0	77.0

1) Refers to the Swedish operations. Long-term healthy refer to employees with

a maximum of five working days of sick leave during a rolling 12 month period.

Parental leave women/men, %	2015	2014
Sweden	82.7/17.3	73/27
Estonia	99.3/0.7	99.4/0.6
Latvia	99.5/0.5	99.5/0.5
Lithuania	98.7/1.3	98.9/1.1

Swedbank strives for diversity, including an even distribution between women and men, among employees in general as well as among senior executives. We are convinced this is important to maintain a balance between women and men, not least among senior executives in the parent company and the Group and their respective management teams. Consequently, we have specifically chosen as of 2011 to show their gender distribution.

Gender distribution by country	2015		2014
%	Female	Male	Female	Male
Sweden	56	44	56	44
Estonia	78	22	79	21
Latvia	78	22	78	22
Lithuania	75	25	75	25
Norway	25	75	26	74
USA	15	85	14	86
Other countries	54	46	55	45

Gender distribution for all employees, Group Executive

Committee and Boards of Directors	2015		2014
%	Female	Male	Female	Male
All employees	65	35	64	36
Swedbank's Board of Directors	44	56	44	56
Group Executive Committee incl. CEO	32	68	29	71
Group Executive Committee and their respective management teams	42	58	42	58
Boards of Directors in the entire Group incl. subsidiaries	46	54	36	64
Senior executives in the entire Group incl. subsidiaries	39	61	25	75

Gender distribution, management
positions by country	2015		2014
%	Female	Male	Female	Male
Management positions, total1	51	49	52	48
Management positions, Sweden	44	56	45	55
Management positions, Estonia	64	36	66	34
Management positions, Latvia	66	34	65	35
Management positions, Lithuania	54	46	55	45

1) Applicable for Swedbank's home markets Sweden, Estonia, Latvia and Lithuania.

Swedbank has chosen in the table above to present Swedbank's Board of Directors and Group Executive Commitee.

The annual report contains a presentation of the gender distribution for all Boards of Directors in the Group, including subsidiaries. For all Boards, including subsidiaries, the distribution is 46 per cent women (36) and 54 per cent men (64). Among all the Group's senior executives, including subsidiaries, the distribution is 39 per cent women (25) and 61 per cent men (75).

G14 Other general administrative expenses

	2015	2014
Expenses for premises	18	92
Rents, etc.	1 154	1 263
IT expenses	1 888	1 824
Telecommunications, postage	158	161
Consulting	310	408
Compensation to savings banks	762	735
Other purchased services	617	635
Travel	190	218
Entertainment	54	59
Office supplies	108	109
Advertising, public relations, marketing	340	361
Security transports, alarm systems	83	85
Maintenance	115	130
Other administrative expenses	356	358
Other operating expenses	113	188
Total	6 266	6 625

Remuneration to auditors	2015	2014
Remuneration to auditors elected by Annual General Meeting, Deloitte
Statutory audit	29	34
Other audit	4	5
Tax advisory		1
Other	9	3
Remuneration to other auditors elected by Annual General Meeting
Statutory audit	2
Other	1
Total	45	44
Internal Audit, not Deloitte	67	67

G15 Depreciation/amortisation of tangible and intangible fixed assets

Depreciation/amortisation	2015	2014
Equipment	313	336
Owner-occupied properties	36	43
Investment properties	3	10
Intangible fixed assets	320	329
Total	672	718

G16 Impairments of tangible assets including repossessed lease assets

Impairments	2015	2014
Investment properties	8	49
Properties measured as inventory	62	206
Repossessed leasing assets	2	1
Total	72	256

G17 Credit impairments

Credit impairments	2015	2014
Provisions for loans that individually
are assessed as impaired
Provisions	942	755
Reversal of previous provisions	–204	–344
Provision for homogenous groups of impaired loans, net	–36	–444
Total	702	–33
Portfolio provisions for loans that individually are not assessed as impaired	–132	–77
Write-offs
Established losses	954	1 808
Utilisation of previous provisions	–501	–821
Recoveries	–428	–396
Total	25	591
Credit impairments for contingent liabilities
and other credit risk exposures	–1	–62
Credit impairments	594	419

Credit impairments by valuation category
Loans and receivables	585	405
Fair value through profit or loss	9	14
Held to maturity
Total	594	419

Credit impairments by borrower category
Credit institutions	–6	–5
General public	600	424
Total	594	419

G18 Tax

Tax expense	2015	2014
Tax related to previous years	–676	22
Current tax	4 616	4 992
Deferred tax	685	–713
Total	4 625	4 301

The difference between the Group's tax expense and the tax expense based on current tax rates is explained below:

	2015		2014
	SEKm	per cent	SEKm	per cent
Results	4 625	22.7	4 301	20.5
22.0% of pre-tax profit	4 482	22.0	4 626	22.0
Difference	–143	–0.7	325	1.5
The difference consists of the following items:
Tax previous years	676	3.3	–22	–0.1
Tax -exempt income/non-deductible expenses	–55	–0.3	55	0.3
Change in unrecognised deferred tax assets which effects the effective tax rate	–1	0.0	–187	–0.9
Tax-exempt capital gains and appreciation in value of shares and participating interests	14	0.1	126	0.6
Other tax basis in insurance operations	120	0.6	117	0.5
Deviating tax rates in other countries	–877	–4.3	264	1.2
Standard income tax allocation reserve	–8	0.0	–21	–0.1
Other, net	–12	–0.1	–7	0.0
Total	–143	–0.7	325	1.5

The 2015 tax expense corresponds to an effective tax rate of 22.7 per cent (20.5).

2015

	Opening	Income	Other com prehensive		Business	Exchange rate
Deferred tax assets	balance	statement	income	Equity	disposals	differences	Closing balance
Deductible temporary differences
Provision for credit impairments	21					–1	20
Other	501	–421			–1	–6	73
Share-based payment	14	1		–7			8
Unused tax losses	450	–335				8	123
Unrecognised deferred tax assets	–348	326				–10	–32
Total	638	–429		–7	–1	–9	192

Deferred tax liabilities
Taxable temporary differences
Untaxed reserves	2 453	–12			–2		2 439
Hedge of net investment in foreign operations	–283	–1	334				50
Provision for pensions	–633	59	777				203
Cash flow hedges	–108	112	31				35
Intangible fixed assets	287	–24					263
Share-based payment	–101			34			–67
Other	69	119			1	–41	148
Total	1 684	253	1 142	34	–1	–41	3 071
Deferred tax in associates		3	19
Total		256	1 161

Deferred tax related to hedging of net investments in foreign operations and cash flow hedging is recognised directly in other comprehensive income, since the change in the value of the hedging instrument is also recognised directly in other comprehensive income. Deferred tax related to untaxed reserves in associates is included on the balance sheet line Investments in associates.

Swedbank AS pays income tax in Estonia only upon distribution of its earnings. The tax rate for 2015 was 20 per cent (21). Retained earnings in Swedbank AS, which would be subject to income tax if distributed, amounted to SEK 12 857m (17 387). The parent company determines the dividend payment and has established a specific

dividend policy that a portion of the profit will be distributed; therefore a deferred tax liability is recognised based on this policy. A one-off dividend of SEK 3 695m was resolved in 2015, resulting in tax expenses of SEK 929m. To the extent dividends are not expected to the paid in the foreseeable future, the Group does not recognise a deferred tax liability. If the largest possible dividend were distributed, a tax expense of SEK 2 589m (3 268) would arise.

The unrecognised portion of deferred tax assets amounted to SEK 32m (349). The assets are not recognised due to uncertainty when and if sufficient taxable earnings will be generated.

Unused tax losses and unused tax credits according to tax calculation

	Total deduction	Deduction for which deferred tax is recognised		Deduction for which deferred tax is not recognised
Maturity		Latvia	Lithuania
Without maturity	819	77	633	109
Total	819	77	633	109

When the Group determines how much of deferred tax assets will be recognised, it forecasts future taxable profits that can be utilised against tax loss carryforwards or other future tax credits. Deferred tax assets are recognised only to the extent such profits are probable. The Group expects that about 55 per cent (75) of the taxable

losses that serve as the basis for recognised deferred tax assets will be utilised before the end of 2018 i.e. within the framework of the Group's three-year financial plan. Most of the losses for which deferred tax assets are recognised derive from the Group's home markets.

2014

Deferred tax assets	Opening balance	Income statement	Other com prehensive income	Equity	Business combinations	Exchange rate differences	Closing balance
Deductible temporary differences
Provision for credit impairments	35	–16				2	21
Other	139	359				3	501
Share-based payment	10			4			14
Unused tax losses	375	61				14	450
Unrecognised deferred tax assets	–142	–206					–348
Total	417	198		4		19	638
Deferred tax liabilities
Taxable temporary differences
Untaxed reserves	2 724	–292			21		2 453
Hedge of net investment in foreign operations	242	7	–532				–283
Provision for pensions	–713	14	104		–38		–633
Cash flow hedges	78	–196	10				–108
Intangible fixed assets	243	–1			45		287
Share-based payment	–92			–9			–101
Other	–99	–40			148	60	69
Total	2 383	–508	–418	–9	176	60	1 684
Deferred tax in associates		–7	–2
Total		–515	–420

Unused tax losses and unused tax credits according to tax calculation

	Total deduction			Deduction for which deferred tax is recognised
Maturity		Latvia	Lithuania	Sweden
2015	2			2
Without maturity	2 164	662	540		962
Total	2 166	662	540	2	962

G19 Earnings per share

Earnings per share are calculated by dividing profit for the year, after adjustments, attributable to holders of ordinary shares in the parent company by a weighted average number of ordinary shares outstanding. Earnings per share after dilution is calculated by dividing profit for the year, after adjustments, attributable to holders of ordinary shares in the parent company by the average of the number of ordinary shares outstanding, adjusted for the dilution effect of potential shares. Earnings per share are calculated separately for continuing operations and discontinued operations. Swedbank's share-related compensation programmes, Programme 2012, Programme 2013, Programme 2014 and Programme 2015, give rise to potential ordinary shares from the grant date for these shares from an accounting perspective. Grant date refers here to the date when the parties agreed to the terms and conditions of the programmes. The grant dates from an accounting perspective for Programme 2012 and Programme 2013 were 27 March 2012 and 2013, respectively. For Programme 2014 the grant date was 19 March 2014 and for Programme 2015 it was 26 March 2015. The rights are treated as options in the calculation of earnings per share after dilution.

	2015	2014
Average number of shares
Weighted average number of shares before adjustments for shares acquired by associates, before dilution	1 104 894 828	1 101 274 830
Weighted average number of shares acquired by associates
Weighted average number of shares, before dilution	1 104 894 828	1 101 274 830
Weighted average number of shares for dilutive potential ordinary shares resulting from share-based compensation programme	8 478 982	9 365 732
Weighted average number of shares, after dilution	1 113 373 811	1 110 640 562
Earnings per share
Profit for the year attributable to the shareholders of Swedbank AB from total operations	15 727	16 447
Profit for the year used for calculating earnings per share from total operations	15 727	16 447
Earnings per share total operations before dilution, SEK	14.23	14.93
Earnings per share total operations after dilution, SEK	14.13	14.81
Profit for the year attributable to the shareholders of Swedbank AB from continuing operations	15 734	16 710
Profit for the year used for calculating earnings per share from continuing operations	15 734	16 710
Earnings per share continuing operations before dilution, SEK	14.24	15.17
Earnings per share continuing operations after dilution, SEK	14.14	15.05
Profit for the year attributable to the shareholders of Swedbank AB from discontinued operations	–6	–262
Profit for the year used for calculating earnings per share from discontinued operations	–6	–262
Earnings per share discontinued operations before dilution, SEK	–0.01	–0.24
Earnings per share discontinued operations after dilution, SEK	–0.01	–0.24

G20 Tax for each component in other comprehensive income

		2015				2014
	Pre–tax amount	Deferred tax	Current tax	Total tax amount	Pre–tax amount	Deferred tax	Current tax	Total tax amount
Items that will not be reclassified to the income statement
Remeasurements of defined benefit pension plans	3 539	–777	–2	–779	463	–104	1	–103
Share of other comprehensive income of associates	88	–19		–19	–9	2		2
Total	3 627	–796	–2	–798	454	–102	1	–101
Items that may be reclassified to the income statement
Exchange differences, foreign operations	–1 591				3 425
Hedging of net investments in foreign operations	1 398	–334	33	–301	–2 685	532	59	591
Cash flow hedges	152	–31		–31	43	–10		–10
Share of other comprehensive income of associates	–135				–29
Total	–176	–365	33	–332	754	522	59	581
Other comprehensive income	3 451	–1 161	31	–1 130	1 208	420	60	480

G21 Treasury bills and other bills eligible for refinancing with central banks etc.

		Carrying amount Amortised cost			Nominal amount
	2015	2014	1/1/2014	2015	2014	1/1/2014	2015	2014	1/1/2014
Valuation category, fair value through profit or loss
Trading
Swedish government	61 421	32 791	45 017	61 484	31 427	44 000	59 095	30 287	42 234
Swedish municipalities	3 644	2 904	626	3 656	2 901	626	3 634	2 872	625
Foreign governments	9 074	6 807	9 308	8 524	6 773	9 219	8 388	6 868	9 131
Other non-Swedish issuers	1 945	3 222	1 308	1 944	3 172	1 309	1 930	3 166	1 306
Total	76 084	45 724	56 259	75 608	44 273	55 154	73 047	43 193	53 296
Valuation category, held to maturity1
Foreign governments	468	501	555	468	501	555	462	492	534
Total	468	501	555	468	501	555	462	492	534
Total	76 552	46 225	56 814	76 076	44 774	55 709	73 509	43 685	53 830

1) The fair value of held-to-maturity investments amounted to SEK 544m (583)

G22 Loans to credit institutions

	2015	2014	1/1/2014
Valuation category, loans and receivables
Swedish banks	59 926	70 063	58 834
Swedish credit institutions	5 314	4 620
Change in value due to hedge accounting at fair value	36	52	28
Foreign banks	14 099	17 239	14 296
Foreign credit institutions	5 304	4 377	1 402
Total	84 679	96 351	74 560
Valuation category, fair value through profit or loss
Trading
Swedish banks
Swedish banks, repurchase agreements		1 230
Swedish credit institutions, repurchased agreements	816	1 908	946
Foreign banks
Foreign banks, repurchase agreements	387	11 243	5 498
Foreign credit institutions, repurchase agreements	536	3 088	1 274
Total	1 739	17 469	7 718
Total	86 418	113 820	82 278

	2015	2014	1/1/2014
Subordinated loans
Associates			120
Other companies	48	53	53
Total	48	53	173

G23 Loans to the public

	2015	2014	1/1/2014
Valuation category, loans and receivables
Swedish public	984 634	866 350	710 175
Foreign public	198 298	197 320	183 300
Change in value due to hedge accounting at fair value	47	66	58
Foreign public, repurchase agreements			23
Total	1 182 979	1 063 736	893 556
Valuation category, fair value through profit or loss
Trading
Swedish public, repurchase agreements	4 612	38 761	28 680
Foreign public, repurchase agreements	30 053	23 850	19 235
Other
Swedish public	196 185	278 160	323 439
Foreign public	126
Total	230 976	340 771	371 354
Total	1 413 955	1 404 507	1 264 910

The maximum credit risk exposure for lending measured at fair value corresponds to the carrying amount.

Finance lease agreements distributed by maturity

2015	< 1 yr.	1—5 yrs.	> 5 yrs.	Total
Gross investment	7 425	12 435	3 295	23 155
Unearned finance income	328	683	165	1 176
Net investment	7 097	11 752	3 130	21 979
Provisions for impaired claims related to minimum lease payments				23

The residual value of the leases in all cases are guaranteed by the lessees or third party. The lease income did not include any contingent rents. Finance leasing are included in Loans to the public and relates to vehicles, machinery, boats etc.

Finance lease agreements distributed by maturity

2014	< 1 yr.	1—5 yrs.	> 5 yrs.	Total
Gross investment	11 918	18 591	5 630	36 139
Unearned finance income	520	1 139	363	2 022
Net investment	11 398	17 452	5 266	34 116
Provisions for impaired claims related to minimum lease payments				17

G24 Bonds and other interest-bearing securities

Issued by other than public agencies	Carrying amount Amortised cost				Nominal amount
	2015	2104	1/1/2014	2015	2104	1/1/2014	2015	2104	1/1/2014
Valuation category, fair value through profit or loss
Trading
Swedish mortgage institutions	37 412	46 643	52 023	37 256	45 979	51 492	36 203	44 576	49 750
Swedish financial entities	20 664	26 336	27 278	20 368	26 278	27 005	19 998	25 765	26 347
Swedish non-financial entities	2 051	4 343	5 793	1 993	4 261	5 789	2 045	4 326	5 778
Foreign financial entities	16 163	34 956	26 137	16 089	34 742	26 002	15 998	34 486	25 866
Foreign non-financial entities	8 402	10 892	13 401	8 146	10 754	13 323	8 170	10 502	13 143
Total	84 692	123 170	124 632	83 852	122 014	123 611	82 414	119 655	120 884
Valuation category, held to maturity1
Foreign mortgage institutions	164	1 219	888	164	1 219	888	159	1 221	889
Foreign financial entities	3 740	52	48	3 740	52	48	3 740	52	49
Foreign non-financial entities	14	14	17	14	14	17	14	14	17
Total	3 918	1 285	953	3 918	1 285	953	3 913	1 287	955
Total	88 610	124 455	125 585	87 770	123 299	124 564	86 327	120 942	121 839

1) The fair value of held-to-maturity investments amounted to SEK 3 926m (1 296). In the aggregate, the carrying amount exceeds the nominal amounts i.e. the amounts that will be redeemed on the maturity date.

G25 Financial assets for which the customers bear the investment risk

	2015	2104	1/1/2014
Valuation category, fair value through profit or loss
Other
Fund units	127 055	120 214	108 111
Interest-bearing securities	14 883	12 901	5 407
Shares	11 504	10 204	9 225
Total	153 442	143 319	122 743

G26 Shares and participating interests

		Carrying amount			Cost
	2015	2014	1/1/2014	2015	2014	1/1/2014
Valuation category, fair value through profit or loss
Trading
Trading stock	8 659	6 414	5 312	8 900	6 089	5 011
Fund shares	2 232	2 605	1 121	2 032	2 352	1 100
For protection of claims	17	13	23	27	27	29
Other			1
Other
Other shares	97	848	601	94	603	435
Total	11 005	9 880	7 058	11 053	9 071	6 575
Valuation category, available for sale
Condominiums	47	45	44	45	43	43
Other	22	6	7	22	6	7
Total	69	51	51	67	49	50
Total	11 074	9 931	7 109	11 120	9 120	6 625
of which unlisted	77	116	90

Unlisted holdings are valued at their latest transaction price. Holdings in the valuation category available for sale have been estimated at acquisition cost, since a more reliable fair value is not considered to be available.

G27 Investments in associates and joint ventures

	2015	2014	1/1/2014
Fixed assets
Credit institutions – Associates	2 530	2 360	1 524
Credit institutions – Joint Venture	2 451	2 142	1 697
Other associates	401	422	419
Total	5 382	4 924	3 640
Opening balance	4 924	3 640	3 552
Additions during the year	18	834	129
Change in accumulated profit shares, total comprehensive income	567	830	528
Dividends received	–53	–380	–533
Disposals during the year	–74		–36
Closing balance	5 382	4 924	3 640

2015
Associates Corporate identity, domicile	Corporate identity number	Number	Carrying amount		Cost Share of capital. %	Year's share of asso ciate's pre–tax profit
Credit institutions
Sparbanken Skåne, Lund	516401–0091	3 670 342	1 188	1 070	22.00	23
Sparbanken Rekarne AB, Eskilstuna	516401–9928	865 000	337	125	50.00	53
Swedbank Sjuhärad AB, Borås	516401–9852	950 000	927	287	47.50	124
Vimmerby Sparbank AB, Vimmerby	516401–0174	340 000	78	41	40.00	3
Total			2 530	1 523		203
Other associates
Babs Paylink AB, Stockholm	556567–2200	4 900	82	20	49.00	25
BDB Bankernas Depå AB, Stockholm	556695–3567	13 000	13	7	20.00	3
BGC Holding AB, Stockholm	556607–0933	29 177	92	11	29.17	17
Finansiell ID-Teknik BID AB, Stockholm	556630–4928	12 735	23	24	28.30
Getswish AB	556913–7382	10 000	8	14	20.00
Rosengård Invest AB, Malmö	556756–0528	5 625	3	10	25.00	–1
UC AB, Stockholm	556137–5113	2 000	33		20.00	19
Owned by subsidiaries
Bankomat AB, Stockholm	556817–9716	150	45	55	20.00	4
Hemnet Sverige AB, Stockholm	556536–0202	340	94	34	34.00	20
AS Sertifitseerimiskeskus, Tallin	10747013	16	8	1	25.00
Summa			401	176		87
Summa			2 931	1 699		290

The share of the voting rights in each entity corresponds to the share of its equity.

All shares are unlisted.

Swedbank does not have any individual material interests in associates. Swedbank's cumulative share of associates' other comprehensive income for the year amounted to SEK 54m (–10) and of the year's total comprehensive income amounted to SEK 209m (216). As of 31 December 2015 Swedbank's share of associates' commitments and contingent liabilities amounted to SEK 459m (2 931) and SEK 1 971m (525), respectively.

2015 Joint venture Corporate identity, domicile	Corporate identity number	Number	Carrying amount		Cost Share of capital, %	Year's share of joint venture's pre-tax profit
Credit institutions
Entercard Holding AB, Stockholm	556673-0585	3 000	2 451	420	50.00	573
Total			2 451	420		573
Total associates and joint ventures			5 382	2 119		863

The EnterCard group comprises EnterCard Holding AB, EnterCard Sverige AB and EnterCard Norge AS. EnterCard Holding AB owns 100 per cent of both EnterCard Sverige AB and EnterCard Norge AS. Swedbank AB received dividends of SEK 0m (44) during the year. Condensed financial information for the EnterCard group is shown below:

	2015	2014
Loans to the public	17 753	16 833
Total assets	21 375	18 930
Amounts owed to credit institutions	15 886	13 810
Total liabilities	16 522	14 671
Net interest income	2 064	2 062
Total income	2 606	3 070
Total expenses	1 220	1 387
Credit impairments	–241	–300
Operating profit	1 145	1 383
Tax expense	–278	–350
Profit for the year	867	1 034
Total comprehensive income	822	986

All shares are unlisted.

G28 Derivatives

The Group trades in derivatives in the normal course of business and for the purpose of hedging certain positions that are exposed to share price, interest rate, credit and currency risks. Interest rate swaps that hedge the interest rate risk component in loan portfolios or in certain debt securities in issue and subordinated liabilities are sometimes recognised as hedging instruments in hedge accounting at fair value. The derivatives are recognised at fair value with changes in value through profit or loss in the same manner as for other derivatives. In note G10 Net gains and losses on financial items at fair value, any ineffectiveness of the hedges is recognised as the change in value of the derivative together with the change in value of the hedged risk component. Interest rate and currency swaps sometimes also hedge projected future interest or currency payments, so-called cash flow

hedges. Future estimated cash flows hedged by the swaps are disclosed below. Since the derivatives are recognised as hedging instruments, the effective portion of the change in fair value is recognised in other comprehensive income. Changes in the value of derivatives used to hedge the net investment in foreign operations are also recognised in other comprehensive income. Any ineffectiveness in hedge accounting is recognised in net gains and losses on financial items at fair value. The carrying amount of derivatives included in hedge accounting is reported separately below. The carrying amounts of all derivatives refer to fair value including accrued interest. The amounts offset for derivative assets and derivative liabilities include cash collateral offsets of SEK 1 666m (2 056) and SEK 775m (717), respectively.

		Nominal amount 2015 Remaining contractual maturity			Nominal amount	Positive fair value		Negative fair value
	< 1 yr.	1–5 yrs.	> 5 yrs.	2015	2014	2015	2014	1/1/2014	2015	2014	1/1/2014
Derivatives in hedge
accounting
Fair value hedges
Interest-rate-related
Swaps	76 312	364 822	65 550	506 684	418 889	18 038	23 235	15 208	452	340	1 189
Currency-related
Swaps											7
Total	76 312	364 822	65 550	506 684	418 889	18 038	23 235	15 208	452	340	1 196
Derivatives in portfolio
fair value hedges
Interest-rate-related
Swaps	42 000	76 550	10 825	129 375	73 700	166	1	38	1 601	1 752	414
Total	42 000	76 550	10 825	129 375	73 700	166	1	38	1 601	1 752	414
Cash flow hedges
Interest-rate-related
Swaps					458					8	11
Currency-related
Swaps	12 875	898	8 466	22 239	22 239		10		2 303	1 785	3 104
Total	12 875	898	8 466	22 239	22 697		10		2 303	1 793	3 115
Net investment in foreign
operations
Currency-related contracts
Swaps					153			9		9
Total					153			9		9

Other derivatives
Interest-related contracts
Options	138 655	176 920	90 772	406 347	446 073	1 361	3 185	1 601	2 012	2 628	1 563
Forward contracts	2 927 556	1 495 764		4 423 320	7 432 637	1 429	2 313	3 688	1 613	2 537	3 640
Swaps	931 999	1 705 804	598 287	3 236 090	2 482 140	45 560	55 119	31 977	49 576	60 951	36 465
Other					3 535			37			1
Currency-related contracts
Options	52 986	1 896		54 882	80 452	859	3 917	578	971	3 575	528
Forward contracts	916 700	19 818	14	936 532	807 843	8 272	21 762	5 255	11 320	13 703	5 622
Swaps	148 457	114 802	41 924	305 183	503 885	21 483	21 707	8 213	12 057	9 291	6 283
Other	32	22		54	914	4	23	13	4	24	13
Equity-related contracts
Options	25 175	22 833	1 052	49 060	49 437	2 450	2 493	2 277	1 067	854	1 039
Forward contracts	5 688	1		5 689	9 138	81	89	67	160	122	48
Swaps	8 076	521		8 597	2 297	132	38	385	142	111	30
Other								8			7
Credit-related contracts

Swaps	458	4 529	276	5 263	12 362	37	131	114	65	156	168
Commodity-related
contracts
Options	28			28	540	1	23	23	1	23	19
Forward contracts	2 474	874		3 348	2 703	185	115	9	179	122	8
Total	5 158 284	3 543 784	732 325		9 434 393 11 833 956	81 854	110 915	54 245	79 167	94 097	55 434
Gross amount	5 289 471	3 986 054		817 166 10 092 691 12 349 395		100 058	134 161	69 500	83 523	97 991	60 159
Offset amount		–1 365 252 –1 976 258	–305 866	–3 647 376		–13 951	–10 959	–5 148	–14 842	–12 297	–5 148
Net amount presented in
the balance sheet	3 924 219	2 009 796	511 300	6 445 315		86 107	123 202	64 352	68 681	85 694	55 011

Maturity distribution regarding future hedged cash flows in cash flow hedge accounting

	< 1 yr.	1–3 yrs.	3–5 yrs.	5–10 yrs.	>10 yrs.
Negative cash flows (liabilities)	11 562	141	919	3 626	4 895

Future cash flows above, expressed in SEKm, are exposed to variability attributable to changed interest rates and/or changed currency rates. These future cash flows are hedged with derivatives, recognized in cash flow hedges, with cash flows that eliminate the variability.

G29 Intangible fixed assets

	Indefinite useful life		Definite useful life
			Internally developed
2015	Goodwill	Customer base	software	Other	Total
Cost, opening balance	14 668	1 812	1 234	1 506	19 220
Additions through business combinations		94			94
Additions through internal development			313		313
Additions through separate acquisitions				54	54
Sales and disposals		–61		–68	–129
Exchange rate differences	–687	–56		–13	–756
Cost, closing balance	13 981	1 789	1 547	1 479	18 796
Amortisation, opening balance		–941	–524	–882	–2 347
Amortisation for the year		–94	–111	–115	–320
Sales and disposals		–6	4	–12	–14
Exchange rate differences		25		3	28
Amortisation, closing balance		–1 016	–631	–1 006	–2 653
Impairments, opening balance	–2 324	–14	–174	–42	–2 554
Impairments for the year		–142	–112		–254
Exchange rate differences	353			2	355
Impairments, closing balance	–1 971	–156	–286	–40	–2 453

Carrying amount	12 010	617	630	433	13 690

For intangible assets with a finite useful life, the amortisable amount is allocated systematically over the useful life. Systematic amortisation relates to both straight line and increasing or decreasing amortisation. The original useful life is between 3 and 20 years.

	Indefinite useful life
2014	Goodwill	Customer base	Internally developed software	Other	Total
Cost, opening balance	13 701	1 672	1 101	1 392	17 866
Additions through business combinations		88		116	204
Additions through internal development			133		133
Additions through separate acquisitions				69	69
Sales and disposals				–81	–81
Exchange rate differences	967	52		10	1 029
Cost, closing balance	14 668	1 812	1 234	1 506	19 220
Amortisation, opening balance		–802	–416	–819	–2 037
Amortisation for the year		–99	–108	–122	–329
Sales and disposals				64	64
Exchange rate differences		–40		–5	–45
Amortisation, closing balance		–941	–524	–882	–2 347
Impairments, opening balance	–1 941	–14	–174	–42	–2 171
Exchange rate differences	–383				–383
Impairments, closing balance	–2 324	–14	–174	–42	–2 554
Carrying amount	12 344	857	536	582	14 319

		Carrying amount
Acquisition year	2015	2014	1/1/2014

1995	328	328	328
1997	1 342	1 342	1 342
1998	651	651	651
1998	13	13	13
1998	9	9	9
2002	159	159	159
2007	24	24	24
2013		19	19
	2 526	2 545	2 545
	1 547	1 547	1 547
	979	998	998
1999	1 111	1 148	1 078
2000	11	11	11
2001	131	135	127
2005	8 050	8 324	7 818
	9 303	9 618	9 034

	3 894	4 026	3 781
	2 005	2 073	1 946
	3 404	3 519	3 307
2005	181	181	181
	181	181	181
	12 010	12 344	11 760

Value in use

Goodwill acquired in business combinations has been allocated to the lowest possible cash generating unit. Recoverable amount has been determined based on value in use. This means that the assets' estimated future cash flows are calculated at present value using a discount rate. Estimated future cash flows are based on the Group's established three-year financial plans. The most important assumptions in the three-year plan are the executive management's estimate of net profit, including credit impairments; growth in each economy, both GDP and industry growth; and the trend in risk weighted assets. Financial planning is done at a lower level than the cash generating unit. The necessary assumptions in the planning are based as far as possible and appropriate on external information. Future cash flows are subsequently estimated with the help of long-term growth assumptions for risk weighted assets as well as on net profit in relation to risk weighted assets. Due to the long-term nature of the investments, cash flow is expected to continue indefinitely. Use of an indefinite cash flow is motivated by the fact that all cash generating units are part of the Group's home markets, which it has no intention of leaving. Net cash flow refers to the amount that theoretically could be received as dividends or must be contributed as capital to comply with capital adequacy or solvency rules. The Group currently believes that a Common Equity Tier 1 capital ratio of 14 per cent (14) is reasonably the lowest level for the cash generating unit, because of which any surpluses or deficits calculated in relation to this level are theoretically considered payable as dividends or will have to be contributed as capital and therefore constitute net cash flow. The discount rate is determined based on the market's risk-free rate of interest and yield requirements, the unit's performance in the stock market in relation to the entire market, and the asset's specific risks. The discount rate is adapted to various periods if needed. Any adjustments needed to the discount factor are determined based on the economic stage the cash generating unit is in and means that each year's cumulative cash flow is discounted by a unique discounting factor. Projected growth in risk weighted assets corresponds to estimated inflation, projected real GDP growth and any additional growth expected in the banking sector, depending on the economic stage the sector is in. In accordance with IAS 36, the long-term growth estimate does not include any potential increase in market share. Long-term growth estimates are based on external projections as well as the Group's experience and growth projections for the banking sector in relation to GDP growth and inflation. Estimated net profit in relation to risk weighted assets is based on historical experience and adjusted based on the economic stage the cash generating unit is in. The adjustment is also based on how the composition of the cash generating unit's balance sheet is expected to change. The parameters are based as far as possible on external sources. The most important assumptions and their sensitivity are described in the table on the following page.

