2017

Annual Report

2017

Annual Report

Annual Report 2017

Annual General Meeting

at Stockholm Concert Hall, Hötorget, Stockholm, Sweden.

– have notified the bank in either of the following ways:

The Board proposes a dividend of SEK 5.75 per share for 2017.

to be distributed by Euroclear Sweden AB on Wednesday 4 April 2018.

between 9 am and 4.30 pm (CET) or

sebgroup.com

Dividend

on Tuesday 20 March 2018:

at sebgroup.com or

Contacts

Head office

Telephone +46 771 62 10 00

Jonas Söderberg2) Head of Investor Relations Telephone: +46 8 763 83 19 E-mail: [email protected]

1) As of 1 May 2018, Masih Yazdi assumes the position of Finance Director (telephone +46 72 023 9458, e-mail: [email protected])

Postal address SEB, SE-106 40 Stockholm, Sweden

Visiting address Kungsträdgårdsgatan 8, Stockholm, Sweden

(telephone + 46 8 506 23198, e-mail: [email protected])

2) As of 1 April 2018 Christoffer Geijer assumes the position of Head of Investor Relations

Skandinaviska Enskilda Banken AB's corporate registration number: 502032-9081

Jan Erik Back1) Chief Financial Officer Telephone: +46 8 22 19 00 E-mail: [email protected]

The Annual General Meeting will be held on Monday 26 March 2018 at 1 pm (CET)

A notice convening the Annual General Meeting, including an agenda, is available on

Shareholders who wish to attend the Annual General Meeting shall at the latest

– be registered in the shareholders' register kept by Euroclear Sweden AB, and

by telephone 0771 23 18 18 (+46 771 23 18 18 from outside Sweden)

in writing to the following address: Skandinaviska Enskilda Banken c/o Euroclear Sweden, Box 191, 101 23 Stockholm, Sweden

Wednesday 28 March 2018, is proposed as record date for the dividend payments. If the Annual General Meeting resolves in accordance with the proposal, the share will be traded ex-dividend on Tuesday 27 March 2018 and dividend payments are expected

Viveka Hirdman-Ryrberg Head of Group Communications

E-mail: [email protected]

and Group Marketing Telephone: +46 8 763 85 77

Malin Schenkenberg Financial Information Officer Telephone: +46 8 763 95 31 E-mail: [email protected] Production: SEB and Intellecta Corporate • Photos; Johnér, Getty Images, Shutterstock, Hans-Erik Nygren, Andreas Lind, Joachim Lundgren and others • Printing: Elanders • SEGR0135 2018.02

This is SEB	Cover
Chairman's statement	2
President's statement	3
Strategy	4
Macro environment	4
SEB's value creation	6
Long-term strategic priorities	9
Current business plan	10
Overall targets and outcome	12
Customers	14
Customer segments	15
Large corporations and financial institutions	16
Small and medium-sized companies	18
Private individuals	20
Stakeholders	22
SEB in society	22
SEB's employees	26
Shareholders and the SEB share	29
REPORT OF THE DIRECTORS
Financial review of the group	32
Result and profitability	32
Financial structure	36
Divisions and business support	38
Geographic markets	40
Risk, liquidity and capital management	44
Regulatory requirements	50
Corporate governance	52
Board of Directors	54
Group Executive Committee	60
Remuneration report	64
Internal control over financial reporting	66
Sustainability Report	67
Financial statements and notes	72
SEB Group	73
Skandinaviska Enskilda Banken	78
Notes to the financial statements	83
Five-year summary	164
Proposal for the distribution of profit	166
Auditor's report	167
Definitions	171
Calendar and other information	Cover

Contents 2017 in brief

Important events

Large corporate customers refinanced their debt in the attractive markets and were less inclined to demand traditional financing.

Financial institutions searched for high-yielding and more risky investments in the low interest market environment.

Private customers increasingly took advantage of SEB's mobile offerings and new functionality was added throughout the year.

Johan Torgeby assumed the role of SEB's President and CEO.

SEB's offices in Arenastaden were inaugurated – new premises for more than 4,500 employees at around 20 per cent lower cost.

For the second year in a row, SEB qualified for inclusion in the Dow Jones Sustainability Index.

SEB signed an agreement to sell SEB Pension to Danske Bank for a total of DKK 6.5bn.

Key figures

2017	2016
45,609	43,251

	20,296
20,806	14,867

12.7	11.3
11.5	7.8
0.48	0.50
7.49	4.88
5.75	5.50
19.4	18.8
5.2	5.1
145	168
	22,702

With our vision and strategy…

Our purpose

We believe that entrepreneurial minds and innovative companies are key to creating a better world. We are here to enable them to achieve their aspirations and succeed through good times and bad.

Our vision

Deliver world-class service to our customers.

Our strategic priorities

Leading customer experience
Maintaining resilience and flexibility
Growing in areas of strength.

Our sustainability aim

Be a role model in sustainability within the financial industry.

…via our business model…

…we serve our customers.

Large corporations

SEB's corporate customers in the Nordic region are among the largest in their respective industries. In Germany and the UK they range from large mid- corporates to large multinationals.

Financial institutions

SEB's institutional clients operate both in the Nordic countries and internationally.

Small and medium-sized companies

In all, SEB serves approximately 400,000 small and medium-sized companies in Sweden and the Baltic countries. Of these, some 274,000 are home bank customers.

Private individuals

SEB has approximately 4 million private individuals among its customers in Sweden and the Baltic countries. Of these some 1.4 million are home bank customers.

Creating value for our stakeholders

4) Outcome incl. items affecting comparability: 11.5%.

Totalfinancial value created by SEB Interest paid to customers Dividends paid to shareholders Salaries, pensions and benefits to employees Payments to suppliers Taxes and social charges 2016 2017 1.4 6.9 8.3 16.6 12.0 12.5 11.9 11.5 16.5 2.0 7.0 8.6 SEK 57.0bn SEK 58.2bn

Our customers

2,300 large corporations 700 financial institutions small- and medium- 400,000 sized companies 4 million private individuals

SEB – the leading Nordic corporate bank Share ofincome 2017, %

Regulatory fees

Who we are

Our commitment to create value for our customers is based on a tradition of entrepreneurship, international outlook and long-term perspective. As a bank we have an important role to play in the shift to a more sustainable world.

Vinjett Vinjett

What we do

SEB plays an active partin the development of the societies in which the bank is operating, primarily by building strong customer relationships. In Sweden and the Baltic countries we offer financial advice and a wide range of financial services. In Denmark, Finland, Norway, Germany and the United Kingdom, our operations have a strong focus on a full-service offering to corporate and institutional clients.

Whom we serve

SEB Annual Report 2017 1

Customers always come first. Our 15,000 committed and experienced employees work as a team to serve our customers in all the markets where we are operating.

SEB's robustness important in a world of rapid change

Globaltrends drive change

Ten years afterthe financial crisis started to spread, globaltrends have reshaped the banking industry.Anew regulatory frame work has contributed to amore transparent and resilientfinancial system.Unprece dented expansionarymonetary policy has supported the real economy, even though negative interestrates and an abundance of liquidity have distorted risk return rewards and compressed financialmarket volatility.Digitalisation and the rapid technological development are impacting customer behaviours and disrupting banks' existing businessmodels. In addition,

banks have increasingly acknowledged theirrole in the shifttowards amore sustainable world.

These trends impacted the Board's work during the past year, which was extraordi narily intense with 25 boardmeetings. It is our beliefthat, in this increasingly com plex world, speed and ability to adapt as well as to attractthe right people have grownmore important; just as the trust that comes with a sound financial position.

Transformation on many fronts

The Board has now worked together with our new CEO, Johan Torgeby,for close to a year. Johan Torgeby has together with his managementteam taken several initiatives to speed up the transformation ofthe bank, develop a more data-driven culture and broaden the set of competences in SEB. The past year also involved major implementation of new regulatory frame works. It was a hallmark for all of SEB that the adaption to MiFID II and IFRS 9, atthe same time as the strategic initiative to transform our German business into a branch, could be finalised timely.

The way forward – world-class service

SEB's strategic direction, to focus on a leading customer experience, ensure continued financialresilience and to grow together with our customers,remains. As we are passing the first phase of ourlongterm vision of world class service, we are now focusing on setting the roadmap for the next phase. We maintain ourfinancial targets and the bank has a solid capital position as well as capital generation which, in the light of the proposed new Basel III standards for creditrisk, continue to be of prime focus. In 2017 total shareholderreturn reached six per cent. Our ambition is higher. We are determined to work relentlessly forthe best interests of our customers, so that you as share holders can expect an attractive and sustainable return overthe long term.

Stockholm, February 2018

Marcus Wallenberg Chairman of the Board

In an increasingly complex world,the ability to adapt and the trustthat comes with a sound financial position, are ever more important." Marcus Wallenberg

Step by step we are delivering on ourlongterm strategy

In SEBwe take great pride in knowing our customerswell and creating long-term value based on a tradition of entrepreneurship and long-termperspective. To us this goes hand in handwith ourtargetto be a rolemodel in sustainabilitywithin the financial industry. We aspire to be the leading Nordic bank for corporations and institutions and the top universal bank in Sweden and the Baltic countries.

More positive business sentiment

In 2017, we could see that business sentiment gradually grew more positive. Spurred by more jobs, higher asset prices and higherinvestmentlevels as well as increased trade,the world economy geared up despite heightened geopolitical uncertainty.However, large global imbal ances remain and central banks have a

difficult balancing actto return to a more conventional monetary policy going forward. Most SEB customer segments increased their activity levels. Large corporate clients benefited from favoura ble financing conditions. IPO and M&A activity picked up and debt capital markets saw high activity, albeit demand fortradi tional bank financing was low. Financial institution customers face an increasingly complex regulatory environment and we were able to supportthem through our broad custody offering including also administrative and back-office services. SME customers in Sweden and the Baltic countries increased their demand for lending. The Swedish housing market saw some healthy signs of stabilisation. Private customers continued to increase their interaction with us – in the branch offices, through remote advisory and mobile services and in our 24/7 contact centre.

Delivering on the business plan

SEB's long-termpriorities–delivering a leading customer experience,maintaining resilience and flexibility and growing in areas of strength–formthe basis for our three-year business plan.Two years into the planwe are speeding up the transformation. We have increasingly focused on areas

wherewe have scale aswell as on simplifying processes and building data analytics capabilities so thatwe can increase customer convenience. This also involves changingways ofworkingwithmore collaboration across SEBwith a holistic advisory approach towards our customers.We strive for agile development,teaming up product, IT, user experience and other specialists to deploymany small launches that are continuously calibratedwith customers.

The prerequisites for banks are quite differenttoday compared with ten years ago. However,the importance of having deeply committed employees working together, eagerto learn and develop, never changes. I would like to take this opportunity to thank all our clients that choose to work with us and our employees. The whole team is deeply committed to delivering world-class service in everythingwe do so thatwe can be the preferred choice overthe long term in the eyes of our customers.

Stockholm, February 2018

Johan Torgeby President and Chief Executive Officer

Macro environment

Vinjett Vinjett

New technologies, new customer behaviours and new regulations are macro trends that affect banks' operations in a tangible way. The global economy continues its strong development, despite growing geopolitical uncertainty.

trong economic development but geopolitical uncertainty S

The global economy continued its strong develop mentin 2017, while interestrates remained low. Geopolitical uncertainty increased whereas the financial markets continued to develop positively. From a global perspective,the eurozone is getting back on its feet and a generalrecovery has also been noted in China, Japan,the USA and emerging markets. The Nordic economies are showing a broad upswing. In Sweden growth was strong while atthe same time the risks in the real estate marketincreasingly came into focus.

As forthe more long-term developmenttrends, extreme weather events putthe issue of climate change into greaterfocus. The target oflimiting

the globaltemperature rise to 2 degrees Celsius appears to be increasingly more difficultto reach.

Geopoliticaltensions, global imbalances and the large migration tides in recent years are factors that significantly affectthe macro environment. Since 2007 global indebtedness has increased by more than 40 percentage points to around 260 per cent of global GDP. In parallel, most Western countries are struggling with a growing demographic challenge posed by disproportionate population pyramids. This is resulting in a greater dependency burden for the actively working and in straining social security systems.

Digitalisation redrawing the map

Forthe pastfewyears, newtechnol ogy, newactors aswell as changing regulations and customer behaviours are redrawing themap regardingwho can offer bank services aswell aswhat services banks can offer and how.

Owing to the rapid development, mature universal banks are encountering competition from fintech com panies, which often develop solutions for specific financial services. They are agile at putting together userfriendly services, buttheir disadvantage is thatthey cannot offerthe trust, convenience and comprehensive solutions provided by full-service banks.

The developmentis shifting so that banks, with theirlarge customer bases, cooperate or enterinto partnerships with new actors in an effort

to jointly create services, develop the offerings and improve the customer experience.

By understanding andmonitoring customer behaviour banks are providing personalised offers at an increasing rate.

Blockchain technology andArtificial intelligence (AI) are developing rapidly and are expected to have amajor impact also on banks.Blockchain technology enables transactions to be verified and processed in real-time.AI, as virtual agents, is already being used by banks for customer service.Digitalisation is also creating opportunities to enhance productivity in the banking sector by automating internal pro cesses and reducing administrative work.

Newrules for consumer protection and transparency

New regulations continue to be implemented forthe financial sector,requiring extensive adaptation of processes,routines and system support. The volume of new regulations is beginning to subside but much work remains in implementing currentregulation changes.

» The Markets in Financial Instruments Direc tive (MiFID II) took effect atthe beginning of 2018, aiming atincreasing consumer protection and transparency in alltypes ofinvestment products. The Payment Services Direc tive (PSD2) comes into force in 2018, and requires banks to open up theirtransaction information,thereby creating the opportunity forthird-party actors to forinstance initiate payments. This is commonly referred to as Open Banking. In addition,the EU's new Gen eral Data Protection Regulation (GDPR) takes effectin May 2018, laying out new rules for how companies in all sectors are to process personal data.