	Annual average REA growth			Annual REA growth	Annual average REA growth			Annual REA growth
	%			%	%			%
Cash-generating unit	2015	2014	2015	2014	2015	2014	2015	2014
	2016–2018	2015–2017	2019–2048	2018–2048	2019–2048	2018–2048	2049–	2049–
Banking operations
Estonia	0.9	0.3	5.0–3.1	6.0–3.1	3.8	4.1	3.0	3.0
Latvia	0.4	0.5	5.0–3.1	5.0–3.1	4.3	4.2	3.0	3.0
Lithuania	4.6	–0.6	4.9–3.1	4.9–3.1	3.7	3.9	3.0	3.0
Sweden	2.0	2.0	3.0	3.0	3.0	3.0	3.0	3.0

	Annual average discount rate		Average discount rate		Annual average discount rate			Average discount rate
	%		%		%			%
Cash-generating unit	2015	2014	2015	2014	2015	2014	2015	2014
	2016–2018	2015–2017	2019–2048	2018–2048	2019–2048	2018–2048	2049–	2049–
Banking operations
Estonia	11.1	10.8	11.1–9.0	10.8–9.0	9.5	9.5	9.0	9.0
Latvia	11.8	12.2	11.7–9.0	12.2–9.0	9.8	9.9	9.0	9.0
Lithuania	11.8	12.2	11.8–9.0	12.2–9.0	9.8	9.9	9.0	9.0
Sweden	6.8	7.2	6.8–6.8	7.2–7.2	6.8	7.2	6.8	7.2

Sensitivity analysis, change in recoverable amount

	Net asset including goodwill, carrying amount, SEKm			Recoverable amount, SEKm		Decrease in assumption of yearly growth by 1 percentage point		Increase in discount rate by1 percentage point
Cash-generating unit	2015	2014	2015	2014	2015	2014	2015	2014
Banking operations
Estonia	18 380	23 457	24 920	27 891	–1 617	–1 548	–2 346	–2 096
Latvia	12 973	12 967	15 082	13 745	–280	–142	–713	–651
Lithuania	13 435	13 667	15 202	14 028	–1 445	–1 107	–2 070	–1 719
Sweden	51 424	38 060	57 561	57 888	–47	284	–5 294	–4 559

1) The cash-generating unit is part of the segment Swedish Banking.

Sensitivity analysis

Given a reasonable change in any of the above assumptions there would be no impairment loss for any cash generating unit, with the exception of the banking operations in Lithuania. For the other cash generating units, with the exception of the banking operations in Lithuania, there is still room for a reasonable change if both assumptions were to occur simultaneously as indicated in the table i.e. both an increase in the discount rate of 1 percentage point and a decrease in the growth assumption of 1 percentage point. The Group is also confident there is room for a reasonable change in the net profit margin assumption for these units without causing an impairment loss.

Banking operations in Baltic countries

Recognised goodwill totalled SEK 9 303m (9 618). Essentially the same assumptions were used in the impairment testing for 2015 as at the previous year-end. The three-year financial plans have been updated, as a result of which the initial growth assumptions after the planning period have been reduced. The discounting factor has been updated with new country-specific risk premiums. No impairments were identified on the balance sheet date. The three-year financial plans have been updated based on conditions in each country. Initial growth assumed in the established three-year financial plans is based on management's best estimate of inflation, real GDP growth and growth in the banking sector in each market. The assessments are based on external sources. After the planning period a linear reduction in annual growth is assumed in principle during the period between 2019 and 2048 from 5 per cent down to 3 per cent, which is considered sustainable growth for a mature market. The initial discount rate for each period reflects a country-specific risk premium that will converge on a straight-line basis to 5 per cent, which is considered relevant for a mature market. Risk premiums are derived from external sources. The discount rate before tax for the period 2016–2018 was approximately 14 per cent (14).

Other cash generating units, excluding banking operations

Other recognised goodwill totalled SEK 1 160m (1 179). No impairments were needed as of the closing day. Average annual growth for other cash generating units has been assumed to be 3 per cent (3) and the lowest discount rate was 7 per cent (7), or 9 per cent (9) before tax.

G30 Tangible assets

	Current assets	Fixed assets
			Owner–occupied
2015	Properties	Equipment	properties	Total
Cost, opening balance	1 089	3 306	1 402	5 797
Additions	11	446		457
Sales and disposals	–321	–637	–158	–1 116
Exchange rate differences	–6	22	8	24
Cost, closing balance	773	3 137	1 252	5 162
Amortisation, opening balance		–2 402	–430	–2 832
Amortisation for the year		–313	–36	–349
Sales and disposals		328	56	384
Exchange rate differences		1	–12	–11
Amortisation, closing balance		–2 386	–422	–2 808
Impairments, opening balance	–312			–312
Impairments for the year	–62			–62
Sales and disposals	3			3
Exchange rate differences	–2			–2
Impairments, closing balance	–373			–373
Carrying amount	400	751	830	1 981

Notes, Group

The useful life of equipment is deemed to be between three and ten years and its residual value is deemed to be zero as in previous years. The depreciable amount is recognised linearly in profit or loss over the useful life. There was no change in useful lives in 2015. No indications of impairment were identified on the balance sheet date for equipment and owner-occupied properties. Equipment included operating leases, mainly motor vehicles, with an accumulated cost of SEK 79m (176) and accumulated depreciation of

SEK 63m (85). Future minimum lease payments amount to SEK 107m (96), of which SEK 53m (41) will be received after more than one year but within five years.

Individual structural components are deemed to have useful lives of between 12 and 25 years. The residual value is deemed to be zero. The depreciable amount is recognised linearly in profit or loss over the useful life. Land has an indefinite useful life and is not depreciated. Estimated useful lives have been changed in individual cases.

	Current assets		Fixed assets
2014	Properties	Equipment	Owner–occupied properties	Total
Cost, opening balance	1 831	3 319	1 248	6 398
Additions	215	512	99	826
Sales and disposals	–962	–583	–12	–1 557
Exchange rate differences	5	58	67	130
Cost, closing balance	1 089	3 306	1 402	5 797
Amortisation, opening balance		–2 430	–370	–2 800
Amortisation for the year		–336	–43	–379
Sales and disposals		406	9	415
Exchange rate differences		–42	–26	–68
Amortisation, closing balance		–2 402	–430	–2 832
Impairments, opening balance	–458			–458
Impairments for the year	–206			–206
Sales and disposals	353			353
Exchange rate differences	–1			–1
Impairments, closing balance	–312			–312
Carrying amount	777	904	972	2 653

G31 Investment properties

	2015	2014
Cost, opening balance	129	986
Additions
Sales and disposals	–108	–857
Exchange rate differences
Cost, closing balance	21	129
Amortisation, opening balance	–18	–61
Amortisation for the year	–3	–10
Sales and disposals	14	53
Amortisation, closing balance	–7	–18
Impairments, opening balance	–14	–240
Impairments for the year	–8	–49
Sales and disposals	16	275
Exchange rate differences
Impairments, closing balance	–6	–14
Carrying amount	8	97

Individual structural components are deemed to have useful lives of between 12 and 25 years. The residual value is deemed to be zero. The depreciable amount is recognised linearly in profit or loss during the useful life. Land is deemed to have an indefinite useful life and therefore is not depreciated.

G32 Other assets

	2015	2014	1/1/2014
Security settlement claims	11 497	6 813	5 743
Other1	3 180	3 289	3 835
Total	14 677	10 103	9 578

1) Includes credit impairment reserve of SEK 6.7m (7) in the Group primarily related to accounts receivable. Property taken over to protect claims amounted to SEK 6m (13) in the Group.

G33 Prepaid expenses and accrued income

	2015	2014	1/1/2014
Accrued interest income	3 764	4 657	5 907
Other	2 598	1 469	1 085
Total	6 362	6 126	6 992

G34 Amounts owed to credit institutions

	2015	2014	1/1/2014
Valuation category, loans and receivables
Swedish banks	85 574	96 673	78 644
Swedish credit institutions	1 131	1 370	1 356
Foreign banks	62 749	64 923	30 592
Foreign credit institutions	223	2 741	2 906
Total	149 677	165 707	113 498
Valuation category, fair value through profit or loss
Trading
Swedish banks, repurchase agreements		1 991	4 182
Swedish credit institutions, repurchased agreements	816	1 907	250
Foreign banks, repurchase agreements		1 848	3 691
Total	816	5 746	8 123
Total	150 493	171 453	121 621

G36 Financial liabilities for which customers bear the investment risk

2015	2014	1/1/2014


130 403	121 377	105 603
17 718	17 672	14 974
9 715	7 128	4 971
157 836	146 177	125 548

G37 Debt securities in issue

	2015	2014	1/1/2014
Valuation category, other financial liabilities
Commercial paper	107 047	195 194	100 170
Covered bonds	531 978	453 655	470 697
Change in value due to hedge accounting at fair value	12 830	23 808	49
Other interest-bearing bond loans	154 076	110 999	101 292
Change in value due to hedge accounting at fair value	168	1 811	185
Other	13	14	16
Total	806 112	785 481	672 409
Valuation category, fair value through profit or loss
Trading
Other	14 561	13 297	13 682
Other1
Covered bonds	5 862	34 205	40 184
Other interest-bearing bond loans		2 029
Total	20 423	49 531	53 866
Total	826 535	835 012	726 275
of which state-guaranteed			8 578
1) nominal amount	7 722	32 112	38 621

G38 Short positions in securities G35 Deposits and borrowings from the public

	2015	2014	1/1/2014
Valuation category, other financial liabilities
Deposits from Swedish public	548 634	494 420	455 626
Deposits from foreign public	194 721	165 576	139 922
Funding	468	535	653
Total	743 823	660 531	596 201
Valuation category, fair value through profit or loss
Trading
Deposits from Swedish public, repurchase agreements	2 798	15 768	18 852
Deposits from foreign public, repurchase agreements	1 485		3 089
Other1
Deposits from Swedish public	164	381	2 466
Total	4 447	16 149	24 407
Total	748 271	676 679	620 608
1) nominal amount	156	394	2 466

	2015	2014	1/1/2014
Valuation category, fair value through profit or loss
Trading
Shares	246	74	121
Interest-bearing securities	7 945	26 984	17 398
Total	8 191	27 058	17 519
of which own issued shares	77		37

G39 Pensions

Defined benefit pension plans are recognised in the balance sheet as a provision and in the income statement in their entirety as a pension cost in staff costs. Revaluations of defined benefit pension plans are recognised in other comprehensive income. The provision in the balance sheet is a net of the pension obligations and the fair value of the assets allocated to fund the obligations, so-called plan assets. The Group calculates provisions and costs for defined benefit pension obligations based on the obligations' significance and assumptions related to future development. The pension obligations as well as the cost of services rendered and interest expense for the pension obligations include payroll tax, which is calculated according to an actuarial method.

Nearly all employees hired in the Swedish part of the Group before 2013 are covered by the BTP2 defined benefit pension plan (a multi-employer occupational pension for Swedish banks). According to this plan, employees are guaranteed a lifetime pension corresponding to a specific percentage of their salary and mainly comprising retirement pension, disability pension and survivor's pension. Remuneration levels differ for salaries with different income base amounts. For salaries over 30 income base amounts, there is no pension according to BTP2. Consequently, the Group's provision

Amount reported in balance sheet for defined benefit pension plans	2015	2014	1/1/2014
Funded pension obligations and payroll tax	18 129	20 977	19 835
Fair value of plan assets	–19 385	–18 429	–16 910
Total	–1 256	2 548	2 925
of which reported as plan assets	1 274
of which reported as a pension liability	18
Changes in funded defined benefit pension plans, including payroll tax	2015	2014
Opening obligations	20 977	19 835
Business combinations		851
Current service cost and payroll tax	613	668
Interest expense on pension obligations	471	698
Pension payments	–742	–724
Payroll tax payments	–182	–167
Remeasurement	–2 947	–186
Settlements	–62
Exchange rate differences	1	2
Closing obligations	18 129	20 977
	2015	2014	2015

Funded pension obligations, including payroll tax			Number of
Active members	6 750	9 316	7 995
Deferred members	3 201	3 125	10 325
Pensioners	8 178	8 536	11 323
Total	18 129	20 977	29 643
Vested benefits	16 715	18 319
Non-vested benefits	1 414	2 658
Total	18 129	20 977
of which attributable to future salary increases	1 306	1 462

Changes in plan assets	2015	2014
Opening fair value	18 429	16 910
Business combinations		677
Interest income on plan assets	421	595
Contributions by the employer	753	695
Pension payments	–742	–724
Remeasurement	591	277
Settlements Exchange rate differences	–65 –2	–1

and pension cost are affected by each employee's anticipated longevity, final salary and income base amounts. The pension plan also contains a complementary retirement pension which has been defined contribution since 2001 rather than defined benefit. In 2012 BTP was renegotiated as entirely a defined contribution pension plan for all new employees as of 2013. The defined benefit pension plan therefore covers only those employed before 2013 and hence is being dissolved. The defined benefit portion of the BTP2 pension plan is funded by purchasing pension insurance from the insurance company SPK (Sparinstitutens PensionsKassa Forsäkringsforening). SPK administers pensions and manages pension assets for Swedbank and other employers. The Group has to determine its share of the plan assets held by SPK. The share amounted to slightly over 70 per cent. This is done using the metric SPK is likely to have used on the closing day to distribute assets if the plan were immediately dissolved or if a situation arose that required an additional payment from employers due to insufficient assets. The employers are responsible for ensuring that SPK has sufficient assets to meet the pension plan's obligations measured on the basis of SPK's legal obligations. There is no such deficit. SPK's asset management is mainly based on the regulations it faces. The Group's provision and other comprehensive income are therefore affected by SPK's return on assets.

For individuals who have been in executive positions, there are complementary individual defined benefit pension obligations. They are funded through provisions to pension funds. The provisions comply with the Act on Safeguarding Pension Benefits.

In addition, there is a small defined benefit pension plan for employees of Swedbank AB's Norwegian branch. The plan's closing pension liability at the end of the year was SEK 58m (66). Plan assets amounted to SEK 41m (43). The amounts are reported below together with the Swedish pension plan. The Group has no other defined benefit plans.

Fair value of plan assets	2015	of which quoted market price in an active market	2014	of which quoted market price in an active market
Bank balances	350	350	1 869
Debt instruments
Swedish government and munici palities	501	501	532	532
Swedish credit institutions
Swedish public
Foreign	20	20	31	31
Equity instruments, foreign			3	3
Derivatives, interest-raterelated
Derivatives, currency-related	82	82	–129
Investment funds, interest	6 903	6 903	7 834	7 834
Investment funds, shares	5 671	5 671	5 896	5 896
Investment funds, other	5 857	4 579	2 281	2 281
Other	1	1	112
Total	19 385	18 107	18 429	16 577
of which own issued instruments bank balances	195		1 869

	Undiscounted cash flows
Remaining maturity 2015	< 1 yr	1–5 yrs	5–10 yrs	> 10 yrs	No maturity/ discount effect	Total
Funded pension obligations, including payroll tax	960	3 324	4 122	41 907	–32 184	18 129
Plan assets	669	185	64		18 467	19 385
Expected contributions by the employer	797

Remaining maturity 2014	Undiscounted cash flows
	< 1 yr	1–5 yrs	5–10 yrs	> 10 yrs	No maturity/ discount effect	Total
Funded pension obligations, including payroll tax	974	3 218	3 733	24 969	–11 917	20 977
Plan assets	2 269	66	52	56	15 985	18 429
Expected contributions by the employer	798

Pension costs reported in income statement	2015	2014
Current service cost and payroll tax	613	668
Interest expense on pension obligations	471	698
Interest income on plan assets	–421	–595
Settlements	3
Pension cost defined benefit pension plans	666	771
Premiums paid for defined contribution pension
plands and payroll tax	271	275
Total	937	1 046

Remeasurements of defined benefit pension plans reported in other comprehensive income	2015	2014
Actuarial gains and losses based on experience	205	195
Actuarial gains and losses arising from changes in financial assumptions	2 742	–9
Actuarial gains and losses arising from changes in demographic assumptions
Return on plan assets, excluding amounts included in interest income	591	277
Total	3 539	463
Actuarial assumptions, per cent	2015	2014
Financial
Discount rate, 1 January	2.29	3.44
Discount rate, 31 December	3.53	2.29
Future annual salary increases, 1 January	2.54	4.00
Future annual salary increases, 31 December	2.84	2.54
Future annual pension indexations/inflation, 1 January	1.28	2.00
Future annual pension indexations/inflation, 31 December	1.63	1.28
Future annual changes in income base amount, 1 January	3.28	3.00
Future annual changes in income base amount, 31 December	3.63	3.28
Demographic
Entitled employees who choose early retirement option	50.00	50.00
Future annual employee turnover	3.50	3.50
Expected remaining life for a 65 years old man	22	22
Expected remaining life for a 65 years old woman	24	24

Sensitivity analysis, pension obligations	2015	2014
Financial
Change in discount rate - 25 bps	743	926
Change in salary assumption +25 bps	317	412
Change in pension indexation/inflation assumption +25 bps	738	902
Change in income base amount assumption -25 bps	129	175
Demographic
All entitled employees choose early retirement option at maximum	927	1 486
Change in employee turnover assumption -25 bps	13	5
Expected remaining life for a 65 years old man and woman +2 year	1 077	1 350

When the cost of defined benefit pension plans is calculated, financial and demographic assumptions have to be made for factors that affect the size of future pension payments. The discount rate is the interest rate used to discount the value of future payments. The interest rate is based on a market rate of interest for first-class corporate bonds traded on a functioning market with remaining maturities and currencies matching those of the pension obligations. The Group considers Swedish covered mortgage bonds as such bonds, because of which the discount rate is based on their quoted prices. The Group's own issues are excluded. Quoted prices are adjusted for remaining maturities with the help of prices for interest rate swaps. The weighted average maturity of the defined benefit obligation is nearly 20 years. A reduction in the discount rate of 0.25 bp would increase the pension provision by approximately SEK 743m (926) and the pension cost by SEK 37m (53). Future annual salary increases reflect projected future salary increases as an aggregate effect of both contractual wage increases and wage drift. Because the defined benefit pension plan no longer covers new employees, only those employed before 2013, the salary increase assumption has been adapted to assume that the plan is closed. As of 2014 an age-based salary increase assumption is therefore used instead. This means that a unique salary increase assumption is set for each age group of employees. As of 2014 the inflation assumption is based on quoted prices for nominal and index-linked government bonds. For longer maturities that lack quoted prices, the inflation assumption is gradually adapted to the Riksbank's target of 2.00 percentage points. The final benefits under BTP are determined on the basis of the income base amount. Therefore, future changes in the income base amount have to be estimated. The assumption is based on historical outcomes. Annual pension indexation has to be determined as well, since indexation historically has always been necessary. The indexation is assumed to correspond to the inflation assumption. BTP2 gives employees born in 1966 or earlier the option to choose a slightly earlier retirement age than normal in exchange for a slightly lower benefit level. Since this option is totally voluntary on the part of those employees, an estimate is made of the future outcome. Early retirements jointly agreed to by the employer and employee are recognised as they arise rather than estimated among actuarial assumptions. The assumed remaining lifetime of beneficiaries is updated annually.

G40 Insurance provisions

	Life insurance		Non–life insurance			Total
	2015	2014	1/1/2014	2015	2014	1/1/2014	2015	2014	1/1/2014
Opening balance	1 584	1 513	1 537	161	132	112	1 745	1 645	1 649
Provisions	972	1 057	843	321	251	224	1 293	1 308	1 067
Payments	–981	–1 059	–908	–285	–231	–208	–1 266	–1 290	–1 116
Exchange rate differences	–38	73	41	–6	9	4	–44	82	45
Closing balance	1 537	1 584	1 513	191	161	132	1 728	1 745	1 645

Provisions for insurance contracts

The Group allocates provisions for the insurance contracts or parts of contracts where significant insurance risks are transferred from the policyholder to the Group. Insurance risks differ from financial risks and mean that the Group compensates the policyholder if a specified uncertain future event adversely impacts the policyholder. The Group is compensated through premiums received from policyholders. Provisions are allocated

for established claims and correspond to the amount that will be paid out. Provisions are also made for damages incurred but not reported. A statistical assessment of anticipated claims based on previous years' experience with each type of insurance contract is used as a basis for the provision. Assumptions are made with regard to interest rates, morbidity, mortality and expenses.

G41 Other liabilities and provisions G43 Subordinated liabilities

	2015	2014	1/1/2014
Security settlement liabilities	11 978	8 624	2 507
Other liabilities	10 380	12 144	11 762
Provisions for guarantees	45	50	53
Restructuring provision	265	524
Other provisions	46	988	75
Total	22 715	22 330	14 397

When it acquired Sparbanken Öresund AB in 2014, Swedbank AB recognised a restructuring reserve of SEK 591m. The acquisition analysis included additional provisions of SEK 1 025m, which largely related to onerous contracts, of which SEK 1 134m (181) were utilised, and SEK 43m were reversed due to lower staff costs.

G42 Accrued expenses and prepaid income

	2015	2014	1/1/2014
Accrued interest expenses	9 238	9 329	10 718
Other	4 005	3 742	3 476
Total	13 243	13 071	14 194

	2015	2014	1/1/2014
Valuation category, other financial liabilities
Subordinated loans	12 382	12 874	4 631
Change in the value due to hedge accounting at fair value	265	268	-12
Total subordinated loans	12 647	13 142	4 619
Undated subordinated loans	11 585	5 290	5 037
of which Tier 1 capital contribution		5 290	5 540
Change in the value due to hedge accounting at fair value	381	525	503
Total undated subordinated loans	11 965	5 815	5 540
Total	24 613	18 957	10 159

	2015	2014	1/1/2014
Restricted equity
Share capital, ordinary shares	24 904	24 904	24 904
Statutory reserve	9 648	9 050	8 741
Other reserve	19 563	16 981	18 788
Total	54 115	50 935	52 433
Non-restricted equity
Currency translation from foreign operations	132	763	–540
Cash flow hedges	17	–105	–139
Share premium reserve	13 206	13 206	13 206
Retained earnings	55 693	52 404	44 580
Total	69 048	66 268	57 107
Non-controlling interest	179	170	165
Total equity	123 342	117 373	109 705

The quote value per share is SEK 22.

Ordinary shares

Number of shares	2015	2014	1/1/2014
Number of shares authorized,
issued and fully paid	1 132 005 722	1 132 005 722	1 132 005 722
Own shares	–26 601 972	–29 750 577	–33 000 000
Own shares for trading
purposes		–166 211
Associate's holdings in shares			–1 599 000
Number of outstanding
shares		1 105 403 750 1 102 088 934 1 097 406 722
Opening balance	1 102 088 934 1 097 406 722
Share delivery due to Equity
settled share based programmes	3 148 605	3 249 423
Repurchase of own shares for
trading purposes		–166 211
Disposal of own shares for
trading purposes	166 211

Associates' disposal of shares		1 599 000

The quote value per share is SEK 22.

Changes in equity for the year and the distribution according to IFRS are indicated in the statement of changes in equity. Ordinary shares each carry one vote and a share in profits. Treasury shares are not eligible for dividends.

G44 Equity G45 Fair value of financial instruments

Carrying amounts and fair values of financial instruments

A comparison between the carrying amount and fair value of the Group's financial assets and financial liabilities according to the definition in IAS 39 is presented below.

Determination of fair values of financial instruments

The Group uses various methods to determine the fair value of financial instruments depending on the degree of observable market data in the valuation and activity in the market. An active market is considered a regulated or reliable marketplace where quoted prices are easily accessible and which demonstrates regularity. Activity is continuously evaluated by analysing factors such as differences in bid and ask prices.

The methods are divided in three different levels:

Level 1: Unadjusted, quoted price on an active market
Level 2: Adjusted, quoted price or valuation model with valuation parameters derived from an active market
Level 3: Valuation model where a majority of valuation parameters are nonobservable and based on internal assumptions.

When financial assets and financial liabilities in active markets have market risks that offset each other, an average of bid and ask prices is used as a basis to determine the fair values. For any open net positions, bid and ask rates are applied based on what is applicable i.e. bid rates for long positions and ask rates for short positions.

In cases that lack an active market, fair value is determined with the help of established valuation methods and models. In these cases assumptions that cannot be directly attributed to a market may be applied. These assumptions are based on experience and knowledge of the valuation of financial markets. The goal, however, is to always maximise the use of data from an active market. All valuation methods and models and internal assumptions are validated continuously by the independent risk control unit. In cases where it is considered necessary, adjustments are made to reflect fair value, so-called fair value adjustments. This is done to correctly reflect the parameters in the financial instruments and which will be reflected in their valuations. For OTC derivatives, for example, where the counterparty risk is not settled with cash collateral, the fair value adjustment is based on the current counterparty risk (CVA and DVA).

The Group has a continuous process that identifies financial instruments which indicate a high level of internal assumptions or low level of observable market data. The process determines how to make the calculation based on how the internal assumptions are expected to affect the valuation. In cases where internal assumptions have a significant impact on fair value, the financial instrument is reported in level 3. The process also includes an analysis based on the quality of valuation data and whether any types of financial instruments will be transferred between the various levels.

For floating rate lending and deposits, the carrying amount equals the fair value.

		2015		2014		1/1/2014
	Fair value	Carrying	amount Difference	Fair value	Carrying amount	Difference	Fair value	Carrying amount	Difference
Assets
Financial assets covered by IAS 39
Cash and balances with central banks	186 312	186 312		113 768	113 768		59 382	59 382
Treasury bills etc.	76 628	76 552	76	46 307	46 225	82	56 852	56 814	38
of which fair value through profit or loss	76 084	76 084		45 724	45 724		56 259	56 259
of which held to maturity	544	468	76	583	501	82	593	555	38
Loans to credit institutions	86 418	86 418		113 820	113 820		82 231	82 278	–47
of which loans receivables	84 679	84 679		96 351	96 351		74 513	74 560	–47
of which fair value through profit or loss	1 739	1 739		17 469	17 469		7 718	7 718
Loans to the public	1 419 486	1 413 955	5 531	1 412 718	1 404 507	8 211	1 270 138	1 264 910	5 228
of which loan receivables	1 188 510	1 182 979	5 531	1 071 947	1 063 736	8 211	898 784	893 556	5 228
of which fair value through profit or loss	230 976	230 976		340 771	340 771		371 354	371 354
Value change of interest hedged items in portfolio hedge	1 009	1 009		1 291	1 291		62	62
Bonds and interest-bearing securities	88 618	88 610	8	124 465	124 455	10	125 579	125 585	–6
of which fair value through profit or loss	84 692	84 692		123 170	123 170		124 632	124 632
of which investments held to maturity	3 926	3 918	8	1 295	1 285	10	947	953	–6
Financial assets for which the customers bear the investment risk	153 442	153 442		143 319	143 319		122 743	122 743
Shares and participating interest	11 074	11 074		9 931	9 931		7 109	7 109
of which fair value through profit or loss	11 005	11 005		9 880	9 880		7 058	7 058
of which available for sale	69	69		51	51		51	51
Derivatives	86 107	86 107		123 202	123 202		64 352	64 352
Other financial assets	18 425	18 425		14 712	14 712		15 403	15 403
Total	2 127 519	2 121 904	5 615	2 103 533	2 095 230	8 303	1 803 851	1 798 638	5 213
Investment in associates		5 382			4 924			3 640
Financial assets held for sale		148			615			1 862
Non-financial assets		21 421			20 528			19 962
Total		2 148 855			2 121 297			1 824 102

		2015		2014			1/1/2014
	Fair value	Carrying	amount Difference	Fair value	Carrying amount	Difference	Fair value	Carrying amount	Difference
Liabilities
Financial liabilities covered by IAS 39
Amounts owed to credit institutions	150 302	150 493	–191	171 457	171 453	4	121 621	121 621
of which other financial liabilities	149 486	149 677	–191	165 711	165 707	4	113 498	113 498
of which fair value through profit or loss	816	816		5 746	5 746		8 123	8 123
Deposits and borrowings from the public	748 254	748 271	–17	676 662	676 679	–17	620 571	620 608	–37
of which other financial liabilities	743 806	743 823	–17	660 514	660 531	–17	596 164	596 201	–37
of which fair value through profit or loss	4 447	4 447		16 149	16 149		24 407	24 407
Debt securities in issue	832 196	826 535	5 661	842 238	835 012	7 226	732 125	726 275	5 850
of which other financial liabilities	811 773	806 112	5 661	792 707	785 481	7 226	678 259	672 409	5 850
of which fair value through profit or loss	20 423	20 423		49 531	49 531		53 866	53 866
Financial liabilities for which the customers
bear the investment risk	157 836	157 836		146 177	146 177		125 548	125 548
Subordinated liabilities	24 627	24 613	14	18 932	18 957	–25	10 072	10 159	–87
of which other financial liabilities	24 627	24 613	14	18 932	18 957	–25	10 072	10 159	–87
Derivatives	68 681	68 681		85 694	85 694		55 011	55 011
Short positions securities	8 191	8 191		27 058	27 058		17 519	17 519
of which fair value through profit or loss	8 191	8 191		27 058	27 058		17 519	17 519
Other financial liabilities	31 596	31 596		30 096	30 096		24 987	24 987
Total	2 021 683	2 016 216	5 467	1 998 314	1 991 126	7 188	1 707 454	1 701 728	5 726
Financial liabilities held for sale		14			39			219
Non-financial liabilities		9 283			12 759			12 450
Total		2 025 513			2 003 924			1 714 397

Financial instruments recognised at fair value

The following tables present fair values of financial instruments recognised at fair value split between the three valuation hierarchy levels.

Level 1 primarily contains equities, fund shares, bonds, treasury bills, commercial paper and standardised derivatives, where the quoted price is used in the valuation. Securities in issue traded on an active market are included in this category as well.

Level 2 primarily contains less liquid bonds that are valued on a curve, lending, funding, liabilities in the insurance operations whose value is directly linked to a specific asset value, and derivatives measured on the basis of observable inputs. For less liquid bond holdings, an adjustment is made for the credit spread based on observable market inputs such as the market for credit derivatives. For loans to the public where there are no observable market inputs for credit margins at the time of measurement, the credit margin of the last transaction executed with the same counterparty is used. This includes the majority of mortgage lending and certain other fixed-rate lending in Swedish Banking at fair value. Securities in issue that are not quoted but measured according to quoted prices for similar quoted bonds are also included in level 2.

Level 3 contains other financial instruments where internal assumptions have a significant effect on the calculation of fair value. Level 3 primarily contains unlisted equity instruments and illiquid options. Level 3 includes shares in Visa Europe Limited, which have been fair valued at zero. The zero value is due to restrictions on transfer of the shares and the uncertainties in the transaction. More detail about these shares can be found in Note G58. The options hedge changes in the market values of combined debt instruments, so-called structured products. Structured products consist of a corresponding option element and a host contract, which in principle is an ordinary interest-bearing bond. When the Group evaluates the level on which the financial instruments are reported, the entire instrument is assessed on an individual basis. Since the bond portion of structured products represents the majority of the financial instrument's fair value, the internal assumptions used to value the illiquid option element normally do not have a significant effect on the valuation and the financial instrument is typically reported in level 2. However, the Group typically hedges the market risks that arise in structured products by holding individual options. The internal assumptions in the individual options are of greater significance to the individual instrument and these are reported as derivatives

in level 3. To estimate the sensitivity of the volatility of the illiquid options, two types of shifts have been made. The shifts are based on each product type and are considered reasonable changes. Based on the historical volalitity of the underlying prices of options in level 3, it is unlikely that the fair value would be affected more than +/– SEK 36m.

When valuation models are used to determine the fair value of financial instruments in level 3, the consideration that has been paid or received is assessed as the best evidence of fair value at initial recognition. Because of the possibility that a difference could arise between this fair value and the fair value calculated at that time using the valuation model, so called day 1 profit or loss, the Group adjusts the valuation models to avoid such differences. As of year-end there were no cumulative differences that were not recognised through profit or loss.

Transfers between fair value hierarchy levels are reflected as taking place at the end of each quarter. During the years ended 2015 and 2014, there were no transfers of financial instruments between valuation levels 1 and 2. Financial instruments are transferred to or from level 3 depending on whether the internal assumptions have changed in significance for the valuation.

Changes in the value of loans to the public, measured according the fair value option and attributable to changes in credit risk, amounted to SEK –9m (–14) during the period and are recognised as credit impairments. Cumulative value changes of that kind amounted to SEK –49m (–40). The amount is determined as the difference between current estimated creditworthiness and estimated creditworthiness of the borrower on the lending date. Other changes in fair value are considered attributable to changes in market risks. The change in the value of securities in issue in level 2, which are measured according to the fair value option and attributable to changes in Swedbank's own creditworthiness, amounted to SEK 81m (10) during the period. The value change is recognised in net gains and losses on financial items at fair value. Cumulative value changes amounted to SEK –41m (–122). The change due to Swedbank's own credit risk has been determined by calculating the difference in value based on current prices from external dealers for Swedbank's own credit risk in its own unquoted issues and the value based on prices of its own credit risk for its own unquoted issues on the origination date. The following table shows financial instruments measured at fair value as per 31 December distributed by valuation level.

		2015
	Level 1	Level 2	Level 3	Total
Assets
Treasury bills and other bills eligible for refinancing with central banks, etc	24 650	51 434		76 084
Loans to credit institutions		1 739		1 739
Loans to the public		230 976		230 976
Bonds and interest-bearing securities	59 213	25 479		84 692
Shares and participating interest	10 908	93	73	11 074
Financial assets for which the customers bear the investment risk	153 442			153 442
Derivatives	166	85 827	114	86 107
Total	248 379	395 548	187	644 114
Liabilities
Amounts owed to credit institutions		816		816
Deposits and borrowings from the public		4 447		4 447
Debt securities in issue	1 509	18 914		20 423
Financial liabilities for which the customers bear the investment risk		157 836		157 836
Derivatives	28	68 653		68 681
Short positions securities	8 191			8 191
Total	9 728	250 666		260 394

Notes, Group

135

		2014
	Level 1	Level 2	Level 3	Total
Assets
Treasury bills and other bills eligible for refinancing with central banks, etc	32 587	13 137		45 724
Loans to credit institutions		17 469		17 469
Loans to the public		340 771		340 771
Bonds and interest-bearing securities	75 188	47 982		123 170
Shares and participating interest	9 681	173	77	9 931
Financial assets for which the customers bear the investment risk	143 319			143 319
Derivatives	5 399	117 722	81	123 202
Total	266 174	537 254	158	803 586
Liabilities
Amounts owed to credit institutions		5 746		5 746
Deposits and borrowings from the public		16 149		16 149
Debt securities in issue	17 768	31 763		49 531
Financial liabilities for which the customers bear the investment risk		146 177		146 177
Derivatives	6 925	78 769		85 694
Short positions securities	27 024			27 058

Total 51 717 278 638 330 355

Changes in Level 3	2015
		Assets
	Equity
	instruments	Derivatives	Total
Opening balance	77	81	158
Purchases	16		16
Sales of assets	–15		–15
Transferred from Level 2 to Level 3		148	148
Transferred from Level 3 to Level 2		–83	–83
Transferred from Level 3 to Level 1	–2		–2
Gains or losses	–3	–6	–9
of which in the income statement, net gains and losses on financial items at fair value	–3	–6	–9
of which changes in unrealised gains or losses for items held at closing day		–47	–47
Closing balance	73	114	187

Changes in Level 3		2014
		Assets
	Equity
	instruments	Derivatives	Total	Derivatives
Opening balance	57	133	190	19
Purchases	21		21
Sales of assets	–2		–2
Transferred from Level 2 to Level 3	3	54	57
Transferred from Level 3 to Level 2		–128	–128	–25
Gains or losses	–2	22	20	6
of which in the income statement, net gains and losses on financial items at fair value	–2	22	20	6
of which changes in unrealised gains or losses for items held at closing day	–2	3	1
Closing balance	77	81	158	0

Financial instruments at amortised cost

The following tables distribute fair value by the three different valuation levels for financial instruments at amortised cost.

			2015
	Carrying amount		Fair value
		Level 1	Level 2	Level 3	Total
Assets
Treasury bills and other bills eligible for refinancing with central banks, etc.	468	544			544
Loans to credit institutions	84 679		84 679		84 679
Loans to the public	1 182 979		1 188 510		1 188 510
Bonds and other interest-bearing securities	3 918	69	3 693	164	3 926
Total	1 272 044	613	1 276 882	164	1 277 659

Liabilities
Amounts owed to credit institutions	149 676		149 485		149 485
Deposits and borrowing from the public	743 823		743 806		743 806
Debts securities in issue	806 112	339 153	472 620		811 773
Subordinated liabilities	24 613		24 626		24 626
Total	1 724 224	339 153	1 390 537		1 729 690

	2014
	Carrying amount	Fair value
		Level 1	Level 2	Level 3	Total
Assets
Treasury bills and other bills eligible for refinancing with central banks, etc.	501	583			583
Loans to credit institutions	96 351		96 351		96 351
Loans to the public	1 063 736		1 071 947		1 071 947
Bonds and other interest-bearing securities	1 285	77		1 218	1 295
Total	1 161 873	660	1 168 298	1 218	1 170 176
Liabilities
Amounts owed to credit institutions	165 707		165 711		165 711
Deposits and borrowing from the public	660 531		660 514		660 514
Debts securities in issue	785 481	283 292	509 415		792 707
Subordinated liabilities	18 957		18 932		18 932
Total	1 630 676	283 292	1 354 572		1 637 864

G46 Reclassification of financial assets

Swedbank chose as of 1 July 2008 to reclassify certain interest-bearing securities which, owing to extraordinary market conditions, had become illiquid. Market conditions at the time were distinguished by extreme turbulence, a shortage of liquidity and a lack of quoted prices on active markets. The holdings, as listed in the table below, were reclassified from trading to held to maturity, since the instruments are no longer held for trading purposes. Instead, executive management intends and has the capacity to hold them to maturity. Financial instruments in the category held for trading are

recognised at fair value with changes in value recognised in profit or loss. Financial instruments in the category held to maturity are recognised at amortised cost less impairments. No impairments were needed as of 31 December 2015, which means that all contractual cash flows are expected to be received. All the holdings are Residential Mortgage Backed Securities (RMBS).

	2015	2014
Carrying amount	160	719
Nominal amount	160	721
Fair value	159	718
Recognised interest income after reclassification	1	3

Nominal amounts and carrying amounts are affected by changes in exchange rates. Carrying amounts are also affected by the allocations of discounts in accordance with the effective interest method. The effective interest rate on the date of reclassification was 5.62 per cent.

G47 Financial assets and liabilities which have been offset or are subject to netting or similar agreements

The tables below present recognised financial instruments that have been offset in the balance sheet under IAS 32 and those that are subject to legally enforceable master netting or similar agreements but do not qualify for offset. Such financial instruments relate to derivatives, repurchase and reverse repurchase agreements, securities borrowing and lending transactions. Collateral amounts represent financial instruments or cash collateral received or pledged for transactions that are subject to a legally enforceable master netting or similar agreements and which allow for the netting

of obligations against the counterparty in the event of a default. Collateral amounts are limited to the amount of the related instruments presented in the balance sheet; therefore any over-collateralisation is not included. Amounts that are not offset in the balance sheet are presented as a reduction to the Net financial assets or liabilities in order to derive net asset and net liability exposures. The amounts offset for derivative assets and derivative liabilities include cash collateral offsets of SEK 1 666m (2 056) and SEK 775m (717), respectively.

Assets	2015				2014
	Deriva tives	Reverse repurchase agreements	Securities borrowing	Total	Derivatives	Reverse repurchase agreements	Securities borrowing	Total
Financial assets, which not have been offset or are subject to netting or similar agreements	4 731			4 731	4 678			4 678
Financial assets, which have been offset or are subject to netting or similar agreements	81 376	36 405	74	117 855	118 524	80 081	74	198 679
Net amount presented in the balance sheet	86 107	36 405	74	122 586	123 202	80 081	74	203 357
Financial assets, which have been offset or are subject to netting or similar agreements Gross amount Offset amount	95 327 –13 951	39 404 –2 999	74	134 805 –16 950	129 483 –10 959	83 857 –3 776	74	213 414 –14 735
Net amount presented in the balance sheet	81 376	36 405	74	117 855	118 524	80 081	74	198 679
Related amount not offset in the balance sheet Financial instruments, netting agreements	39 613	5 085		44 698	63 394	15313		78 707
Financial instruments, collateral	1 220	31 320	74	32 614	2 177	64 746	74	66 997
Cash, collateral	19 915			19 915	29 717			29 717
Total amount not offset in the balance sheet	60 748	36 405	74	97 227	95 288	80 059	74	175 421
Net amount	20 628			20 628	23 236	22		23 258

Liabilities	2015				2014
	Deriva tives	Repurchase agreements	Securities lending	Total	Derivatives	Repurchase agreements	Securities lending	Total
Financial liabilities, which have not been offset or are
subject to netting or similar agreements	2 885			2 885	3 670			3 670
Financial liabilities, which have been offset or are
subject to netting or similar agreements	65 796	5 102	13	70 911	82 025	21 514	1 011	104 550
Net amount presented in the balance sheet	68 681	5 102	13	73 796	85 695	21 514	1 011	108 220

Financial liabilities, which have been offset or are subject to netting or similar agreements
Gross amount	80 638	8 101	13	88 752	94 322	25 290	1 011	120 623
Offset amount	–14 842	–2 999		–17 841	–12 297	–3 776		–16 073
Net amount presented in the balance sheet	65 796	5 102	13	70 911	82 025	21 514	1 011	104 550
Related amount not offset in the balance sheet
Financial instruments, netting agreements	39 613	5 085		44 698	63 394	15313		78 707
Financial instruments, collateral	3 021	7	13	3 041	3 636	6 197	1011	10 844
Cash, collateral	15 651	2		15 653	11 903	4		11 907
Total amount not offset in the balance sheet	58 285	5 094	13	63 392	78 933	21 514	1 011	101 458
Net amount	7 511	8		7 519	3 092			3 092

G48 Specification of adjustments for non-cash items in operating activities

	2015	2014
Amortised origination fees	–514	–670
Unrealised changes in value/currency changes	1 710	184
Capital gains/losses on sale of subsidiaries and associates	–41
Capital gains/losses on sale of subsidiaries and associates, discontinued operations		–163
Bargain purchase		–461
Capital gains/losses on property and equipment	–1	–101
Undistributed share of equity in associates	–810	–600
Depreciation and impairment of tangible fixed assets including repossessed leased assets	362	439
Amortisation and impairment of goodwill and other intangible fixed assets	574	329
Credit impairment	990	815
Changes to provisions for insurance contracts	–15	–20
Prepaid expenses and accrued income	–257	1 028
Accrued expenses and prepaid income	–2 330	–1 791
Share-based payment	413	459
Other	–7	–3
Total	74	–555

G50 Assets pledged, contingent liabilities and commitments

Assets pledged
Assets pledged for own liabilities	2015	2014	1/1/2014
Government securities and bonds pledged with the Riksbank	9 675	8 092	10 710
Government securities and bonds pledged with foreign central banks	12 772	10 073	868
Government securities and bonds pledged for liabilities credit institutions	1 241	5 033	6 735
Government securities and bonds pledged for deposits from the public	2 310	11 356	12 699
Government securities and bonds pledged for derivatives
Loans pledged for securities in issue1	819 551	780 213	740 215
Financial assets pledged for investment contracts	145 410	136 529	118 627
Cash	13 697	11 717	7 178
Total	1 004 656	963 013	897 032

1) The pledge is defined as the borrower's nominal debt including accrued interest.

The carrying amount of liabilities for which assets are pledged amounted to SEK 748 437 m (704 115) for the Group in 2015.

G49 Dividend paid and proposed

	2015		2014
Ordinary shares	SEK per share	Total	SEK per share	Total
Dividend paid	11,35	12 539	10,10	11 133
Proposed dividend	10,70	11 880	11,35	12 537

The Board of Directors recommends that shareholders receive a dividend of SEK 10.70 per ordinary share (11.35) in 2016 for the financial year 2015, corresponding to SEK 11 880m (12 537).

Other assets pledged	2015	2014	1/1/2014
Securities loans	13	1 002	177
Government securities and bonds pledged
for other commitments	3 194	5 776	2 675
Cash	459	366	334
Total	3 666	7 144	3 186

Companies in the Group regularly pledge financial assets as collateral for their obligations to central banks, stock exchanges, central securities depositories, clearing organisations and other institutions with similar or closely related functions, as well as to insurance policyholders. The transactions can be made by one or more companies in the Group depending on the operations of each company. These financial assets are recognised as assets pledged. Companies in the Group also participate in arrangements that are not pledges but where financial assets are used for similar purposes. Such financial assets are also recognised as assets pledged. One example of assets pledged is when financial assets of a certain value are transferred to derivative counterparties to offset their credit risk vis-à-vis the Group. Another example involves certain transfers of financial assets that the Group is obligated to repurchase, so-called repos. A third example is that certain types of credit can be included in the cover pool for covered bonds and thereby give preferential rights to the assets to investors who hold such bonds. Because of the pledges and other arrangements mentioned above, the value of the financial assets in question cannot be utilised in any other way as long as the pledge or arrangement remains in effect. The transactions are made on commercial terms.

Contingent liabilities

Nominal amount	2015	2014	1/1/2014
Loan guarantees	5 535	4 619	5 588
Other guarantees	27 777	20 490	14 620
Accepted and endorsed notes	140	108	80
Letters of credit granted but not utilised	2 321	2 025	1 528
Other contingent liabilities	185	17	121
Total	35 958	27 259	21 937
Provision for anticipated credit impairments	–47	–50	–53

Commitments

Nominal amount	2015	2014	1/1/2014
Loans granted but not paid	168 803	163 263	129 912
Overdraft facilities granted but not utilised	66 509	73 744	68 297
Total	235 312	237 007	198 209

G51 Transferred financial assets

The Group transfers ownership of financial assets in connection with repos and security loans. Although ownership has been transferred in these transactions, the asset remains on the balance sheet since the Group is still exposed to the asset's risk of fluctuating in value. This is because the agreement stipulates at the time of transfer that the asset will be restored. The sales proceeds received in connection with repos are recognised as liabilities. All assets and related liabilities are recognised at fair value and included in the valuation category fair value through profit and loss, trading.

Liabilities related to securities lending refer to collateral received in the form of cash. These liabilities are reported in the valuation category other financial liabilities. In addition to what is indicated in the table for securities lending, collateral is received in the form of other securities to cover the difference between the fair value of the transferred assets and the recognised liability's fair value. As of year-end the Group had no transfers of financial assets that had been derecognised and where the Group has continuing involvement.

	Transferred assets			Associated liabilities
2015	Carrying amount	Of which repurchase agreements	Of which securities lending	Carrying amount	Of which repurchase agreements	Of which securities lending
Valuation category , fair value through profit or loss
Trading
Equity instruments	426		426	74		74
Debt securities	3 553	3 553		3 553	3 553
Total	3 979	3 553	426	3 627	3 553	74

	Transferred assets			Associated liabilities
2014	Carrying amount	Of which repurchase agreements	Of which securities lending	Carrying amount	Of which repurchase agreements	Of which securities lending
Valuation category , fair value through profit or loss
Trading
Equity instruments	127		127	74		74
Debt securities	17 471	17 471		17 441	17 441
Total	17 598	17 471	127	17 515	17 441	74

G52 Operational leasing

The agreements mainly relate to premises in which the Group is the lessee. The terms of the agreements comply with customary practices and include clauses on inflation and property tax. The combined amount of future minimum lease payments that relate to non-cancellable agreements is allocated on the due dates as follows:

	Income				Income
Expenses	subleasing	Total	2014	Expenses	subleasing	Total
694	6	688	2015	667	6	661
606	6	600	2016	552	5	547
467	4	463	2017	415	4	411
411	4	407	2018	371	4	367
286		286	2019	271		271
199		199	2020	195		195
183		183	2021	165		165
178		178	2022	164		164
166		166	2023	155		155
1 249		1 249	2024 or later	1 435		1 435
4 441	20	4 421	Total	4 390	19	4 371

G53 Business combinations

Business combinations refer to acquisitions of businesses in which the parent company directly or indirectly obtains control of the acquired business.

Business combinations in 2014

On 20 May 2014 Swedbank AB acquired 100 per cent of the shares in Sparbanken Öresund AB. Sparbanken Öresund AB owned 100 per cent of the shares in the subsidiaries Sparbanken Öresund Fastighetsbyra AB and FriSparbar Företagskredit AB as well as 80 per cent of the subsidiary Cerdo Bankpartner AB. On the same date, directly after the acquisition, Sparbanken Öresund AB sold a number of bank branches to Sparbanken Skåne AB. Because certain assets and liabilities were acquired with the intent of being

Cash and balances with central banks	20
Loans to credit institutions	4461
Loans to the public	16 331
Interest-bearing securities	1973
Shares and participating interests	33
Investments in associates	60
Derivatives	26
Intangible fixed assets	205
Tangible assets	113
Other assets	219
Prepaid expenses and accrued income	134
Group of assets classified as held for sale	10 503
Total assets	34 078

Amounts owed to credit institutions	2 841
Deposits and borrowings from the public	11 596
Debt securites in issue	2 028
Derivatives	49
Deferred tax liabilities	176
Other liabilities	1 625
Subordinated liabilities	947
Liabilities directly associated with group of assets
classified as held for sale	11 417
Total liabilities	30 679
Subsidiary's net assets	3 399
Acquisition cost. Cash	2 938
Bargain purchase, reported as other income	461
Cash flow
Acquired cash and cash equivalents in subsidiary	20
Cash paid	–2 938
Net	–2 918

Acquired loans, fair value	16 331
Acquired loans, gross contractual amounts	16 654
Acquired loans, best estimate of the contractual cash	258

immediately resold, they have been classified as of the acquisition date as held for sale. The recognised gain from the acquisition was due to the fact that Swedbank has to make extensive changes to the acquired operations, including the elimination of offices and related systems. Consequently, a restructuring reserve of SEK 591m was recognised in the income statement for this purpose directly after the acquisition.

Excluding the bargain purchase gain on the acquisition, the acquired company contributed SEK 489m to income and SEK 75m profit after tax from the acquisition date. If the company had been acquired at the beginning of the financial year 2014, the Group's income for 2014 would have been SEK 39 653m instead of SEK 39 304m. The Group's profit after tax would have been SEK 16 457m instead of SEK 16 463m.

G54 Discontinued operations

	2015			2014
Profit from discontinued operations	Russia	Total	Russia	Lithuania	Total
Income	1	1	161	252	413
Expenses	21	21	64	239	303
Profit before impairments	–20	–20	97	13	110
Credit impairments/impairments	–66	–66	–349		–349
Operating profit	–86	–86	–252	13	–239
Tax expense	104	104	36		36
Post-tax profit for the year from discontinued operations	18	18	–216	13	–203
Disposal result				163	163
Reclassification to the income statement	–24	–24	–223		–223
of which exchange differences foreign operations	–87	–87	–508		–508
of which hedging of net investments in foreign operations	91	91	365		365
of which income tax	–28	–28	–80		–80
Profit for the year from discontinued operations, after tax	–6	–6	–439	176	–262

		2015		2014
Assets classified as held for sale	Russia	Total	Russia	Lithuania	Total
Loans to the public	18	18	519		519
of which impaired loans, gross	108	108	262		262
of which individual provisions	–90	–90	–178		–178
of which impaired loans, net	18	18	84		84
of which portfolio provisions			–210		210
Other assets	130	130	96		96
Total assets	148	148	615		615

Liabilities classified as held for sale
Other liabilities	14	14	39		39
Total liabilities	14	14	39		39

In 2013 the Group's Russian operations were reclassified as discontinued operations. The assets and related liabilities of these companies are recognised as assets and liabilities attributable to the sale on separate lines in the balance sheet. As of year-end 2015 the operations comprised the companies OOO Leasing and FRiR RUS OOO, with around 15 employees (15). The assets in these operations were gradually divested in 2014 and 2015. In 2014 OAO Swedbank was liquidated and Ektornet Kr. Valdemara,

whose principal asset was a property in Moscow, was sold. In 2014 the large part of the Group's foreign net asset in roubles was repaid to Swedbank AB. In connection with the repayment, related exchange differences, effects of currency hedges and taxes were reclassified from other consolidated income to profit or loss. In 2014 Lithuanianbased Alita group was sold to MG Baltics for SEK 184m. The sale produced a capital gain of SEK 163m. Alita group was acquired exclusively for the purpose of resale.

G55 Related parties and other significant relationships

	Associates		Other related parties
Assets	2015	2014	2015	2014
Loans to credit institutions	7 941	6 903
Loans to the public	1 000	691		26
Other assets	5	11	38	31
Prepaid expenses and
accrued income		1
Total assets	8 946	7 607	38	57

Liabilities
Amount owed to credit institutions	2 201	2 360
Deposits and borrowing from
the public	3	30	246	2 594
Debt securities in issue, etc.	694	1 448
Other liabilities	5	7
Total liabilities	2 904	3 845	246	2 594

Contingent liabilities
Derivatives, nominal amount	1 883	1 792

Income and expenses
Interest income	106	202
Interest expenses		3	7	78
Dividends received	53	380
Commission income	97	6
Commission expenses	67	48
Other income	12	13
Other general administrative
expenses	2	3

Associates

Investments in associates are specified in note G27.

During the year the Group provided capital injections of SEK 10m (0). As of 31 December associates have issued guarantees and pledged assets of SEK 438m (1 057) on behalf of Swedbank.

The Group has sold services to associates that are not credit institutions primarily in the form of product and systems development as well as marketing. The Group's expenses to, and purchases of services from, associates that are not credit institutions mainly consist of payment services and cash management.

The partly owned banks that are associates sell products that are provided by the Group and receive commissions for servicing the products. The cooperation between the partly owned banks and Swedbank is governed by the agreement described in the section, Other significant relationships. In 2014 Sparbanken Skåne AB, formerly Färs & Frosta Sparbank, sold all 5 330 000 shares in Swedbank AB.

Joint ventures

The Group's holding in EnterCard is a joint venture. EnterCard issues debit and credit cards in Sweden and Norway to Swedbank's customers. Swedbank AB finances Enter-Card's corresponding holding.

Key persons

Disclosures regarding Board members and the Group Executive Committee can be found in note G13 Staff costs.

Other related parties

Swedbank's pension funds and Sparinstitutens Pensionskassa secure employees' postemployment benefits. They rely on Swedbank for traditional banking services.

Other significant relationships

Swedbank has close cooperation with the savings banks in Sweden. The cooperation between Swedbank and the 58 savings banks, including five of Swedbank's partly owned banks, is governed by a master agreement to which a number of other agreements are attached regarding specific activities. On 1 July 2011 a new six-year agreement entered into force. Like the previous agreement, it presumes that the savings banks have a certain basic range of services and products as well as access to competency in certain areas. One saving bank currently do not fulfil the requirements and instead has signed a clearing agreement with Swedbank.

Through the cooperation Swedbank's Swedish customers gain access to a nationwide network. At the same time the savings banks and partly owned banks are able to offer the products and services of Swedbank and its subsidiaries to their customers. Together, the savings banks and partly owned banks account for about 30 per cent of the Group's product sales in the Swedish market. In addition to marketing and product issues, close cooperation exists in a number of administrative areas. Swedbank is the clearing bank for the savings banks and partly owned banks and provides a wide range of IT services. The cooperation also offers the possibility to distribute development costs over a larger business volume.

The savings banks, savings bank foundations and partly owned banks together represent one of the largest shareholder groups in Swedbank, with a total of 12.9 per cent (11.6) of the voting rights.

Swedbank has 1.4 per cent of the voting rights in a non-profit association, the Swedish Savings Banks Academy. The Group does not have loans, guarantees or assets pledged to this association.

G56 Interests in unconsolidated structured entities

A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when all voting rights relate to administrative tasks and the relevant activities are directed by means of contractual arrangements. In 2014 Swedbank owned interests in structured entities that were not consolidated since Swedbank did not control the entities. Information on the Group's interests in unconsolidated structured entities is provided below.

Sponsor definition

Swedbank is a sponsor of structured entities when the Group sets up and determines the design of a structured entity and when the structured entity's products are associated with Swedbank's brand.

Investment funds

Swedbank is a primary sponsor of investment funds where the Group serves as a manager. Swedbank's interests in such funds mainly refer to capital investments by the Group's insurance operations, starting capital and fees received to manage the funds' investments. Asset management fees are based on the fair value of the funds' net assets. Consequently, these fees expose Swedbank to a variable return based on the funds' performance. Swedbank has provided unused loan guarantees to these investment funds, which entails a financial claim against the investment funds.

Securitisation

Securitisation means that assets are transferred to a structured entity which issues securities to third-party investors. The securities have varying levels of priority and are secured by the assets. The securities are entitled to interest from the assets' return, with the most subordinate investor receiving the residual return. Swedbank holds senior debt in the form of investment-grade Residential Mortgage Backed Securities issued by structured entities. They were not set up by Swedbank.

Swedbank's interests in unconsolidated structured entities are shown below. The interests do not include ordinary derivatives such as interest rate and currency swaps and transactions where Swedbank creates rather than receives variable returns from the structured entity.

	2015
	Group Sponsored Investment Funds	Non Sponsored Investment Funds	Securitisations	Total
Loans to the public		17		17
Bonds and other interest-bearing securities			160	160
Financial assets of which the customers bear the investment risk	10 785			10 785
Shares and participating interests	107	69		176
Total assets recognised in the balance sheet	10 892	86	160	11 138
Total income from interests1	6 399	–9	1	6 391
Total assets of the structured entities2	737 994		8 357

	2014
	Group Sponsored Investment Funds	Non Sponsored Investment Funds	Securitisations	Total
Loans to the public		16		16
Bonds and other interest-bearing securities			719	719
Financial assets of which the customers bear the investment risk	11 171			11 171
Shares and participating interests	239	50		289
Total assets recognised in the balance sheet	11 410	66	719	12 195
Total income from interests1	6 695	11	3	6 709
Total assets of the structured entities2	714 639		32 077

1) The result from interests in unconsolidated structured entities includes asset management fees, changes in fair value and interest income.

2) Securitisations represent the total issuance amount outstanding for the tranches held by Swedbank.

Swedbank's maximum exposure to losses corresponds to the investments' carrying amounts recognised in the balance sheet. In addition, Swedbank has exposure to notional SEK 1 140m (1 788) for unused loan commitments provided to the Group's Sponsored Investment Funds. During the year Swedbank did not provide any non-contractual financial or other support to unconsolidated structured entities and as of the closing day had no intention to provide such support.

G57 Sensitivity analysis

	Change	2015	2014
Net interest income, 12 months1
Increased interest rates, scenario 1	+ 1 % point	4 887	3 203
Decreased interest rates, , scenario 1	– 1 % point	–7 471	–4 698
Increased interest rates, scenario 2	+ 1 % point	4 887	3 203
Decreased interest rates, , scenario 2	– 1 % point	–4 573	–2 410
Change in value,2
Market interest rate	+ 1 % point	954	–523
	– 1 % point	–1 138	468
Stock prices	+10%	11	26
	–10%	–6	–15
Exchange rates	+5%	17	–54
	–5%	77	12
Other
Stock market performance3	+/– 10 %	+/–327	+/–332
Staff changes	+/– 100 persons	+/–66	+/–71
Payroll changes	+/– 1 % point	+/–82	+/–86
Impaired loans4	+/– 1 SEK bn	+/–20	+/–25
Credit impairment ratio	+/– 0,1 % point	+/–1 500	+/–1 518

1) The NII sensitivity calculation covers all interest bearing assets and liabilities, onand off balance, on a contractual level in the banking book. It is a static analysis with parallel shifts across the interest rate curve that takes place over-night, and illustrates the effect on NII for a 12 month period. Maturing assets and liabilities during the 12 month period are assumed to be repriced to the existing contractual interest rate +/- the shift. The assets that are re-priced are assumed to have the same interest rate throughout the remaining part of the 12-month period. In the positive shift transaction accounts are assumed to have 0% elasticity (i.e. there is no adjustment made to the paid interest) while all other deposits have a 100% elasticity to changes in the market rate (i.e. adjustments are made to the interest paid). In the negative shift all deposits are assumed to have 100% elasticity to the respective floors. In the negative shift scenarios a floor on contractual rates for deposits is applied: Scenario 1: For deposits from the public a floor of 0% is applied on the contractual rate. All other balance sheet items are allowed to go to negative contractual rates. Scenario 2: For deposits from the public a floor of 0% is applied on the contractual rate on deposits from private individuals. All other balance sheet items allow for negative contractual rates.

2) The calculation refers to the immediate effect on profit of each scenario for the Group's interest rate positions at fair value and its equity and currency positions.

3) Refers to the effect on net commission income from a change in value of Swedbank Robur's equity funds.

4) The interest rate for the 2015 calculation is 2.00 per cent (2.50).

G58 Other information

On 2 November Visa Inc. announced its intention to acquire Visa Europe Limited, conditional on regulatory approval, which is expected at the earliest in the second quarter of 2016. Swedbank is a member of Visa Europe and part-owner of Visa Sweden Ekonomisk Förening. Visa Sweden in turn is a group member of Visa Europe. Through its membership, Swedbank would receive a portion of the proceeds from the anticipated acquisition, consisting of cash and preference shares in Visa Inc. In addition, Swedbank could receive an additional purchase price consideration. Swedbank currently estimates its income at EUR 140m – EUR 180m, based on a preliminary calculation of the cash proceeds and preference shares. There is still uncertainty how high the amount could eventually be depending on, among other factors, allocation calculations and the value of the preference shares. Moreover, Swedbank's shares in Visa Sweden are not transferable. Due to the many uncertainties surrounding the transaction, the limits associated with the holding and the amount it could receive, Swedbank's right to a portion of the proceeds from the transaction was not recognised as a receivable or an increase in the value of the shares in Visa Europe Limited or Visa Sweden in 2015. Provided that regulatory approval is received, Swedbank will post a positive one-off effect in 2016 as a result of the acquisition.

G59 Events after 31 December 2015

Michael Wolf stepped down as President and CEO as of 9 February 2016. Birgitte Bonnesen has been appointed as Acting President and CEO.

Swedbank signed an agreement in February 2016, with Pembroke Real Estate to lease office space in Stockholm for approximately 800 employees from the first quarter of 2017.

Financial statements and notes – Parent company

Income statement

Statement of comprehensive income

Financial statements, Parent Company

Balance sheet
Statement of changes in equity
Statement of cash flow

Initial notes

150	Note	P1 Accounting policies
151	Note	P2 Risks
151		Credit risks
152		Liquidity risks
153		Market risks
153		Interest rate risks
154		Currency risks
155	Note	P3 Capital adequacy analysis
157	Note	P4 Geographical distribution of revenue

Income statement

157	Note		P5 Net interest income
158	Note		P6 Dividends received
158	Note		P7 Net commissions
158	Note		P8 Net gains and losses on financial items at fair value
158	Note		P9 Other income
159			Note P10 Staff costs
160			Note P11 Other general administrative expenses
160			Note P12 Depreciation/amortisation and impairments of tangible and intangible fixed assets
160			Note P13 Credit impairments
160			Note P14 Impairments of financial fixed assets
160			Note P15 Appropriations
161		Note P16 Tax

Comprehensive income

Swedbank Annual Report 2015

Note P17 Tax for each component in other comprehensive income

Balance sheet

162	Note P18 Treasury bills and other bills eligible for refinancing with central banks etc.
162	Note P19 Loans to credit institutions
162	Note P20 Loans to the public
163	Note P21 Bonds and other interest-bearing securities
163	Note P22 Shares and participating interests
164	Note P23 Investments in associates

165			Note P24 Investments in Group entities
-----	--	--	----------------------------------------	--	--	--

166			Note P25 Derivatives
167			Note P26 Intangible fixed assets
167			Note P27 Leasing equipment
168			Note P28 Tangible assets
168			Note P29 Other assets
168			Note P30 Prepaid expenses and accrued income
168			Note P31 Amounts owed to credit institutions
168			Note P32 Deposits and borrowings from the public
168			Note P33 Debt securites in issue
169			Note P34 Other liabilities
169			Note P35 Accrued expenses and prepaid income
169			Note P36 Provisions
169			Note P37 Subordinated liabilities
170			Note P38 Untaxed reserves
170			Note P39 Equity
170			Note P40 Fair value of financial instruments
173			Note P41 Reclassification of financial assets
174			Note P42 Financial assets and liabilities, which have been offset or are subject to netting or similar agreements
Statement of cash flow
175			Note P43 Specification of adjustments for non-cash items in operating activities
Other notes

175	Note P44 Assets pledged, contingent liabilities and commitments
176	Note P45 Transferred financial assets
176	Note P46 Operational leasing
177	Note P47 Related parties and other significant relationships
177	Note P48 Events after 31 December 2015

Income statement, Parent company

SEKm	Note	2015	2014
Interest income		12 000	17 008
Leasing income		3 875	4 222
Interest expenses		–3 702	–6 958
Net interest income	P5	12 173	14 272
Dividends received	P6	12 918	22 131
Commission income		9 575	9 338
Commission expenses		–3 426	–3 241
Net commissions	P7	6 149	6 097
Net gains and losses on financial items at fair value	P8	294	979
Other income	P9	1 259	1 288
Total income		32 793	44 767
Staff costs	P10	7 667	7 913
Other general administrative expenses	P11	4 536	4 323
Total general administrative expenses		12 203	12 236
Depreciation/amortisation and impairments of tangible and intangible fixed assets	P12	4 455	4 481
Total expenses		16 658	16 717
Profit before impairments		16 135	28 050
Credit impairments, net	P13	658	539
Impairments of financial fixed assets	P14	236	2 193
Operating profit		15 241	25 318
Appropriations	P15	–137	–698
Tax expense	P16	1 917	3 761
Profit for the year		13 461	22 255

Statement of comprehensive income, Parent company

SEKm	Note	2015	2014
Profit for the period reported via income statement		13 461	22 255
Items that will not be reclassified to the income statement
Remeasurements of defined benefit pension plans		8	–8
Income tax	P17	–2	1
Items that may be reclassified to the income statement
Cash flow hedges
Gains/losses arising during the year		1	–13
Reclassification adjustments to income statement, net interest income		4	18
Income tax	P17	–2	–1
Other comprehensive income for the period, net of tax		9	–3
Total comprehensive income for the period		13 470	22 252

Balance sheet, Parent company

SEKm	Note	2015	2014	1/1/2014
Assets
Cash and balances with central banks		131 859	73 802	32 439
Treasury bills and other bills eligible for refinancing with central banks etc.	P18	70 531	41 073	50 208
Loans to credit institutions	P19	425 095	435 979	388 521
Loans to the public	P20	416 482	432 879	346 320
Bonds and other interest-bearing securities	P21	86 881	118 948	116 527
Shares and participating interests	P22	10 880	9 641	6 849
Investments in associates	P23	1 995	1 986	1 158
Investments in Group entities	P24	57 450	58 343	55 190
Derivatives	P25	98 300	133 703	83 323
Intangible fixed assets	P26	900	1 285	1 372
Leasing equipment	P27	12 956	12 339
Tangible assets	P28	526	560	333
Current tax assets		1 629	1 288	469
Deferred tax assets	P16	197	349	53
Other assets	P29	20 134	16 801	12 312
Prepaid expenses and accrued income	P30	3 253	7 528	5 106
Total assets		1 339 068	1 346 504	1 100 180
Liabilities and equity Liabilities
Amounts owed to credit institutions	P31	220 983	222 569	195 096
Deposits and borrowings from the public	P32	599 476	532 118	501 294
Debt securites in issue	P33	275 845	318 041	214 605
Derivatives	P25	98 508	118 696	74 408
Current tax liabilities		239	2 246	1 766
Deferred tax liabilities	P16
Other liabilities	P34	27 686	44 484	28 396
Accrued expenses and prepaid income	P35	4 070	4 252	3 746
Provisions	P36	245	63	98
Subordinated liabilities	P37	24 613	18 010	10 083
Total liabilities		1 251 665	1 260 479	1 029 492
Untaxed reserves	P38	10 021	10 043	6 305

Equity	P39
Share capital		24 904	24 904	24 904
Other funds		5 968	5 968	5 968
Retained earnings		46 510	45 110	33 511
Total equity		77 382	75 982	64 383
Total liabilities and equity		1 339 068	1 346 504	1 100 180

Pledged assets, contingent liablilities and commitments	P44

The balance sheet and income statement will be adopted at the Annual General Meeting on 5 April 2016.