Two important accounting standards,took effect on 1 January 2018 – IFRS 9 Financial Instruments, and IFRS 15 Revenue from Con tracts with Customers. Both set standards for betterinformation about companies' income and profitability.

In 2017 the European Commission began work on a project aimed at ensuring that financialregulators incorporate sustainability aspects into their supervision.

Read more about IFRS 9 and 15 on p. 37. Read about SEB's regulatory work on p. 50.

SEB Annual Report 2017

SEB creates value

Customer centricity, long-term perspectives and financial strength form

the foundation for meeting the expectations of customers, employees and society at large. Ultimately, this creates value for the shareholders.

Customers

1.7 million corporate and private customers The customers' needs are atthe core ofthe bank's business. Customers' high expectations on service and quality advice as well as sustainable solutions drive the bank's business

Shareholders

development and offerings.

269,000 shareholders

The capital provided by SEB's share holders is a prerequisite for conducting the bank's business. The shareholders expect a competitive and sustainable return on their capital. Many ofthe major owners have a long-term perspective on their engagementin the bank.

Employees

15,000 employees

SEB's employees build and deepen customerrelationships. Their commitment, skills and continuous learning are key success factors forthe bank's business and future development.

Society

Society at large

Banks play an integralrole in society and are vitalfor creating economic growth and social value. With this comes an expectation thatthe bank takes greatresponsibility for how it acts,to enable society to continue to develop in a sustainable way.

Strategy

Long-term strategy

SEB's strategy is built on developing deep customerrelationships with a long-term perspective. See p. 9.

Service

Customer-oriented offering

Proactive quality advice and a holistic offering are provided atthe customers' convenience, based on customerinsights. See p. 16–21.

IT

Secure and functional IT

The IT structure promotes stability in the daily operation and agile development of products and services. See p. 48 and p. 7 in the Sustainability Overview.

Value creation based on trust

Banks play a fundamentalrole in society by acting as an interme diary providing, and advising on, a wide range offinancing and savings solutions,risk management and payment services for all types of customers. SEB's operations impact – and is impacted by – customers, shareholders, employees and society. Withouttheir trust,the bank cannotfunction. This is why the bank adapts to a changing environment, acts in accordance with regulations and

expectations, and strives to provide services that are insightful, transparent and accessible on customers'terms.

In addition, high ethical standards are being upheld internally in orderto maintain the stakeholders'trust. SEB's Code of Conduct, internalrules and procedures are in place, supported by a culture based on openness, business acumen and SEB's core values. ReadmoreabouttheCodeofConductonp.28andonsebgroup.com

Resilience

Financial strength

Financial strength gives the resilience and flexibility required to serve customers over the long term.See p. 9, 32 and 44.

Governance

Solid corporate governance

Corporate governance is based on clear allocation ofresponsibility, a well devel oped structure forinternal control and ownerinvolvement. See p. 52.

Risk

Sound risk culture

To meet customers' needs SEB assumes and manages risks. SEB knows its custo mers well and risks are mitigated by prudence,risk awareness and expertise throughoutthe organisation. See p. 44.

creates both social and financial value

For customers

By providing proactive advice and a wide range of convenient services, SEB supports its customers' longterm aspirations and adds value in all phases oflife ofindividuals and development stages of companies and institutions.See p. 16–21.

For shareholders

Dividends and potential increases in market value overtime contribute to shareholders'financial security and enable new investments. SEB's competitiveness is increased and long-term risks are reduced through the integration of environmental, social and governance aspects. See p. 29.

For employees

The employees take partin, and value, the opportunities forlearning and further developmentthat are integrated in SEB's business. Employees also participate in the many partnerships that SEB supports to help communities develop and prosper. See p. 26.

For society at large

SEB intermediates financial solutions, provides payment services and manages risks, which together promote economic growth and prosperity. SEB pays taxes and fees according to localrules where it operates. SEB takes responsibility as a provider offinancing and as an asset manager and works proactively with environmental, social and governance issues.See p. 22.

Total distribution offinancial value SEK58.2bn for 2017 Interest paid to customers SEK 16.6bn Dividends paid to shareholders SEK 12.5bn Salaries, pensions and benefits to employees SEK 11.5bn Payments to suppliers SEK 8.6bn Taxes and social fees SEK 7.0bn Regulatory fees

SEK 2.0bn

World-class service

SEB's long-term vision, to deliver world-class service to our customers, reflects a future in which customer orientation, simplicity and accessibility increase in importance.

Long-term strategic priorities

Founded in the service of enterprise more than 160 years ago, SEB has through the years played an active partin societal developmentin the markets in which it operates. Building on this entrepreneurial heritage, itis the bank's ambition to be the undisputed leading Nordic corpo rate and institutional bank, as well as the top

universal bank in Sweden and the Baltic countries. Itis also the bank's ambition to be a role model in sustainability within the financial industry. The long-term strategic priorities and the three-year business plan, outlined on the next page, define the way forward.

SEB's strategic priorities Select indicators

A strategy for all stakeholders

The strategic priorities and the business plan, which includes the sustainability success factors,reflectthe bank's material matters. These material matters are in line with the expectations of SEB's stakeholders. The opera tions are carried out based on a foundation of sound risk management,financial strength, business ethics and conduct, data protection and people management. Each year,the material matters are assessed to ensure thatthe priorities remain relevant and to identify poten tial emerging issues. The evaluation is based on internal and external stakeholder perspectives from economic, environmental and social viewpoints. From the stakeholder dialogues,the bank draws conclusions on how to prioritise and integrate the material matters into the business plan.

Read more about the materiality process and stakeholder engagement in the Sustainability Overview.

Current business plan

SEB's long-term strategic priorities form the basis for the three-year business plan for 2016–2018. The plan focuses on two main areas, growth and transformation, supplemented by three sustainability success factors. The validity of the three-year plan is ensured by rolling updates to align with changing business conditions.

Since 1 January 2016:

Assets under management (netinflow and value) increased by SEK

162billion

Growth in corporate credits, SEK

93billion

New large corporate customers

130

Growth

Accelerated growth in Sweden Further strengthen the bank's position across all customer segments in Sweden. Provide ^a widerrange of services

Nordic and German large corporations and institutions

Savings offering to private individuals and corporate customers

Create growth by offering private and corporate customers convenient and advisory-based solutions including bancassurance to caterfor customers' need forlong-term savings.

Since 1 January 2016:

Increase in loans reclassified in accordance with SEB's green framework, SEK

SEB's green bonds, underwritten globally, increased by SEK

Sustainability success factors

In orderto reach the ambition to be a role model in sustainability within the financial industry,the bank focuses on three sustainability success factors. The prerequisite is engaged and knowledgeable employees who provide responsible and proactive advice, with a specialfocus on environmental impact and transparency. Read more the Sustainability Overview

Sustainable financing

Increase the share of positive impact financing. Strengthen sustainable advising and expand the sustainable offering.

and increasingly use customer data to proactively offer

Read more on p. 16–21

new services.

Expand the corporate and institutional customer business in the Nordic countries and Germany with focus on the full-service offering and digital portals while selectively attracting targeted UK corporate customers.

Transformation

Read more on p. 16–21

World-class service	Focus on customerjourneys and use customer data in orderto create a leading customer experience based on a personalised and convenientfull-service offering where customers can choose where and in what mannerthey wantto be served.
Digitalisation	Develop customised advisory tools and interfaces based on individual customer needs and behaviourin various channels. This includes transforming the firstline of service to digital solutions and portals. Automate internal processes in orderto improve efficiency.
Continuous Continue to investin attracting talents with the right values and learning providing continuous learning and development opportunities to existing employees. Ensure a gradual competence shift broad- ening the role for client executives and also developing capa bilities in service design and data analytics.

Since 1 January 2016:

Increase in customer usage of mobile services

40%

Remote advisory meetings

in the Baltic countries 1,500

Employees in leadership/talent management programmes

1,543

Sustainable investments

Be the leadingNordic supplier of sustainable investmentswith a comprehensive and competitive offeringwhere environmental, social andgovernance factors are fully integratedintotheinvestmentprocessinallasset types.Strengthen sustainable investment advising.

Innovation and entrepreneurship

Read more on p. 22–25

Supportinnovation and entrepreneurship to drive sustainable economic development and contribute to creating new jobs.

Since 1 January 2016:

Contribution to entrepreneurial and innovation partnerships, SEK

25 million

2017: Funds managed with sustainability criteria; share of SEB Funds'

total assets under management 25%

Overalltargets and outcome

The progress of the strategy and three-year business plan is monitored and measured at many levels. These selected metrics provide a progress overview.

Customers

²⁰¹⁷ ²⁰¹⁶ ²⁰¹⁵ Customer experience and satisfaction Various internal and external metrics are used to measure customer satisfaction. Customers' willingness to recommend SEB is one ofthe key measures ofthe bank's progress.

Shareholders

Financial targets

Through the resilience and flexibility that come from a strong capital base, good access to funding, high credit ratings and cost efficiency, SEB can create shareholder value in varying market condi tions. The Board of Directors sets three financialtargets that contribute to financial strength.

Nordic large corporations Customers' willingness to recommend 1)

Small companies in Sweden SEB internal NPS 2)

1) According to Prospera 2) Net Promoter Score method

Nordic financial institutions Customers' willingness to recommend 1)

	Industry		Outcome	Industry average
4.1	3.7	2015	3.6	3.5
4.1	3.8	2016	3.9	3.7
4.2	3.8	2017	3.9	3.7

Private individuals in Sweden SEB internal NPS 2)

Target		Outcome	Target
>35	2015	34	>35
>35	2016	37	>35
>45	2017	41	>45

Target

Leading position in selected customer segmentswhere an importantmeasure iswhether customers arewilling to recommend SEB.

Other customer surveys

According toProspera's overall performance evaluation SEBmaintained its no. 1 place in the ranking fromNordic tier 1 corporations, butthe ranking fromallNordic large corporations decreased from2nd in2016to3rd place in2017.

The ranking of SEBbyNordic finan cial institutionsmovedto no.2,from no. 1. Swedish institutions, however, ranked SEBas no. 1 in alltenpossible categories.

In the SwedishQuality Indexmeasurement of customer satisfaction, SEB ranked second among the larger banks, both among private and corpo rate customers. Comparedwith last year, however, SEB's score fromboth segments decreased. Thiswas an industry-wide trend.

Common equity Tier ¹ capitalratio, Per cent

Return on equity, Per cent

2015		(12.9)
2016	7.8	(11.3)
2017	11.5	(12.7)

Outcome excluding items affecting comparability are shown within parenthesis.

Dividend payoutratio, Per cent

Outcome excluding items affecting comparability are shown within parenthesis.

1) Based on the proposed dividend for 2017

Target

SEB shallmaintain a Common Equity Tier 1 (CET1) capitalratio thatis around 150 basis points higherthan the regulatory requirement. Per 31 dec 2017 SEB's bufferwas 2.2 per cent. SEB's estimate ofthe current CET1 requirementfromthe Swedish Finan-

cial SupervisoryAuthoritywas 17.2 per cent at year-end 2017.

Target SEB shall generate a competitive return on equity. This means that the bank in the long term aspires to achieve a 15 per centreturn on equity.

Target

40 per cent or more of earnings per share. SEB strives forlong-term dividend growth. The size ofthe dividend takes into account SEB's financial position,the prevailing economic situation, earnings,regulatory requirements and opportunities for growth.

Employees

Motivation and engagement The annual employee survey, Insight, measures employee engagement, efficiency and trust. It also measures employees' willingness to recommend SEB as a place to work.

Employee engagement, Index Engagement

		Financial sector average
2015	79	71
2016		73
2017		73

Employees, Index Willingness to recommend

SEB as a place to work
	Outcome		Financial sector average
2015		80	71
2016		78	73
2017		78	74

Performance excellence, Index Efficiency and trust

	Financial sector average		Outcome	Financial sector average
79	71	2015	80	75
77	73	2016	81	76
77	73	2017	81	77

Target

SEB's targetis to be themost attractive employerin the financial sector. Progress ismeasured through the employee survey Insight.

Comment

SEBcontinues to outperformthe financial sector on employee engagement, performance excellence aswell aswillingness to recommendtheworking place.

Society

Reputation

SEB monitors the results ofthe TNS Reputation Index, which measures the bank's reputation among consumers and business owners.

Sustainability

SEB wants to be a role model in sustainability within the finan cial industry. One indicatoris whetherthe bank meets the criteria forinclusion in sustainability indexes. SEB also has the ambition to lowerits CO2 impact.

Reputation1), Index

	Outcome	2) Average
2015	42	42
2016	45	40
2017	42	38

1) Corporate reputation among the general public, according to TNS Reputation Index (weighted in the Baltic countries).

Inclusion in sustainability index

SEB meets the criteria

STOXX
Ethibel
FTSE4Good
ECPI
Dow Jones

CO2 emissions

Tonnes Outcome	Target for 2020
2015	21,315	17,000
2016	20,437	17,000
2017	20,537	17,000

Sweden Baltic countries

Target

17,000tonnesCO2.

	Outcome	2) Average
2015	57	56
2016	54	51
2017	57	55

2) SEB, SHB, Swedbank, Nordea, Danske Bank.

Target To be included in atleastfive selected sustainability indexes.

ReduceCO2 emissions by20per cent between2016and2020,reaching

Target

Reduce the gap to the no. 1 in the indus try and in the long termhave the strongestreputation among industry peers.

Comment

The long-termtrend in Sweden is stable. SEBwas ranked as no.2,which was abovemarket average. In Estonia, SEBwas ranked as shared no. 1. In Latvia and Lithuania there hasbeen a negative trend and SEBranked as no.3.

Comment

SEBhas been included in STOXX, Ethibel, FTSE4Good and ECPIfor several years.2017was the second yearthat SEBwas included in theDowJones sustainability index.

Comment

TheCO2 emissionswere almostflat comparedwith the previous year. Increased business travel counter acted reductions relatedto company cars and paper use.