Statement of changes in equity, Parent company

SEKm	Share capital	Share pre mium reserve	Statutory reserve	Cash flow hedges	Retained earnings	Total
Opening balance 1 January 2014	24 904	13 206	5 968	–7	20 312	64 383
Dividend					–11 133	–11 133
Repurchase of own shares for trading purposes					–33	–33
Share based payments to employees					459	459
Deferred tax related to share based payments to employees					12	12
Current tax related to share based payments to employees					42	42
Total comprehensive income for the year				4	22 248	22 252
of which through the Profit and loss acount					22 255	22 255
of which through other comprehensive income for the year before tax				5	–8	–3
of which tax through other comprehensive income for the year				–1	1
Closing balance 31 December 2014	24 904	13 206	5 968	–3	31 907	75 982

Opening balance 1 January 2015	24 904	13 206	5 968	–3	31 907	75 982
Dividend					–12 539	–12 539
Disposal of own shares for trading purposes					33	33
Share based payments to employees					413	413
Deferred tax related to share based payments to employees					–34	–34
Current tax related to share based payments to employees					57	57
Total comprehensive income for the year				3	13 467	13 470
of which through the Profit and loss acount					13 461	13 461
of which through other comprehensive income for the year before tax				5	8	13
of which tax through other comprehensive income for the year				–2	–2	–4
Closing balance 31 December 2015	24 904	13 206	5 968		33 304	77 382

Statement of cash flow, Parent company

SEKm Note	2015	2014
Operating activities
Operating profit	15 241	25 318
Adjustments for non-cash items in operating activities P43	–5 743	–5 351
Taxes paid	–4 118	–5 483
Increase/decrease in loans to credit institution	18 761	–46 316
Increase/decrease in loans to the public	25 425	–67 305
Increase/decrease in holdings of securities for trading	1 612	4 826
Increase/decrease in deposits and borrowings from the public including retail bonds	56 805	30 880
Increase/decrease in amounts owed to credit institutions	–1 920	634
Increase/decrease in other assets	28 071	–46 635
Increase/decrease in other liabilities	–36 564	59 287
Cash flow from operating activities	97 570	–50 145
Investing activities
Acquistiton of/contribution to Group entities and associates	–789	–7 544
Disposal of/repayment from Group entities and associates	810	1 245
Acquisition of other fixed assets and strategic financial assets	–10 253	–972
Disposals of other fixed assets and strategic financial assets	3 400	388
Dividends and Group contributions received	13 743	6 484
Cash flow from investing activities	6 911	–399
Financing activities
Issuance of interest-bearing securities	77 787	28 996
Redemption of interest-bearing securities	–28 554	–19 139
Issuance of commercial papers	934 414	718 129
Redemption of commercial papers	–1 017 532	–624 946
Dividend paid	–12 539	–11 133
Cash flow from financing activities	–46 424	91 907
Cash flow for the year	58 057	41 363
Cash and cash equivalents at the beginning of the year	73 802	32 439
Cash flow for the year	58 057	41 363
Cash and cash equivalents at end of the year	131 859	73 802

Comments on the cash flow statement

Operating activities

Cash flow from operating activities is based on operating profit for the year. Adjustments are made for items not included in cash flow from operating activities. Changes in assets and liabilities from operating activities consist of items which are part of normal business activities such as loans to and deposits from the public and credit institutions, and which are not attributable to investing and financing activities. Cash flow includes interest receipts of SEK 17 903m (19 608) and interest payments of SEK 3 487m (7 069). Capitalised interest is included.

Investing activities

Investing activities consist of the purchase and sale of strategic financial assets, contributions to and repayments from subsidiaries and associated companies, and other fixed assets. Shareholders' contributions were paid to the subidiaries Swedbank Hypotek AB of SEK 695m, Sparia Group Försäkring AB of SEK 76m, Swedbank Management Company S.A. of SEK 5m and Sparfrämjandet AB of SEK 4m, and the associated company Getswish AB of SEK 9m. During the year all the shares in Visa Inc were sold for SEK 678m and all the shares in MasterCard Inc for SEK 91m. Moreover, the subsidiary Sparia AB was liquidated, which resulted in income of SEK 40m, and condominium rights were sold for SEK 1m.

Cash and cash equivalents

Notes

All amounts in the notes are in millions of Swedish kronor (SEKm) and represent carrying amounts unless indicated otherwise. Figures in parentheses refer to the previous year.

P1 Accounting policies

BASIS OF ACCOUNTING

As a rule, the parent company follows IFRS and the accounting principles applied in the consolidated financial statements, as reported on pages 67–74. In addition, the parent company is required to consider and prepare its annual report in accordance with the Annual Accounts Act for Credit Institutions and Securities Companies, the regulations and general advice of the Swedish Financial Supervisory Authority FFFS 2008:25 and recommendation RFR 2 Reporting for Legal Entities issued by the Swedish Financial Reporting Board. The parent company's annual report is therefore prepared in accordance with IFRS to the extent the standards are compatible with the Annual Accounts Act for Credit Institutions and Securities Companies, RFR 2 and the Swedish Financial Supervisory Authority regulations. The most significant differences in principle between the parent company's accounting and the Group's accounting policies relate to the recognition of:

the currency component in currency hedges of investments in foreign subsidiaries and associates
associates
goodwill and internally generated intangible assets
finance leases
pensions
untaxed reserves and Group contributions, and
operating segments

The headings in the financial statements follow the Annual Accounts Act for Credit Institutions and Securities Companies and the Swedish Financial Supervisory Authority's regulations, due to which they differ in certain cases from the headings in the Group's accounts.

CHANGES IN ACCOUNTING POLICIES

No new or amended IFRS, interpretations or other regulatory changes have been applied or had a significant effect on the parent company's financial position, results or disclosures.

SIGNIFICANT DIFFERENCES IN THE PARENT COMPANY'S ACCOUNTING POLICIES COMPARED WITH THE GROUP'S ACCOUNTING POLICIES

Hedging of net investment in foreign operations

The currency component of liabilities that constitute currency hedges of net investments in foreign subsidiaries and associates is valued in the parent company at cost.

Associates

Investments in associates are recognised in the parent company at cost less any impairment. All dividends received are recognised in profit or loss in Dividends received.

Subsidiaries

Investments in subsidiaries are recognised according to the acquisition cost method. The investments' value is tested for impairment if there is any indication of diminished value. In cases where the value has decreased, it is written down to its value at the Group level. All dividends received are recognised through profit and loss in Dividends received.

Intangible assets

The parent company amortises goodwill systematically based on estimated useful life. All expenditures, including for development, which are attributable to internally generated intangible assets are expensed through profit and loss.

Leasing equipment

The parent company recognises finance leases as operating leases. This means that the assets are recognised as equipment with depreciation within depreciation/amortisation of tangible and intangible assets in the income statement. Rent income is recognised as leasing income within net interest income in the income statement.

Pensions

The parent company recognises pension costs for Swedish defined benefit pension plans according to the Act on Safeguarding Pension Benefits, which means that they are recognised as defined contribution plans. Premiums paid to defined contribution plans are expensed when an employee has rendered his/her services.

Untaxed reserves and Group contributions

Due to the connection between reporting and taxation, the deferred tax liability attributable to untaxed reserves is not recognised separately in the parent company. The reserves are instead recognised, gross, in the balance sheet and income statement. Group contributions received are recognised through profit and loss in Dividends received.

Operating segments

The parent company does not provide segment information, which is provided in the Group. A geographical distribution of revenue is reported, however.

P2 Risks

Swedbank's risk management is described in note G3. Specific information on the parent company's risks is presented in the following tables.

Credit risks

Impaired, past due and foreborne loans	2015	2014
Impaired loans
Carrying amount before provisions	2 473	1 455
Provisions	1 210	679
Carrying amount after provisions	1 263	776

Share of impaired loans, net %	0.33	0.24
Share of impaired loans, gross %	0.64	0.44

Carrying amount of impaired loans that returned
to a status as normal during the period		504
Fully collateralized loans with incurred loss event	67

Past due loans that are not impaired
Valuation category, loans and receivables
Loans with past due amount,
5–30 days	203	45
31–60 days	242	204
61–90 days	234
more than 90 days	69	421
Total	748	670


Foreborne loans
Performing	4 675
Non-performing	1 143

Impaired loans are loans for which it is likely that payments will not be fulfilled in accordance with the terms of the contract. A loan is not impaired if there is collateral which covers capital, interest and fees for any delays by a satisfactory margin. Provisions for impaired loans as well as other elements of lending where losses have occurred but individual claims have not yet been identified are specified above. Loss events include non-payments or delayed payments where it is likely the borrower will become bankrupt and domestic or local economic conditions that are tied to nonpayments, such as declines in asset values. The carrying amount of impaired loans largely corresponds to the value of collateral in cases where collateral exists. Forborne loans refer to loans where a change has been made to the terms of the contract as a result of the customer's reduced ability to pay.

Provisions	2015	2014
Opening balance	1 110	1 289
New provisions	699	364
Recoveries of provisions	–119	–124
Utilisation of previous provisions	–178	–237
Portfolio provisions for loans that are not impaired	–35	–74
Change in exchange rates and other adjustments	246	–109
Closing balance	1 724	1 110
Total provision ratio for impaired loans, % (Including port folio provision in relation to loans that individually are assessed as impaired)	68	76
Provision ratio for individually assessed impaired loans, %	49	47

Concentration risk, customer exposure

At end of 2015 the Group did not have any exposures against single counterparties that exceeded 10 per cent of the capital base.

Collateral that can be sold or pledged even if the counterparty fulfils its contractual obligations

When it grants repos, the parent company receives securities that can be sold or pledged. The fair value of these securities covers the carrying amount of the repos. The parent company also receives collateral in the form of securities that can be sold or pledged for derivatives and other exposures. The fair value of such collateral as of year-end amounted to SEK 1 989m (1 829). None of this collateral has been sold or pledged.

Liquidity risks

In the summary of maturities, undiscounted contractual cash flows are distributed on the basis of remaining maturities until the agreed time of maturity. For lending to the public, amortising loans are distributed based on the amortisation schedule. Liabilities whose repayment date may depend on various options have been distributed based on the earliest date on which repayment could be demanded. Differences between nominal amount and carrying amount, discounted cash flows, are reported together with items without an agreed maturity date where the anticipated realisation date has not been determined in the column No maturity/discount effect.

	Undiscounted contractual cash flows
Remaining maturity 2015	Payable on demand		< 3 mths. 3 mths.—1 yr.	1—5 yrs.	5—10 yrs.	> 10 yrs.	No maturity/ discount effect	Total
Assets
Cash and balances with central banks	131 859							131 859
Treasury bills and other bills eligible for refinancing with central banks		45 744	8 005	11 492	24	2 370	2 896	70 531
Loans to credit institutions	5 010	73 161	326 432	15 146	5 291	55		425 095
Loans to the public		63 006	88 834	214 207	35 921	14 514		416 482
Bonds and other interest-bearing securities		5 938	36 415	41 406	428	181	2 513	86 881
Shares and participating interests							70 325	70 325
Derivatives		22 313	27 568	37 967	7 695	1 219	1 538	98 300
Intangible fixed assets							900	900
Tangible assets							13 482	13 482
Other assets		15 347	2 241				7 625	25 213
Total	136 869	225 509	489 495	320 218	49 359	18 339	99 279	1 339 068
Liabilities
Amounts owed to credit institutions	99 745	110 976	9 487	775				220 983
Deposits and borrowings from the public	526 112	56 962	14 663	1 739				599 476
Debt securities in issue		102 504	32 244	120 293	19 057		1 746	275 844
Derivatives		18 601	21 172	33 224	7 776	1 628	16 107	98 508
Other liabilities		30 384	1 820	25	8	36	9 989	42 262
Subordinated liabilities					12 411	11 653	549	24 613
Equity							77 382	77 382
Total	625 857	319 427	79 386	156 056	39 252	13 317	105 773	1 339 068

The large part of deposits from the public is contractually payable on demand. Despite the contractual terms, the deposits are essentially a stable and a long-term source of funding.

Undiscounted contractual cash flows
Remaining maturity 2014	Payable on demand			1—5 yrs.	5—10 yrs.	> 10 yrs.	No maturity/ discount effect	Total
Assets		< 3 mths. 3 mths.—1 yr.
Cash and balances with central banks	73 802							73 802
Treasury bills and other bills eligible for refinancing with central banks		12 659	4 336	13 184	3 127	3 760	4 007	41 073
Loans to credit institutions	1 488	134 535	277 558	17 601	4 715	82		435 979
Loans to the public		126 182	85 818	166 262	36 617	18 000		432 879
Bonds and other interest-bearing securities		13 433	31 043	66 949	2 889	430	4 204	118 948
Shares and participating interests							69 971	69 971
Derivatives		34 689	31 674	63 291	10 900	3 146	–9 997	133 703
Intangible fixed assets							1 285	1 285
Tangible assets							12 900	12 900
Other assets		14 209	2 133	3			9 619	25 964
Total	75 290	335 707	432 562	327 290	58 248	25 418	91 989	1 346 504
Liabilities
Amounts owed to credit institutions	90 185	126 099	5 630	649	6			222 569
Deposits and borrowings from the public	455 404	63 294	11 187	2 233				532 118
Debt securities in issue		134 516	86 162	95 044	1 477		842	318 041
Derivatives		22 481	27 793	64 120	12 083	2 836	–10 617	118 696
Other liabilities		46 481	3 885	22	10	42	10 648	61 088
Subordinated liabilities					11 967	5 297	746	18 010
Equity							75 982	75 982
Total	545 589	392 871	134 657	162 068	25 543	8 175	77 601	1 346 504

The large part of deposits from the public is contractually payable on demand. Despite the contractual terms, the deposits are essentially a stable and a long-term source of funding.

Debt securities in issue

Turnover during the year	2015	2014
Commercial paper
Opening balance	193 215	100 130
Issued	934 511	718 031
Repaid	–1 017 532	–641 926
Change in exchange rates	–3 383	16 980
Closing balance	106 811	193 215
Bond loans with state guarantee
Opening balance		8 581
Repaid		–8 089
Change in market values		–618
Change in exchange rates		126
Closing balance		0

Turnover during the year	2015	2014
Other interest-bearing bond loans
Opening balance	113 557	92 213
Issued	64 805	17 356
Repurchased	–837	–995
Repaid	–23 861	–4 847
Change in market values	1 821	–835
Change in exchange rates	–1 012	8 637
Closing balance	154 473	111 529
Structured products
Opening balance	13 297	13 681
Issued	6 687	4 803
Repaid	–3 854	–5 110
Change in market values	–1 569	–77
Closing balance	14 561	13 297
Total debt securities in issue	275 845	318 041

Market risks

Interest rate risks

Change in value if the market interest rate rises by one percentage point

The impact on the value of assets and liabilities, including derivatives, when market interest rates rise by one percentage point.

2015			< 3 mths. 3—6 mths. 6—12 mths.	1—2 yrs.	2—3 yrs.	3—4 yrs.	4—5 yrs.	5—10 yrs.	> 10 yrs.	Total
SEK	–563	–184	333	–176	68	10	–51	–25	–35	–623
Foreign currency	900	295	54	–52	6	–23	208	–29	70	1 429
Total	337	111	387	–228	74	–13	157	–54	35	806

of which financial instruments measured at fair value through profit or loss

2015			< 3 mths. 3—6 mths. 6—12 mths.	1—2 yrs.	2—3 yrs.	3—4 yrs.	4—5 yr.s	5—10 yrs.	> 10 yrs.	Total
SEK	–90	–147	127	–103	8	3	–9	50	–49	–210
Foreign currency	605	280	66	–43	16	7	227	–12	72	1 218
Total	515	133	193	–146	24	10	218	38	23	1 008

2014			< 3 mths. 3—6 mths. 6—12 mths.	1—2 yrs.	2—3 yrs.	3—4 yrs.	4—5 yrs.	5—10 yrs.	> 10 yrs.	Total
SEK	–448	212	–320	–63	83	212	–353	106	–112	–683
Foreign currency	128	60	21	–10	2	27	8	26	–5	257
Total	–320	272	–299	–73	85	239	–345	132	–117	–426

of which financial instruments measured at fair value through profit or loss

2014			< 3 mths. 3—6 mths. 6—12 mths.	1—2 yrs.	2—3 yrs.	3—4 yrs.	4—5 yrs.	5—10 yrs.	> 10 yrs.	Total
SEK	–1 312	892	–1 157	65	719	1 005	–67	–1 414	877	–392
Foreign currency	6	27	32	–6	5	19	7	27	–2	115
Total	–1 306	919	–1 125	59	724	1 024	–60	–1 387	875	–277

Currency risks

Currency distribution

2015	SEK	EUR	USD	GBP		DKK	NOK	Other	Total
Assets
Cash and balances with central banks	244	13 874	112 678			307	4 704	52	131 859
Loans to credit institutions	390 461	19 742	4 764	82		410	2 986	6 651	425 096
Loans to the public	316 896	26 074	35 603	1 554		4 736	27 065	4 554	416 482
Interest-bearing securities	126 914	9 512	12 136	113			8 736		157 411
Other assets, not distributed	208 220								208 220
Total	1 042 735	69 202	165 181	1 749		5 453	43 491	11 257	1 339 068
Liabilities
Amounts owed to credit institutions	156 547	14 825	34 085	2 167		1 230	9 227	2 902	220 983
Deposits and borrowings from the public	544 371	8 387	40 345	600		1 295	3 275	1 203	599 476
Debt securities in issue and subordinated liabilities	39 441	87 787	148 107	16 544			1 864	6 714	300 457
Other liabilities, not distributed	140 770								140 770
Equity	77 382								77 382
Total	958 511	110 999	222 537	19 311		2 525	14 366	10 819	1 339 068
Other assets and liabilities,
including positions in derivatives		–32 482	–57 376	–17 586		2 943	29 318	439
Net position in currency		9 315	–20	–24		16	194		9 480

Currency distribution
2014	SEK	EUR	USD	GBP	LTL	DKK	NOK	Other	Total
Assets
Cash and balances with central banks	332	1	68 378			311	4 105	675	73 802
Loans to credit institutions	403 414	25 824	4 211	321	11	62	1 944	192	435 979
Loans to the public	330 803	24 839	40 636	1 489		4 606	24 814	5 692	432 879
Interest-bearing securities	115 569	16 616	16 788	75			10 973		160 021
Other assets, not distributed	243 823								243 823
Total	1 093 941	67 280	130 013	1 885	11	4 979	41 836	6 559	1 346 504
Liabilities
Amounts owed to credit institutions	157 657	21 845	35 165	3 847		1 244	2 786	25	222 569
Deposits and borrowings from the public	495 687	8 111	21 421	419		977	3 495	2 008	532 118
Debt securities in issue and subordinated liabilities	41 017	77 500	196 800	17 029			2 436	1 269	336 051
Other liabilities, not distributed	179 784								179 784
Equity	75 982								75 982
Total	950 127	107 456	253 386	21 295		2 221	8 717	3 302	1 346 504
Other assets and liabilities,
including positions in derivatives		36 236	123 227	19 387	13 570	–2 752	–32 894	–3 257

P3 Capital adequacy analysis

Swedbank's legal capital requirement is based on CRR, but is more specifically limited by the Basel 1 floor within CRR. The SFSA has clarified that the Basel 1 floor, i.e. 80% of the capital requirement according to Basel 1, will remain in effect for Swedish banks. The capital requirement for the parent company calculated according to CRR exceeds the capital requirement according to the Basel 1 floor. For the parent company, the Basel 1 floor therefore does not represent a minimum requirement. The parent company calculates an internally estimated capital requirement. As of 31 December 2015 the internal capital requirement amounted to SEK 27.1bn. The capital base amounted to SEK 92.1bn.

	Parent company
Capital adequacy	2015	2014
Shareholders' equity according to the Group's
balance sheet	77 382	75 982
Anticipated dividend	–11 828	–12 511
Share of capital of accrual reserve	4 273	4 205
Value changes in own financial liabilities	–56	–17
Cash flow hedges		6
Additional value adjustments1	–452
Goodwill	–421	–769
Intangible assets after deferred tax liabilities	–424	–463
Net provisions for reported IRB credit exposures	–210	–570
Shares deducted from CET1 capital	–42	–410
Common Equity Tier 1 capital	68 222	65 453
Additional Tier 1 capital	10 614	4 989
Total Tier 1 capital	78 836	70 442
Tier 2 capital	13 249	12 402
Total capital	92 085	82 844
Minimum capital requirement for credit risks,
standardised approach	7 027	7 176
Minimum capital requirement for credit risks, IRB	12 900	13 609
Minimum capital requirement for credit risks, default
fund contribution	4	3
Minimum capital requirement for settlement risks	1	2
Minimum capital requirement for market risks	820	1 480
Trading book	812	1 273
of which VaR and SVaR	527	709
of which risks outside VaR and SVaR	285	564
FX risk other operations	8	207
Minimum capital requirement for credit
value adjustment	590	587
Minimum capital requirement for operational risks	3 053	2 736
Minimum capital requirement2	24 395	25 593
Risk exposure amount credit risks	249 147	259 849
Risk exposure amount settlement risks	7	29
Risk exposure amount market risks	10 245	18 497
Risk exposure amount credit value adjustment	7 383	7 333
Risk exposure amount operational risks	38 161	34 200
Risk exposure amount	304 943	319 908

Common Equity Tier 1 capital ratio, %	22.4	20.5
Tier 1 capital ratio, %	25.9	22.0
Total capital ratio, %	30.2	25.9

	Parent company
Capital buffer requirement3, %	2015	2014
CET1 capital requirement including buffer requirements	7.9	7.0
of which minimum CET1 requirement	4.5	4.5
of which capital conservation buffer	2.5	2.5
of which countercyclical capital buffer	0.9
CET 1 capital available to meet buffer requirement4	17.9	16.0

	Parent company
Leverage ratio6	2015	2014
Tier 1 Capital, SEKm	78 836	70 442
Total exposure, SEKm	1 986 593	1 960 610
Leverage ratio, %,	4.0	3.6
Total exposure taking into account CRR article 429.7, SEKm7	1 094 371	1 130 434
Leverage ratio taking into account CRR article 429.7, %7	7.2	6.2

1) Adjustment due to the implementation of EBA's technical standards on prudent valuation. The objective of these standards is to determine prudent values of fair valued positions.

2) Total minimum capital requirement under Pillar 1 i.e 8% of total risk exposure amount.
3) Buffer requirement according to Swedish implementation of CRD IV.
4) CET1 capital ratio as reported less minimum requirement of 4.5% (excluding buffer requirements) and less any CET1 items used to meet the Tier 1 and total capital requirements.
5) Basel 1 floor based on the higher of the Basel 3 capital requirement and 80% of Basel 1 capital requirement. In the latter case the own funds is adjusted according to CRR article 500.4.
6) Calculated according to applicable regulation on each reporting date. 7) Taking into account potential exemption according to CRR article 429.7 excluding

certain intragroup exposures.

	Parent company 2015
Minimum capital requirement for credit risks1	Exposure value	Average risk weight, %	Minimum capital requirement
Institutional exposures	113 117	16	1 418
Corporate exposures	379 982	31	9 329
Retail exposures	88 687	24	1 714
Securitisation	160	8	1
Non credit obligation	58 983	9	438
Total credit risks, IRB	640 929	25	12 900
Credit risks, standardised approach	1 227 832	7	7 027
Total	1 868 761	13	19 927

2015
	2014
26 021	28 135
92 538	83 414
66 517	55 279

	Parent company 2014
Minimum capital requirements for credit risks1	Exposure value	Average risk weight, %	Minimum capital requirement
Institutional exposures	135 493	16	1 723
Corporate exposures	364 455	32	9 384
Retail exposures	90 654	24	1 766
Securitisation	763	11	7
Non credit obligation	74 196	12	729
Total credit risks, IRB	665 561	26	13 609
Credit risks, standardised approach	1 082 614	8	7 176
Total	1 748 175	15	20 785

1) Total minimum capital requirement under Pillar 1, i.e 8 per cent of total

risk exposure amount.

Notes, Parent Company

		Parent company
Minimum capital requirements for market risks1	2015	2014
Interest rate risk	810	1 265
of which for specific risk	283	556
of which for general risk	527	709
Equity risk	195	126
of which for specific risk
of which for general risk	195	126
Currency risk in trading book	199	170
Commodity risk	2	7
Total minimum capital requirement for risks
in trading book2	812	1 273
of which stressed VaR	351	504
Currency risk outside trading book	8	207
Total	820	1 480

1) Total minimum capital requirement under Pillar 1 i.e 8 per cent of total risk exposure amount.

2) The parent company's capital requirement for general interest-rate risk, equity risk and currency risk in the trading book are calculated in accordance with the VaR model.

	Parent company
Minimum capital requirement for operational risks1	2015	2014
Standardised approach	3 053	2 736
of which trading and sales	516	517
of which retail banking	1 749	1 501
of which commercial banking	565	503
of which payment and settlement	156	162
of which retail brokerage	5	4
of which agency services	21	17
of which asset management	–7
of which corporate finance	48	32
Total	3 053	2 736

1) Capital requirement for operational risks are calculated according to standardised approach.

Parent company 2015
Risk exposure amount and minimum capital requirement1	Risk exposure amount	Minimum capital requirement
Credit risks, STD	87 832	7 027
Central government or central banks exposures	96	8
Regional governments or local authorities exposures	59	5
Public sector entities exposures	44	4
Institutional exposures	1 883	151
Corporate exposures	7 906	632
Retail exposures	5 147	412
Exposures secured by mortgages on immovable property	724	58
Exposures in default	245	20
Equity exposures	70 688	5 655
Other items	1 040	82
Credit risks, IRB	161 262	12 900
Institutional exposures	17 727	1 418
Corporate exposures	116 614	9 329
Retail exposures	21 425	1 714
of which mortgage lending	2 811	225
of which other lending	18 614	1 489
Securitisation	12	1
Non-credit obligation	5 484	438
Credit risks, default fund contribution	53	4
Settlement risks	7	1
Market risks	10 245	820
Trading book	10 144	812
of which VaR and SVaR	6 584	527
of which risks outside VaR and SVaR	3 560	285
FX risk other operations	101	8
Credit value adjustment	7 383	590
Operational risks	38 161	3 053
of which standardised approach	38 161	3 053
Total	304 943	24 395

1) Total minimum capital requirement under Pillar 1 i.e 8 per cent of total risk exposure amount.

P4 Geographical distribution of revenue

2015	Sweden	Norway	Denmark	Finland	USA	Other	Total
Interest income	8 792	1 891	56	204	884	173	12 000
Leasing income	3 875						3 875
Dividends received	12 918						12 918
Commission income	8 927	465	12	97	36	38	9 575
Net gains and losses on financial items at fair value	2 524	–1 691	5	–483	7	–68	294
Other income	1 254	4			1		1 259
Total	38 290	669	73	–182	928	143	39 921

2014	Sweden	Norway	Denmark	Finland	USA	Other	Total
Interest income	14 079	1 766	46	298	655	164	17 008
Leasing income	4 222						4 222
Dividends received	22 131						22 131
Commission income	8 592	586	12	91	24	33	9 338
Net gains or losses on financial items at fair value	350	760	4	–186		51	979
Other income	1 283	3	1		1		1 288
Total	50 657	3 115	62	203	680	248	54 966

The geographical distribution has been allocated to the country where the business was carried out.

P5 Net interest income

	2015	2014
Interest income	12 000	17 008
Leasing income	3 875	4 222
Interest expenses	3 702	6 958
Net interest income before depreciation for financial leases	12 173	14 272
Depreciation according to plan finance leases	3 627	3 885
Net interest income after depreciation for financial leases	8 546	10 387

Analysis		2015			2014
	Average balance	Interest income/ expense	Average annual interest rate, %	Average balance	Interest income/ expense	Average annual interest rate, %
Loans to credit institutions	428 651	870	0,20	410 354	3 975	0,97
Loans to the public	439 199	10 201	2,32	362 967	11 388	3,14
Interest-bearing securities	166 491	1 255	0,75	144 973	2 224	1,53
Total interest-bearing assets	1 034 341	12 326	1,92	918 294	17 587	1,92
Derivatives	124 956	–499		99 544	–732
Other assets	388 033	4 048		275 238	4 375
Total assets	1 547 330	15 875	1,03	1 293 076	21 230	1,64
Amounts owed to credit institutions	233 382	360	0,15	202 969	873	0,43
Deposits and borrowings from the public	689 641	864	0,13	591 858	2 730	0,46
of which deposit guarantee fees		283			278
Debt securities in issue	347 599	3 164	0,91	297 126	3 130	1,05
of which commissions for funding with state guarantee					31
Subordinated liabilities	23 462	1 041	4,44	16 238	645	3,97
Total interest-bearing liabilities	1 294 084	5 429	0,42	1 108 191	7 379	0,67
Derivatives	119 990	–2 180		89 959	–889
Other liabilities	60 938	453		30 650	468
of which stability fee		395			428
Total liabilities	1 475 011	3 702	0,25	1 228 800	6 958	0,57
Equity	72 319			64 276
Total liabilities and equity	1 547 330	3 702	0,24	1 293 076	6 958	0,54
Net interest income		12 173			14 272
Net interest margin			0,83			1,10
Interest income impaired loans		24			29
Interest income on financial assets at amortised cost		15 301			19 211
Interest expenses on financial liabilities at amortised cost		5 655			7 285

P6 Dividends received

Shares and participating interests	322	303
Investments in associates	53	380
Investments in Group entities1	12 543	21 448
Total	12 918	22 131
1) of which, through Group contributions	7 624	9 608

P7 Net commissions

Commission income	2015	2014
Payment processing	1 114	1 112
Cards	3 609	3 287
Service concepts	495	490
Asset management	1 617	1 580
Life insurance	437	438
Brokerage	513	536
Other securities	69	60
Corporate finance	242	464
Lending	819	742
Guarantee	151	140
Deposits	55	51
Non-life insurance	56	52
Other commission income	398	386
Total	9 575	9 338

Commission expenses	2015	2014
Payment processing	–854	–868
Cards	–2 025	–1 800
Service concepts	–16	–16
Asset management	–76	–68
Life insurance		–30
Other securities	–241	–242
Lending and guarantees	–81	–68
Other commission expenses	–133	–149
Total	–3 426	–3 241

Net commissions	2015	2014
Payment processing	261	243
Cards	1 584	1 487
Service concepts	479	474
Asset management	1 541	1 512
Life insurance	437	408
Brokerage	513	536
Other securities	–172	–182
Corporate finance	242	464
Lending	738	674
Guarantee	151	140
Deposits	55	51
Non-life insurance	56	52
Other commission income	264	238
Total	6 149	6 097

P8 Net gains and losses on financial items at fair value ²⁰¹⁵ ²⁰¹⁴

	2015	2014
Valuation category, fair value through profit or loss
Trading and derivatives
Shares and related derivatives	11	–111
Interest-bearing instruments and related derivatives	–496	605
Total	–485	494
Other financial instruments
Shares and related derivatives	19	104
Loans	–17	38
Financial liabilities	–8	12
Total	–6	154
Hedge accounting at fair value
Hedging instruments	–258	573
Hedged item	236	–556
Total	–22	17
Financial liabilities valued at amortised cost	–29	–1
Change in exchange rates	836	315
Total	294	979

P9 Other income

	2015	2014
IT services	855	928
Other operating income	404	360
Total	1 259	1 288

P10 Staff costs

Total staff costs	2015	2014
Salaries and remuneration	4 469	4 678
Compensation through shares in Swedbank AB	279	314
Social insurance charges	1 498	1 600
Pension costs	1 125	1 017
Training costs	84	106
Other staff costs	212	198
Total	7 667	7 913
of which variable staff costs	501	628

Variable Compensation Programme 2010–2015	2015	2014
Programme 2010
Recognised expense for compensation that is settled with shares in Swedbank AB		1
Recognised expense for social charges related to the share settled compensation		–1
Programme 2011
Recognised expense for compensation that is settled with shares in Swedbank AB	5	41
Recognised expense for social charges related to the share settled compensation	4	36
Programme 2012
Recognised expense for compensation that is settled with shares in Swedbank AB	85	100
Recognised expense for social charges related to the share settled compensation	44	61
Recognised expense for cash settled compensation	1
Programme 2013
Recognised expense for compensation that is settled with shares in Swedbank AB	71	78
Recognised expense for social charges related to the share settled compensation	25	29
Recognised expense for cash settled compensation		–1
Recognised expense for payroll overhead costs related to the cash settled compensation		–2
Programme 2014
Recognised expense for compensation that is settled with shares in Swedbank AB	73	94
Recognised expense for social charges related to the share settled compensation	25	27
Recognised expense for cash settled compensation	–12	117
Recognised expense for payroll overhead costs related to the cash settled compensation	6	44
Programme 2015
Recognised expense for compensation that is settled with shares in Swedbank AB	45
Recognised expense for social charges related to the share settled compensation	13
Recognised expense for cash settled compensation	82
Recognised expense for payroll overhead costs related to the cash settled compensation	34
Total recognised expense	501	624

Number of performance rights that establish the recognised
share based expense, millions	2015	2014
Outstanding at the beginning of the period	9.7	9.5
Additional outstanding at beginning of
period due to mergers	0.0	0.2
Allotted	0.9	2.1
Forfeited	0.3	0.3
Exercised	1.6	1.8
Outstanding at the end of the period	8.7	9.7
Exercisable at the end of the period	0	0
Weighted average fair value per performance
right at measurement date, SEK	142	132
Weighted average remaining contractual life, months	11	17
Weighted average exercise price per
performance right, SEK1	0	0

1) Applicable for the following groups; outstanding at the beginning of the period, granted during the period, forfeited during the period, exercised during the period, expired during the period, outstanding at the end of the period, exercisable at the end of the period.

2015	Board of Directors, President and equivalent senior executives			Other employees
Countries	Number of persons	Salaries and other re-mune	rations Variable pay	Salaries and variable pay	Total
Sweden	29	94	8	4 250	4 352
Denmark				18	18
Norway				284	284
USA				29	29
Finland				32	32
Other countries				33	33
Total	29	94	8	4 646	4 748

2014		Board of Directors, President and equivalent senior executives
Countries	Number of persons	Salaries and other re-mune	rations Variable pay	Salaries and variable pay	Total
Sweden	28	83	6	4 441	4 530
Denmark				18	18
Norway				370	370
USA				20	20
Finland				29	29
Other countries				25	25
Total	28	83	6	4 903	4 992

Board members, President and equivalent senior executives	2015	2014
Costs during the year for pensions and similar benefits	34	30
No. of persons	19	17
Granted loans, SEKm	105	102
No. of persons	21	20

	2015		2014
Distribution by gender %	Female	Male	Female	Male
All employees	56	44	56	44
Directors	44	56	44	56
Other senior executives, incl. President	32	68	29	71

P11 Other general administrative expenses

	2015	2014
Rents etc.	899	958
IT expenses	1 699	1 554
Telecommunications, postage	106	108
Consulting and outside services	836	692
Travel	131	149
Entertainment	37	37
Office supplies	97	95
Advertising, public relations, marketing	224	219
Security transports, alarm systems	54	54
Maintenance	101	92
Other administrative expenses	263	279
Other operating expenses	89	86
Total	4 536	4 323

Remuneration to Auditors elected by Annual General Meeting, Deloitte AB	2015	2014
Statutory audit	18	20
Other audit	3	5
Tax advisory		1
Other	8	3
Total	29	29
Internal Audit, not Deloitte AB	60	59

P12 Depreciation/amortisation and impairments of tangible and intangible fixed assets

	2015	2014
Depreciation/amortisation
Equipment	196	160
Intangible fixed assets	453	436
Lease objeccts	3 627	3 885
Total	4 276	4 481
Impairments
Intangible fixed assets	112
Lease objects	67
Total	179
Total	4 455	4 481

P13 Credit impairments

	2015	2014
Provisions for loans that individually
are assessed as impaired
Provisions	699	364
Reversal of previous provisions	–119	–130
Provision for homogenous groups of impaired loans, net		6
Total	580	240
Portfolio provisions for loans that individually are not assessed as impaired	–34	–74
Write-offs
Established losses	360	739
Utilisation of previous provisions	–178	–236
Recoveries	–74	–84
Total	108	419
Credit impairments for contingent liabilities and other credit risk exposures	4	–46
Credit impairments	658	539
Credit impairments by valuation category
Loans and receivables	656	537
Fair value through profit or loss	2	2
Total	658	539
Credit impairments by borrower category
Credit institutions	–6	–5
General public	664	544
Total	658	539

P14 Impairments of financial fixed assets

	2015	2014
Investments in Group entities
Cerdo Bankpartner Aktiebolag, Helsingborg	7
Ektornet AB, Stockholm	107	309
Sparbanken Öresund AB, Malmö		1 334
Sparia Försäkrings AB, Stockholm		518
Swedbank (Luxembourg) S.A., Luxembourg	20	18
Swedbank Management Company S.A., Luxembourg		9
FRiR RUS OOO, Moscow	15
Total	149	2 188
Investments in associates
Rosengård Invest AB, Malmö	1	2
Getswish AB, Stockholm		3
Total	1	5
Loans comprising net investment
FRiR RUS OOO, Moscow	86
Total	86
Total	236	2 193

P15 Appropriations

Untaxed reserves	2015	2014
Accelerated depreciation, equipment	–130	33
Tax allocation reserve	–7	–731
Total	–137	–698

P16 Tax

Tax expense	2015	2014
Tax related to previous years	–803
Current tax	2 285	4 161
Deferred tax	435	–400
Total	1 917	3 761

	2015		2014
	SEKm	per cent	SEKm	per cent
Results	1 917	12.5	3 761	14.5
22.0% of pre-tax profit	3 383	22.0	5 724	22.0
Difference	1 466	9.5	1 963	7.5
The difference consists of the following items
Tax previous years	803	5.2
Tax -exempt income/non-deductible expenses	–292	–1.9	–81	–0.3
Non-taxable dividends	1 094	7.1	2 689	10.3
Non-deductible goodwill impairment	–22	–0.1	–22	–0.1
Tax-exempt capital gains and appreciation in value of shares and participating interests	2		12	0.0
Standard income tax allocation reserve	–8		–20	–0.1
Non deductible impairment of financial fixed assets	–54	–0.4	–482	–1.9
Deviating tax rates in other countries	–57	–0.4	–133	–0.5
Total	1 466	9.5	1 963	7.5

2015

Deferred	Opening	Income	Other com– prehensive			Exchange rate
tax assets	balance	statement	income	Equity	Mergers	differences	Closing balance

Deductible temporary differences
Cash flow hedges	2	–3	1
Provisions for pensions	93	3			9		105
Share related compensation	100			–33			67
Intangible assets	–53	39			–41		–55
Income	207	–207
Other		–267			315	32	80
Total deferred tax assets	349	–435	1	–33	283	32	197

2014

Deferred			Other com–			Exchange
tax assets	Opening balance	Income statement	prehensive income	Equity	Mergers	rate differences	Closing balance

Deductible temporary differences
Cash flow hedges	3		–1				2
Provisions for pensions	94	–1					93
Share related compensation	89			9	2		100
Intangible assets		10			–63		–53
Income	–135	342					207
Other	2	49			–51
Total deferred tax assets	53	400	–1	9	–112		349

Notes, Parent Company

P17 Tax for each component in other comprehensive income

	2015				2014
	Pre–tax amount	Deferred tax	Current tax	Total tax amount	Pre–tax amount	Deferred tax	Current tax	Total tax amount
Remeasurements of defined benefit pension plans	8		–2	–2	–8		1	1
Cash flow hedges	5	–2		–2	5	–1		–1
Other comprehensive income	13	–2	–2	–4	–3	–1	1

P18 Treasury bills and other bills eligible for refinancing with central banks etc.

	Carrying amount			Amortised cost			Nominal amount
	2015	2014	1/1/2014	2015	2014	1/1/2014	2015	2014	1/1/2014
Valuation category, fair value through profit or loss
Trading
Swedish government	61 408	32 777	44 798	61 471	31 414	43 786	61 408	30 274	42 022
Swedish municipalities	3 644	2 904	463	3 656	2 901	463	3 644	2 872	462
Foreign governments	3 534	2 170	3 716	2 995	2 148	3 648	3 534	2 131	3 629
Other non-Swedish issuers	1 945	3 222	1 231	1 944	3 172	1 232	1 945	3 166	1 229
Total	70 531	41 073	50 208	70 066	39 635	49 129	70 531	38 443	47 342

P19 Loans to credit institutions P20 Loans to the public

	2015	2014	1/1/2014
Valuation category, loans and receivables
Swedish banks	59 510	66 793	57 866
Swedish credit institutions	344 668	330 870	299 828
Change in value due to hedge accounting at fair value	36	52	28
Foreign banks	13 602	16 418	17 191
Foreign credit institutions	5 304	4 377	1 402
Total	423 120	418 510	376 315
Valuation category, fair value through profit or loss
Trading
Swedish banks, repurchase agreements		1 230
Swedish credit institutions, repurchase agreements	1 051	1 908	5 434
Foreign banks, repurchase agreements	387	11 243	5 498
Foreign credit institutions, repurchase agreements	537	3 088	1 274
Total	1 975	17 469	12 206
Total	425 095	435 979	388 521
Subordinated loans	2015	2014	1/1/2014

Subsidiaries		4 000	394
Associates			120
Other companies	48	52	53
Total	48	4 052	567

	2015	2014	1/1/2014
Valuation category, loans and receivables
Swedish public	306 834	295 927	230 832
Foreign public	73 573	71 560	64 573
Total	380 407	367 487	295 405
Valuation category, fair value through profit or loss
Trading
Swedish public, repurchase agreements	4 612	38 761	28 680
Foreign public, repurchase agreements	30 028	23 829	19 234
Other
Swedish public	1 435	2 802	3 001
Total	36 075	65 392	50 915
Total	416 482	432 879	346 320

The maximum credit risk exposure for lending measured at fair value corresponds to the carrying amount.

P21 Bonds and other interest-bearing securities

Issued by other than public agencies		Carrying amount		Amortised cost		Nominal amount
	2015	2014	1/1/2014	2015	2014	1/1/2014	2015	2014	1/1/2014
Valuation category, fair value through profit or loss
Trading
Swedish mortgage institutions	40 044	51 290	54 724	39 898	50 781	54 161	38 613	49 058	52 338
Swedish financial entities	20 589	26 310	27 022	20 293	26 252	26 750	19 926	25 740	26 093
Swedish non-financial entities	2 022	4 343	5 583	1 964	4 262	5 579	2 018	4 325	5 568
Foreign financial entities	12 138	25 627	18 098	12 067	25 424	17 973	11 956	25 118	17 799
Foreign non-financial entities	8 231	10 159	10 212	7 974	10 029	10 142	8 024	9 787	9 968
Total	83 024	117 729	115 639	82 196	116 748	114 605	80 537	114 028	111 766
Valuation category, held to maturity1
Foreign mortgage institutions	164	1 219	888	164	1 219	888	160	1 221	889
Foreign banks	3 693			3 693			3 693
Total	3 857	1 219	888	3 857	1 219	888	3 853	1 221	889
Total	86 881	118 948	116 527	86 053	117 967	115 493	84 390	115 249	112 655
of which listed	82 230	114 321	112 779

1) The fair value of held-to-maturity investments amounted to SEK 3 857 m (1 218).

P22 Shares and participating interests

	Carrying amount			Cost
	2015	2014	1/1/2014	2015	2014	1/1/2014
Valuation category, fair value through profit or loss
Trading
Trading stock	8 637	6 381	5 270	8 880	6 054	4 965
Fund shares	2 113	2 456	976	1 930	2 223	970
Other
Other shares	63	755	553	59	553	390
Total	10 813	9 592	6 799	10 869	8 830	6 325
Valuation category, available for sale
Condominiums	45	44	43	45	44	43
Other	22	5	7	22	5	7
Total	67	49	50	67	49	50
Total	10 880	9 641	6 849	10 936	8 879	6 375
of which unlisted	67	49	50

Unlisted holdings are valued at their last transaction price. Holdings in the valuation category available for sale have been estimated at acquisition cost, since a more reliable fair value is not considered to be available.

Swedbank Annual Report 2015

P23 Investments in associates

Fixed assets	2015	2014	1/1/2014
Credit institutions	1 944	1 944	1 130
Other associates	51	42	28
Total	1 995	1 986	1 158
Opening balance	1 986	1 158	1 153
Additions during the year	10	833	5
Impairments during the year	–1	–5
Closing balance	1 995	1 986	1 158

Corporate identity, domicile	Corporate identity number	Number	Carrying amount	Cost	Share of capital. %
Credit institutions
EnterCard Holding AB, Stockholm	556673-0585	3 000	420	420	50.00
Sparbanken Skåne AB, Lund	516401-9928	3 670 342	1 070	1 070	22.00
Sparbanken Rekarne AB, Eskilstuna	516401-0091	865 000	125	125	50.00
Swedbank Sjuhärad AB, Borås	516401-9852	950 000	288	288	47.50
Vimmerby Sparbank AB, Vimmerby	516401-0174	340 000	41	41	40.00
Total			1 944	1 944
Other associates
Babs Paylink AB, Stockholm	556567-2200	4 900	19	19	49.00
BDB Bankernas Depå AB, Stockholm	556695-3567	13 000	2	7	20.00
BGC Holding AB, Stockholm	556607-0933	29 177	11	11	29.18
Finansiell ID-Teknik BID AB, Stockholm	556630-4928	12 735	4	24	28.30
Getswish AB, Stockholm	556913-7382	10 000	11	14	20.00
Rosengård Invest AB, Malmö	556756-0528	5 625	4	10	25.00
Upplysningscentralen, Stockholm	556137-5113	2 000			20.00
Total			51	85
Total			1 995	2 029

The share of the voting rights in each entity corresponds to the share of its equity. All shares and participating interests are unlisted.

P24 Investments in Group entities

Fixed assets	2015	2014	1/1/2014
Swedish credit institutions	17 806	18 721	14 887
Foreign credit institutions	32 345	32 253	33 126
Other entities	7 299	7 369	7 177
Total	57 450	58 343	55 190
Opening balance	58 343	55 190	57 231
Additions during the year	920	6 801	1 377
Impairments during the year	–149	–2 188	–3 418
Disposals during the year	–1 664	–1 460
Closing balance	57 450	58 343	55 190

Corporate identity, domicile	Corporate identity number	Number	Carrying amount	Cost	Share of capital, %
Swedish credit institutions
Swedbank Mortgage AB, Stockholm	556003-3283	23 000 000	17 623	17 623	100
Ölands Bank AB, Borgholm	516401-0034	780 000	135	135	60
Frispar Företagskredit AB, Malmö	556636-2728	4 800	48	48	100
Total			17 806	17 806
Foreign credit institutions
Swedbank AS, Tallinn	10060701	85 000 000	18 287	18 287	100
Swedbank AS, Riga	40003074764	942 856 206	7 484	7 484	100
Swedbank AB, Vilnius	112029651	164 008 000	6 497	6 497	100
Swedbank First Securities LLC, New York	20-416-7414	100	48	89	100
Swedbank (Luxembourg) S.A., Luxembourg	302018-5066	300 000	19	142	100
Swedbank Management Company S.A., Luxembourg	B149317	250 000	10	19	100
Total			32 345	32 518
Other entities
ATM Holding AB, Stockholm	556886-6692	350	32	39	70
Ektornet AB, Stockholm	556788-7152	5 000 000	156	1951	100
FR & R Invest AB, Stockholm	556815-9718	10 000 000	50	50	100
FRiR RUS OOO, Moskva	11107746962377	1		27	100
OOO Leasing, Moskva	1047796412531	2	3	3	100
Sparfrämjandet AB, Stockholm	556041-9995	45 000	4	4	100
Sparia Group Försäkring AB, Stockholm	516406-0963	70 000	146	70	100
Swedbank Franchise AB, Stockholm	556184-2120	1 000	277	277	100
Swedbank Försäkring AB, Stockholm	516401-8292	150 000	3347	3347	100
Swedbank och Sparbankernas Mobile Solutions AB, Stockholm	556891-5283	100			100
Swedbank Robur AB, Stockholm	556110-3895	10 000 000	3283	3267	100
Övriga		2 305	1	12
Total			7 299	9 047
Total			57 450	59 371

The share of the voting rights in each entity corresponds to the share of its equity. All entities are unlisted.

In 2015 the wholly owned subsidiaries Sparbanken Öresund AB and Swedbank Administration AB with the subsidiary Sparfrämjandet Aktiebolag were merged in Swedbank AB. As a result of the merger, Sparfrämjandet Aktiebolag became a wholly owned subsidiary of Swedbank AB. The merger result for Sparbanken Öresund AB amounted to SEK 14m and for Swedbank Administration AB to SEK 873m, which were recognised as dividends received. Through the merger with Sparbanken Öresund AB, Swedbank AB took over the shares in the wholly owned subsidiary Cerdo Bankpartner Aktiebolag, which was written down to SEK 0.

P25 Derivatives

		Nominal amount/ remaining contractual maturity		Nominal amount			Positive fair value		Negative fair value
	< 1 yr.	1–5 yrs.	> 5 yrs.	2015	2014	1/1/2014	2015		2014 1/1/2014	2015	2014	1/1/2014
Derivatives in hedge accounting
Fair value hedges
Interest-rate-related
contracts
Swaps	14 641	90 272	18 078	122 990	86 282	58 578	2 227	2 511	1 666	152		363
Currency-related contracts
Swaps						65					216	7
Total	14 641	90 272	18 078	122 990	86 282	58 643	2 227	2 511	1 666	152	216	370
Cash flow hedges
Interest-rate-related
contracts
Swaps					458	1 330					8	11
Total					458	1 330					8	11
Hedges of net investment in foreign operations
Currency-related contracts
Swaps						1 510			9
Total						1 510			9

Other derivatives
Interest-rate-related contracts
Options held	138 651	176 917	93 881	409 449	446 063	594 970	2 304	3 184	1 599	2 012	2 628	1 563
Forward contracts	2 927 556	1 495 764		4 423 320	7 433 105	10 494 825	1 429	2 313	3 688	1 613	2 537	3 640
Swaps	1 090 220	2 305 325	696 649	4 092 194	3 180 529	3 187 627	66 709	82 556	50 900	69 085	85 095	53 288
Currency-related contracts
Options held	52 944	1 863		54 807	80 249	56 040	858	3 915	573	970	3 573	528
Forward contracts	930 595	19 826	14	950 435	809 843	796 672	8 300	21 774	5 301	11 331	13 723	5 630
Swaps	216 815	246 047	137 616	600 478	568 686	534 910	27 768	25 703	21 948	26 770	21 983	13 258
Equity-related contracts
Options held	24 270	22 422	1 051	47 743	48 106	41 253	2 406	2 448	2 221	1 049	840	1 022
Forward contracts	5 688	1		5 689	22 012	7 266	81	89	67	160	123	48
Swaps	8 075	521		8 597	4 634	2 992	132	38	385	142	111	30
Credit-related contracts
Swaps	459	4 529	275	5 263	12 362	12 383	37	131	114	65	156	168
Total		5 395 273 4 273 215		929 487 10 597 976		12 605 587 15 728 938 110 024 142 151				86 796 113 197 130 769		79 175
Total before netting
agreements		5 409 914 4 363 487		947 565 10 720 966		12 692 327 15 790 421 112 251 144 662				88 471 113 349 130 993		79 556
Netting agreements	–1 321 162	–1 983 777	–299 668	–3 604 607			–13 951	–10 959		–5 148 –14 841 –12 297		–5 148
Total		4 088 752 2 379 710	647 897	7 116 359	12 692 327 15 790 421			98 300 133 703	83 323		98 508 118 696	74 408
of which cleared	1 366 739	1 976 258	305 866	3 648 863	3 407 122	3 090 375	12 254	8 459	1 696	13 637	9 986	2 364

P26 Intangible fixed assets

	2015				2014
	Goodwill	Customer base	Other	Total	Goodwill	Customer base	Other	Total
Cost, opening balance	3 439	41	1 061	4 541	3 369	41	591	4 001
Additions through separate acquisitions			19	19	70		10	80
Mergers		89	116	205			537	537
Sales and disposals			–78	–78			–77	–77
Cost, closing balance	3 439	130	1 118	4 687	3 439	41	1 061	4 541
Amortisation, opening balance	–2 670	–39	–436	–3 145	–2 323	–37	–268	–2 629
Amortisation for the year	–348	–10	–95	–453	–347	–2	–86	–436
Mergers		–6	–11	–17			–142	–142
Sales and disposals			51	51			60	60
Amortisation, closing balance	–3 018	–55	–491	–3 564	–2 670	–39	–436	–3 145
Impairments, opening balance			–111	–111
Impairments for the year			–112	–112			–111	–111
Impairments, closing balance			–223	–223			–111	–111
Carrying amount	421	75	404	900	769	2	514	1 285

Goodwill is amortised over an estimated useful life of 5 to 20 years. For other intangible assets with a finite useful life, the amortisable amount is divided systematically over the useful life. Systematic amortisation refers to both straight-line and increasing or decreasing amortisation. The original useful life is between 3 and 20 years. No need for impairment was found on the closing day.

P27 Leasing equipment

Fixed assets			2015	2014
Cost, opening balance			21 532
Mergers			238	21 240
Additions			6 449	5 677
Sales and disposals			–6 569	–5 385
Cost, closing balance			21 650	21 532
Depreciation, opening balance			–9 192
Depreciation for the year			–3 627	–3 885
Mergers			–111	–8 694
Sales and disposals			4 283	3 387
Depreciation, closing balance			–8 647	–9 192
Impairments, opening balance
Impairments for the year			–67
Sales and disposals			20
Impairments, closing balance			–47
Carrying amount			12 956	12 340
2015	< 1 yr	1–5 yrs	> 5 yrs	Total
Future minimum lease payment	3 995	6 717	2 873	13 585

The residual value of all lease assets is guaranteed by lessees or third parties. The lease assets are depreciated over the lease term according to the annuity method. The lease assets primarily consist of vehicles and machinery. The lease payments do not contain any variable fee.

P28 Tangible assets

		2015		2014
		Fixed assets		Fixed assets
	Equipment	Owner– occupied properties	Total	Equipment	Owner– occupied properties	Total
Cost, opening balance	2 188	24	2 212	1 886	24	1 910
Additions	175		175	364		364
Mergers	6		6	108		108
Sales and disposals	–121	–24	–145	–170		–170
Cost, closing balance	2 248		2 248	2 188	24	2 212
Depreciation, opening balance	–1 639	–13	–1 652	–1 564	–13	–1 577
Depreciation for the year	–196		–196	–160		–160
Mergers	–3		–3	–72		–72
Sales and disposals	116	13	129	157		157
Depreciation, closing balance	–1 722		–1 722	–1 639	–13	–1 652
Carrying amount	526		526	549	11	560

The useful life of equipment is deemed to be between three and ten years; its residual value is zero as in previous years. The depreciable amount is recognised linearly in profit or loss over the useful life. No indications of impairment were found on the closing day. Individual structural components of owner-occupied properties are depreciated

over their useful life. The residual value is deemed to be zero. The depreciable amount is recognised linearly in profit or loss over the useful life. Land has an indefinite useful life and is not depreciated.

P29 Other assets

	2015		2014 1/1/2014
Security settlement claims	10 816	5 571	5 656
Group contributions	7 624	9 619	6 495
Other	1 694	1 611	161
Total	20 134	16 801	12 312

P30 Prepaid expenses and accrued income

	2015		2014 1/1/2014
Accrued interest income	2 076	2 481	4 104
Other	1 177	5 047	1 002
Total	3 253	7 528	5 106

P31 Amounts owed to credit institutions

	2015		2014 1/1/2014
Valuation category, loans and receivables
Swedish banks	85 731	99 830	79 799
Swedish credit institutions	71 038	49 181	73 434
Foreign banks	63 184	65 267	31 303
Foreign credit institutions	214	2 545	2 437
Total	220 167 216 823		186 973
Valuation category, fair value through profit or loss
Trading
Swedish banks, repurchase agreements		1 991	4 182
Swedish credit institutions, repurchased agreements	816	1 907	250
Foreign banks, repurchase agreements		1 848	3 691
Total	816	5 746	8 123
Total	220 983 222 569		195 096

P32 Deposits and borrowings from the public

	2015	2014	1/1/2014
Valuation category, other financial liabilities
Deposits from Swedish public	553 631	494 026	460 009
Deposits from foreign public	41 398	21 943	16 877
Total	595 029	515 969	476 886
Valuation category, fair value through profit or loss
Trading
Deposits from Swedish public, repurchase agreements	2 798	15 768	18 852
Deposits from foreign public, repurchase agreements	1 485		3 089
Other1
Deposits from Swedish public	164	381	2 467
Total	4 447	16 149	24 408
Total	599 476	532 118	501 294
1) nominal amount amounts to	156	394	2 466

P33 Debt securities in issue

	2015		2014 1/1/2014
Valuation category, other financial liabilities
Commercial papers	106 811	193 215	100 130
Other interest-bearing bond loans	154 076	110 999	100 609
Change in value due to hedge accounting
at fair value	397	530	185
Total	261 284	304 744	200 924
Valuation category, fair value through profit or loss
Trading
Other	14 561	13 297	13 681
Total	14 561	13 297	13 681
Total	275 845	318 041	214 605

Turnover of debt securities in issue is reported in note P2 Liquidity risks, page 152.

	2015	2014	1/1/2014
Security settlement liabilities	11 876	7 827	2 427
Group liabilities		637	637
Short position in shares	247	74	109
of which own issued shares	78		37
Short position in interest-bearing securities	7 945	26 984	17 410
Other	7 618	8 962	7 813
Total	27 686	44 484	28 396

P34 Other liabilities P35 Accrued expenses and prepaid income

	2015	2014	1/1/2014
Accrued interest expenses	1 831	2 157	2 046
Other	2 239	2 095	1 700
Total	4 070	4 252	3 746

P36 Provisions

	2015	2014	1/1/2014
Pensions	17	23	15
Provisions for guarantees	21		65
Other	207	40	18
Total	245	63	98

P37 Subordinated liabilities

	2015	2014 1/1/2014
Valuation category, other financial liabilities
Subordinated loans	12 382	11 927	4 554
Change in the value due to hedge accounting at fair value	265	268	–11
Total subordinated loans	12 647	12 195	4 543
Undated subordinated loans	11 585	5 290	5 037
of which Tier 1 capital contribution	11 585	5 290	5 540
Change in the value due to hedge accounting at fair value	381	525	503
Total undated subordinated loans	11 966	5 815	5 540
Total	24 613	18 010	10 083

Specification of subordinated liabilities

Fixed-term subordinated loans

	Right to prepayment		Nominal amount,	Carrying
Maturity	for Swedbank AB	Currency	million		amount, SEKm Coupon interest, %
1989/2019		SEK	111	131	11.00
2012/2022	2017	EUR	500	4 651	3.00
2014/2024	2019	EUR	750	7 032	2.38
2012/2022	2017	SEK	250	250	3.11
2013/2023	2018	SEK	400	400	2.79
2013/2023	2018	SEK	148	148	2.59
2012/2022	2017	SEK	35	35	–
Total				12 647

Undated subordinated loans approved by the Swedish Financial Supervisory Authority as Tier 1 capital contribution

	Right to prepayment		Nominal amount,	Carrying
Maturity	for Swedbank AB	Currency	million		amount, SEKm Coupon interest. %
2004/undated	2016	GBP	199	2 494	5.75
2007/undated	2017	SEK	2 000	2 154	6.67
2008/undated	2018	SEK	871	1 053	8.28
2015/undated	2020	USD	750	6 265	5.50
Total				11 966

Certain subordinated loans are used as insurance instruments to hedge the net investment in foreign operations. In the parent company the currency component of these liabilities is recognised at cost, whereas in the Group it is recognised at the closing day rate.

P38 Untaxed reserves P39 Equity

	Accumulated accelerated	Tax allocation
	depreciation	reserve	Total
Opening balance 2014	192	6 114	6 306
Allocation/Reversal	32	–731	–699
Changes resulting from mergers	4 429	6	4 435
Closing balance 2014	4 653	5 390	10 043
Opening balance 2015	4 653	5 390	10 043
Allocation/Reversal	–130	–7	–137
Changes resulting from mergers	19	96	115
Closing balance 2015	4 542	5 479	10 021

Tax allocation reserve	2015	2014	1/1/2014
Allocation 2008			731
Allocation 2010	28	6
Allocation 2011	1 862	1 857	1 857
Allocation 2012	3 538	3 528	3 526
Allocation 2013	51
Total	5 479	5 390	6 114

	2015	2014	1/1/2014
Restricted equity
Share capital, ordinary shares	24 904	24 904	24 904
Statutory reserve	5 968	5 968	5 968
Total	30 872	30 872	30 872
Non-restricted equity
Cash flow hedges		–3	–8
Share premium reserve	13 206	13 206	13 206
Retained earnings	33 304	31 907	20 313
Total	46 510	45 110	33 511
Total equity	77 382	75 982	64 383

Changes in equity for the period and the distribution according to IFRS are indicated in the statement of changes in equity.

P40 Fair value of financial instruments

Carrying amounts and fair values of financial instruments

A comparison between the carrying amount and fair value of the parent company's financial assets and financial liabilities according to the definition in IAS 39 is presented below.

Determination of fair values of financial instruments

The parent company uses various methods to determine the fair value of financial instruments depending on the degree of observable market data in the valuation and activity in the market. An active market is considered either a regulated or reliable marketplace where quoted prices are easily accessible and which demonstrates regularity. Activity is continuously evaluated by analysing factors such as differences in bid and ask prices.

The methods are divided in three different levels:

Level 1: Unadjusted, quoted price on an active market
Level 2: Adjusted, quoted price or valuation model with valuation parameters derived from an active market
Level 3: Valuation model where a majority of valuation parameters are nonobservable and based on internal assumptions.

When financial assets and financial liabilities in active markets have market risks that offset each other, an average of bid and ask prices is used as a basis to determine their fair values. For any open net positions, bid and ask rates are applied as applicable i.e. bid rates for long positions and ask rates for short positions. When there is no active market, fair value is determined with the help of established valuation methods and models. In these cases, assumptions that cannot be directly attributed to a market may

be applied. These assumptions are based on experience and knowledge of the valuation of financial markets. The goal, however, is to always maximise the use of data from an active market. All valuation methods and models and internal assumptions are validated continuously by the independent risk control unit. In cases where it is considered necessary, adjustments are made to reflect fair value, so-called fair value adjustments. This is done to correctly reflect the parameters in the financial instruments and which will be reflected in their valuations. For OTC derivatives, for example, where the counterparty risk is not settled with cash collateral, the fair value adjustment is based on the current counterparty risk (CVA and DVA). In cases where the model risk is considered reliable, an assessment is also made whether a fair value adjustment is necessary given the model risk.

The parent company has a continuous process that identifies financial instruments which indicate a high level of internal assumptions or low level of observable market data. The process determines how to make the calculation based on how the internal assumptions are expected to affect the valuation. In cases where internal assumptions have a significant impact on fair value, the financial instrument is reported in level 3. The process also includes an analysis based on the quality of valuation data and whether any types of financial instruments will be transferred between the various levels.

For floating rate lending and deposits, which are recognised at amortised cost, the carrying amount is assessed to equal the fair value.