Customers

Vinjett Vinjett

With the customers' needs in focus and based on the bank's vision to provide world-class service, SEB is taking a number of initiatives in its business plan in order to improve the customer experience with respect to advisory services, simplicity and sustainability.

Customer segments

Large corporations

2,300 SEB serves some 2,300 large corporations in a wide range of industries and in most cases with an internationalfocus. In the Nordic countries these companies are among the largestin their respective industries, while in Germany and the United Kingdom customers range from the large mid-corp segment up to multi national corporations.

Financial institutions

SEB serves some 700 financial institutions, consisting of pension and asset managers, hedge funds, insurance companies and other banks, active in the Nordic countries and internationally.

400,000 Small andmedium-sized companies

SEB serves some 400,000 small and medium-sized companies in Sweden and the Baltic countries. Ofthese 175,000 are home bank customers in Sweden and 99,000 in the Baltic countries. The segmentincludes approximately 650 mid-corp and public sector customers in Sweden, many with international operations. In the public sector,the bank serves government agencies, state owned companies and municipalities.

Private individuals

700 4,000,000 SEB has approximately four million private customers in Sweden and the Baltic countries. Ofthese 488,000 are home bank customers in Sweden and 920,000 in the Baltic countries. For private customers with sizeable capital and a need for more qualified advice, SEB offers a comprehensive range of private banking services.This offeringwasbroadenedin2017, andSEB nowprovidesprivatebanking services to some39,000customers.

Customer activity 2017

T he world economy developed positively in 2017. Strong balance sheets, less dependence ofinventory cycles and increased financial sector regulation dampened busi ness cycle volatility. In the prevailing low interest-rate environment, capital market volatility was low despite heightened geopolitical uncertainty.

Demand fortraditional bank financing was low during the year among Nordic and German large corporates. In the markets with low volatility, institutional customers' demand forrisk management services decreased while they searched

for higher-yielding assets. Equity capital market and IPO activities were strong.

In the Baltic countries, small and medi um-sized companies and private customers were more positive and sought financing to an increasing degree. Baltic customers are showing a growing appreciation for new mobile banking services and increasingly use them.

In Sweden, customerinteraction was high in all channels – including branches, the 24-hour contact centre and digital channels. Towards the end of the year, the Swedish housing market saw some healthy signs of stabilisation.

Large corporations and financial institutions

Growth and trans formation, three-year plan 2016–2018

SEB continued to grow in the Nordic countries and gained some 100 new large corporate customers since the business plan was launched. In the first two years ofthe plan, customerrelations have broadened and earnings per cus tomerincreased among large corporate customers. SEB fortified its leading posi tion regarding major corporate transac tions. In addition, according to Prospera's annual customer satisfaction survey, SEB was ranked highest among peers in Sweden.

Looking ahead,the work focuses on continuing the deepening ofthe customerrelations and increasing the number of products that are used.

The three-year plan includes a broad ening ofthe UK operations, where SEB now directly targets selected UK large corporates. The bank broughtin more than ten UK corporate customers during 2017.

SEB's in-depth knowledge of its corporate and institutional customers enables the bank to create services that add value. The bank is exploring the opportunities of new technologies and was the first Nordic bank to use blockchain technology to execute payments.

Growth

Improved custody services

During 2017 a number oflarge financial institutions chose to transfertheir custody account business to Investor World, SEB's new global custody account services platform, giving them access to improvements in areas such as managing customers' mutualfunds, collateral, corporate events, cash management and currency trading.

The platform has been developed in partnership with Brown Brothers Har riman, who provides the infrastructure, with SEB maintaining responsibility forthe customerinterface and ofthe relationship with customers.

Transformation

Visual support for cash management

In 2017 SEB launched a new advanced analysis and planning function which is integrated in C&I Online,the internet bank forlarge corporates and financial institu tions. The function, called Analytics, helps customers gain an overview, analyse and streamline theirliquidity position.

Analytics is directed primarily attreas ury and cash managers. Customers can include all oftheir banks world-wide in the system and thereby gain an aggregate overview oftheirliquidity.

First blockchain payment

In 2017 SEB was the first bank in the Nordic countries to use blockchain technology to execute real payments in production. One of the bank's large corporate customers is now using this technology in executing payments between its SEB accounts in Sweden and New York. This pilot project is promising and shows that it is possible to execute a payment in a few seconds, compared

SEB's position statements and sector policies

The policies are available on sebgroup. com/about-seb/sustainability

with up to 2 days previously, with maintained security.

Another blockchain initiative relates to customers' internationaltrade which requires manual and time-consuming doc ument handling. To simplify this process, the bank has joined together with more than ten international banks to develop a prototype, allowing the entire process to be more efficient.

Another area is fund trading. SEB has initiated cooperation with Nasdaq to test a new fund trading platform based on blockchain technology.

The bank has also become a part-owner in the R3 blockchain consortium and has invested in the Danish company Coinify, which works with blockchain payments.

Sustainability

Sustainable financing

Keeping pace with the growing climate challenge requires large infrastructure investments. Atthe same time, borrowers

Meet one of our customers:

"What's most important is a long-term perspective, partnership and an interest to join us on our growth journey"

Pia Aaltonen-Forsell

CFO at Ahlstrom-Munksjö

Ahlstrom-Munksjö is an indus trial groupthatdevelops fibre basedmaterialswith advanced functions that are usedin industrial applications aswell as in consumerproducts.The company has41production plants in 14countries.

The company has a long-standing relationship with SEB, which is one ofits core banks. This relationship coversmost product areas, fromfinancing and cashman-

agementto trade finance and trading solutions formanaging currency risks.

"This long and broad relationship is proofthatwe are satisfiedwith the cooperation. What'smostimportantin a banking relationship is a longtermperspective that can be applied in both good and tough times. Theremust also be a sense of engagement and interestin helping develop the company."

Meet one of our customers:

"SEB offers good and globally diversified service across regions as well as asset classes"

Mikko Mursula CFO atIlmarinen

The mutual insurance com pany Ilmarinen is responsible for pensions for some 1.1 million people in Finland. Assets under management amountto slightly more than EUR 45bn.

"When Italkwith our key people and their cooperation with SEB, I always see a few recurring common denomina tors.Among these are the good

personalrelationships and strong local presence here in Finland and the rest ofthe Nordic countries", saysMikko Mursula. SEBreceives high marks forits experienced and competent equities analysis team. The bank is also regarded as a leaderin sustainabil ity. "SEBwas one ofthe firstto include sustainability aspects in its equitymanagement".

and investors are becoming more aware ofthe advantages ofintegrating sustainability aspects in investment decisions.

SEB is contributing to this development by helping customers raise capitalfor green investments in areas such as infra structure and renewable energy. In 2007, SEB pioneered theworld's first green bond togetherwith the World Bank, and has now become theworld's third-largest under writer of green bonds. In 2017 SEB issued its first own green bond for EUR500million –money thatis earmarked forfinancing green initiatives and solutions.

SEB adheres to a number of policies that setthe framework forthe bank's lending and business in certain sectors with environmental impacts, such as fossilfuels, and the mining and metals industries. These and other sector policies and position statements form a valuable base for the customer dialogues and help incorpo rate sustainability aspects into various decisions. Since 2015 SEB does not provide new financing for coal mining and coal-fired power plants.

SEB is one ofthe largest microfinance fund managers in Europe. By investing in microfinance institutions, SEB's microfi nance funds offers loans to people with lowerincome in developing countries, who are often outside ofthe financial system. SEB manages six microfinance funds at a total value of around SEK 6 billion,reach ing more than 19 million entrepreneurs in 38 developing countries.

Small and medium-sized companies

Growth and trans formation, three-year plan 2016–2018

Corporate business is developing favourably with higherrevenue, new customers and a larger share of customers' busi ness. The bank's focus on advisory services and cross-selling is contributing to growth in revenue. In Sweden,the increase in lending volumes since the start of 2016 was driven primarily by lending in the real estate sector while demand for other corporate lending was relatively low. Corporate deposits were stable. Corporate credits have increased in the Baltic countries two years into the business plan.

Focus in 2018 will be on continuing growth efforts in the corporate segment, in Sweden with the target ofincreasing the market share by one percentage point per year. The opportunity for com panies to become customers digitally, the Greenhouse concept (see article to the right) and external partnerships are contributing factors expected to lead to higher business volumes and a growing share of customers' business.

SEB facilitates for customers through accessible services and is further developing its offering with new solutions, often in partnership with fintech companies and service providers. SEB works to promote entrepreneurship and innovation.

Growth

Partnerfor growth companies

In 2017 SEB launched Greenhouse, an undertaking designed to strengthen the bank's partnerships with growth compa nies. The idea is to serve as a discussion partnerthat companies can turn to for alltypes of business and growth matters and not only direct banking matters. Toward this end SEB has built up a network of external partners for matters that companies need assistance with, such as raising venture capital,tax issues, legal affairs and recruiting.

Greenhouse involves providing inspira tion and sharing knowledge through seminars, workshops and networking get-togethers. In addition, SEB invites selected companies to Growth Lab, a ten-week programme in which they receive help in concretising their growth plans.

Atthe innovation centre in Tallinn, SEB started a similar growth programme dur ing 2017 in which a number of selected companies receive support over a period ofthree to six months in concretising their development plans, strengthening their innovative ability and formulating their business models. Similar programmes are planned for Latvia and Lithuania in 2018.

Basic security for small business owners

Having adequate insurance protection is a common area of concern for small busi ness owners. SEB is one offew actors in the marketto offer competitive insurance coverfor all small business owners.

Since 2017 the Trygg Start ("Secure Start") and Trygg Grund ("Secure Basic") insurance solutions are included as default options in the bank's basic package for small business owners, giving them greater opportunities to complementtheir basic cover. Through Trygg Start, newly started companies can obtain health insurance, while Trygg Grund provides more established small businesses com prehensive insurance cover comparable to that provided through employment.

Transformation

Integration with service providers SEB has for a long time builtintegrated solutions that allow large corporations to manage and automate payments directly in their business systems. The same developmentis now rapidly unfolding for smaller companies, but here itis a matter of enabling technical integration with providers of cloud-based business systems as well as with bookkeeping and payroll services companies.

The firstintegration was created back in 2014 with the Visma business system. Since then, additional service providers have been added.

In 2017 SEB acquired a part-ownership stake in the fintech company Capcito. The company offers an online service through which companies can link their business systems to Capcito and thereby gain access to financing based on cash flow and underlying accounts receivable.

Meet one of our customers:

"For us the customer comes first, and SEB treats me the same way. "

Vladas A. Bumelis

Founder and Chairman ofthe Board of Biotechpharma

Biotechpharma is a Lithuanian company that develops and manufactures biopharmaceu tical products forthe pharmaceutical industry. The com pany has 150 employees and serves some 150 customers, primarily in the USA, Europe and Asia.

As an entrepreneur, Vladas has a long-standing relationship with SEB, which has sup ported him with financing and other services through his journey of growth.

"Ifeelthat banks should be a little conservative. They are

welcome to double-check the business plans and say no the firsttime. You can then go home and fine-tune your plans – notjust once, but sev eraltimes. This improves the results", he says.

When SEB launched a pri vate banking offering in Lithu ania a few years ago, Vladas left his previous Swiss bank and also moved his private banking business to SEB.

"I appreciate SEB's corpo rate culture. Itis based on relationships and commitmentto the customers."

Sustainability

Customer dialogue on sustainability The commitmentto sustainability is growing among the bank's small and mediumsized corporate customers. SEB supports them by giving and sponsoring lectures and arranging workshops on environmen-

tal, social and governance aspects in busi ness activities, and how to integrate these in their day-to-day operations.

SEB is working continuously to integrate sustainability in its own operations. In 2017 the toolfor business and credit analysis for small and medium-sized com panies was updated. Client executives now take sustainability aspects into accountin their analyses of companies

and in credit decisions. Coupled to the tool are support questions related to environ mental, social and governance aspects, which client executives reflect over and discuss with customers where needed. The aim is to analyse a company's entire value chain and gain a better understanding ofthe customer's opportunities and challenges. Such discussions are appreci ated by customers.

In the three Baltic countries SEB is working for positive social development by promoting entrepreneurship and including sustainability as a natural part of customer advice.

Private individuals

SEB makes everyday life easier by simplifying processes and providing easy-to-use solutions forthe bank's services and advice. Advanced data analysis and artificial intelligence are adding value through greater proactivity.

Growth and trans formation, three-year plan 2016–2018

Greater proactivity and improved ser vices contributed to increased growth in home mortgage volumes as well as deposits. In the Baltic countries, deposits grew and lending volumes have increased since the beginning of 2016 on the back ofimproved household finances. In Sweden,the growth in home mortgages can be credited partly to more proactive advice and simplified processes for new home mortgages and for customer onboarding. Focus in 2018 will be on achieving a growth rate that is more in line with the total market.

Personal Banking customers have been cautious aboutincreasing savings in mutualfunds and a potentialfor greater growth remains. Even so, savings volumes have increased since the start of 2016.

New services, automated functions and the introduction ofrobot advice will free up time for more proactive and per sonalised service forthose who need it. In 2018,focus will be on furtherincreas ing proactivity, such as through the remote advisory services functionality.

Growth

Savings

The shifting demographic trends increase the need forlong-term savings. In Sweden SEB is the only major bank with a bancassurance savings offer; including traditional life insurance. A similar offeris provided in the Baltic countries. SEB managed assets, for both private and institutional customers, increased by SEK 14bn netin 2017.

Improved customer experience

Customers appreciate and increasingly use SEB's convenient services. In 2017 it became easierfor private individuals to obtain a home mortgage commitment or become a new customer ofthe bank entirely digitally.

With respectto home mortgages,the first step was a simplified home mortgage calculation, which gives customers an indication of how much they have the possibility to borrow. The second step was a simplified process for obtaining a mortgage commitment, which takes a few minutes to complete.