	2015		2014			1/1/2014
		Carrying			Carrying		Carrying
	Fair value	amount Difference	Fair value		amount Difference	Fair value		amount Difference
Assets
Financial assets covered by IAS 39
Cash and balances with central banks	131 859	131 859	73 802	73 802		32 439	32 439
Treasury bills etc.	70 531	70 531	41 073	41 073		50 208	50 208
of which fair value through profit or loss	70 531	70 531	41 073	41 073		50 208	50 208
Loans to credit institutions	425 095	425 095	435 979	435 979		388 521	388 521
of which loans receivables	423 120	423 120	418 510	418 510		376 314	376 314
of which fair value through profit or loss	1 975	1 975	17 468	17 468		12 206	12 206
Loans to the public	416 482	416 482	432 879	432 879		346 320	346 320
of which loan receivables	380 407	380 407	367 487	367 487		295 405	295 405
of which fair value through profit or loss	36 075	36 075	65 392	65 392		50 916	50 916
Bonds and interest-bearing securities	86 881	86 881	118 947	118 948	–1	116 513	116 527	–14
of which fair value through profit or loss	83 024	83 024	117 728	117 728		115 639	115 639
of which investments held to maturity	3 857	3 857	1 218	1 219	–1	873	888	–14
Shares and participating interest	10 880	10 880	9 641	9 641		6 849	6 849
of which fair value through profit or loss	10 813	10 813	9 592	9 592		6 849	6 849
of which available for sale	67	67	49	49
Derivatives	98 300	98 300	133 703	133 703		83 323	83 323
Other financial assets	22 209	22 209	19 277	19 277		16 415	16 415
Total	1 262 237	1 262 237	1 265 301	1 265 302	–1	1 040 587	1 040 601	–14

		2015		2014			1/1/2014
	Carrying		Carrying			Carrying
	Fair value	amount Difference		Fair value		amount Difference	Fair value		amount Difference
Liabilities
Financial liabilities covered by IAS 39
Amounts owed to credit institutions	220 983	220 983		222 569	222 569		195 096	195 096
of which other financial liabilities	220 167	220 167		216 823	216 823		186 973	186 973
of which fair value through profit or loss	816	816		5 746	5 746		8 123	8 123
Deposits and borrowings from the public	599 476	599 476		532 118	532 118		501 294	501 294
of which other financial liabilities	595 029	595 029		515 969	515 969		476 887	476 887
of which fair value through profit or loss	4 447	4 447		16 149	16 149		24 407	24 407
Debt securities in issue etc.	274 952	275 845	–893	319 007	318 041	966	214 940	214 605	335
of which other financial liabilities	260 391	261 284	–893	305 710	304 744	966	201 259	200 924	335
of which fair value through profit or loss	14 561	14 561		13 297	13 297		13 681	13 681
Subordinated liabilities	24 626	24 613	13	17 985	18 010	–25	9 996	10 083	–87
of which other financial liabilities	24 626	24 613	13	17 985	18 010	–25	9 996	10 083	–87
Derivatives	98 508	98 508		118 696	118 696		74 408	74 408
Short positions securities	8 192	8 192		27 058	27 058		17 520	17 520
of which fair value through profit or loss	8 192	8 192		27 058	27 058		17 520	17 520
Other financial liabilities	21 327	21 327		18 945	18 945		12 284	12 284
Total	1 248 064	1 248 944	–880	1 256 380	1 255 438	941	1 025 537	1 025 290	248

Financial instruments recognised at fair value

The following tables present fair values of financial instruments recognised at fair value, split between the three valuation hierarchylevels.

Level 2 primarily contains less liquid bonds that are valued on a curve, lending, funding and derivatives measured on the basis of observable inputs. For less liquid bond holdings, an adjustment is made for the credit spread based on observable market inputs such as the market for credit derivatives. For loans to the public where there are no observable market inputs for credit margins at the time of measurement, the credit margin of the last transaction executed with the same counterparty is used. Securities in issue that are not quoted but measured according to quoted prices for similar quoted bonds are also included on level 2.

Level 3 contains other financial instruments where internal assumptions have a significant effect on the calculation of fair value. Level 3 primarily contains unlisted equity instruments and illiquid options. The options hedge changes in the market values of combined debt instruments, so-called structured products. Structured products consist

of a corresponding option element and a host contract, which in principle is an ordinary interest-bearing bond. When the Group evaluates the level on which the financial instruments are reported, the entire instrument is assessed on an individual basis. Since the bond portion of structured products represents the majority of the financial instrument's fair value, the internal assumptions used to value the illiquid option element normally do not have a significant effect on the valuation and the financial instrument is typically reported in level 2. However, the Group typically hedges the market risks that arise in structured products by holding individual options. The internal assumptions in the individual options are of greater significance to the individual instrument and these are reported as derivatives in level 3. To estimate the sensitivity of the volatility of the illiquid options, two types of shifts have been made. The shifts are based on each product type and are considered reasonable changes. Based on the historical volalitity of the underlying prices of options in level 3, it is unlikely that the fair value would be affected more than +/- SEK 36m. When valuation models are used to determine fair value of financial instruments in level 3, the consideration that has been paid or received is assessed as the best evidence of fair value at initial recognition. Because of the possibility that a difference could arise between this fair value and the

fair value calculated at that time using the valuation model, so called day 1 profit or loss, the Group adjusts the valuation models to avoid such differences. As of year-end there were no cumulative differences that were not recognised through profit or loss. Transfers between fair value hierarchy levels are reflected as taking place at the

end of each quarter. During the years ended 2015 and 2014, there were no transfers

of financial instruments between valuationj levels 1 and 2. Financial instruments are transferred to or from level 3 depending on whether the internal assumptions have changed in significance for the valuation.

The following table shows financial instruments measured at fair value as per yearend distributed by valuation method.

		2015			2014
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Assets
Treasury bills and other bills eligible for refinancing with central banks etc.	19 098	51 433		70 531	27 936	13 137		41 073
Loans to credit institutions		1 975		1 975		17 468		17 468
Loans to the public		36 075		36 075		65 392		65 392
Bonds and interest-bearing securities	57 203	25 821		83 024	68 539	49 190		117 728
Shares and participating interest	10 744	69	67	10 880	9 445	147	49	9 641
Derivatives	150	98 036	114	98 300	5 399	128 223	81	133 703
Total	87 195	213 409	181	300 785	111 319	273 558	130	385 007
Liabilities
Amounts owed to credit institutions		816		816		5 746		5 746
Deposits and borrowings from the public		4 447		4 447		16 149		16 149
Debt securities in issue etc.		14 561		14 561		13 297		13 297
Derivatives	13	98 495		98 508	6 925	111 771		118 696
Short positions securities	8 192			8 192	27 025	34		27 058
Total	8 205	118 319		126 524	33 950	146 997		180 947

Changes in level 3		2015
		Assets
	Equity	instruments Derivatives	Total
Opening balance	49	81	130
Mergers	20		20
Acquisitions	16		16
Sales of assets	–13		–13
Maturities		–35	–35
Issued		9	9
Transferred from Level 2 to Level 3		148	148
Transferred from Level 3 to Level 2		–83	–83
Transferred from Level 3 to Level 1	–2		–2
Gains or loss	–3	–6	–9
of which in the income statement, net gains and losses on financial items at fair value	–3	–6	–9
of which are changes in unrealised gains or losses for items held at closing day		–47	–47
Closing balance	67	114	181

2014
		Liabilities
Equity instruments	Derivatives 133	Total 183	Derivatives 19
50
	54	54
	–128	–128	–25
–1	22	21	6
–1	22	21	6
–1	3	2
49	81	130
		Assets

Financial instruments at amortised cost

The following tables distribute fair values by the three valuation levels for financial instruments at amortised cost.

		2015
			Fair value
	Carrying
	amount	Level 2	Level 3	Totalt
Assets
Loans to credit institutions	423 120	423 120		423 120
Loans to the public	380 407	380 407		380 407
Bonds and other interest-bearing securities	3 857	3 693	164	3 857
Total	807 384	807 220	164	807 384
Liabilities
Amounts owed to credit institutions	220 167	220 167		220 167
Deposits and borrowing from the public	595 029	595 029		595 029
Debts securities in issue	261 284	260 391		260 391
Subordinated liabilities	24 613	24 626		24 626
Total	1 101 093	1 100 213		1 100 213

	2014

Carrying amount	Level 2	Level 3	Totalt

418 510	418 510		418 510
367 487	367 487		367 487
1 219		1 218	1 218
			787 216
		787 216 785 997	Fair value 1 218

Total	1 055 546	1 056 487	1 056 487
Subordinated liabilities	18 010	17 985	17 985
Debts securities in issue	304 744	305 710	305 710
Deposits and borrowing from the public	515 969	515 969	515 969
Amounts owed to credit institutions	216 823	216 823	216 823
Liabilities

P41 Reclassification of financial assets

them to maturity. Financial instruments in the category held for trading are recognised at fair value with changes in value recognised in profit or loss. Financial instruments in the category held to maturity are recognised at amortised cost less impairments. No impairments were needed as of 31 December, meaning that all contractual cash flows are expected to be received. All the holdings are Residential Mortgage Backed Securities (RMBS).

	2015	2014
Carrying amount	160	719
Nominal amount	160	721
Fair value	159	718
Recognised interest income after reclassification	1	3

P42 Financial assets and liabilities which have been offset or are subject to netting or similar agreements

The disclosures below refer to recognised financial instruments that have been offset in the balance sheet or are subject to legally binding netting agreements, even when they have not been offset in the balance sheet, as well as to related rights to financial collateral. As of the closing day these financial instruments referred to derivatives, repos (including reverse), security settlement claims and securities loans.

	2015			2014
		Reverse repurchase	Securities			Reverse repurchase	Securities
Assets	Derivatives	agreements	borrowing	Total	Derivatives	agreements	borrowing	Total
Financial assets, which not have been offset or are subject to netting or similar agreements	5 019			5 019	4 678			4 678
Financial assets, which have been offset or are subject to netting or similar agreements	93 281	36 615	74	129 970	129 025	80 059	74	209 158
Net amount presented in the balance sheet	98 300	36 615	74	134 989	133 703	80 059	74	213 836
Financial assets, which have been offset or are subject to netting or similar agreements
Gross amount	107 232	39 614	74	146 920	139 984	83 835	74	223 893
Offset amount	–13 951	–2 999		–16 950	–10 959	–3 776		–14 735
Net amount presented in the balance sheet	93 281	36 615	74	129 970	129 025	80 059	74	209 158
Related amount not offset in the balance sheet
Financial instruments, netting agreements	49 947	5 085		55 032	72 591	15 313		87 904
Financial instruments, collateral	1 220	31 453	74	32 747	2 177	64 746	74	66 997
Cash, collateral	19 915	77		19 992	29 717			29 717
Total amount not offset in the balance sheet	71 082	36 615	74	107 771	104 485	80 059	74	184 618
Net amount	22 199			22 199	24 540			24 540

		Reverse repurchase	Security settlement	Securities		Reverse repurchase	Securities
Liabilities	Derivatives	agreements	claims	borrowing	Derivatives	agreements	borrowing	Total
Financial liabilities, which not have been offset or are subject to netting or similar agreements	2 930			2 930	3 670			3 670
Financial liabilities, which have been offset or are subject to netting or similar agreements	95 577	5 100	13	100 690	115 027	21 514	1 011	137 552
Net amount presented in the balance sheet	98 507	5 100	13	103 620	118 697	21 514	1 011	141 222
Financial liabilities, which have been offset or are subject to netting or similar agreements
Gross amount	110 419	8 099	13	118 531	127 324	25 290	1 011	153 625
Offset amount	–14 842	–2 999		–17 841	–12 297	–3 776		–16 073
Net amount presented in the balance sheet	95 577	5 100	13	100 690	115 027	21 514	1 011	137 552
Related amount not offset in the balance sheet
Financial instruments, netting agreements	49 947	5 085		55 032	72 591	15 313		87 904
Financial instruments, collateral	3 021	7	13	3 041	3 636	6 197	1 011	10 844
Cash, collateral	15 651	2		15 653	11 903	4		11 907
Total amount not offset in the balance sheet	68 619	5 094	13	73 726	88 130	21 514	1 011	110 655
Net amount	26 958	6		26 964	26 897			26 897

P43 Specification of adjustments for non-cash items in operating activities

	2015	2014
Amortised origination fees	–553	–522
Unrealised changes in value/currency changes	–2 022	7 290
Depreciation of tangible and intangible fixed assets	3 823	4 481
Impairment of financial fixed assets	415	2 193
Credit impairment	732	622
Dividend Group entities	–12 385	–17 864
Prepaid expenses and accrued income	4 274	–2 422
Accrued expenses and prepaid income	–190	516
Share based payments to employees	279	314
Other	–116	41
Total	–5 743	–5 351

P44 Assets pledged, contingent liabilities and commitments

Assets pledged
Assets pledged for own liabilities	2015	2014	1/1/2014
Government securities and bonds pledged with the Riksbank	10 648	10 201	10 869
Government securities and bonds pledged with foreign central banks	12 772	10 073	868
Government securities and bonds pledged for liabilities to credit institutions, repurchase agreements	1 244	6 115	6 898
Government securities and bonds pledged for deposits from the public, repurchase agreements	2 310	11 356	13 006
Government securities and bonds pledged for derivatives
Cash	13 697	11 717	7 178
Total	40 671	49 462	38 819

The carrying amount of liabilities for which assets are pledged amounted to SEK 40 671 m (49 462) in 2015.

Other assets pledged	2015	2014	1/1/2014
Securities lending	13	1 002	177
Government securities and bonds pledged for
other commitments	3 194	5 685	2 695
Cash	459	366	334
Total	3 666	7 053	3 206

Collateral is pledged in the form of governement securities or bonds to central banks in order to execute transactions with the central banks. In so-called genuine repurchase transactions, where the parent company sells a security and at the samt time agrees to repurchase it, the sold security remains on the balance sheet. The carrying amount of the security is also recognised as a pladged asset. In principle, the parent company cannot dispose of pledged collateral. generally, the assets are also separated behalf of the beneficiaries in the event of the parent company' s insolvency.

Contingent liabilities

Nominal amount	2015	2014	1/1/2014
Loan guarantees	547 718	496 603	522 950
Other guarantees	25 229	17 352	14 609
Accepted and endorsed notes	140	108	80
Letters of credit granted but not utilised	2 153	1 853	1 213
Other contingent liabilities	51	18	97
Total	575 291	515 934	538 949
Provision for anticipated credit impairments	–21	–19	–65

Commitments

Nominal amount	2015	2014	1/1/2014
Loans granted but not paid	137 719	128 814	106 173
Overdraft facilities granted but not utilised	68 263	72 374	74 375
Total	205 982	201 188	180 548

The nominal amount of interest, equity and currency related contracts are shown in note P25 Derivatives.

P45 Transferred financial assets

The parent company transfers ownership of financial assets in connection with repos and security loans. Although ownership has been transferred in these transactions, the asset remains on the balance sheet since the parent company is still exposed to the asset's risk of fluctuating in value. This is because the agreement stipulates at the time of transfer that the asset will be restored. Sales proceeds received in connection with repos are recognised as liabilities. All assets and related liabilities are recognised at fair value and included in the valuation category

fair value through profit and loss, trading. Liabilities related to securities lending refer to collateral received in the form of cash. These liabilities are reported in the valuation category other financial liabilities. In addition to what is indicated in the table for securities lending, collateral is received in the form of other securities to cover the difference between the fair value of the transferred assets and the recognised liability's fair value. At year-end the parent company had no commitments in financial assets that had been removed from the balance sheet.

	Transferred assets			Associated liabilities
2015	Carrying amount	Of which repurchase agreements	Of which securities	lending Carrying amount	Of which repurchase agreements	Of which securites lending
Valuation category , fair value through profit or loss
Trading
Equity instruments	426		426	74		74
Debt securities	3 554	3 554		3 554	3 554
Total	3 980	3 554	426	3 628	3 554	74

Transferred assets			Associated liabilities
	Of which repurchase	Of which securi		Of which repurchase	Of which secur ites lending


127		127	74		74
17 471	17 471		17 441	17 441
17 598	17 471	127	17 515	17 441	74
	Carrying amount	agreements		ties lending Carrying amount	agreements

P46 Operational leasing

The agreements mainly relate to premises in which the parent company is the lessee. The terms of the agreements comply with customary practices and include clauses on inflation and property tax. The combined amount of future minimum lease payments that relate to non-cancellable agreements is allocated on the due dates as follows:

2015	Expenses	Income subleasing	Total	2014	Expenses	Income subleasing	Total
2016	607	36	571	2015	577	36	541
2017	563	34	529	2016	508	32	476
2018	442	26	416	2017	386	24	362
2019	400	24	376	2018	360	22	338
2020	284		284	2019	263		263
2021	199		199	2020	191		191
2022	183		183	2021	165		165
2023	178		178	2022	164		164
2024	166		166	2023	155		155
2025 or later	1 248		1 248	2024 or later	1 433		1 433
Total	4 270	120	4 150	Total	4 202	114	4 088

2014	Expenses	Income subleasing	Total
2015	577	36	541
2016	508	32	476
2017	386	24	362
2018	360	22	338
2019	263		263
2020	191		191
2021	165		165
2022	164		164
2023	155		155
2024 or later	1 433		1 433
Total	4 202	114	4 088

P47 Related parties and other significant relationships

	Subsidiaries		Associates		Other related parties
	2015	2014	2015	2014	2015	2014
Assets
Loans to credit institutions	340 717	328 138	7 940	6 903
Loans to the public	995	2 935		690
Bonds and other interest-bearing securities	2 873	4 956
Derivatives	12 743	11 131
Other assets	7 639	9 837		6	38	31
Prepaid expenses and accrued income	388	727
Total assets	365 355	357 723	7 940	7 599	38	31

Liabilities
Amount owed to credit institutions	71 280	52 138	1 993	2 360
Deposits and borrowing from the public	8 156	13 236		25	246	2 561
Derivatives	30 071	33 247
Other liabilities	37	839
Accrued expenses and prepaid income	44	109
Total liabilities	109 588	99 568	1 993	2 385	246	2 561
Contingent liabilities
Guarantees	493 783	493 783
Derivatives, nominal amount	688 443	724 785	1 883	1 792
Income and expenses
Interest income	-2 028	647	100	197
Interest expenses	1 229	10		3	7	78
Dividends received	3 873	10 701	53	380
Commission income	1 625	1 683	6	6
Commission expenses	2	1 651
Other income	171	241	12	13
Other general administrative expenses	41	74			717	656

P48 Events after 31 December 2015

See Group note G59.

Reports and notes – Sustainability

Sustainability report
S1 Pay
S2 Finance
S3 Save/Invest
S4 Procure
S5 Employees
S6 Environmental impacts
S7 Social engagement

Global Reporting Initiative – GRI

GRI Standard Disclosures
Reporting according to G4-DMA
GRI Specific Standard Disclosures

Sustainability report

We integrate sustainability in our operations and business decisions, so it is also covered as an integral part of our annual report. Swedbank's sustainability report conforms to the Global Reporting Initiative's (GRI) guidelines, version G4 level Core, and has been reviewed by the auditing firm Deloitte in accordance with the assurance report on page 192. The report consists of the Annual Report 2015 and the Detailed sustainability report 2015.

Sustainability is an important part of our business. Our work is steered by a sustainability framework and integrated in existing business processes and decisions. Beyond the Group-wide framework, we have chosen to adopt and support a number of international initiatives to guide our work and the overarching sustainability work in the bank. The UN's Global Compact's ten principles, the UN Principles for Responsible Investments (UNPRI) and the UN's framework for companies and human rights are examples of the critical commitments that guide us. In 2015 we also signed the Montreal Carbon Pledge, an international initiative whose signatories commit to disclose the carbon footprint of their investment portfolios.

The following model provides an overview of our sustainability integration and examples of our commitments, governing documents and

work processes. The sustainability report allows us to inform our stakeholders of the work we have done and the results we have achieved. Through our dialogue with stakeholders we have identified and prioritised the most material and strategically important areas for us to reach our goal of sustainable banking.

The results presented in the following notes are divided into four core processes: pay, finance, save/invest and procure. We also report the results of our work related to environmental issues, social engagements, gender equality and diversity, and occupational health and safety.

The sustainability information is found on pages 17, 22–23 and 178– 189 and in the document "Detailed sustainability report 2015," available at www.swedbank.com.

Sustainability integration

S1 Pay

In the Pay area sustainability risks are tied to money laundering and terrorist financing, among other things. It is important therefore that we know our customers, understand where their money comes from and why they want a relationship with the bank, to more easily detect unusual behaviour. Through system support for monitoring transactions and reconciliations of customer databases against sanction lists we reduce our business risks.

The payment and card areas in the bank's home markets and internationally are undergoing major change in terms of regulations and customer preferences. Physical, online and mobile payments are merging and will increasingly be executed on mobile devices, regardless of whether a sale was in a brick-and-mortar store or through a traditional e-commerce website. The number of payments through our digital channels continued to increase in 2015 through a combination of economic growth and the shift from cash to card and electronic payments. For the Group in total, e-payments rose by 59 per cent in Jan-Sept 2015 compared with the same period a year earlier.

Accessibility, i.e. the ease with which customers can contact the bank and transact banking services, is also increasing as digital channels develop. All four of our home markets have a high level of Internet penetration and widespread mobile coverage to facilitate it. This is in addition to the Telephone Bank, ATMs (owned by Bankomat AB in Sweden) and a traditional retail network with 275 branches in Sweden and 144 branches in the Baltic countries.

Digitisation is changing products and services as customers demand more digital solutions and the accessibility they offer. Swedbank has therefore made it a priority. Increased digitisation and less cash handling in society also pave the way for efficient resource utilisation. In the bank resources are freed up for individual financial advice as customers increasingly turn to and rely on digital channels.

Sweden	2015	2014
Population (million)	9.6	9.6
Private customers (million)	4.0	4.1
Corporate customers (thousand)	265 000	270 000
Cards (million)	4.1	3.9
Branches	275	314
Internet Bank customers (million) 1,2	3.9	3.7
Internet Bank logins (million)2	240	254
Internet Bank payments (million)2	162	174
Mobile Bank customers (million)2	2.5	2.0
Mobile Bank logins (million)2	396	416
Swish payments (million)	80	20
Donations to WWF from WWF cards (SEKm)3	1.6	3.6
Customers with WWF cards3	80 212	136 983

1) The cost to the customer to access the Internet Bank is about SEK 175 per year.

2) Including savings banks.

3) Swedbank and the savings banks no longer collaborate with WWF on card products. Donations continue to be paid to WWF for outstanding cards.

Estonia	2015	2014
Population (million)	1.3	1.3
Private customers (million)	0.8	1.0
Corporate customers (thousand)	135 000	130 000
Cards (million)	1.1	1.1
Branches	36	50
Accessible branches	28	28
ATMs	423	457
Internet Bank customers (million)1	0.9	0.9
Internet Bank logins (million)2	46.6	47
Internet Bank payments (million)	67.0	643
Mobile Bank customers (million)1	0.32	0.26
Mobile Bank logins (million)	5.6	3.9

1) No fees are charged to use the Internet Bank and Mobile Bank.

2) Relates to private customers.

Latvia	2015	2014
Population (million)	2.0	2.0
Private customers (million)	0.9	1.0
Corporate customers (thousand)	90 000	87 000
Cards (million)	1.0	1.0
Branches	41	54
Accessible branches	31	32
ATMs	413	409
Internet Bank customers (million)1	0.9	0.9
Internet Bank logins (million)2	43.6	43.4
Internet Bank payments (million)	55.1	52.2
Mobile Bank customers (million)1	0.39	0.31
Mobile Bank logins (million)	4	2,9

1) No fees are charged to use the Internet Bank and Mobile Bank. 2) Relates to private customers.

Lithuania	2015	2014
Population (million)	3.0	3.0
Private customers (million)	1.5	2
Corporate customers (thousand)	84 000	89 000
Cards (million)	1.6	1.7
Branches	67	77
Accessible branches	63	64
ATMs	454	520
Internet Bank customers (million)1	1.3	1.3
Internet Bank logins (million)2	46.4	46
Internet Bank payments (million)	43.8	42.9
Mobile Bank customers (million)1	0.35	0.24
Mobile Bank logins (million)	4.1	2.4

1) No fees are charged to use the Internet Bank and Mobile Bank. 2) Relates to private customers.

S2 Finance

Responsible lending is critical to a well-functioning bank. In our lending to both private and corporate customers we take responsibility by explaining risks and reviewing each customer's long-term financial situation. Based on our vision, we believe that the foundation for a sound and sustainable economy begins with loan amortisation and manageable debt levels. In recent years Swedbank has introduced more extensive amortisation requirements on mortgages in Sweden. At the same time our customers are now more willing to pay off their mortgages as they see amortisation as an important complement to savings. This is a view the bank shares, so we want to make it easier for them to pay off their loans. In 2013 Swedbank gave customers the option to amortise up to an additional 20 per cent of their mortgages each year without prepayment fees.

A sustainability risk assessment is conducted in connection with all corporate loan applications over SEK 5m in Sweden and EUR 0.8m in the Baltic countries. The previous limit in Sweden, SEK 1m, was raised in 2015 to harmonise processes and thresholds in the Group, providing a more standardised form to assess loans. For corporate loans below the limit, sustainability related factors are assessed as part of the customer analysis. In dialoguing with the customer, we are also able to identify new business opportunities, such as investment needs tied to an industry's sustainable development.

As a complement to the sustainability risk assessment, we have established internal guidelines that describe sustainability risks within each sector as well as international standards and norms for interactions with customers.

In cases where additional guidance is needed to minimise sustainability risks, credit decisions can be escalated to Swedbank's Ethics and Sustainability Council, which handles cases involving the environment, human rights, social responsibility, business ethics and/or corruption.

Green bonds, which are earmarked for sustainable development, have grown strongly in recent years in Sweden and internationally. We work with several independent institutions specialised in reviewing and classifying green bonds. Through this type of bond we played a role in 2015 as issuing institution for financing an array of international environmental projects valued at over SEK 3.2bn.

Corporate lending	2015	2014
Corporate lending (SEKm)	501 693	495 181
Renewable energy lending (SEKm)1	10 318	8 373
Number of customers with renewable energy loans1	135	182
Number of green bonds2	5	2
Green bonds, total compiled from the start (SEKbn)2	6.8	3.6
Sustainability risk analysis in lending
–Sweden (no. of business loan applications approved)3	48 404
– Estonia (no. of business loans approved)	662	649
– Latvia (no. of business loans approved)	539	456
– Lithuania (no. of business loans approved)	624	530
No. of credit cases escalated to Group's Ethics and Sustainability Council4	8	8

1) Total renewable energy lending refers to wind power, biomass district heating, pellet production,

biogas and hydropower. 2) Financing of solar, wind and hydroelectric power.

3) Revised limit and new measurement method do not allow comparisons with 2014.

4) The total number of cases escalated to the Council in 2015, including non-credit-related, was 18.

Private lending (Sweden)	2015	2014
Energy loans (SEKm)1	73	92
Households with loan-to-value ratios above 70% of property value (%)	14	22
Share of households with loan-to-value ratios above 70% that amortise (new lending)2	95	87
Share of households with loan-to-value ratios above 70% that amortise (total portfolio)	89	71

1) Energy loans are available to customers in Sweden and used to finance residential energy savings.

2) New lending refers to all mortgages paid out in the fourth quarter 2015.

Share of corporate lending by country, %	2015	2014
Sweden	77	77
Estonia	5	5
Latvia	3	3
Lithuania	4	4
Norway	8	7
Finland	2	2
Other	1	2

Share of corporate lending by sector, %	2015	2014
Property management	42	41
Agriculture, forestry and fishing	15	15
Manufacturing	8	9
Retail	6	6
Shipping	6	6
Public sector and utilities	5	4
Construction	4	3
Corporate services	4	3
Finance and insurance	2	2
Transportation	2	2
Hotel and restaurant	1	1
Information and communications	1	1
Other corporate lending	4	5

S3 Save/Invest

We offer customers sustainable savings through responsible investments. An important part of savings is asset management. The main strategy employed by our fund management company, Swedbank Robur, in order to be a responsible asset manager is to encourage companies through dialogue and active ownership to work more diligently with sustainability and responsible corporate governance. We dialogue with the companies and maintain continuous contact with the boards and managements of those where the funds are major shareholders. The fund management company participates in nomination committees, votes at annual meetings and collaborates with other investors. An important goal of Swedbank Robur's ownership work is to balance these boards in terms of competence, experience and diversity, including gender, as well as to balance independent and non-independent directors.

Swedbank Robur does not invest in companies that manufacture cluster bombs, land mines, chemical and biological weapons, and nuclear weapons. Our sustainability funds are managed with special criteria on the environment, human rights, occupational health and safety, and business ethics. One of the funds, Humanfond, donates to charitable organisations and gives investors the option to donate two per cent of their investment value per year to an affiliated charity of their choice.

During the year Swedbank Robur was one of the first fund managers to report the carbon footprint of all its equity and blend funds, which it did on two occasions. This shows how much CO² the companies in a fund emit in relation to their revenue i.e. how climate efficient they are. The fund's carbon footprint is the sum of the footprints of all its holdings proportionate to the fund's interest in each company. The calculations are based on company-specific climate data in accordance with GHG Protocol Scope 1+ 2 from the environmental benchmarking firm Trucost. We estimate CO² impacts for the funds and their indices. We report data externally for funds that have emissions data for ≥ 75% of the market value of their shareholdings. On both occasions the majority of the funds whose impacts were estimated outperformed their comparative indexes. Since June 2015 the Ethica fund family does not invest in companies that produce fossil fuels: coal, oil and gas.

In addition to funds, Swedbank offers savings in the form of structured investments with or without capital protection, where the return is tied to various asset classes and markets, so-called SPAX equity-linked bonds. A number of structured investments have special ethical requirements that exclude companies associated with animal testing, genetic modification, a lack of respect for human rights or unfair labour conditions, among other things. Certain products can be excluded as well e.g. nuclear weapons, weapons, or tobacco. Certain indexes are chosen specifically because they exclude coal and oil production. Moreover, their investments can be focused on companies that will benefit from future investments to resolve major global challenges.

Asset management1	2015	2014
Total assets under management (SEKbn)	1 090	1 052
– of which in funds (SEKbn)	738	715
Assets under management with specific sustainability criteria (%)2	39	40

1) Asset management as of 31 December 2015.

2) Includes sustainability funds and discretionary management with specific sustainability criteria.

Advocacy funds (no.)	2015	2014
Companies contacted on sustainability issues (no.)	2631	332
– of which companies listed in Sweden	71	132
– of which companies listed outside Sweden	192	200
Participation in nominating committees in Sweden (no.)	59	61
Participation in annual general meetings (no.)	269	243
– of which in companies listed in Sweden	140	135
– of which in companies listed outside Sweden	129	108

1) Of which 93 companies contacted through collaborations and 170 through own contacts.

Analysis of sustainability funds	2015	2014
Sustainability analyses of listed Swedish companies (no.)	97	130
Sustainability analyses of listed foreign companies (approx. no.)1	1 800	1 800
Share of investable companies listed in Sweden (%)2	33	35
Share of investable companies listed outside Sweden (%)3	43	46

1) Internal analysis of external data. The figure is an estimate.

2) Share of companies in SIX Portfolio Return Index (SIXPRX) approved for investment by our Ethica sustainability funds. 64 per cent of SIXPRX was analysed as of 31 December 2015 and 51 per cent of the companies were approved for investment.

3) Share of companies in MSCI World Index approved for investment by our Ethica sustainability funds. 100 per cent of the index was analysed as of 31 December 2015.

Products with sustainability profile, SEKm	2015	2014
Assets under management in sustainability funds
– Ethica Sverige	4 717	6 035
– Ethica Sverige MEGA	1 687	2 377
– Ethica Global	1 978	2 806
– Ethica Global MEGA	3 407	2 363
– Ethica Ränta	1 312	1 042
– Humanfond	2 149	2 154
– Talenten Aktiefond MEGA	1 320	1 436
– Talenten Räntefond MEGA	1 671	1 317
Charitable donations from
Swedbank Robur Humanfond1	43	43
SPAX Sverige2	652	375
SPAX Europe Etik3	143
SPAX Vatten We Effect Refugee4	10
Bevis Sverige Etik Balans5	18
Bevis Sverige Etik Östersjölaxen6	35
Bevis WinWin Sverige Etik7		81

1) Humanfond had a total of 31 015 investors and 69 affiliated organisations.

2) Maturity 6 years, follows ten Swedish companies that meet ethical requirements.

3) Maturity 4 years, follows a European equity index and meets ethical requirements. 4) Maturity 5 years, follows companies focused on water management. A portion of the premium and arranger's

fee, at least 2.5 per cent, is donated to the aid organisation We Effect.

5) Investment with 1 year maturity linked to performance of a Swedish ethical equity index. 6) Investment with 3 year maturity linked to a broad Swedish ethical equity index. Premiums and a portion

of the commission and arranger's fee, at least 2 per cent, is donated to the Baltic Salmon Fund.

7) Investment with 1 year maturity linked to performance of a Swedish ethical equity index.

Climate footprint of selected funds compared with their respective indexes1	tonnes CO2e/SEKm, fund	tonnes CO2e/SEKm, index
Three largest funds (assets under management, SEKm)
– Allemansfond Komplett (48 080)	14	35
– Aktiefond Pension (31 421)	14	35
– Kapitalinvest (22 107)	14	35
Regional equity funds (assets under management, SEKm)
– Sverigefond (12 856)	25	18
– Europafond (4 857)	26	43
– Globalfond (3 307)	15	44
– Amerikafond (4 900)	10	43
– Asienfond (2 332)	32	71

1) The calculations are based on fund holdings as of 30 June 2015.

Climate footprint, Ethica sustainability funds,

tonnes of CO2e/SEKm1	June 2015	Dec 2014
Ethica Global
– fund footprint	9	34
– index footprint, MSCI World Index	44	46
Ethica Sweden
– fund footprint	13	21
– index footprint, SIX Portfolio Return Index	18	21

1) Tonnes CO2e/SEKm. Calculations based on fund holdings on 30 June 2015 and 31 December 2014. The decrease is due to more stringent requirements on companies with a large climate impact and on divestment from coal, oil and gas in 2015.