In the sameway, itis possible to become a newcustomerwithout having to visit a branch office to identify oneself,fill in a know-your-customerformand sign various agreements. The only requirementis that the customeris of age and has amobile BankID.

Transformation

Remote advisory services

In the area of pensions SEB has for some time offered remote advisory services, enabling customers to get qualified pensions advice directly attheir workplaces or at home. This increases accessi bility and convenience, and has resulted in a high level of customer satisfaction according to surveys.

A similarfunction forremote advisory services was introduced in 2017 in the Baltic countries, where private customers can book a video conference with an advisor and perform certain services such as opening a new bank account.

In the Swedish operations, screen sharing technology and remote advice are being tested for alltypes of services in a pilot project.

Data analysis and artificial intelligence

Access to data is becoming an increasingly importantresource for understanding customers' needs, boosting customer loyalty, improving service and attracting more customers.

In 2017 SEB established a data lake, a technical platform for gathering, quality assuring and providing easy access to all data at SEB's disposal. This includes struc tured and unstructured data, internal as well as external data, and everything from real-time date to static data. With the help

Meettwo of our customers:

"It is a major advantage to be a customer both as a private person and business owner. "

Lotta and Anders Svensson Private and corporate customers

Lotta and her brother Anders Svensson run the building supply firm Woody Bygghandel Stockholm Syd. As entrepreneurs they have a long and deep relation with SEB.

"The bank is engaged in what we do. We trust each other and try to find solutions that are good for both parties. This is the exact same stand point we have in ourrelationships with our own customers", says Anders.

Both Anders and Lotta also do their personal banking with SEB.

"Itis amajor advantage to be a customer both as a pri vate person and business owner.Of course,mostthings can be handled digitally. Butit means a lot knowingwe can rely on a personal engagement fromthe bank", says Lotta.

"What's mostimportantis thatthings run smoothly on a day-to-day basis. Time is the one thing there is too little of!"

of artificial intelligence and advanced data analysis,the bank can increase its level of service and proactively meet customers' needs. SEB's digital assistant, Aida, devel oped further knowledge on serving cus tomers. Maintaining good control and structure ofthe bank's data increases internal efficiency.

Robotics technology is another new area. Manualtasks performed in many steps, such as monthly reports compiled from a variety of sources, can easily be programmed and performed by virtual (software) robots giving SEB employees time for more advanced tasks.

The private customer offering was enhanced with the launch of digital card payments through collaboration with Samsung Pay. In addition, Fitbitlaunched the payment service Fitbit Pay in Sweden, Norway, Denmark and Finland. SEB joined from start enabling many ofits card holders to pay with their smart watches in stores providing contactless payments.

Sustainability

Sustainable products

Interestin sustainable products is growing among private customers, especially in the savings area where more and more customers want assurances thattheir savings contribute to more sustainable societies.

During 2017 changes were made in fund managementto strengthen SEB's basic offering from a sustainability perspective. Today the bank's allocation funds, strategy funds, invest directly in stocks and bonds to a higher degree. This is giving fund managers greater opportunities to influence the individual holdings from a sustainability perspective. Approximately two-thirds ofthe strategy funds' assets willthereby adhere to the fund company's most stringent sustainability standards, which are the same as for SEB's sustaina bility funds.

SEB also offers several mutualfunds with a distinct sustainability profile, such as the SEBGreen Bond Fund,which invests in green bonds, and the SEB Hållbarhets fond Global and SEB Hållbarhetsfond Sverige equity funds, whose managers choose companies that actively contribute to sustainable development.

During 2017 SEB Hållbarhetsfond Sver ige obtained the Nordic "Swan" ecolabel, thereby certifying thatthe fund meets enhanced sustainability requirements which affectthe choice of shares in the fund. The requirements also mean that the fund's managers should clearly report how the fund and its investments contribute to sustainable development.

Read more in the Sustainability Overview.

SEB in society

As a bank, SEB is an integrated part of society and the communities where it operates. By engaging in innovation and entrepreneurship, financial literacy and social inclusion, the bank contributes to empowering future generations. The bank also works continuously to reduce its direct and indirect carbon dioxide impact.

A n environment where entrepreneurship is promoted and companies can thrive and investleads to prospering societies as this creates growth and new jobs. SEB therefore supports and collaborates with a number of organisations and meeting points to support companies;from start-ups through Young Entrepreneurs (Ung Företagsamhet) and Venture Cup,to the entrepreneurial elite, via Entrepreneur ofthe Year. In the Baltic countries SEB runs the web-based eAkadeemia, with educational videos,training and test modules for start-up businesses and entrepreneurs.

SEB's supportto partnerships forfuture generations, SEK

Supporting social entrepreneurs

Social entrepreneurs play an increasingly importantrole in societies where social and economic gaps as well as inequalities increase. SEB has a partnership with Inkludera, an umbrella organisation for social entrepreneurs that support groups in society thatrisk exclusion. In 2017 SEB participated atthe Social Innovation Summitin Malmö, one ofthe largest meeting places for social innovation in the Nordic countries. The overall goal was to explore new solutions to societal challenges. Together with Inkludera, SEB focused on how municipalities can become more successful in purchasing services for a better world among social entrepreneurs and thereby create value for society.

PegahAfsharian and Natassia Fry foundedKompis Sverige, a non-profit organisation supported by Inkludera. The organisation matches and creates meetings between Swedes and immigrants. SEB employees participate in the program.

Financial inclusion

SEB shares its knowledge about personal finances and can thus empower people to make more informed financial decisions and contribute to betterfunctioning socie ties. For many years, SEB has organised a Financial Literacy Road Show across the Baltic countries with the aim to educate youths to manage their private finances and to inspire them forthe future. SEB sessions have been run by 367 employees who have met with a total of 13,700 youths during the lasttwo years.

Mentor

Since 1997, SEB has partnered with Mentor, a foundation aiming to create relationships and build trust between young people and adults,to motivate and inspire as well as prevent drug abuse. Through Mentor, SEB's employees can support young teenagers and contribute to society, and atthe same time improve theirleader ship skills and personal development. In 2017,the Mentor engagementincluded, in total, close to 6,000 relationships. In Sweden, employees invested about 4,300 volunteering hours.

Reducing the bank's environmental footprint in society

Climate change is one oftoday's most serious challenges. SEB recognises the impor tance of actively working to reduce the direct environmental impact. SEB works to optimise the bank's energy consumption, reduce paper consumption and improve the company carfleet. Specialfocus is put on airtravel in orderto furtherreduce emissions related to business travel. This area accounts forthe major part of SEB's carbon footprint.

Read more in the Sustainability Report, p. 70.

The Global Goals – a business plan forthe world

Agenda 2030 and the UN's sustainable development goals

In 2017,the UN's Sustainable Development Goals (SDGs – also known as the Global Goals) have become a common "business plan" for nations, organisations and the business sector. The SDGs, which were adopted by the UN in 2015, are focused on ending poverty, protecting the planet and ensuring equality for all. They are integrated and they harmonise the three core elements of sustainable development: economic growth, social inclusion and environmental protection.

Through an active partnership with SEB's customers,the bank supports and contributes to many ofthe 17 Global Goals. How ever, SEB has chosen to prioritise four ofthese where the bank's operations have a fundamental impact:

8 Decent work and economic growth
9 Industry, innovation and infrastructure
13 Climate action
16 Peace, justice and strong institutions

Many of SEB's customers have settheir own priorities among the global goals, and the map ofthe goals facilitates the discussions that are being held with the bank on customers' challenges and opportunities.

For more than a decade SEB has developed a wide range of sustainable products, as well as policies and processes, which are aligned with the global goals. SEB has been a pioneerin offer ing green bonds and microfinance funds, and conducts systematic sustainability work in its investment operations. The bank's supportto entrepreneurs and strong focus on combating finan cial crime are other areas in which SEB is actively contributing to the goals.

In 2017, several initiatives were taken within SEB with respect to development of products and services related to the global goals. The ambition is to presentthe results ofthis work in 2018. Read more about how SEB is coupling the Sustainable Develop-

ment Goals to its operations in the Sustainability Overview.

Sustainability – a business issue

Sustainability is today an increasingly integrated part ofthe bank's business activities. This is rooted in the insightthat sustainability contributes to the bank's long-term profitability. SEB's ambition is to create long-term value from an economic, ethical, social and environmental perspective. The bank takes responsibility for how the business affects customers, employees, shareholders and society atlarge.

Climate crisis, social unrest and the risk of stranded assets are some examples of undesirable developmentthat affect people, companies and societies,the effects of which also SEB must manage in its business. How ever, sustainable development also means great opportunities. Rapid technological progress and new ways ofthinking lead to innovative solutions that contribute to meeting new needs in societies and reshaping industries.

On an international and national level, governments, authorities and the business sectors are taking strong measures to secure a more sustainable world including combatting climate change. For SEB,this means thatthe bank develops its advisory services furtherto also include how its customers can navigate in a more complex world. SEB is also upgrading its analysis and tools for how to better manage sustainability risks in its credit analyses and decisions.

Banks and the financial system play a centralrole in this development through their actions. One example of SEB's contribution to this shiftis the funnelling of capitalto green infrastructure investments. Another example is thatthe bank offers sustainable saving solutions for customers who wish to directthe investments into companies that are bestin class in terms of environmental, social and governance criteria.

Private customers' priorities

SEB strives to provide customers with services that are transparent and accessible on theirterms and often invites customers to test beta versions of new services. An example ofthis is a dialogue conducted by SEB's fund company with private customers with holdings in the fund SEB Hållbarhets fond Sverige in 2017. Based on the UN's 17 Global Goals, customers were invited to select what sustainability issues they considered to be the mostimpor tantto address in the companies where customers had made investments. The answers show that customers prioritise three ofthe goals, 13, Climate action, 6, Clean water and sanitation and 4, Quality education.

As a result ofthe survey, SEB's fund company will intensify efforts to combat climate change. Therefore, the fund company has joined the Institutional Inves tors Group on Climate Change. Here, investors gather globally in orderto influence the hundred companies that accountforthe largest share of emissions in the world. The companies are primarily in the gas and oil industry.

SEB's employees

SEB's employees share a strong beliefin the bank's purpose and vision. They feel that they can make a difference and are eager to develop. Looking ahead, the bank needs to further strengthen its competences in data analysis and continue promoting new ways of working, collaboration, and an innovative and inclusive culture that is built upon the bank's values.

S EB is an attractive employer with committed and motivated employees. The annual employee survey, Insight, shows thatthe bank's vision inspires and motivates employees,that employees like theirjobs, and thatthey feel involved in decisions that affectthem. Employee engagement and performance excellence (efficiency and trust) scores are high compared with the bank's peer companies in the interna tionalfinancial sector.

New ways of working and an innovative work environment

SEB's business plan is focused on profita ble growth and transformation. Achieving this requires employees who take responsibility fortheir own development as well as an innovative and inclusive work environment.

The method for driving development projects has been revised and is based to a growing extent on an agile work approach with cross-functionalteams that develop new services in close interaction with customers, based on their needs. Simplicity and user experience are central components in all development work.

Hackathons and knowledge sharing

The establishment ofthe bank's new offices in Arenastaden in Stockholm has opened new opportunities to foster highly dynamic ways of working and cross-functional collaboration. To promote a learning culture SEB has established numerous, diverse meeting forums in which employees can share their knowledge and inspiring stories. These meetings are video recorded and shared with all parts of the bank.

SEB has established an innovation lab in which employees have an opportunity, during a limited period oftime,to develop ideas up to creation of a finished proto type. In 2017 SEB conducted its firstinter nal hackathon at which some 70 employees spent one intensive day and night developing prototypes that offered improvements for customers and the bank.

Data is the heart of the bank, and that heart beats forthe customers."

Salla Franzén Chief Data Scientist at SEB

Continuous learning and new competences

The financial sectoris undergoing a rapid transformation, and to continue to be successful SEB needs to develop new competences. Toward this end SEB has developed a group-wide method for strategic planning offuture needs. With the help ofthis, every department can identify future key competences, deter mine the development needs for existing professionalroles and carry out succes sion planning.

SEB needs to strengthen its expertise in areas such as data analysis, service design and the digital customer experience, on top of other areas such as risk and security. This can be achieved in partthrough externalrecruitment, however, compe tence development of existing employees is atleast as important.

SEB's philosophy is that competence developmentis achieved primarily through continuous learning in the daily work. This is complemented by different types oftraining that SEB carries outfor a large portion ofthe employees.

#MeToo

During 2017,the #MeToo campaign highlighted the problem of sexual harassment and discrimination in many workplaces. #MeToo was discussed severaltimes within the Group Executive Committee and in the Board of Directors. SEB increased the internal communication on SEB's stance and how to reportimproprieties. The campaign speeded up the switch from an internalto a thirdparty whistle-blowing function which is now completed.

Meet Salla

With a background as a mathematician, Salla takes special interestin machine learning and algorithms. She leads an analysis team thatis tasked with inspiring and supporting all parts ofthe bank in basing their work on data – that is, using all ofthe knowledge at SEB's disposal to create value for customers.

Name: Salla Franzén

Age: 39

Position: Chief data scientist With SEB since: 2011

Key experience: The powerin working with highly motivated colleagues who are passion ate about new customer and business insights.

Inspiration: Numerous podcasts, articles, open source communities as well as interaction with scientists in my field of work.

Employee statistics 1)

2017	2016	2015

15,946	16,260	16,599
8,053	8,222	8,320

1,304	1,369	1,404
5,213	5,125	5,118
1,376	1,544	1,757

15,804	16,087	16,432

		15,605
12.8	10.7	9.0

2.9	3.0	2.8
47	46	44


77	77	79

		80
	14,946 81	15,279 81

1)See also table p. 69 and the Sustainability Overview

Meet Yasser

Yasser arrived in Sweden three years ago from Syria. Via an internship at SEB's branch in Vellinge, he has now gained a permanent position as customer adviser atthe Norrmalm branch office in Stockholm.

Name: Yasser Kaddour

Age: 29

Position: Customer adviser

With SEB since: 2015

Key experience: Everything is possible in life as long as you keep fighting to reach your goal.

Main inspiration: My family and my first manager at SEB, Madeleine Stjernrup Öberg.

I try to give something extra in every meeting."

Yasser Kaddour – Customer adviser

Equipping managers

SEB's leadership philosophy has evolved in an effortto equip managers to lead in a complex and rapidly changing world. An importantrole forleaders involves building secure teams, which requires an ability for empathetic listening. Focus is on driving change, promoting innovation and ensuring thatthe corporate culture reflects the bank's values, purpose and vision.

To better understand each other and to meet customers' needs, SEB fosters diver sity and an inclusive culture at all levels of the bank and across all dimensions, regardless of gender, age, or geographic or professional background. A large number of activities have been initiated within the bank to raise awareness aboutthese issues, implement measures and follow up on progress. SEB's Board of Directors and the Group Executive Committee adopted a governance document which states that inclusion and diversity are criticalforthe bank's long-term success and that SEB can and should do betterin these areas.

Every year SEB conducts a Global Talent Review to identify individuals with poten tialfor a future key role or management position.

More than ten per cent of employees are included in this talent pool, in which they are monitored and given opportunities to broaden their networks by participating in various development projects outside oftheirregular units.

Health and work environment

SEB works long term and preventively to offer a safe and sound workplace in an effortto ensure employee well-being and a healthy work/life balance.

In Sweden, SEB's level of sick leave remains low, at 2.9 per cent, compared with otherindustries and the financial sector. In the global employee survey (Insight), SEB's index for health and work environment was nearly 10 percentage points higherthan the industry average.

Labourlaw and unions

SEB employees are covered by collective orlocal agreements. SEB has a European working council with representatives from all EU and EES countries in which SEB is represented.

Recruitment in new arenas

SEB has a strong employer brand according to annual rankings conducted among students and young professionals. This applies especially for finance and busi ness administration students. In pace with the ongoing competence shift and growing recruitment need in new compe tence areas, the bank needs to stren gthen its attractiveness among individuals that are attracted by IT companies and start-ups. Accordingly, SEB has widened its recruiting activities. The bank not only participates in traditional recruitment fairs for finance students but also uses interactivity and new formats such as invitations to hackathons and open workshops on artificial intelligence, blockchain technology and other cutting edge technologies.

SEB's core values

Customers first

We put our customers' needs first, always seeking to understand how to deliverreal value.

Commitment

We are personally dedicated to the success of our customers and are accountable for our actions.

Collaboration We achieve more working together.

Simplicity

We strive to simplify whatis complex.

SEB's core values serve as the foundation forthe bank's ways of working and culture, and in combination with the bank's vision – to deliver world-class service to our customers – they serve to motivate and inspire employees, managers and the organisation as a whole. These values are described in SEB's Code of Conduct, which provides guidance on ethical matters for all employees.

Read the Code of Conduct on sebgroup.com

Shareholders and the SEB share

In 2017 the value of the SEB Class A share increased by 1 per cent to SEK 96.30. while the OMX Stockholm 30 Index (OMXS30) increased by 4 per cent. Earnings per share amounted to SEK 7.49 (4.88). The Board proposes a dividend of SEK 5.75 per share for 2017 (5.50).

Share capital

SEB's share capital amounts to SEK 21,942m distributed on 2,194.2 million shares. Each Class A share entitles the holder to one vote and each Class C share to 1/10 of a vote.

Stock exchange trading

The SEB shares are listed on Nasdaq Stockholm, but are also traded on other exchanges, such as Chicago Board of Exchange, Boat and Turquoise.

In 2017 the value ofthe SEB Class A share increased by 1 per cent while the OMX Stockholm 30 Index (OMXS30) was up by 4 per cent and the MSCI European Banks Index increased by 10 per cent. Totalturnoverin SEB shares in 2017 amounted to SEK 312bn (307) of which 124bn (134) on Nasdaq Stockholm. Market capitalisation by year-end was SEK 211bn (210). The share is included in the Dow Jones Sustainability Index and the FTSE-4Good Index, which facilitate investments in companies which are globally recognised fortheir corporate responsibility.

Dividend policy

SEB strives to achieve long-term dividend growth without negatively impacting the group's targeted capitalratios. The annual

dividend per share shall correspond to 40 per cent or more of earnings per share. Each year's dividend is assessed in the light of prevailing economic conditions and the group's earnings, growth possibilities,regulatory requirements and capital position.

Dividend

The Board of Directors proposes to the Annual General Meeting a dividend of SEK 5.75 (5.50) per Class A and Class C share respectively for 2017, which corresponds to a 77 per cent (113) dividend payoutratio. Excluding items affecting comparability,the dividend

Number of outstanding shares		31 December 2017
	Share Class A	Share Class C	Total no. of shares
Total number ofissued shares	2,170,019,294	24,152,508	2,194,171,802
Repurchased own shares forlong-term incentive 1) programmes	–27,125,923		–27,125,923
Repurchased own shares for capital purposes 2)	0	0	0
Total number of outstanding shares	2,142,892,371	24 ,152,508	2,167,045,879

1) Utilization of authorization from the Annual General Meeting

2017 to acquire own shares for long-term equity programmes.

2) 2017 AGM decision, no repurchases made.

Distribution of shares by size of holding

Size of holding	No. of shares	Per cent	No. of shareholders
1 – 500	31,799,489	1.4	171,980

501 – 1,000	31,744,207	1.4	41,498
1,001 – 5,000	99,688,315	4.5	45,168
5,001 – 10,000	41,856,880	1.9	5,870
10,001 – 20,000	32,081,059	1.5	2,280
20,001 – 50,000	32,127,636	1.5	1,046
50,001 – 100,000	20,703,662	0.9	292
100,001 – 500,000	63,391,394	2.9	268
500,001 – 1,000,000	33,615,222	1.5	47
1,000,001 –	1,807,163,938	82.4	112
	2,194,171,802	100.0	268,561

Source: Euroclear and Holdings

Data per share

payoutratio was 70 per cent (75). The proposed record date for the dividend is 28 March 2018. Ifthe Annual General Meeting resolves in accordance with the proposal,the share

will be traded ex-dividend on 27 March 2018 and dividend payments will be disbursed on 4 April 2018.

Changes in share capital

	2017	2016	2015	2014	2013
Basic earnings, SEK	7.49	4.88	7.57	8.79	6.74
Diluted earnings, SEK	7.46	4.85	7.53	8.73	6.69
Shareholders' equity, SEK	66.42	65.00	65.11	61.47	56.33
Net worth, SEK	74.84	73.00	72.09	68.13	62.10
Cash flow, SEK	13.59	19.02	1.28	–61.98	–19.66
Dividend per A and C share, SEK	1) 5.75	5.50	5.25	4.75	4.00
2), SEK Year-end share price
per Class A share	96.30	95.55	89.40	99.55	84.80
per Class C share	96.05	95.20	88.85	97.65	79.90
Highest price paid 2), SEK
per Class A share	109.00	99.75		111.50 100.60	85.10
per Class C share	109.90	101.10	112.50	99.10	80.30
Lowest price paid 2), SEK
per Class A share	94.05	67.75	83.45	82.25	55.70
per Class C share	95.15	70.35	83.75	77.45	53.20
Dividend as a percentage of earnings (payoutratio),%	76.7	112.8	69.4	54.0	59.3
Dividend yield, %	6.0	5.8	5.9	4.8	4.7
P/E (share price at year-end/earnings)	12.8	19.6	11.8	11.3	12.6
Number of outstanding shares, million
average	2,167.6	2,177.6		2,191.2 2,186.8 2,190.8
at year-end	2,167.0			2,169.0 2,193.3 2,188.7 2,179.8

	Year Transaction	SEK	Change in number of shares	Accumulated number of issued shares	Share capital SEK m
1972				5,430,900	543
	1975 Rights issue 1:5	125	1,086,180	6,517,080	652
1976	Rights issue 1:6	140	1,086,180	7,603,260	760
	1977 Split 2:1		7,603,260	15,206,520	760
1981	Rights issue 1B:10	110	1,520,652	16,727,172	837
	1982 Bonus issue 1A:5		3,345,434	20,072,606	1,004
	1983 Rights issue 1A:5	160	4,014,521	24,087,127	1,204
	1984 Split 5:1		96,348,508	120,435,635	1,204
	1) 1986 Rights issue 1A:15	90	8,029,042	128,464,677	1,284
	1989 Bonus issue 9A+1C:10		128,464,677	256,929,354	2,569
	1990 Directed issue 2)	88.42	6,530,310	263,459,664	2,635
	1993 Rights issue 1:1		20 263,459,664	526,919,328	5,269
	1994 Conversion		59,001	526,978,329	5,270
	1997 Non-cash issue	91.30	61,267,733	588,246,062	5,882
	3) 1999 Rights Issue 1:5	35	116,311,618	704,557,680	7,046
	2005 Reduction ofthe share capital		–17,401,049	687,156,631	6,872
	2009 Rights issue 11:5	10	1,507,015,171	2,194,171,802	21,942

1) The recorded share capital as of 31 December 1986 was SEK 1,204m. since

the proceeds from the rights issue were not paid in full until early 1987.

2) The issue was directed at the member banks of Scandinavian Banking Partners. 3) Subscribed and paid shares were not registered as share capital in the balance sheet

until the rights issue had been registered which took place in January 2000.

Through splits in 1977 (2:1) and 1984 (5:1). the nominal value of the shares was changed from SEK 100 to SEK 10.

1) As proposed by the Board of Directors. 2) Source: Nasdaq Stockholm.

The largest shareholders 31 December 2017

lecember 2017

	No. of shares	Of which Class C shares	Share of capital	Share of votes %
			%	2017	2016
Investor	456,198,927 4,000,372		20.8	20.8	20.8
Alecta	141,937,500		6.5	6.5	7.1
Trygg Foundation	114,673,802		5.2	5.3	6.0
Swedbank Robur Funds	102,838,285		4.7	4.7	4.3
AMF	78,212,406		3.6	3.6	3.9
BlackRock	46,151,913	231	2.1	2.1	1.7
SEB Funds	33,380,243		1.5	1.5	1.8
SEB's own 1) shareholding	27,125,923		1.2	1.2	1.2
Vanguard	27,114,487	60,152	1.2	1.2	1.2
Nordea Funds	26,494,921		1.2	1.2	1.0
Fourth Swedish National Pension Fund	25,008,002		1.1	1.2	1.2
XACT Funds	23,298,529		1.1	1.1	1.0
First Swedish National Pension Fund	22,773,696		1.0	1.0	0.8
Didner & Gerge Funds	20,428,514		0.9	0.9	0.9
AFA Insurance	14,620,930		0.7	0.7	0.8

1) See table Number of outstanding shares on p. 29

Source: Euroclear and Holdings

Different voting power of class A shares (voting power 1) compared to C shares (voting power 0.1) gives differences in share of votes vs. share of capital.

Market capitalisation SEK m 2017 2016 2015 2014 2013 Year-end market capitalisation1) 211,293 209,645 196,146 218,384 185,947 Volume of shares traded 123,889 133,790 142,188 113,566 94,738

1) Based on Nasdaq Stockholm share price of SEK 96.30

The majority of the banks 268,561 shareholders are private individuals with small holdings. The ten largest shareholders account for 48 per cent of capital and votes. Source: Euroclear and Holdings

The investor perspective

Overthe years SEB has capitalised on its long standing strong position as the leading corporate bank in the Nordic region and on its financial strength. Over the last five years, the share price of the SEB Class A share increased by 74 per cent while the dividend per share increased by SEK 1.751).

Long-term perspective

SEB has been the corporate bank since it was established by A. O. Wallenberg in 1856. To this day the Wallenberg family is deeply engaged in the bank's current and future operations via the main shareholderInvestor AB.

There is a clear connection between the macroeconomic development, customer activity and the development ofthe bank's earnings. SEB is focusing on growth in areas of strength – corporate business, all customer segments in Sweden and the long-term savings offering – and on transformation – to provide world-class service, increased digitalisation and competence development. These efforts will affectthe future results and therefore the market value ofthe share.

An investorin SEB believes in a positive economic development in the bank's home markets – the Nordic and Baltic countries, Germany and the United Kingdom – and in the bank's ability to capitalise on this development overtime while managing any negative developmentin an effective manner.

Return on investment

The return on an investmentin SEB is not only contributable to the share price but also to the dividend. SEB's Board of Directors has proposed to the Annual General Meeting that SEK 5.75, corre sponding to 77 per cent of earnings per share, shall be distributed

for 2017. The dividend payoutratio excluding items affecting comparability corresponds to 70 per cent.

The dividend yield, i.e.the dividend in relation to the share price at year-end 2017 was 6.0 per cent (5.8) based on the proposed dividend.

Total shareholderreturn (TSR) – i.e. share price development and reinvested dividends per share – was 6 per centfor 2017 (14). The average TSR forthe Nordic peer group in 2017 was 6 per cent (21). Overthe pastfive years, TSR forthe SEB share was 16 per cent on average.

Beta value and volatility

The beta value of SEB's share price in 2017 was 0.99 (1.17). The measure shows how the share price of a specific share moves in relation to the stock market as a whole, in this case compared to OMXS30. A beta value of 1.00 indicates thatthe share price developmentis the same as the market.

The volatility of SEB's share price was 15 per centfor 2017 (30). The corresponding value forthe Nordic peer group was 17 per cent (28). The measure shows the daily change in share price compared with its average for a given time period.

1) Based on the dividend proposal.

1) A dividend of SEK 5.75 per share is proposed for 2017.

Financialreviewofthe group

Both macroeconomic indicators and the business environment in SEB's markets were on a positive track during the year. SEB's customers in all segments increased their activity levels and the bank's operating profit, before items affecting comparability, increased by 12 per cent. SEB's financial position is strong and a dividend of SEK 5.75 per share is proposed.