S4 Procure

Swedbank has around 15 000 suppliers and annual procurement costs of SEK 6.3bn. The central procurement process governs all reported purchases over EUR 50 000, aggregated on an annual basis, which are managed with the support of the bank's central procurement unit. Since Swedbank's business areas own all supplier agreements and demand specifications locally, contracts cannot be signed in certain cases until the central procurement unit is involved. If a supplier has been selected without the support of the procurement unit, it cannot be evaluated according to our sustainability criteria. In such cases it is important that we ensure the supplier meets them e.g. by signing our code of conduct.

Sustainability in our supplier relations is distinguished by dialogue, transparency and a mutual willingness to learn and develop. We influence our suppliers by setting clear sustainability demands on the products and services we buy. In recent years the procurement unit has focused its efforts on dialogue, developing ways to introduce sustainability requirements, and monitoring how well suppliers comply with them.

In acquisitions handled by the bank's central procurement unit, suppliers are evaluated according to criteria for human rights, labour rights, business ethics and the environment. Existing suppliers are monitored as well, mainly through continuous dialogue and audits. Suppliers that do not meet our sustainability criteria are eliminated. Because suppliers estimate their own ability to meet the obligations of our code of conduct and through our on-site visits, we are able to monitor compliance. In 2015 the procurement unit increased the number of supplier visits by 58 per cent to ensure that the suppliers remain committed to sustainability.

Swedbank launched a new interior design concept during the year for our branches. In the procurement process stringent demands were placed on sustainability in the choice of products and suppliers. Sector guidelines were used as well to identify which sustainability related challenges the industry is facing and to give advice on which aspects should be stressed in the procurement process. Certain suppliers and products were excluded because they did not meet our environmental and sustainability requirements. The new decor is designed to produce the smallest environmental impact possible. One example is the special equipment that is designed in a way that makes it possible to separate various materials for recycling. In selecting upholstery priority was given to certified materials.

Supplier audits	2015	2014
No. of reported purchases over EUR 50 0001	266	172
Number that have undergone sustainability analysis	229	151
Share of reported purchases that have undergone sustainability analysis (%)	86	86
Supplier visits conducted (no.)	30	19

1) Based on data from the internal purchasing system.

S5 Employees

It is important that our employees enjoy their work and have an opportunity to develop. Motivated and engaged employees are essential in order to meet our customers' and the market's needs. We work continuously and in structured fashion with employee competence and set clearly defined goals for each employee to support their personal development. All employees are offered internal training, including in sustainable banking.

Swedbank has a large internal job market comprising every country where the Group operates. We encourage internal mobility, which we feel benefits the individual's development as well as the bank's. By increasing internal mobility we can capitalise on the competence and potential of employees.

Gender equality and diversity are important to Swedbank. Our policy, which is put into practice through a gender equality and diversity plan, comprises our efforts to increase equality in the organisation. It includes measures to encourage equal wages, working conditions and treatment as well as diversity and to discourage discrimination and harassment.

Our priorities, which apply to 2017, are to eliminate unwarranted wage differences, achieve gender equality at the highest management level and increase diversity in general, with a focus on employees with a foreign background in Sweden.

Equal pay for Swedbank means paying men and women based on the same factors and eliminating wage differences due to gender. A wage survey is conducted annually in all our home markets. Current differences are largely due to the fact that men and women have different jobs with different pay scales, with women more often working at lower scales. If a difference cannot be explained, it is considered unwarranted. We work continuously to identify and mitigate unwarranted wage differences, including by comparing the wages of employees with the same positions or degree of difficulty and tracking managers according to various gender equality goals.

Equal gender distribution at the highest management level is important to us, and several measures are being taken around the bank to achieve it. One is to train managers on gender equality, diversity and norms.

Our efforts to raise the number of employees with a foreign background in Sweden had positive results during the year. Employees with a foreign background increased in 2015 from 12 to 14 per cent. The biggest gains were in urban areas and in business areas with the most trainees as part of the "A Job at Last" initiative.

Total number and share of new employees

by gender, age group and country, %	2015	2014
Number of new employees	909	1 346

Women	66	62
Men	34	38

0–29 years	72	61
30–44 years	24	30
45–59 years	4	8
60– years	0	1

Sweden	11	37
Estonia	32	25
Latvia	26	14
Lithuania	31	24

Internal training1	2015	2014
Total number of training hours	379 887	462 876
Training hours per full-time employee (average FTE)	25	32
- training hours men	13	18
- training hours women	20	24
- training hours managers	21	25
- training hours specialists	8	15
Training programs in environment, sustainability, code of conduct and money laundering (number)2	27 258	9 352
Training programs in sustainable banking as well as money laundering and terrorist financing (number)3	5 778	24 324

1) The table also includes the savings banks.

2) Mandatory new training in ethics and the Code of Conduct was launched in 2015.

3) The training is mandatory and was launched in 2014.

Rate of employee turnover by gender, age group

and country, %	2015	2014
Women	8.9	10.2
Men	9.6	9.6

0–29 years	10.2	15.3
30–44 years	8.0	8.6
45–59 years	5.1	4.6
60– years	36.4	30.0

Sweden	8.2	7.6
Estonia	9.1	13.4
Latvia	11.4	16.2
Lithuania	13.0	11.2
Total	9.4	10.0

Wage difference women vs. men, management

positions by country, %1	2015	2014
Sweden	–28	–28
Estonia	–39	–39
Latvia	–51	–46
Lithuania	–32	–32
Group total	–39	–40

1) Includes management positions at every level. HR responsibility is the common denominator for this category.

Wage difference women vs. men, management positions by business area, %1	2015	2014
Swedish Banking	–16	–20
Large Corporates & Institutions	–50	–46
Baltic Banking	–45	–38
Group Products	–38	–43
Group Functions	–28	–30

1) Includes management positions at every level. HR responsibility is the common denominator for this category.

Wage difference women vs. men, specialists by country, %	2015	2014
Sweden	–23	–23
Estonia	–37	–38
Latvia	–31	–34
Lithuania	–39	–41
Group total	–40	–39

Wage difference female vs. male, specialists by business area, % 2015 2014 Swedish Banking –17 –16 Large Corporates & Institutions –42 –39 Baltic Banking –33 –36 Group Products –37 –37 Group Functions –19 –19

Employee survey, index	2015	2014
Engagement index, Results/Comparison1	83
Recommendation index, Results/Comparison2	–3	18
Leadership index, Results/Comparison3	84

1) New for 2015.

2) Likelihood of recommending Swedbank as an employer externally. Calculated on a scale of 0–10, where the share of negative responses (0-6) is subtracted from the share of positive responses (9–10). 3) New for 2015.

Level of education, %	2015	2014
Sweden
University degree	40	45
Other university education	15	6
Upper secondary school	41	41
Other education	3	8
Estonia
University degree	66	65
Other university education	17	19
Upper secondary school	9	8
Other education	8	8
Latvia
University degree	71	71
Other university education	23	22
Upper secondary school	6	7
Other education	0	0
Lithuania
University degree	83	80
Other university education	13	14
Upper secondary school	4	6
Other education	0	0

Age distribution, %	2015	2014
Sweden
0–29 years	16	12
30–44 years
	37	39
45–59 years	39	41
60– years	8	8
Estonia
0–29 years	23	24
30–44 years	57	57
45–59 years	18	17
60– years	2	2
Latvia
0–29 years	26	29
30–44 years	53	60
45–59 years	20	10
60– years	1	1
Lithuania
0–29 years	26	27
30–44 years	53	52
45–59 years	20	20

S6 Environmental impacts

Our biggest environmental impact is generated indirectly through our financing, investments, payments and procurement. Despite that direct impacts are fairly limited, it is our responsibility, to the best of our ability, to minimise and report our carbon footprint. Since the base year 2010 we have cut our greenhouse gas emissions in half. Consequently, the goal for 2018 has been revised and the new goal is to cut emissions by 60 per cent based on the 2010 level.

The large share of our emissions is generated through energy consumption in our properties and through business travel. It is important therefore to increasingly use renewable energy, especially in properties in the Baltic countries, where consumption is usually more CO² intensive than in Sweden. In 2015 we reduced our total energy consumption by nearly 21 000 MWh and increased the share of renewable energy we purchased compared with the previous year. The move of our head office in 2014 generated significant energy savings, since our energy consumption has been cut in half in our new building, which has been certified by the Swedish Green Building Council and meets the requirements for its highest rating.

In addition, we are working to reduce emissions generated from our business travel. Among the measures we are taking is to travel by train rather than air between certain destinations in Sweden where we have previously relied more on flying. We are also trying to change the way we meet by holding more meetings on digital platforms. In this way we free up more time and resources for our employees while reducing travel times and the impact of our business travel.

We also work actively to reduce internal resource consumption by increasing our electronic archiving and distribution. With e-archiving we are taking the first step in the digitisation of our contracts. As a result, customers can obtain important documents digitally, directly through the Internet Bank, rather than on paper. E-distribution provides secure storage and easy access for the customer, leads to more effective customer meetings, and in the long run reduces the number of printouts.

Greenhouse gas emissions1, tonnes CO2e	2015	2014
Total emissions	35 444	41 715
Previous reduction target 2018, 50%2	36 139.5	36 139.5
New reduction target 2018, 60%2	28 912

Emissions by scope according to GHG protocol
Emissions scope 13	989	2 495
Emissions scope 24	19 195	21 985
Emissions scope 35	15 260	17 235

Emissions by country
Emissions, Sweden	15 873	19 906
Emissions, Estonia	12 336	14 216
Emissions, Latvia	2 600	2 680
Emissions, Lithuania	3 519	3 343
Emissions, other6	1 116	1 570

1) Carbon dioxide, methane and nitrous oxide.

2) The base year is 2010, when we reported 72 279 tonnes of CO2 emissions.

3) Our direct emissions. Based on fuel consumption and refrigerant gas loss. 4) Our indirect emissions generated through electricity consumption and heating/cooling.

5) Our other indirect emissions from business travel, security transports, paper consumption, water consumption and waste (business-related meals and consumption of coffee and fruit are included in 2014).

6) Norway, Finland, Denmark, USA, Luxembourg, China and South Africa.

Emissions by category, tonnes CO2e	2015	2014
Sweden
Office premises	5 029	7 364
Business travel	10 659	11 978
Other emissions1	185	564
Estonia
Office premises	11 093	12 953
Business travel	1 168	1 159
Other emissions1	75	104
Latvia
Office premises	1 561	1 697
Business travel	780	795
Other emissions1	259	188
Lithuania
Office premises	1 337	1 546
Business travel	1 508	1 435
Other emissions1	674	362
Other countries
Office premises	413	357
Business travel	699	1 206
Other emissions1	4	7

1) Security transports, paper consumption and waste (business-related meals and consumption of coffee and fruit are included in 2014).

Other environmental data	2015	2014
Energy consumption in our offices (MWh)	130 368	151 207
Renewable energy as a share of total energy consumption (%)1	38	36
Paper consumption (tonnes)	1 035	979
Water consumption (m3/FTE)	8,6	11
Recycled waste (tonnes)	634	636
Incinerated waste (tonnes)	383	586
Landfill waste (tonnes)	344	299

1) Renewable energy refers to wind power and hydroelectric power.

Internal energy consumption1	2015	2014
Total emissions from energy consumption (tonnes Co2e/MWh)	0.15	0.14
Energy consumption per employee (MWh/FTE)	8.5	9.5

1) Our indirect energy consumption consists of consumption of energy, heating, cooling and gas.

Comparative figures, tonnes CO2e	2015	2014
Total emissions per employee	2.32	2.63
Scope 1 and 2 emissions per employee	1.32	1.54
Total emissions per m2 office space	0.074	0.080
Scope 1 and 2 emissions per m2 office space	0.042	0.047

S7 Social engagement

Social engagement has played a key role through Swedbank's history. The first savings bank was founded in 1820 to help the general public save and achieve long-term financial security. The same holds true today. As a major bank, we are part of and are affected by everything that happens in society. We are engaged in social issues such as education, youth unemployment and entrepreneurship. Positive development in these areas is important for society's development as well as for the bank's business.

Swedbank has a tradition of educating the public. In Latvia our employees have arranged over 300 lectures on personal finance for high school students to teach them about managing money and savings. In Swedbank Swedbank and the savings banks met 38 000 students during the year through the Young Economy initiative. Teaching young people to be financially sustainable is important to us. Swedbank, the savings banks and the Swedish Public Employment Service have worked together on the Young Jobs initiative since 2009 to help the young unemployed gain a foothold in the job market. Together with the bank's corporate network around Sweden, over 10 000 traineeships have been created for young people ages 18-24 who need work experience, references and training. Over 1 200 of them have completed a three-month traineeship at Swedbank and the savings banks, after which one third have been offered some form of employment. In autumn 2011 Swedbank expanded its collaboration with the Employment Service to focus on unemployed foreign-born academics, especially those with business degrees. The initiative was named A Job at Last, and to date the bank has offered over 160 people a six-month traineeship, where their skills are validated to help match them with the right jobs.

The large part of our social investments in 2015 involved sponsorship of social activities such as Young Jobs and A Job at Last which are described above. Customers who choose the bank's products and services where a percentage of the funds' value is donated to charities with a sustainability focus also contribute to the bank's social investments.

Social investments, total SEKm	2015	2014
Social investments, total	107	144
–of which Sweden	87	104
–of which Estonia	7	8
–of which Latvia	11	30
–of which Lithuania	2	2

Social investments per

engagement, %	Sweden	Estonia	Latvia	Lithuania
Sponsorship of social activities	43	79	46	70
Staff volunteering in paid time	7	19	2	7
Management costs	0	2	3	2
Products and services with a social benefit1	0	0	0	19
Gifts from customers via the bank's products and services	50	0	49	2

1) Refers mainly to donation portals in Lithuania.

2015
SEKm	%
37 624	–
1 256	3
15 735	42
563	1
681	2
4 616	12
1 197	3
2 827	7
6 171	18
7 093	19
11 880	31
3 899	10

1) Refers to non-deductible VAT expensed by Swedbank.

GRI Standard Disclosures

GRIR = Swedbank's GRI Report 2015

AR = Annual Report 2015

		Page/reference	Global Compact (principle no.)
	Strategy and analysis
G4-1	Statement from the CEO and Chair	9–11
	Organisational profile
G4-3	Name of the organisation	Front cover
G4-4	Primary brands, products, and/or services	105 note G6
G4-5	Location of the organisation's headquarters	71 note G1
G4-6	Number of countries where the organisation operates	2, 106 note G7
G4-7	Nature of ownership and legal form	46–57
G4-8	Markets served	2 , 106 note G7
G4-9	Scale of the organisation	2–3
G4-10	Employee data	110 note G13, 183–184	1–6
G4-11	Percentage of total employees covered by collective bargaining agreements	110 note G13	3
G4-12	The organisation's supply chain	183, GRIR 3	1–6
G4-13	Significant changes during the reporting period	71 note G2	1–10
G4-14	Whether and how the precautionary approach or principle is addressed by the organisation	71 note G2, GRIR 4	7–9
G4-15	Externally developed economic, environmental and social charters, principles, or other initiatives to which the organisation subscribes or which it endorses	GRIR 4
G4-16	Memberships of associations and national or international advocacy organisations	GRIR 4
	Identified Material Aspects and Boundaries
G4-17	Organisational structure including list of entities included or excluded	46–57
G4-18	Explanation of the process for defining the report content and the aspect boundaries and how the organisation has implemented the reporting principles for defining report content	GRIR 5	1–10
G4-19	Material aspects identified in the process for defining report content	GRIR 5
G4-20	For each material aspect, report the aspect boundary within the organisation	GRIR 6
G4-21	For each material aspect, report the aspect boundary outside the organisation	GRIR 6
G4-22	The effect of and reasons for any restatements of information provided in previous reports, and the reason for such restatements	GRIR 6
G4-23	Significant changes from previous reporting periods in the Scope and Aspect Boundaries	GRIR 7
	Stakeholder Engagement
G4-24	List of stakeholder groups engaged by the organisation	GRIR 7
G4-25	The basis for identification and selection of stakeholders	GRIR 7
G4-26	The organisation's approach to stakeholder engagement	GRIR 7
G4-27	Key topics and concerns that have been raised through stakeholder engagement, and how the organisation has responded to those key topics	GRIR 8	1–10
Report Profile
G4-28	Reporting period	GRIR 2
G4-29	Date of most recent previous report	GRIR 9
G4-30	Reporting cycle	GRIR 9
G4-31	Provide the contact point for questions regarding the report or its contents	Cover back, GRIR 18
G4-32	Report the 'in accordance' option the organisation has chosen, the GRI Content Index for the chosen option and reference to external assurance	179, 188
G4-33	Policy and current practice with regard to seeking external assurance for the report	179, 192	1–10
Governance
G4-34	Governance structure of the organisation	46–63
	Ethics and Integrity
G4-56	The organisation's values, principles, standards, and norms of behaviour such as codes of conduct and codes of ethics	1, GRIR 9	1–10

Reporting according to G4-DMA

Description		Pages
G4-DMA-a	Report why the identified aspects are material for Swedbank's sustainability work	GRIR 10–11
G4-DMA-b	Report how the organisation manages the material aspects	GRIR 10–11
G4-DMA-c	Report the evaluation of the management approach	GRIR 10–11

GRI Specific Standard Disclosures

The GRI indicators tied to the material aspects as defined by the bank's materiality analysis and how these material aspects align with GRI's indicators and specific standard disclosures are shown below. The same table shows how our work supports the Global Compact's ten principles.

One or more indicators are reported for each material aspect. We have used one or more of GRI's indicators where available and reported them in the table below using GRI's designations. For aspects that lack GRI disclosures, we have used our own disclosures. For all our material aspects, at least one disclosure/specific standard disclosure is reported in accordance with GRI G4.

GRIR= Swedbank GRI Report 2015 AR = Annual Report 2015

Material Aspects	Indicator	Indicator name/disclosure	Page/reference	Global Compact (principle no.)
	Economic impacts
	Economic performance
Sound compensation culture		Compensation within Swedbank	110 note G13	6
Social engagement	G4-EC1	Direct economic value generated and distributed	23, 186
Sound lending culture		Households with loan-to-value ratio over 70% of property value	181
		Share of households with loan-to-value ratio over 70% that amortise	17, 181
Financial stability		Results and ROE	3, 67
		Capital adequacy ratio	98 note G4
		Profit for the year	3
		Dividend per share	118 note G19
Low risk profile		Risk exposure amount	26
Competitive prices		Market shares private market and corporate market	2
	Indirect economic impacts
Sustainability integrated in internal processes	G4-EC8	Significant indirect economic impacts, including the extent of impacts	186, GRIR 12
	Environmental impacts
	Energy
Responsible resource management G4-EN5		Internal energy consumption	185, GRIR 13	8
	Greenhouse gas
	G4-EN15	Direct greenhouse gas (GHG) emissions (Scope 1)	185, GRIR 13	8
	G4-EN16	Energy indirect greenhouse gas (GHG) emissions (Scope 2)	185, GRIR 13	7–8
	G4-EN17	Other indirect greenhouse gas (GHG) emissions (Scope 3)	185, GRIR 13	8
	G4-EN18	Greenhouse gas (GHG) emission intensity	185, GRIR 13	8
	Supplier Environmental Assessment
	G4-EN32	Percentage of new suppliers that were screened using environmental criteria	183, GRIR 3, 13	7-8
	Social impacts – Working conditions
	Hiring
Attractive employer	G4-LA1	Total number and rates of new employee hires and employee turnover by age group, gender, and region.	183
	Diversity and gender equality
Gender equality and diversity	G4-LA12	Composition of governance bodies and break down of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity	184, GRIR 14	6
	Equal pay for men and women
	G4-LA13	Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation	184, GRIR 14	6

Material Aspects	Indicator	Indicator name/disclosure	Page/reference	Global Compact (principle no.)
	Skills development
Competent personnel	G4-LA9	Average hours of training per year per employee by gender, and by employee category	183, GRIR 14
	Social impacts – Human rights
	Investments
Sustainability integrated in internal processes	G4-HR1	Total number and percentage of significant investment agreements and contracts that include human rights clauses or that underwent human rights screening	181	1–6
	Supplier assessments for human rights
	G4-HR10	Percentage of new suppliers that were screened using human rights criteria	183	1–6
	Social impacts – Organisation's role in society
	Local communities
Accessibility	G4-FS13	Access points in low-populated or economically disadvantaged areas by types	180	6
High quality products	G4-FS14	Initiatives to improve access to financial services for disadvantaged people	180	6
	Anti-corruption
Fight corruption and money laundering	G4-SO3	Number/percentage of operations assessed for risks related to corruption and the significant risks identified	17, 181, GRIR 16	10
		Share of suppliers undergoing business ethics risk assessments	183	1–10
		Share of holdings in fund portfolios undergoing business ethics risk assessments	182	1–10
		Number of corporate customers undergoing business ethics risk assessments	181	1–10
Transparent reporting		Reporting of taxes for the year	115 note G18, GRIR 17	10
		Reporting of profit for the year	3, 67	10
	Social impacts – Product responsibility
	Product and service labelling
Customised advice	G4-PR5	Results of surveys measuring customer satisfaction	19
Secure IT systems		Reliability of IT systems	GRIR 17	1–2
High service level		Results of surveys measuring customer satisfaction	19
	Product portfolio
Sustainable products and services	G4-FS6	Percentage of the portfolio for business line by specific region, size and by sector	181, GRIR 17	1–10
	G4-FS7	Monetary value of products and services designed to deliver a specific social benefit for each business line broken down by purpose	181	1–10
	G4-FS8	Monetary value of products and services designed to deliver environmental benefit for each business line broken down by purpose	181	1–10
	Active ownership
Responsible owner	G4-FS10	Percentage and number of companies held in the institution's portfolio with which the reporting organisation has interacted on environmental or social issues	182, GRIR 18	1–10
Sustainable products and services	G4-FS11	Percentage of assets subject to positive and negative environmental or social screening	182, GRIR 18	1–10

Signatures of the Board of Directors and the CEO

The Board of Directors and the President hereby affirm that the annual report has been prepared in accordance with the Act on Annual Accounts in Credit Institutions and Securities Companies (ÅRKL), the instructions and general guidelines of the Swedish Financial Supervisory Authority (FFFS 2008:25) and the Swedish Financial Accounting Standards Council's recommendation RFR 2 Accounting for Legal Entities, and provides an accurate portrayal of the Parent Company's position and earnings and that the Board of Directors' Report provides an accurate review of trends in the company's operations, position and earnings, as well as describes significant risks and instability factors faced by the company.

The Board of Directors and the President hereby affirm that the consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the EU, and provide an accurate portrayal of the Group's position and earnings and that the Board of Directors' report for the Group provides an accurate review of trends in the Group's operations, position and earnings, as well as describes significant risks and instability factors faced by the Group.

Stockholm, 25 February 2016

Anders Sundström Lars Idermark Chair Vice Chair

Employee representative Employee representative

Ulrika Francke Göran Hedman Anders Igel

Pia Rudengren Karl-Henrik Sundström

Siv Svensson Maj-Charlotte Wallin

Roger Ljung Camilla Linder

Birgitte Bonnesen Acting President and CEO

Our auditors' report was submitted on 25 February 2016

Deloitte AB

Svante Forsberg Authorised Public Accountant

Auditors' report

To the annual meeting of the shareholders of Swedbank AB (publ), corporate identity number 502017-7753

Report on the annual accounts and consolidated accounts

We have audited the annual accounts and consolidated accounts of Swedbank AB (publ) for the financial year 1 January 2015 – 31 December 2014 except for the corporate governance statement on pages 46–57. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 26–45, 64–177.

Responsibilities of the Board of Directors and the Managing Director for the annual accounts and consolidated accounts

The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these annual accounts in accordance with the Annual Accounts Act for Credit Institutions and Securities Companies and of the consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act for Credit Institutions and Securities Companies, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Managing Director, as well as evaluating the overall presentation of the annual accounts and consolidated accounts. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinions

In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act for Credit Institutions and Securities Companies and present fairly, in all material respects, the financial position of the parent company as of 31 December 2015 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act for Credit Institutions and Securities Companies, and the consolidated accounts have been prepared in accordance with the Annual Accounts Act for Credit Institutions and Securities Companies and present fairly, in all material respects, the financial position of the group as of 31 December 2015 and of their financial performance and cash flows in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act for Credit Institutions and Securities Companies.

Our opinions do not cover the corporate governance statement on pages 46–57. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.

We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and the group.

Report on other legal and regulatory requirements

In addition to our audit of the annual accounts and consolidated accounts, we have examined the proposed appropriations of the company's profit or loss and the administration of the Board of Directors and the Managing Director of Swedbank AB (publ) for the financial year 1 January 2015– 31 December 2015. We have also conducted a statutory examination of the corporate governance statement.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss, and the Board of Directors and the Managing Director are responsible for administration under the Companies Act and the Banking and Financing Act and that the corporate governance statement on pages 46–57 has been prepared in accordance with the Annual Accounts Act.

Auditor's responsibility

Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company's profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden. As a basis for our opinion on the Board of Directors' proposed appropriations of the company's profit or loss, we examined the Board of Directors' reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act.

As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and circumstances of the company in order to determine whether any member of the Board of Directors or the Managing Director is liable to the company. We also examined whether any member of the Board of Directors or the Managing Director has, in any other way, acted in contravention of the Companies Act, the Banking and Financing Act, the Annual Accounts Act for Credit Institutions and Securities Companies or the Articles of Association.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Furthermore, we have read the corporate governance statement and based on that reading and our knowledge of the company and the group we believe that we have a sufficient basis for our opinions. This means that our statutory examination of the corporate governance statement is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden.

Opinions

We recommend to the annual meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.

A corporate governance statement has been prepared, and its statutory content is consistent with the other parts of the annual accounts and consolidated accounts.

Stockholm, 25 February 2016

Deloitte AB

Svante Forsberg Authorised Public Accountant

Auditor's Limited Assurance Report on Swedbank AB's Sustainability Report

To Swedbank AB

This is the translation of the auditor's report in Swedish.

Introduction

We have been engaged by the Board of Directors and President of Swedbank AB to undertake a limited assurance engagement of Swedbank AB's Sustainability Report for the year 2015. The Company has defined the scope of the Sustainability Report on page 178.

Responsibilities of the Board of Directors and the Executive Management for the Sustainability Report

The Board of Directors and the Executive Management are responsible for the preparation of the Sustainability Report in accordance with the applicable criteria, as explained on page 178 in the Sustainability Report, and are the parts of the Sustainability Reporting Guidelines (published by The Global Reporting Initiative (GRI)) which are applicable to the Sustainability Report, as well as the accounting and calculation principles that the Company has developed. This responsibility also includes the internal control relevant to the preparation of a Sustainability Report that is free from material misstatements, whether due to fraud or error.

Responsibilities of the auditor

Our responsibility is to express a conclusion on the Sustainability Report based on the limited assurance procedures we have performed.

We conducted our limited assurance engagement in accordance with RevR 6 Assurance of Sustainability Reports issued by FAR. A limited assurance engagement consists of making inquiries, primarily of persons responsible for the preparation of the Sustainability Report, and applying analytical and other limited assurance procedures. The procedures performed in a limited assurance engagement vary in nature from, and are less in extent than for, a reasonable assurance engagement conducted in accordance with IAASB's Standards on Auditing and Quality Control and other generally accepted auditing standards in Sweden. The audit firm applies International Standard on Quality Control (ISQC) 1 and has a comprehensive system of quality control comprising documented guidelines and routines for complying with ethical requirements, professional standards, and applicable laws and regulations.

Our procedures are based on the criteria defined by the Board of Directors and the Executive Management as described above. We consider these criteria suitable for the preparation of the Sustainability Report.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion below.

Conclusion

Based on the limited assurance procedures we have performed, nothing has come to our attention that causes us to believe that the Sustainability Report, is not prepared, in all material respects, in accordance with the criteria defined by the Board of Directors and Executive Management.

Stockholm 25 February 2016

Deloitte AB

Svante Forsberg Elisabeth Werneman Andreas Drugge Authorised Public Accountant Authorised Public Accountant Expert Member of FAR

Annual General Meeting

The Annual General Meeting will be held at Dansens Hus, Barnhusgatan 14, Stockholm on Tuesday, 5 April 2016.

Notification of attendance

Shareholders who wish to attend the Annual General Meeting must:

be recorded in the share register maintained by Euroclear Sweden AB (Euroclear) on 30 March 2016.
notify the company of their intention to participate and the number of persons who will accompany them (max. 2) well before and preferably not later than 30 March 2016.

Notification may be submitted in writing to Swedbank, c/o Euroclear, Box 7839, SE-103 98 Stockholm, Sweden marking the envelope "Swedbank's AGM" or by telephone +46 8 402 90 60, or online at www.swedbank.com/ir under Corporate Governance/Annual General Meeting. When notifying the company, please indicate your name, personal/company registration number (for Swedish citizens or companies), address and telephone number. Participation by proxy is permitted, provided the proxy is no more than one year old and is submitted to Swedbank well in advance of the meeting, preferably not later than 30 March 2016. If issued by a legal entity, the proxy must be accompanied by a certified registration certificate or other document attesting to the authority of the signatory.

Nominee-registered shares

To be entitled to attend the meeting, shareholders whose shares are nominee-registered must request to have them temporarily re-registered in their own names in the shareholders' register maintained by Euroclear. The re-registration process must be completed by the nominee well in advance of the record day 7 April 2016.

Notice and agenda

A list of the items on the agenda for the Annual General Meeting is included in the notice of the meeting. The notice will be published no later than 8 March 2016 at http://www.swedbank. com/ir under the heading Annual General Meeting and in Post och Inrikes Tidningar (The Official Swedish Gazette). An announcement of notice publication was also published in Dagens Nyheter and elsewhere.

Dividend

The Board of Directors recommends that shareholders receive a dividend of SEK 10.70 per ordinary share. The proposed record day for the dividend is 7 April 2016. The last day for trading in Swedbank's shares including the right to the dividend is 5 April 2016. If the Annual General Meeting adopts the Board of Directors' recommendation, the dividend is expected to be paid by Euroclear on 12 April 2016.

Owner and share data

Number of shareholders, 31 December 2015

Size of holding	No. of shareholders	No. of shares	Holding, %
1—100	146 474	4 765 403	0.42
101—500	112 700	28 960 556	2.56
501—1 000	27 127	19 919 309	1.76
1 001—2 000	12 733	17 883 821	1.58
2 001—5 000	5 722	17 695 545	1.56
5 001—10 000	1 392	10 017 514	0.88
10 001—100 000	1 252	36 552 284	3.23
100 001—500 000	302	66 449 016	5.87
500 001—	272	929 762 274	82.13
Totalt	307 974	1 132 005 722	100

Source: Euroclear Sweden AB

Share statistics. A share	2015	2014	2013	2012	2011
High price, SEK	223.90	199.80	182.80	128.90	118.90
Low price, SEK	177.20	165,70	127.90	89.15	68.90
Closing price, 31 Dec., SEK	187.10	195.50	181.00	127.00	89.15
Daily turnover, millions of shares1	6,3	7.0	7.4	7.7	11.1
Daily turnover, SEKm1	1 246	1 245	1 145	858	1 091
Total market capitalisation, 31 Dec., SEKbn	207	221	205	139	98
ISIN code A share: SE0000242455

1)Turnover data include turnover on all marketplaces. including OTC trading.

Sources: NASDAQ OMX. www.nasdaqomxnordic.com and Fidessa Fragmentation Index. http://fragmentation.fidessa.com/fragulator/

Largest shareholders, 31 December 2015, by owner group1

Share of capital and votes, %	2015
Folksam	9.2
Sparbanks-Gruppen – Members	9.0
ALECTA PENSIONSFÖRSÄKRING	4.5
JPM CHASE NA3	4.0
AMF – Insurance and Funds	4.0
Sparbanksstiftelser – not Sparbanks-Gruppen	3.9
Swedbank Robur Funds	3.2
Swedbank AB2	2.4
CLEARSTREAM BANKING S.A., W8IMY3	1.8
SEB Investment Management	1.7
10 largest shareholders	43.8
Number of shareholders	300 607

1) Shareholders in lowercase letters are grouped.

2) Repurchased shares, which carry no votes or dividend rights.

3) These shares are nominee-registered shares on at least two levels: with a Swedish custodianbank and on at least one additional level with a foreign bank. Consequently, there is no information on the owner(s) behind the name on the list. There may be one or more owners. The same foreign custodian bank may appear multiple times on the list.

Source: Euroclear Sweden AB

Swedbank's rating, 31 December 2015

		Swedbank AB		Swedbank Mortgage AB	Covered bonds
		Rating Outlook Rating Outlook Rating Outlook
Standard & Poor's
Short-term	A-1+		A-1+
Long-term	AA-	N	AA-	N	AAA	S
Moody's
Short-term	P-1		P-1
Long-term	Aa3	S	Aa3	S	Aaa	–
BCA1	a3
Fitch
Short-term	F1	p	–			–
Long-term	A+		–

1) Rating without implicit support from other party.