Important events and trends in 2017

First quarter

Johan Torgeby was installed as SEB's president and chief executive officer.
Financial institutions showed a greaterinterestin sustaina ble investment opportunities.
SEB issued its first green bond which raised EUR 500m. The funds will be used to finance customers' green efforts.
The digital mortgage application service was launched in Sweden.See p. 20.

Second quarter

The market volatility decreased and therefore also the previously high customer demand forrisk management services.
SEB's new premises in Arenastaden,for more than 4,500 employees, was inaugurated.
A new corporate cash managementfunction which offers customers a liquidity overview, including accounts in other banks, was launched.See p. 16.

Third quarter

Forthe second yearin a row SEB qualified forinclusion in the Dow Jones Sustainability Index as the only Nordic bank.
Remote advisory services in the Baltic countries were introduced.See p. 20.

Fourth quarter

The business in Germany focusing on large corporate and institutional customers was transformed into a branch. See p. 34.
An agreement was signed with Danica to sell SEB Pension in Denmark.See p. 35.
An impairment and otheritems affecting comparability reduced the result by SEK 1,681m aftertax.See p. 34.
SEB invited IT developers to create new solutions based on the bank's Open Banking functionality.

Full year

The world economy was on a positive path,though the challenge ofrecord-high indebtedness remains.
The very expansive monetary policy with negative interestrates and quantitative easing continued.

Result and profitability

Both the 2017 and 2016 results include several items affecting comparability. In orderto simplify the reporting and analysis of the result, items affecting comparability have been summarised in a new row in the income statement called Items affecting comparability. Above this row another new row called Operating profit before items affecting comparability is presented.

See p. 34 and note 49.

Operating profit before items affecting comparability increased by 12 per cent and amounted to SEK 22,702m (20,296). Items affecting comparability amounted to SEK 1,896m (5,429). Operating profit (afteritems affecting comparability) increased by 40 per cent and amounted to SEK 20,806m (14,867). Net profit increased by 53 per centto SEK 16,244m (10,618).

Operating income

Total operating income increased by 5 per cent and amounted to SEK 45,609m (43,251).

Net interest income amounted to SEK 19,893m (18,738). The Swedish repo rate was -0.5 per cent and ECB's Euro refinancing rate was zero per centthroughoutthe year which affected net interestincome negatively.

Customer-driven netinterestincome increased by SEK 1,330m to SEK 21,794m year-on-year. Lending volumes and lending mar gins contributed positively in roughly equal parts to netinterest income. Deposit margins were down due to effects from the neg ative interestrates that were not possible to reflectin customer pricing. The deposit volume effect was negligible.

Net interest income from other activities (funding, etc.) was an expense amounting to SEK 1,901m (1,726). Regulatory fees were SEK 436m higherthan 2016 and amounted to SEK 1,798m (1,362). The fees related to deposit guarantees schemes,

SEK 258m, and there was a resolution fund fee in the amount of SEK 1,540m. In 2016, the resolution fund fee of 4.5 basis points applied to the adjusted balance sheet volumes was charged, versus 9 basis points for 2017. In 2018, the fee will be 12.5 basis points.

Net fee and commission income increased by 7 per centto SEK 17,725m (16,628). Corporate customers were active in the capital markets taking advantage ofthe low interestrate levels and there were many corporate initial public offerings and mergers and acquisitions. The fees from the issue of securities and advisory fees increased by SEK 367m year-on-yearto SEK 1,167m, gross. Demand fortraditional lending was lower, especially among large corporations, and gross lending fees that amounted to SEK 2,254m were down by 11 per cent compared to 2016. Stock market values increased during the year. The market val ues and new business volumes led to an increase in gross fee income related to custody and mutualfunds in the amount of SEK 776m to SEK 8,040m. Out ofthis amount,total performance and transaction fees increased by SEK 81m to SEK 356m (275). Net payments and card fees increased by 6 per cent, SEK 191m, to SEK 3,263m year-on-year. Gross life insurance commissions related to the unit-linked insurance business increased by SEK 54m to SEK 1,707m.

Net financial income decreased by 3 per centto SEK 6,880m (7,056). In 2016, customers were seeking risk management ser vices throughoutthe turbulent year. High volatility and market activity characterised the beginning of 2017, butthese subsided to a low levelforthe rest ofthe year. The market conditions affected credit spreads and thereby the valuation of counter party risk (CVA) and own creditrisk in derivatives (DVA) as well as own creditrisk forissued bonds atfair value through profit and loss (OCA). Compared to 2016,this valuation increased by SEK 429m to SEK 210m (-219). Netfinancial income,relating to the traditional life insurance operations in Sweden and Denmark, decreased by SEK 9 per cent,to SEK 1,738m.

Holistic management

Creating sustainable value is a continuous process in an environmentthatis under constant change. The Board of Directors sets the conditions by deciding on the bank's long-term strate gic direction,financialtargets, business plans and overallrisk tolerance. Profitability targets are set within the framework ofthe risk tolerance level and the capital adequacy targets.

In orderto maximise customer and shareholder value,the financial consequences of business decisions are evaluated and operations are managed proactively based on these aspects:

1. growth, mix and risk level of business volumes
1. capital and liquidity requirements driven by the business 3. profitability.

Pricing in accordance with risk is thereby a natural part ofthe business and monitoring nominalreturns and risk-based return is an important part of management.

The Board's overarching risk tolerance statements convey the direction and level ofrisk,funding structure, liquidity buffers and capitaltargets. SEB's main risk is creditrisk. Other materialrisks include liquidity, market, operational (including IT and information security), business, pension and insurance risks. SEB strives to continuously identify and manage potential

Payments, cards, structured lending, deposits, guarantees and otherfees

Custody & mutualfunds
Secondary market & derivatives

Newissues&advisory

Life insurance income

future risks,forinstance by using stress tests and scenario analysis. The capital buffer and liquidity reserves are held to coverthe risk in case of unforeseen events.

All activities are carried outresponsibly based on economic, environmental and social aspects and in accordance with regulations and expectations – all in orderto maintain the confidence ofthe stakeholders.

Net otherincome increased by 34 per centto SEK 1,112m (829). Realised capital gains as well as unrealised valuation and hedge accounting effects were included in this line item.

Operating expenses

Total operating expenses were stable at SEK 21,936m (21,812). A 3 per cent decrease in staff costs was offset by an increase in other expenses. The average number offulltime equivalents decreased by 333 compared to 2016,to 14,946. Fees to financial supervisory authorities and otherregulatory fees amounted to SEK 168m (138). Combined with the SEK 1,798m that are accounted for as netinterest,totalregulatory fees amounted to SEK 1,966m.

The cost cap remains unchanged at SEK 22bn for 2018. Over the past eight years, SEB's cost cap has been lowered step by step from SEK 24bn.

Net credit losses

Net credit losses amounted to SEK 808m (993). Asset quality remained robust and the overall creditloss level was 5 basis points (7).

Items affecting comparability

The nettotal ofitems affecting comparabilitywas an expense of SEK1,896m(5,429).See box belowand note49.

Information on items affecting comparability

In orderto facilitate the comparison of SEB's underlying operating profit between time periods, SEB has moved items affecting comparability into a separate line in the income statement.

See note 49 for a summary and analysis of the line items in the income statement that are impacted.

2017

The total expense forItems affecting comparability in the 2017 income statement amounted to SEK 1,896m before tax and SEK 1,681m aftertax.

In total,the items affecting comparability, including an effect on other comprehensive income of SEK 494m, decreased equity by SEK 2,175m.

Visa Sweden The settlement ofthe acquisition of Visa Europe by Visa Inc. consisted of a combination of cash and shares to be paid to the different Visa Europe members. In Sweden, SEB is an indirect member. A dividend of SEK 494m was received after an agreement was reached regarding the allocation ofthe settlement between the members. There was no tax effect.

The holdings in Visa were classified as an Available-forsale asset where the change in value was recognised in Other comprehensive income. The dividend reduced the valuation amountin Other comprehensive income by SEK 494m.

SEB's German business The operations in Germany were transformed and the core business was transferred from SEB AG to the German branch ofthe parent company, Skandinaviska Enskilda Banken AB, as per 2 January 2018. The purpose ofthe change is to simplify the reporting and administration of

Income tax expense

Total income tax increased by 7 per cent and amounted to SEK 4,562m (4,249). The effective tax rate forthe year was 22 per cent (29), in line with SEB's expected tax rate. In both 2017 and 2016,there were tax effects from the items affecting comparability.

In 2017, new legislation was introduced in Sweden which dis continued the tax deductibility ofinterest expenses on subordi nated debtthat qualifies as Tier 1 or Tier 2 capital. This increased income tax expenses by SEK 362m.

the German operations. The business that was nottransferred to the branch will be dismantled overtime.

The provisions related to redundancy and excess premises amounted to a total of SEK 521m. In addition, SEB entered into an agreementto transferthe pension obligations underthe defined benefit plan in SEB AG to Versicherungsverein des Bankgewerbes a.G (BVV) at a total cost of SEK 891m. The transferis planned forthe second quarter 2018.

Impairment and derecognition ofIT assets An impairment and a derecognition ofintangible IT assets amounted to SEK 978m. The positive tax effect was SEK 215m.

2016

The total effect ofItems affecting comparability in 2016 was an expense in the amount of SEK 5,429m before tax and SEK 5,352m aftertax.

Visa Baltic The settlement ofthe transaction of SEB's Baltic holdings in Visa Europe resulted in a gain of SEK 520m. The gain generated a tax expense of SEK 24m.

Reorganisation and restructuring SEB implemented a new customer-oriented organisation which resulted in an impairment of goodwill in the amount of SEK 5,334m. This expense was nottax deductible.

There were financial effects from restructuring activities in the Baltic and German businesses as well as an impairment and derecognition ofintangible IT assets no longerin use. The total amount expensed was SEK 615m with a positive tax effect amounting to SEK 101m.

A dividend from the subsidiary in Estonia was taxed atthe time of pay-outto the parent company. The tax amounted to SEK 72m. See notes 3 and 15 forfurtherinformation on tax.

Profitability

Return on equity forthe full year was 11.5 per cent (7.8). Excluding items affecting comparability return on equity was 12.7 per cent (11.3).

Other comprehensive income

Other comprehensive income amounted to SEK -1,036m (-946). The value ofthe pension plan assets exceeds the defined ben efit obligations. The discountrate used forthe pension obligation in Sweden was 2.2 per cent (2.4 at year-end 2016). The net value ofthe defined benefit pension plan assets and liabilities increased during the yearleading to other comprehensive income of SEK 784m (-1,875).

The net effectfrom the valuation of balance sheetitems that may subsequently be reclassified to the income statement, i.e.the total of cash-flow hedges, available-for-sale financial assets and translation offoreign operations, was negative and amounted to SEK -1,820m (929). A dividend in the amount of SEK 494m was received from Visa Sweden (reported as an item affecting comparability).See prior page. The dividend reduced the valuation ofthe holdings in Visa Sweden, which was recog nised in the line item Available-for-sale.

Divestment of SEB Pension Denmark

On 14 December 2017 SEB signed an agreementto sell all shares in SEB Pensionsforsikring A/S and SEB Administration A/S (SEB Pension) to Danica Pension livsforsikringsaktieselskab, a subsidi ary to Danske Bank (Danica) fortotal proceeds of DKK 6.5bn, consisting of a cash consideration of DKK 5.0bn and a pre-closing dividend of DKK 1.5bn. The pre-closing dividend will be in addition to the dividend of DKK 1.1bn which SEB received in the first six months of 2017.

As per year-end 2017, assets under management by SEB Pension amounted to DKK 101bn, and the net profit contribution was DKK 490m forthe year.

The effect on SEB's key financialratios, on a pro forma basis will be limited. The Common Equity Tier 1 ratio will improve by approximately 0.6 percentage points and earnings per share will see a limited negative impact. The divestmentreduces SEB's exposure to marketrisk.

The relevantinsurance assets and liabilities were reclassified as Held for sale in the balance sheet.

Key figures

	2017	2016	2015	2014	2013
Return on equity, %	11.53	7.80	12.24	15.25	13.11
Return on equity, excluding items affecting comparability, %	12.67	11.30	12.85	13.07	13.11
Return on total assets, %	0.57	0.37	0.57	0.71	0.58
Return on risk exposure amount, %	2.65	1.80	2.71	3.23	2.38
Basic earnings per share, SEK	7.49	4.88	7.57	8.79	6.74
Weighted average number of shares1), millions	2,168	2,178	2,191	2,187	2,191
Diluted earnings per share, SEK	7.46	4.85	7.53	8.73	6.69
Weighted average number of diluted shares2), millions	2,178	2,188	2,203	2,202	2,207
Creditloss level, %	0.05	0.07	0.06	0.09	0.09
Totalreserve ratio individually assessed impaired loans, %	55.1	68.8	68.3	62.2	86.9
Netlevel ofimpaired loans, %	0.25	0.21	0.20	0.29	0.17
Gross level ofimpaired loans, %	0.39	0.33	0.35	0.49	0.35
3), % Liquidity Coverage Ratio (LCR)	145	168	128	115	129
Risk exposure amount, SEK m	610,819	609,959	570,840	616,531	598,324
Risk exposure amount expressed as own funds requirement, SEK m	48,866	48,797	45,667	49,322	47,866
Common Equity Tier 1 capitalratio, %	19.4	18.8	18.8	16.3	15.0
Tier 1 capitalratio, %	21.6	21.2	21.3	19.5	17.1
Total capitalratio, %	24.2	24.8	23.8	22.2	18.1
Leverage ratio, %	5.2	5.1	4.9	4.8	4.2
4) Number offulltime equivalents	14,946	15,279	15,605	15,714	15,870
Assets under custody, SEK billion	8,046	6,859	7,196	6,763	5,958
Assets under management, SEK billion	1,830	1,749	1,700	1,708	1,475

1) The number ofissued shares was 2,194,171,802. SEB owned 25,177,693 Class A shares forthe equity based programmes at year-end 2016. During 2017 SEB has purchased 6,986,000 shares and 5,037,770 shares have been sold. Thus, at 31 December 2017 SEB owned 27,125,923 Class A-shares with a market value of SEK 2,612m. 2) Calculated dilution based on the estimated economic value ofthe long-term incentive programmes.