Data per share

SEK	2015	2014	2013	2012	2011
Earnings per share before dilution1, 2	14.23	14.93	11.76	13.03	9.53
Earnings per share before dilution, continuing operations1, 2	14.24	15.17	13.89	13.94
Earnings per share after dilution1, 2	14.13	14.81	11.66	12.98	9.52
Earnings per share after dilution, continuing operations1, 2	14.14	15.05	13.79	13.88
Equity per share	114,40	106.35	99.82	93.70	84.40
Cash dividend per ordinary share	10.703	11.35	10.10	9.90	5.30
Cash dividend per preference share				9.90	5.30
P/E	13.15	13.1	15.4	9.8	9.4
Price/equity per share	1.64	183.83	181.33	135.54	105.63

1) Since the terms to convert the preference shares to ordinary shares are mandatory, the preference shares are included in the calculation of key ratios.

2) Without deducting the preference share dividend. When calculating earnings per share according to IA S 33, the non-cumulative preference share dividend is deducted from profit.

The calculations are specified in Note G19.

3) Board of Directors' proposal.

Changes in share capital

Year	Transactions	Quota value per share, SEK	Added/ repurchased shares	No. of preference shares	No. of A shares	No. of C shares	Share capital, SEKm
1999	Bonus issue	20	175 936 281		527 808 843		10 556
2004	Share repurchase	20	–14 937 531		512 871 312		10 556
2005	New share issue	20	2 502 100		515 373 412		10 606
2006	Cancellation of shares	20			515 373 412		10 307
2006	Bonus issue	21			515 373 412		10 823
2008	New share issue	21	257 686 7061	257 686 706	515 373 412		16 234
2009	Conversion of preference shares to ordinary shares	21	–38 050 112	219 636 594	553 423 524		16 234
2009	New share issue	21	386 530 059	219 636 594	939 953 583		24 351
2010	Conversion of preference shares to ordinary shares	21	–12 369 856	207 266 738	952 323 439		24 351
2011	C share issue	21	1 500 000	207 266 738	952 323 439	1 500 000	24 383
2011	Conversion of preference shares to ordinary shares	21	–12 866 678	194 400 060	965 190 117	1 500 000	24 383
2012	Conversion of preference shares to ordinary shares	21	–10 128 513	184 271 547	975 318 630	1 500 000	24 383
2012	Cancellation of shares	21	–29 084 455	180 855 906	951 149 816		23 772
2012	Bonus issue	22		180 855 906	951 149 816		24 904
2013	Conversion of preference shares to ordinary shares	22	– 6 944 758	173 911 148	958 094 574		24 904
2013	Mandatory conversion of preference shares to ordinary shares	22	–173 911 148		1 132 005 722		24 904

1)Subscribed and paid preference shares amounted to 194 985 456 at year-end 2008.

Market shares

	Market shares, per cent				Volumes, SEKbn
Sweden	2015 2014 2013 2012 2011						2014	2013	2012	2011
Private market

Deposits	21	21	21	22	23	310	286	270	268	260
Lending	23	24	24	24	25	770	731	690	673	659
of which mortgage lending1	25	25	25	26	26	665	627	591	575	562
Bank cards (thousands)	n.a.	n.a.	n.a.	n.a.	n.a.	4 066	3 903	3 836	3 835	3 797

1) Excluding savings banks' investments in Swedbank Robur and the figures for 2015 relates to September.

Corporate market

Deposits	19	19	18	16	16	183	163	151	131	122
Lending	19	19	17	17	17	397	388	340	335	326

	Market shares, per cent					Volumes, SEKbn
Baltic countries	2015	2014	2013	2012	2011	2015	2014	2013	2012	2011
Private market

Estonia
Deposits	55	54	54	54	54	30	29	25	23	22
Lending	47	46	46	46	47	30	29	27	26	27
of which mortgage lending	46	45	46	46	46	27	27	25	24	25
Bank cards (thousands)	60	60	60	61	62	1 104	1 100	1 088	1 095	1 102

Latvia
Deposits	28	28	29	28	23	20	19	16	13	10
Lending	29	29	29	30	27	15	16	16	17	18
of which mortgage lending
(as of Sept 2015)	31	31	31	28	26	13	14	14	13	14
Bank cards (thousands)
(as of Sept 2015)	43	42	42	41	41	982	978	1 000	993	956

Lithuania (as of Sept 2015)
Deposits	37	37	37	36	36	34	33	26	24	22
Lending	28	28	27	27	26	19	18	17	16	15
of which mortgage lending	26	27	26	25	25	16	16	15	14	15
Bank cards (thousands)	48	49	51	50	50	1 659	1 700	1 821	1 869	1 805

			Market shares, per cent			Volumes, SEKbn
Baltic countries	2015	2014	2013	2012	2011	2015	2014	2013	2012	2011
Corporate market

Estonia
Deposits	41	36	37	38	41	31	27	24	23	23
Lending	34	34	35	35	36	30	30	28	26	27

Latvia
Deposits	12	12	14	13	10	18	17	17	14	8
Lending (as of Dec 2014)	17	17	17	18	18	17	17	17	17	18

Lithuania (as of Sept 2015)
Deposits	24	22	25	27	24	12	13	12	12	10
Lending	23	23	21	21	20	20	20	18	18	19

Competition in Swedbank's home markets

In an international comparison, the banking sector is fairly concentrated in Swedbank's home markets.

In Sweden, Swedbank, Handelsbanken, Nordea and SEB accounted for about 70 per cent of deposits and lending in 2015. Swedbank is the biggest in retail banking and has a leading market position in mortgages (25 per cent), deposits from private customers (21 per cent) and fund management (22 per cent). In the Swedish corporate market, the bank's share was 19 per cent for lending and 19 per cent for deposits at the end of 2015.

The Estonian banking sector is more concentrated than Sweden's. The market is dominated by foreign companies. Together, Swedbank, SEB, Nordea and Sampo (owned by Danske Bank) control around 90 per cent of the market. Swedbank had a market share of 55 per cent of deposits from private customers and 47 per cent of lending. In the Estonian corporate market, the bank's share was 34 per cent for lending and 41 per cent for deposits. Latvia has a more fragmented market where local banks account for 30 to 70 per cent of the various segments. In 2015 Swedbank accounted for 28 per cent of deposits and 29 per cent of lending to private customers. In the corporate market, the bank's share was 17 per cent for lending and 12 per cent for deposits.

Like Sweden, the banking market in Lithuania is dominated by a few major players. Among private customers, Swedbank accounted for 37 per cent of deposits and 28 per cent of lending. In the corporate market, the bank's share was 23 per cent of lending and 24 per cent of deposits.

Market shares, Sweden, %

Corporate market, deposits Corporate market, lending

11 12 13 14 15

0 10

SBAB Sparbankerna

Swedbank

Private market, deposits Private market, lending Private market, mortgage lending

11 12 13 14 15

Market shares, Baltic countries, %

0 11 12 13 14 15

100						Other Övriga
80						Swedbank
60
40
20
0
	11	12	13	14	15 1

0 20 11 12 13 14 15 Latvia, deposits Latvia, lending Latvia, mortgage lending

⁶⁰ Övriga

Estonia, deposits Estonia, lending Estonia, mortgage lending

1) Market shares for Lithuanian deposits and lending and Latvian mortgage lending refer to 30 September 2015 and for Latvian corporate lending 31 December 2014.

Sources: Statistics Sweden, Estonian Central Bank, Association of Commercial Banks of Latvia, Financial and Capital Market Commission (Latvia), Association of Lithuanian Banks and public quarterly reports.

Five-year summary

Key ratios	2015	2014	2013	2012	2011
Profit
Return on equity, %	13.5	15.0	12.5	14.6	12.2
Return on equity continuing operations, %	13.5	15.2	14.7	15.6
Return on total assets, %	0.67	0.80	0.68	0.76	0.65
Cost/income ratio	0.43	0.45	0.45	0.46	0.54
Net interest margin, %	1.01	1.13	1.17	1.12	1.07

Capital adequacy1
Common Equity Tier 1 ratio, Basel 3 incl IAS 19, %	24.1	21.2	18.3	15.4	14.3
Tier 1 capital ratio, Basel 3 incl IAS 19, %	26.9	22.4	19.6	16.8	15.8
Capital adequacy ratio, Basel 3 incl IAS 19, %	30.3	25.5	20.7	18.5	18.1
Common Equity Tier 1 capital, Basel 3 incl IAS 19	93 926	87 916	80 826	75 242	73 595
Tier 1 capital, Basel 3 incl IAS 19	104 550	92 914	86 371	81 661	81 286
Capital base, Basel 3 incl IAS 19	117 819	105 588	91 026	89 917	93 473
Risk exposure amount, Basel 3 incl IAS 19	389 098	414 214	440 620	487 105	515 137

Credit quality
Credit impairment ratio, %	0.04	0.03	0.00	-0.01	-0.14
Share of impaired loans, gross, %	0.40	0.41	0.55	1.05	1.87
Provision ratio for individually identified impaired loans, %	40	35	38	51	52
Total provision ratio for impaired loans, %	56	53	54	62	62

Other data	2015	2014	2013	2012	2011
Private customers, million2	7,2	7,3	7.2	7.2	7,2
Corporate customers, thousands3	640	642	624	616	630
Internet banking customers, million4	7.1	7,5	7.2	7.0	6,7
Full-time employees	13 893	14 583	14 265	14 861	16 287
Branches4	658	709	721	753	852
ATMs4	1 290	1 397	1 396	2 051	2 482

1) 2015 and 2014 according to current regulation Basel 3. Prior years figures are Swedbank's estimate based on current knowledge of future regulations. 2) N umber of private customers in the baltic countries are reported according to a new defintion as from 2015, lowering the reported number of customers by approximately 0.8 million for 2014. Historical figures have been restated accordingly.

3) In 2011, 60 000 corporate customers with one-man businesses were reclassified as private customers, based on the Swedish Tax Authority's review of the definition of a company.

4) Including savings banks and partly owned banks.

<-- PDF CHUNK SEPARATOR -->

Comments to five-year summary

2015 – The result for the year decreased by 4 per cent, mainly due to lower net gains and losses on financial items at fair value and a one-off tax expense. Expenses decreased by 7 per cent and was due to one-off expenses of SEK 615m in connection with the acquisition of Sparbanken Öresund in 2014, but also due to efficiencies. Impairment of intangible assets consisted of an IT system writedown and the writedown of a previously acquired asset management assignment. Total lending to the public, excluding repos and the Swedish National Debt Office, increased by 3 per cent, primarily driven by private mortgage lending. Swedbank's increased deposits were mainly driven by Swedish Banking

2014 – Profit before credit impairments increased by 7 per cent. All business segments, as well as the acquisition of Sparbanken Öresund, contributed to higher income. Stronger commission income and net interest income contributed the most. Net gains and losses on financial items also increased, while other income decreased excluding the one-off effect of SEK 461m from the acquisition of Sparbanken Öresund. Expenses increased by 6 per cent to SEK 17 602m, slightly below the expense target. Of these expenses, SEK 615m were one-off expenses attributable to the acquisition of Sparbanken Öresund during the second quarter 2014. Excluding Sparbanken Öresund, expenses decreased slightly.

2013 – Profit increased by 3 per cent from stronger net interest income due to repricing and lower funding costs, but also higher commission income and largely unchanged expenses. Swedish Banking was the biggest contributor to the higher profit. During the year Swedbank sold its Ukrainian subsidiary, which resulted in a cumulative negative translation difference of SEK 1 875m in profit. This and the remaining Russian operations are recognised as discontinued operations. The reclassification did not affect Swedbank's capital, capitalisation, cash flow or the Board's proposed dividend for 2013. During the year the phase-out of Ektornet continued.

2012 – Profit increased due to improved net interest income and a cost reduction of 8 per cent, with every unit of the bank contributing. Net interest income rose mainly as a result of the repricing of lending and lower funding costs. The credit impairments were mainly from Ukraine, while the Baltic countries reported recoveries. Swedbank's capital position was further strengthened and the Board of Directors amended the bank's dividend policy to 75 per cent of net profit.

2011 – Credit quality continued to improve, and net recoveries of SEK 1.9bn were generated primarily by Baltic Banking. Net interest income was positively affected by higher interest rates. Lending began to grow again thanks to growth in Sweden, while volume continued to decrease in the Baltic countries, Russia and Ukraine. In 2011 Swedbank was now one of the most well capitalised banks in Europe, with a Common Equity Tier 1 capital ratio of 15.7 per cent according to Basel 2.

Income statement
SEKm	2015	2014	2013	2012	2011
Net interest income	22 993	22 642	22 029	20 361	19 014
Net commissions	11 199	11 204	10 132	9 614	9 597
Net gains and losses on financial items at fair value	571	1 986	1 484	3 073	1 584
Net insurance	708	581	647	595	506
Share of profit or loss of associates	863	980	852	798	767
Other income	1 290	1 911	1 794	1 827	2 577
Total income	37 624	39 304	36 938	36 268	34 045
Staff costs	9 395	10 259	9 651	9 238	9 917
Other expenses	6 266	6 625	6 258	6 470	7 471
Depreciation/amortisation of tangible and intangible fixed assets	672	718	739	852	1 011
Total expenses	16 333	17 602	16 648	16 560	18 399
Profit before impairments	21 291	21 702	20 290	19 708	15 646
Impairments of intangible fixed assets	254	1	182	20	1 960
Impairments of tangible fixed assets	72	256	693	407	174
Credit impairments	594	419	60	-185	-1 911
Operating profit	20 371	21 026	19 355	19 466	15 423
Tax expense	4 625	4 301	4 099	4 157	3 669
Profit from continuing operations	15 746	16 725	15 256	14 312	11 754

Profit for the period from discontinued operations, after tax	-6	-262	-2 340	-997	4
Profit for the year	15 740	16 463	12 916	14 312	11 758
Profit for the year attributable to: Shareholders in Swedbank AB	15 727	16 447	12 901	14 304	11 744
Non-controlling interests	13	16	15	8	14

Balance sheet
SEKm	2015	2014	2013	2012	2011
Loans to credit institutions	86 418	113 820	82 278	85 480	97 195
Loans to the public	1 413 955	1 404 507	1 264 910	1 238 864	1 211 454
Interest-bearing securities
Treasury bills and other bills eligible for refinancing with central banks	76 552	46 225	56 814	20 483	25 853
Bonds and other interest-bearing securities	88 610	124 455	125 585	115 324	112 458
Shares and participating interests
Financial assets for which customers bear the investment risk	153 442	143 319	122 743	104 194	95 747
Shares and participating interests	11 074	9 931	7 109	8 106	2 015
Shares and participating interests in associates	5 382	4 924	3 640	3 552	3 111
Derivatives	86 107	123 202	64 352	102 265	103 726
Others	227 315	150 914	96 671	168 592	205 506
Total assets	2 148 855	2 121 297	1 824 102	1 846 860	1 857 065
Amounts owed to credit institutions	150 493	171 453	121 621	122 202	139 598
Deposits and borrowings from the public	748 271	676 679	620 608	579 663	561 696
Debt securities in issue	826 535	835 012	726 275	767 454	781 458
Financial liabilities for which customers bear the investment risk	157 836	146 177	125 548	105 104	96 449
Derivatives	68 681	85 694	55 011	92 141	90 484
Other	49 084	69 952	55 175	62 803	69 716
Subordinated liabilities	24 613	18 957	10 159	14 307	19 531
Equity	123 342	117 373	109 705	103 186	98 133
Total liabilities and equity	2 148 855	2 121 297	1 824 102	1 846 860	1 857 065

Three-year summary Swedish Banking

SEKm	2015	2014	2013

Income statement
Net interest income	13 435	13 350	13 633
Net commissions	7 176	6 939	6 335
Net gains and losses on financial items at fair value	264	230	126
Share of profit or loss of associates	862	980	850
Other income	814	1 179	658
Total income	22 551	22 678	21 602
Staff costs	3 487	4 034	3 285
Variable staff costs	157	211	215
Other expenses	6 237	6 410	6 035
Depreciation/amortisation	106	91	62
Total expenses	9 987	10 746	9 597
Profit before impairments	12 564	11 932	12 005
Impairment of intangible assets
Impairment of tangible assets
Credit impairments	482	246	338
Operating profit	12 082	11 686	11 667
Tax expense	2 548	2 392	2 501
Profit for the year attributable to:
Shareholders of Swedbank AB	9 521	9 280	9 152
Non-controlling interests	13	14	14

Balance sheet, SEKbn
Cash and balances with central banks
Loans to credit institutions	42	58	41
Loans to the public	1 064	1 023	936
Bonds and other interest-bearing securities
Financial assets for which customers bear inv. risk	153	142	120
Derivatives
Other assets	11	12	12
Total assets	1 270	1 235	1 109
Amounts owed to credit institutions	87	93	81
Deposits and borrowings from the public	458	416	385
Debt securities in issue
Financial liabilities for which customers bear inv. risk	155	143	124
Derivatives
Other liabilities	519	529	486
Subordinated liabilities			0
Total liabilities	1 219	1 183	1 076
Allocated equity	51	52	33
Total liabilities and equity	1 270	1 235	1 109

Income items
Income from external customers	22 376	22 490	21 425
Income from transactions with other business areas	175	188	177

Key ratios
Return on allocated equity, %	18.5	25.5	28.1
Loans/deposits	235	249	243
Credit impairment ratio, %	0.05	0.03	0.04
Cost/income ratio	0.44	0.47	0.44

Risk exposure amount	183	185	201
Full-time employees	4 469	5 008	4 530

201

Three-year summary Baltic Banking

SEKm	2015	2014	2013

Income statement
Net interest income	3 558	3 496	3 156
Net commissions	2 052	1 956	1 733
Net gains and losses on financial items at fair value	202	239	316
Share of profit or loss of associates
Other income	476	416	419
Total income	6 288	6 107	5 624
Staff costs	845	783	782
Variable staff costs	75	78	66
Other expenses	1 426	1 512	1 453
Depreciation/amortization	136	144	155
Total expenses	2 482	2 517	2 456
Profit before impairments	3 806	3 590	3 168
Impairment of intangible assets		1	1
Impairment of tangible assets	8	10	23
Credit impairments	-172	-186	-437
Operating profit	3 970	3 765	3 581
Tax expense	1 510	565	393
Profit for the year attributable to:
Shareholders of Swedbank AB	2 460	3 200	3 188
Non-controlling interests

Balance sheet, SEKbn
Cash and balances with central banks	2	3	2
Loans to credit institutions			1
Loans to the public	125	126	119
Bonds and other interest-bearing securities	1	1	1
Financial assets for which customers bear inv. risk	3	3	2
Derivatives
Other assets	37	31	20
Total assets	168	164	145
Amounts owed to credit institutions
Deposits and borrowings from the public	145	139	120
Debt securities in issue		1	1
Financial liabilities for which customers bear inv. risk		3	2
Derivatives
Other liabilities
Subordinated liabilities
Total liabilities	145	143	123
Allocated equity	20	21	22
Total liabilities and equity	168	164	145

Income items
Income from external customers	6 288	6 107	5 619
Income from transactions with other business areas			5

Key ratios
Return on allocated equity, %	12,3	14,6	14,0
Loans/deposits	86	91	100
Credit impairment ratio, %	-0,14	-0,16	-0,37
Cost/income ratio	0,39	0,41	0,44
Risk exposure amount	74	81	88
Full-time employees	3 853	3 920	3 940

Three-year summary Large Corporates & Institutions

SEKm	2015	2014	2013

Income statement
Net interest income	3 428	3 485	3 394
Net commissions	2 025	2 233	1 995
Net gains and losses on financial items at fair value	1 891	1 929	1 960
Share of profit or loss of associates
Other income	143	121	167
Total income	7 487	7 768	7 516
Staff costs	1 425	1 364	1 175
Variable staff costs	228	288	412
Other expenses	1 629	1 644	1 607
Depreciation/amortisation	64	68	58
Total expenses	3 346	3 364	3 252
Profit before impairments	4 141	4 404	4 264
Impairment of intangible assets			56
Impairment of tangible assets
Credit impairments	284	381	180
Operating profit	3 857	4 023	4 028
Tax expense	630	880	1 036
Profit for the year attributable to:
Shareholders of Swedbank AB	3 227	3 143	2 992
Non-controlling interests

Balance sheet, SEKbn
Cash and balances with central banks	5	5	3
Loans to credit institutions	277	300	371
Loans to the public	218	240	205
Bonds and other interest-bearing securities	34	60	54
Financial assets for which customers bear inv. risk
Derivatives	92	123	85
Other assets	27	19	18
Total assets	653	747	736
Amounts owed to credit institutions	200	234	199
Deposits and borrowings from the public	121	118	111
Debt securities in issue	17	15	16
Financial liabilities for which customers bear inv. risk
Derivatives	88	119	80
Other liabilities	208	241	315
Subordinated liabilities
Total liabilities	634	727	721
Allocated equity	19	20	15
Total liabilities and equity	653	747	736

Income items
Income from external customers	7 371	7 655	7 512
Income from transactions with other business areas	116	113	4

Key ratios
Return on allocated equity, %	16.2	19.3	17.2
Loans/deposits	150	165	174
Credit impairment ratio, %	0.16	0.18	0.08
Cost/income ratio	0.45	0.43	0.43
Risk exposure amount	112	124	137
Full-time employees	1 195	1 193	1 086

203

Definitions

Additional Tier 1 capital

Additional Tier 1 capital according to article 51 after the deductions in article 56 and after application of article 79 in CRR.

Capital adequacy ratio

The capital base in relation to risk exposure amount.

Capital base

The sum of Tier 1 (primary) and Tier 2 (supplementary) capital according to article 72 in CRR.

Capital requirement

Regulation on how much capital a company must hold in order to pursue business.

Cash flow per share

Cash flow for the year in relation to the weighted average number of shares outstanding during the year.

Common Equity Tier 1 capital

Common Equity Tier 1 capital according to article 26 after applicable adjustments specified in article 32-35, deductions according to article 36 and the exemptions and alternatives in articles 48, 49 and 79 in CRR.

Common Equity Tier 1 capital ratio

Common Equity Tier 1 capital in relation to the risk exposure amount.

Cost/income ratio

Expenses in relation to income.

Credit impairments

Established losses and provisions for the year less recoveries related to loans as well as the year's net expenses for guarantees and other contingent liabilities.

Credit impairment ratio

Credit impairments on loans and other credit risk provisions, net, in relation to the opening balance of loans to credit institutions and loans to the public.

Duration

The average weighted maturity of payment flows calculated at present value and expressed in number of years.

Earnings per share after dilution

Profit for the year allocated to shareholders in relation to the weighted average number of shares outstanding during the year, rights issue adjustment factor included, adjusted for the dilution effect of potential shares.

Earnings per share before dilution

Profit for the year allocated to shareholders in relation to the weighted average number of shares outstanding during the year, rights issue adjustment factor included.

Equity per share

Shareholders' equity in relation to the number of shares outstanding.

Impaired loans

Loans where there is, on individual level, objective evidence of a loss event, and where this loss event has an impact on the cash flow of the exposure. Impaired loans, gross, less specific provisions for loans assessed individually constitute impaired loans, net.

Interest fixing period

Contracted period during which interest on an asset or liability is fixed.

Loan/deposit ratio

Lending to the public excluding Swedish National Debt Office and repurchase agreements in relation to deposits from the public excluding Swedish National Debt Office and repurchase agreements.

Net interest margin

Net interest income in relation to average total assets.

Net asset value per share

Shareholders' equity according to the balance sheet and the equity portion of the difference between the book value and fair value of the assets and liabilities divided by the number of shares outstanding at year-end.

Number of employees

The number of employees at year-end, excluding long-term absences, in relation to the number of hours worked expressed in terms of full-time positions.

P/E ratio

Market capitalisation at year-end in relation to Profit for the financial year allocated to shareholders.

Price/equity

The share price at year-end in relation to the equity per share at year-end.

Provision ratio for individually identified impaired loans Provisions for impaired loans assessed individually in relation to impaired loans, gross.

Restructured loan

A loan where the terms have been modified to more favourable for the borrower, due to the borrower's financial difficulties.

Return on equity

Profit for the financial year allocated to shareholders in relation to average shareholders' equity.

Return on total assets

Profit for the financial year in relation to average total assets.

Risk exposure amount

Capital requirement for credit risk, market risk, settlement risk and operational risk according to the capital adequacy rules multiplied by 12.5.

Share of impaired loans, gross

Carrying amount of impaired loans, gross, in relation to the carrying amount of loans to credit institutions and the public excluding provisions.

Share of impaired loans, net

Carrying amount of impaired loans, net, in relation to the carrying amount of loans to credit institutions and the public.

Tier 1 capital

The sum of Common Equity Tier 1 capital and additional tier 1 capital according to article 25 in CRR.

Tier 1 capital ratio

Tier 1 capital in relation to the risk exposure amount.

Tier 2 capital

Tier 2 capital according to article 62 after deductions in article 66 and after applications of article 79 in CRR.

Total provision ratio for impaired loans

All provisions for loans in relation to impaired loans, gross.

Total return

Share price development during the year including the actual dividend, in relation to the share price at the beginning of the year.

VaR

Value at Risk (VaR) is a statistical measure used to quantify market risk. VaR is defined as the expected maximum loss in value of a portfolio with a given probability over a certain time horizon.

Yield

Dividend per share in relation to the share price at year-end.

Addresses

HEAD OFFICE

Swedbank AB Corp. identity no. 502017–7753 Registered office: Stockholm Visiting address: Landsvägen 40 Mailing address: SE-105 34 Stockholm Telephone: +46 8 585 900 00 Card blocking: +46 8 411 10 11 Telephone bank: +46 771-22 11 22 Swift: SWEDSESS E-mail: [email protected] www.swedbank.com

CHINA

Swedbank Shanghai Branch

Citigroup Tower 601 No. 33 Huayuanshiqiao Road 200122 Shanghai Telephone: +86 21 386 126 00 Fax: +86 21 386 127 11 Swift: SWEDCNSH www.swedbank.cn

DENMARK

Swedbank Kalvebod Brygge 45 DK-1560 Copenhagen V

Telephone: +45 88 97 9000 Fax: +45 88 97 9025 Swift: SWEDDKKK E-mail: [email protected] www.swedbank.dk

ESTONIA

Swedbank AS Liivalaia 8 EE-150 40 Tallinn Telephone: +372 6310 310 Fax: +372 6310 410 Swift: HABAEE2X E-mail: [email protected] www.swedbank.ee

FINLAND

Swedbank

Visiting address: Mannerheimintie 14 B Mailing address: P.O. Box 1107 FIN-00101 Helsinki Telephone: +358 20 74 69 100 Fax: +358 20 74 69 101 Swift: SWEDFIHH E-mail: [email protected] www.swedbank.fi

LATVIA

AS Swedbank Balasta dambis 1A LV-1048 Riga Telephone: +371 67 444 444 Fax: +371 67 444 344 Swift: HABALV22 E-mail: [email protected] www.swedbank.lv

LITHUANIA

Swedbank AB Konstitucijos ave. 20A LT-03502 Vilnius Telephone: +370 5 268 4444 Fax: +370 5 258 2700 Swift: HABALT22 E-mail: [email protected] www.swedbank.lt

LUXEMBOURG

Swedbank Asset Management S.A. Visiting address: 65 Boulevard G D Charlotte L-1331 Luxembourg Mailing address: P.O. Box 1305 L-1013 Luxembourg Telephone: +352 404 94 01 Fax: +352 40 49 04 Swift: BNELLULL E-mail: [email protected] www.swedbank.lu

NORWAY

Swedbank Visiting address: Filipstad Brygge 1, Aker Brygge Mailing address: P.O. Box 1441 Vika N-0115 Oslo Telephone: +47 23 11 62 00 Fax: +47 23 11 62 01 Swift: SWEDNOKK E-mail: [email protected] www.swedbank.no

SWEDEN

Large Corporates & Institutions Visiting address: Landsvägen 40 Mailing address: SE-105 34 Stockholm Telephone: +46 8 585 909 63 E-mail: [email protected] www.swedbank.com

Swedbank Fastighetsbyrå AB

Visiting address: Västra Järnvägsgatan 7 Mailing address: Box 644, SE-101 32 Stockholm Telephone: +46 8 545 455 00 E-mail: [email protected] www.fastighetsbyran.se

Svensk Fastighetsförmedling AB

Visiting address: Årstaängsvägen 11 Mailing address: P.O. Box 47106 SE-100 74 Stockholm Telephone: +46 8 505 358 00 E-mail: [email protected] www.svenskfast.se

Swedbank Företagsförmedling AB

Visiting address: Wallingatan 33, Stockholm Mailing address: Östra hamngatan 37 SE-411 10 Göteborg E-mail: [email protected] www.swedbankff.se

Swedbank Försäkring AB

Visiting address: Junohällsvägen 1 Mailing address: SE-105 34 Stockholm Telephone: +46 8 585 900 00

Swedbank Juristbyrå AB

Visiting address: Västra Järnvägsgatan 7 Mailing address: Box 371 SE-101 27 Stockholm Telephone: +46 8 545 451 00 e-post: [email protected] www.juristbyran.com

Swedbank Mortgage AB

Visiting address: Landsvägen 40 Mailing address: SE-105 34 Stockholm Telephone: +46 8 585 900 00 www.swedbank.com/IR

Swedbank Robur AB

Visiting address: Landsvägen 40 Mailing address: SE-105 34 Stockholm Telephone: +46 8 585 924 00 E-mail: [email protected] www.swedbankrobur.se

USA

Swedbank New York Branch One Penn Plaza, 15th floor

New York, NY 10119 Telephone: +1 212 486 8400 Fax: +1 212 486 3220 Swift: SWEDUS33 www.swedbank.us

Swedbank First Securities LLC

One Penn Plaza, 15th floor New York, NY 10119 Telephone: +1 212 906 0800 Fax: +1 212 759 9205 www.swedbankfs.com

AI Terminal

Swedbank A

2978_rns_2016-06-07_4c193239-8342-4ee8-b80d-b91a868519af.pdf

Annual report

A sustainable fi nancial system – a crucial element in building a society

Contents

Board of Directors' report

Income, balance sheet and notes, Group:

Income, balance sheet and notes, parent company:

Sustainability

Financial information 2016

Annual General Meeting 2016

Leading position in our home markets: Sweden, Estonia, Latvia and Lithuania

High cost efficicency and low risk profile produce a competitive return

Our business segments satisfy a broad range of customer needs

Swedish Banking

– Sweden, our largest market

Number of employees

Baltic Banking

– largest bank in the Baltic region

Number of employees Share of profit before impairments

Large Corporates & Institutions – our large corporate business

Group Functions & Other – centralised business support units

Number of employees

Stable result

Improvements in 3 of 5 target areas

Our priorities are focused on long-term competitiveness and value creation

Improve customer value

Increase effectiveness

Strengthen employee engagement

Sustainability and customer value are at the core of our strategy

Part of building a sustainable society

The year in brief

1 JANUARY Mobile Bank 5 years with 90% customer satisfaction Our customers are driving

28 JANUARY 27% The cost target for 2015 was reached and the profit increased by 27 per cent. Year-end report for 2014

12 FEBRUARY

18 FEBRUARY

12 MARCH

26 MARCH

APRIL Entrepreneurship

25 MARCH

Swedbank signs card acquiring agreement in Finland

Swedbank Economic Forum in Baltic countries 150 corporate and private

APRIL Young Lithuanians encouraged to study IT

Q3

23 SEPTEMBER

127 000 new Swedbank customers

8 JULY

3%

SEPTEMBER

Award for world's best customer service in social media Swedbank ranks first in Social Bankers' quarter in a row. The survey is based on,

SEK 1m

12 OCTOBER

100 000 new customers welcomed from Sparbanken Öresund

13 NOVEMBER

Swedbank one of Sweden's most sustainable brands Swedbank came 16th when Sustainability Engagement Mapping

4 December

3 November

Strong cost control and low risk

What were the most important profit contributors in 2015?

What did the Board of Directors focus on in 2015?

What are Swedbank's strengths?

What areas will the bank be focusing on?

It has been a very turbulent period with volatile stock markets and extremely low interest rates. What kind of challenges does this pose for Swedbank?

Swedbank has introduced stricter amortisation principles. Isn't the bank at risk of being exclusive with such high amortisation requirements?

Do we have a housing bubble in Sweden?

There were reports in 2015 that certain managers were involved in real estate deals outside the bank. Is it appropriate that senior executives engage in such deals?

The Board of Directors decided to dismiss Michael Wolf as CEO as of 9 February 2016. Why?

The geopolitical situation has worsened with a huge wave of refugees and turmoil in our region. How is Swedbank affected?

What is the bank doing right now to address the big increase in migration?

Lastly, can shareholders continue to expect a dividend in the same range as before?

"We must continue to adapt to changing customer preferences"

You were recently asked to take over as Acting CEO of the bank. How does it feel?

What's on top of the agenda?

Employee engagement has been mentioned by the Board of Directors as an important area that needs improvement. How will this be achieved?

Another important area emphasized by the Board is customer satisfaction. What are your thoughts?

How will digitisation affect Swedbank's operations going forward?

What are Swedbank's biggest advantages in an increasingly digital world?

There has been a great focus on costs. Are there any untapped areas where you see opportunities to be more efficient?

You have been head of Baltic Banking, which has come quite far in the digitisation process. Does it have anything to teach the rest of the Group?