3) According to Swedish FSA regulations forrespective period.

4) Average forthe year.

A five-year summary of the group and the parent bank's income statements and balance sheets is available on p. 164–165.

Definitions are available on p. 171–172.

Financial structure

Total assets, which at 31 December 2017 amounted to SEK 2,560bn, decreased by SEK 61bn year-on-year (2,621).

Loan portfolio

Loans to the public reported in the balance sheet amounted to SEK 1,485bn, an increase of SEK 32bn year-on-year (1,453). Excluding repos and debt securities, loans to the public increased by SEK 55bn.

The majority ofthe bank's creditrisk is summarised in the credit portfolio (in which loans, commitments and derivatives are included). Excluding banks where credit volumes are short-term and more volatile,the credit portfolio increased by SEK 25bn to SEK 2,061bn (2,036). The credit portfolio increased mainly due to growth in Swedish and Baltic household mortgage lending in the amount of SEK 22bn and Swedish housing cooperative associa tions which increased to SEK 7bn. Real estate management credits decreased by SEK 8bn year-on-year, while the corporate credits remained stable.See p. 44–49 and note 17.

Interest-bearing securities

SEB's credit exposure in the bond portfolio (interest-bearing securities and credit derivatives and futures) amounted to SEK 156bn (168).See note 17a.

Derivatives

The fair value ofthe derivative contracts is booked as assets and liabilities on the balance sheet. They amounted to SEK 105bn and SEK 85bn respectively.

The mix and volumes of derivatives reflectthe demand for derivatives by the bank's customers for management oftheir financialrisks. The bank is a market makerfor derivatives and also uses derivatives forthe purpose of protecting its own cash flows and fair value ofits financial assets and liabilities from forinstance interestrate fluctuationsSee notes 22 and 31.

Insurance assets and liabilities

Financial assets within the insurance operations amounted to SEK 305bn (404). Out ofthis,financial assets where policyhold ers carry the risk (mostly unit-linked insurance), amounted to SEK 283bn (296) and other assets (mostly traditional and risk insurance) amounted to an additional SEK 22bn (108).

Liabilities in the insurance operations amounted to SEK 303bn (404). Out ofthis, SEK 284bn (297) was related to financial com mitments forinvestment contracts (mostly unit-linked insurance), while SEK 19bn (107) was related to insurance contracts (mostly traditional and risk insurance). When the agreementto sell SEB Pension to Danica was signed the relevantinsurance assets and liabilities were reclassified as Available for sale financial assets.See p. 35.

Tangible and intangible assets

Intangible assets totalled SEK 10.7bn (11.4), of which 44 per cent represented goodwill. Goodwill items are subjectto a yearly impairmenttest and there was no impairmentin 2017. Impairment and derecognition ofintangible IT assets amounted to SEK 978m (615).See box p. 34. Deferred acquisition costs in insurance operations amounted to SEK 4.0bn (4.0). Due to the implementation ofIFRS 15 the deferred acquisition costs will decrease in 2018.See box p. 37.

Deposits, borrowings and issued securities

The financing ofthe group consists of deposits from the public (households, corporates, etc.), borrowings from financial institu tions as well as issuance of money marketinstruments, bonds, covered bonds and subordinated debt.See p. 47 and note 17f forinformation on liquidity management.

Deposits and borrowings from the public amounted to SEK 1,005bn (962). Household deposits increased by SEK 23bn while corporate deposits increased by SEK 40bn during the year.

Issued securities with short and long maturities amounted to SEK 614bn (669). During the year short-term funding in the form of commercial paper and certificates of deposit decreased by SEK 44bn. In terms oflong-term funding SEK 47bn covered bonds and SEK 28bn senior debt matured during the year. The bank was able to use its favourable position from a creditrisk point of view to raise new funding in the form of new issues of covered bonds in

Rating

Moody's rates SEB's long-term senior unsecured debt at Aa3 with a stable outlook due to SEB's asset quality, earnings stability and diversification as well as increased efficiency.

Fitch rates SEB's long-term senior unsecured debt at AAwith a stable outlook. The outlook is based on SEB's longterm strategy, earnings stability and diversification.

S&P rates SEB's long-term senior unsecured debt at A+ with a stable outlook. The outlook is based on the bank's strong capital and well diversified earnings in terms of geography and business areas.

Moody's Outlook stable		Standard & Poor's Outlook stable		Fitch Outlook stable
Short	Long	Short	Long	Short	Long
P-1	Aaa	A–1+	AAA	F1+	AAA
P-2	Aa1	A–1	AA+	F1	AA+
P-3	Aa2	A–2	AA	F2	AA
	Aa3	A–3	AA–	F3	AA–
	A1		A+		A+

the amount of SEK 55bn and SEK 20bn senior debt. SEB's inaugural own green bond in the amount of EUR 500m was part ofthe seniorfunding raised.

Issued subordinated debt amounted to SEK 32bn (41). During the year SEK 12bn subordinated debt was called and SEK 5bn additionaltier 1 subordinated debt was issued.

Total equity

Total equity atthe opening of 2017 amounted to SEK 141bn. In accordance with a resolution ofthe Annual General Meeting in 2017, SEK 11.9bn of equity was used forthe dividend (11.5). Net profit amounted to SEK 16.2bn and other comprehensive income amounted to SEK -1bn. At year-end 2017,total equity amounted to SEK 144bn. Due to changes in accounting policies in 2018, equity will decrease by around SEK 6bn, all else equal,See box below.

Dividend

TheBoardofDirectorsproposes to theAnnualGeneralMeeting adividendofSEK5.75perClassAandClassCshare respectively (5.50),whichcorresponds to a77per centpayoutratio (113).Excludingitems affectingcomparability,thepayoutratiowas70per cent (75).The totalproposeddividendamounts toSEK12.5bn (11.9), calculatedonthetotal numberofissuedshares asper31December 2017, excluding repurchasedshares.

Assets under management and custody

At year-end, assets under management amounted to SEK 1,830bn (1,749). The netinflow of volumes was SEK 14bn. The increase in value was SEK 66bn. Assets under custody amounted to SEK 8,046bn (6,859).

Assets under management			SEK bn
	2017	2016	2015
Start of period	1,749	1,668	1,689
Inflow	491	255	268
Outflow	–477	–178	–220
Acquisition/disposal net	0	0	–75
Change in value	66	4	7
End of period	1,830	1,749	1,668

Ahead of 2018

In 2018,the bank will continue its work in accordance with the strategic direction and the business plan. A new three-year business plan for 2019–2021 will be developed.

Signs are thatthe macroeconomic development may be positive going forward. However, large global economic imbal ances remain and the potentialreduction ofliquidity supportto financial markets from central banks world-wide may create direct and indirect effects that are difficultto assess. There are signs thatthe Swedish central bank may introduce an interest rate raise in late 2018. Political uncertainty is higher after Brexit and the result of key elections in the Western world.

In SEB, credit,market, liquidity, IT and operational aswell as insurance risks affectthe business.Risk composition and risk management are described on p.44–49and in notes 17, 19and20.

Changes in accounting policies in 2018

As of 1 January 2018, IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers came into force. Combined they willreduce equity by approximately SEK 6bn.See note 1 and the first interim report 2018.

IFRS 9 Financial Instruments

Regarding classification and measurement, certain holdings which have been valued atfair value throughOther comprehen sive income,will nowbe reclassified to fair value through profit or loss and presented inNetfinancial income. Some ofthese holdingswere however determined to be valued at amortised cost. The current positive fairmarket value in the amount of SEK0.3bn inOther comprehensive incomewilltherefore be removed.

Regarding financial liabilities,the rules entail a change of reporting ofthe own creditrisk adjustment (OCA). The value change in OCA was reported in Netfinancial income but will be reported in Other comprehensive income going forward. In addition, certain issued bonds will be valued atfair value through profit orloss ratherthan amortised cost. In total, equity will decrease by SEK 1.8bn.

The impairment modelfor creditlosses was changed from an incurred loss modelto an expected loss model. The impact is driven by three main factors: 1. All items in scope are each assigned a reserve going forward. 2. An increase of creditloss reserves on retail portfolios. 3. A negative scenario shall be incorporated in the calculation ofthe expected creditlosses. The change will lead to an increase ofthe creditloss reserves at an amount of SEK 1.6bn and the net effect aftertax will be a SEK 1.2bn reduction of equity. Going forward the application ofthe IFRS 9 requirements will probably increase volatility in profit and loss.

IFRS 15 Revenue from Contracts with Customers

The main effectfrom IFRS 15 is that a smaller part ofthe deferred acquisition costs (DAC) within the life operations can be recognised as an asset. The change willresultin a decrease of DAC in the balance sheet of SEK 2.6bn, with a corresponding reduction on equity. Similarly, netfees and commissions in the 2017 income statement will be restated reducing income by SEK 47m.

Divisions and business support

Large Corporates& FinancialInstitutions

Corporate&

Private

Baltic

Life&Investment

Management

Customers

Head: Joachim Alpen

Co-heads: Christoffer Malmer Mats Torstendahl

Division Business offering 2017 development

The division serves 2,300 large corpo rate customers and 700 financial institu tions and offers advisory-driven commercial and investment banking services in the Nordic region, Germany, United Kingdom and through an interna tional presence. Customer-driven trading, liquidity management,financing, capital markets, custody services and asset management sales are part of the offering.

The division serves some 488,000 private and 175,000 corporate home banking customers in Sweden with full banking and advisory services through digital services and 118 branch offices. The division issues cards in the Nordic countries under SEB's own brand as well as for Eurocard and Diners Club, and offers leading private banking services to high net worth individuals.

The division provides bank products and advisory services in Estonia, Latvia and Lithuania to around 920,000 private and 99,000 corporate home banking customers through mobile solutions, online as well as from the network of 78 branch offices. SEB's Baltic real estate holding companies are also part ofthe division.

Large Corporate clients increased activities gradu ally benefitting from low interestrates,favourable financing conditions and improved growth pros pects. The equity and debt capital markets were active. Customers were interested in sustainability matters where SEB is an advisor.

Financial Institutions were less active in the mar kets with low volatilities and interestrates. However, in the primary markets institutions played an impor tantrole in new issues. The complex regulatory environment drove demand for SEB's custody offering.

Private: 22,500 private customers were onboarded in the new digital process and, due to the enhancement ofthe mortgage application process,the number of applications more than doubled. The growth rate in household mortgage lending was 4.5 per cent.

Corporate: SEB launched the service concept Greenhouse,for companies with growth ambitions, where SEB provides both seminars and external partners. Corporate lending, partly driven by financing ofresidential properties, increased to SEK 221bn.

Customers increasingly used digital services. SEB held around 1,500 remote advisory sessions with high customer satisfaction and there were 250,000 bank mobile app users and 210,000 SmartID users. An EU Instant payments functionality, launched in Estonia and Latvia, and an automated credit decision process for consumerloans simplified banking for customers. Open Banking was launched with a developer portal with APIs for external parties.

The division provides life insurance and asset management solutions for corpora tions, private individuals and institutions primarily in the Nordic and Baltic regions. In Sweden the offering covers a broad range of products, now including tradi tional life insurance. The responsibility includes the management offunds and otherinvestment portfolios, where one main aspectis SEB's offering in the sustainability area.

Life:In Sweden, stepswere taken to improve the accessibility for corporate clients.Annual new sales for 2017 amounted to SEK 21bn, corresponding to a 9.4 per cent market share.An agreementto divest SEB Pensionwas signedwithDanica (see p. 35). In the Baltic region, newproductswere launched and the customer experiencewas strengthenedwithin the pension area.

Investment Management: The focus on sustainability continued, in linewith the increasing clientinterest for sustainable products.

Business Supportis a cross-divisionalfunction with the responsibility to support business oper-

The IT developmentis done step-by-step,taking small initiatives and using agile ways of work-

Reliable services are provided to SEB's customers, by ensuring that digital channels are

Head: David Teare

Head: Riho Unt

Unit Function

Business Support

Head: Martin Johansson

ations with proactive IT development and execution of back-office services as well as to ensure stable daily operations ofthe IT systems – all carried out with focus on cost efficiency. ing. In this way fast delivery and outcome in line with customer and business needs are ensured. running without disruption and payments and othertransactions are handled efficiently.

Operating income and profit (SEKbn) Comments on the result Divisions'relative share of:

Corporate&PrivateCustomers

Operating profit decreased to SEK 8,823m. Netinterestincome decreased due to an increase in resolution fund fees during the year. Netfee and commission income was higher as a result of higher activity among corporate clients. Net financial income decreased when inves tors were in a wait-and-see mode. Operating expenses were stable. Creditlosses decreased and corresponded to a credit loss level of 8 basis points.

Operating profitincreased to SEK 8,146m, mainly driven by the higher net interestincome. Netfee and commission income increased due to increased busi ness volumes overall– payments, card and from investment management related fees. Netfinancial income increased while operating expenses were largely unchanged. Creditlosses decreased and corresponded to a credit loss level of 4 basis points.

Operating profitincreased to SEK 1,977m. Netinterestincome grew due to increased volumes and higher margins on new lending. Netfee and commission income was higher as a result of overall increased customer cards and payments activity. Netfinancial income increased. Operating expenses were unchanged. Creditlosses decreased and corre sponded to a creditloss level of 1 basis point.

Operating profitincreased to SEK 3,558m. Netfee and commission income increased due to higher asset values in the investment management business during the year. Netfinancial income relating to the traditional life insurance business in Sweden and Denmark decreased. Operating expenses decreased.

The Operations unit established shared service centres in Riga and Vilnius some 10 years ago and the services provided continue to expand. Operations processes 255 million transactions per year, of which 90 per cent are fully automated. Since 2010 productivity has doubled with a smaller work force.

Operating profit 2)

Geographic markets

Market	Development 2017	Per country
Sweden Universal banking Johan Torgeby President and CEO	Positive macroeconomic factors and growing business volumes improved outcome in all income categories. Non-recurring costs relating to the move to new premises in Arenastaden increased operating expenses.	Share of SEB's operating profit20171) Per cent
Estonia Universal banking Allan Parik Country manager	2017was characterisedby strongconsumer confidence andincreasedcorporateprofitability.Privatelendingand savings volumes increasedandtowards the endofthe year corporate credits startedto grow.SEBis second biggestbank inEstonia.
Latvia Universal banking Ieva Tetere Country manager	Both a new internet bank and new IT systems were imple- mented. The mobile app and mobile authorisations solu tions increased customer satisfaction. Overall stable economic growth resulted in higher demand forfinancing. SEB is the second biggest bank in Latvia.	2017 Sweden 57 Denmark 8 Norway 8
Lithuania Universal banking RaimondasKvedaras Country manager	Steady economic growth improved the business climate and increased household mortgage demand. SEB imple- mented various digital solutions to make banking faster and simpler. Meanwhile preparations for a new core banking platform were made. SEB is the biggest bank in Lithuania.	Finland 5 Germany 2) 4 Estonia 4 Latvia 2 Lithuania 4 Great Britain 5
Denmark Corporate banking Peter Høltermand Country manager	An improved business climate led to enhanced demand forinvestment banking services, while the historically low volatility led to lower activity in Markets. Investment Management continued to attractforeign inflows offunds. The divestment of SEB Pension was announced.	Other markets 3 1) Operating profit before items affecting comparability 2) Excluding treasury operations
Norway Corporate banking William Paus Country manager	Parts ofthe Norwegian economy developed negatively, forinstance the oil and gas industry. SEB was chosen as business partnerin refinancing and new loans by existing as well as new customers, and was involved in several large corporate transactions.
Finland Corporate banking Marcus Nystén Country manager	Improving macroeconomic conditions had a positive effect on customer activity in all segments. Among several large transactions, SEB acted as joint global coordinatorin the largestIPO ofthe yearin the Nordic countries – Terveystalo, a health care service provider.
Germany Corporate banking Johan Andersson Country manager	The markets were characterised by continued competition, low margins and excess liquidity. Customers focused on refinancing and bond issuing. SEB was involved in corporate transactions.See p. 34 forinformation on transforming SEB AG to a branch.
UnitedKingdom Corporate banking Mark Luscombe Country manager	The profitable growth continued from adding new clients and deepening existing clientrelationships. UK corporate clients welcomed SEB's focused efforts and demanded all types of service offerings, butin particular capital markets products.
Other markets Corporate banking The international network	SEB continued to serve customers in its branch offices in Luxembourg, Poland, Russia, Ukraine, China, Hong Kong, Singapore, India, United States and Brazil.

Market shares and customer contacts

SEB's market shares

Percent	2017	2016	Total market, SEK bn, 2017

Lending to the public
Sweden	14.2	14.4	5,965
lending to households	12.7	13.2	3,792
lending to companies	16.8	16.4	2,173
Estonia1)	25.0	23.2	179
Latvia1)	18.2	16.7	145
Lithuania1)	29.4	29.6	186
Deposits from the public
Sweden	15.6	15.7	2,771
deposits from households	11.5	11.6	1,776
deposits from companies	22.8	23.6	995
Estonia1)	22.0	22.5	170
Latvia1)	12.0	10.5	200
Lithuania1)	27.0	27.6	184
Equity trading
Stockholm	5.5	6.0	8,338
Oslo	3.1	3.1	2,217
Helsinki	2.7	2.5	2,618
Copenhagen	2.4	2.9	3,813
SEK-denominated corporate bonds	16.5	16.7	149
Mutualfunds,total volumes2)
Sweden	11.9	11.9	4,018
Finland	2.8	3.0	1,142
Unit-linked insurance, premium income
Sweden	16.3	16.8	65
Life insurance, premium income
Sweden	7.8	8.7	211
Denmark	N/A	8.9

1) Excl.financial institutions & leasing. Estonia and Latvia per November 2017, Lithuania per September 2017.

2) Excluding third-party funds.

Sources: Statistics Sweden, Bank of Estonia, Financial and Capital Market Commission in Latvia, Association of Lithuanian Banks, Swedish Insurance Federation, Nasdaq etc.

Customer contacts

	2017	2016	2015
Number of syndicated loans in Nordic countries	61	73	65
Number of equity capital market transactions in the Nordic region	31	24	19
Number of Nordic mergers and acquisitions	16	24	17
International private banking branches	12	12	12
Number of Swish payments via SEB's app (million)	28	18	8
Online bank, number of visits (million)	148	174	158
Mobile bank, number oflogins (million)	184	129	100
Telephone bank, number of calls (million)	4.6	4.4	4.3
Number oflife insurance intermediaries and brokers	2,200	2,500	2,550
Number of branch offices	196	219	252
Number of ATMs 1)	2,649	2,757	2,640

1) whereof 1,900 jointly owned by major Nordic banks

Total household savings - savings accounts, mutualfunds,traditional and unitlinked insurance and bonds but excluding directly owned equities – in Sweden amounted to SEK 8,583bn as of 31 December 2017 (traditional insurance per 30 September, 2017).

Market shares, Sweden Per cent

Profitrelated to business volumes

Customers' financial needs are the source of SEB's business volumes and result. The general relationships between customer-driven business volumes on- and off-balance sheet, the income statement and external factors are outlined below.

The macroeconomic situation is of greatimportance for customer behaviour and,together with the bank's own actions, itis a major factorimpacting the business and the result.

In times of positive economic development both businesses and private individuals are more likely to invest and consume. This may lead to increased lending, more payments, a higher number of corporate transactions, etcetera, all of which affect netinterest and net commission income positively.

In an unfavourable part ofthe business cycle, customers may be more restrictive and growth in business and transaction vol umes may level out while creditlosses may increase. On the other hand customers hedge theirrisks in uncertain and volatile times, which may increase netfinancial income.

SEB's totalresultis less volatile overtime than each line item in the income statement stand-alone. Forinstance netfee commis sion income tends to increase when financial income decreases and vice versa.

	Income statement, simplified	SEK m
		2017
A	Netinterestincome	19,893
B	Netfee and commission income	17,725
C	Netfinancial income	6,880
D	Net otherincome	1,112
	Total operating income	45,609
	Total operating expenses	–21,936
2 3 4 5	Creditlosses and other	– 970
	Operating Profit Before IAC	22,702
	Items affecting comparability	– 1,896
	Operating profit	20,806
	Income tax expense	– 4,562
	Net profit	16,244

Business volumes on the balance sheet 1) SEK m

ASSETS	2017	LIABILITIES AND EQUITY	2017
1 Central banks	190,000	12 Central banks	44,243
2 Loans to other creditinstitutions	34,715	13 Deposits from creditinstitutions	44,833
3 of which Debt securities	0	14 Deposits and borrowings from the public	1,004,721
4 Loans to the public	1,484,803	15 Liabilities to policyholders	303,202
5 of which Debt securities	13,030	16 Commercial papers/Certificates of deposit	83,069
6 Debt securities	109,513	17 Long-term debt	530,964
7 Equity instruments	48,371	Debt securities issued	614,033
8 Derivatives	104,868	2) 18 Debtinstruments	10,809
9 Insurance assets	313,203	2) 19 Equity instruments	14,228
Financial assets atfair value	575,955	20 Derivatives and other	89,275
10 Debt securities	25,824	Financial liabilities atfair value	114,313
11 Equity instruments	1,952	Otherliabilities	257,935
Available-for-sale financial assets	27,776	21 Subordinated debt	32,390
Other assets	246,347	Total equity	143,925
TOTAL ASSETS	2,559,596	TOTAL LIABILITIES AND EQUITY	2,559,596

1) From 2018 the balance sheet presentation will change due to the implementation ofIFRS 9.

See p. 37, note 1 and the first quarterly reportfor 2018.

2) Short position – a negative item in the inventory held for customertrades

Selected business volumes outside the balance sheet (in accordancewith accounting principles) SEK bn

			2017
22	Assets under	Customers investin forinstance mutual
	management	funds	1,830
22	Assets under	The bank safekeeps securities and collects dividends and interest on
	custody	customers' behalf	8,046
22	Commitments	Preapproved customer credits	563
22	Guarantees	The bank assists customers with credit
		risk management	123

22	Payments and cash management	Customers make payments and manage account balances.
22		Card transactions Customers make card payments.
22	Securities transactions	Customers use the bank as an intermediary in securities transactions,forinstance equities.
22	Corporate transactions	Corporate customers seek advice and assistance for various corporate transactions, such as acquisitions, IPOs etc.

Customers' business volumes and income

A Netinterestincome	Netfee and B commission income	C Netfinancial income	D Net otherincome
Netinterestincome is the differ ence between income from lend ing and expenses associated with deposits and borrowings. Margins and business volumes have a major bearing. Interest margins differin various markets, mainly due to varying maturities and risk.	Netfee and commission income increases with growing transac- tion volumes. Fund-related commissions increase with higher market values.	Netfinancial income is driven by both the market value and realised gains and losses on transactions with securities, currencies and derivatives . The trend in the finan- cial markets plays a majorrole.	Items in net otherincome occur sporadically with no clearlink to macroeconomic factors.
Customerloans generate interest income overthe life ofthe transac- tion. Up-frontfees on new loans are treated as interestincome. 1 2 4	SEB participates in, orleads, syndications ofloans leading to netfee and commission income or expenses. 4			Loa ns
SEB maintains an inventory of debt instruments – interest-bearing securities and bonds – for customertrades and liquidity management. They accrue interest 6 10 18 1) overlife. 3 5		SEB holds debtinstruments for customertrading and liquidity management. The customertrad ing activity as well as the market value ofthe inventory affect net financial income. 6 18 1)	Sales from the bank's inventory of debtinstruments held forliquidity management orinvestment affect this item. 3 5 10	inst rum Deb t ent s
	Brokerage fees occurin equity trading. 22	SEB holds equity instruments for customertrading and is a counter- partin equity swaps. The customer trading,the market value and divi dends affectthis item. 7 19 1)	Sales from the bank's equity hold ings and dividends affectthe item. 11	Inst Equ rum ity ent s
Interestrate derivatives that are used by SEB to reduce volatility in the result (so-called hedging) accrue interest overlife. 8 20	In certain cases, SEB charges and pays fees when trading in deriva tives. 8 20	SEB is a counterparty for custom- ers wishing to manage risk (for instance foreign exchange and interestrate risk) using derivative instruments. Both customertrades and the market value ofthe hold ings affectfinancial income. 8 20	The market value of derivatives that SEB uses for hedging. 8 20	Der ivat ives
Customer deposits generate inter est expense 12 13 14	Certain bank accounts generate fee income. 14			bor Dea row pos nd ings its
	SEB provides savings in unit-linked insurance, depositinsurance and similar products where the customer bears the risk. Invested volumes generate fee income. In addition, distribution generates fee expenses. 9 15 22	SEB provides savings in traditional pension with a certain guaranteed return, sickness and health insur- ance and related services. The item depends on the invested volumes as well as the outcome ofinsurance claims. 9 15		Insu ran ce and sav ings
SEB's operations are funded by long and short-term interest-bear ing securities, all of which generate interest expense. 16 17 21	Index-linked bonds generating fee income are provided forthe purpose of customerinvestment. 16 17	The market value including the creditrisk in SEB's issued index- linked bonds affects the item. 17	Early redemption by SEB ofits debt instruments affects this item. 16 17 21	and Issu sub ed de sec ord bt urit inat ies ed
	Various customer services are provided which generate both fee and commission income and expense. Mostfees are fixed and transaction based; some are market value based. 22			Bus bal out ines anc sid s e vol e she the um et es

1) Short position – a negative item in the inventory held for customertrades.

Risk, liquidity and capital management

SEB works to safeguard its strong financial position in order to meet customers' and other stakeholders' needs. Assuming risk is an integral part of banking, and risk, liquidity and capital management enables the bank to create customer value while maintaining resilience in all potential circumstances.

Risk review 2017

SEB continued to demonstrate its resilience with continued high asset quality and low creditlosses, a stable liquidity position and robust capital adequacy.

The global economic development was positive despite the prevailing geopolitical uncertainty. Economic growth was driven by increased employment, high asset prices, more investments

and trade, and the financial markets continued to develop positively. Atthe same time, large global economic imbalances remain. The reduction of central banks' liquidity supportto finan cial markets worldwide may create direct and indirect effects that are difficultto assess. Record high indebtedness, demographic headwinds and new,transforming technologies add to uncertainties in the market.

Risk profile	The Board of Directors decides on the overarching risk tolerance. The Presidentis responsible for optimising the risk profile within to the Board's risk tolerance and capital adequacy targets and to manage SEB's risks overall.
	Board's risk tolerance statements in brief SEB shall:	Comment
Creditrisk and asset quality	Have a robust credit culture based on long term relationships, knowledge aboutthe customers and focus on theirrepayment ability. This will lead to a high quality credit portfolio.	• SEB has a well-balanced credit portfolio with main exposure to Nordic large corporates and households in Sweden. • Asset quality remains strong with low creditlosses. Over the pastten years, which includes the Baltic crisis, annual creditlosses have averaged 0.17 per cent oflending.
Marketrisk	Achieve low earnings volatility by gener- ating revenues based on customer-driven business.	• SEB takes marketrisk in customer-driven trading activity and in its liquidity portfolio. Generally, SEB's marketrisk is low. • Interestrate risk arises due to mismatches in rates and maturities in the bank's assets and liabilities, and is managed by the Treasury function.
Operational and reputationalrisk	Strive to mitigate operationalrisks in all business activities and maintain the bank's reputation.	• SEB has historically reported operational losses below European peer average. • Managing and mitigating IT and cyberrisks is a key priority to ensure secure and available information, services and products for customers.
Liquidity and funding risk	Have a soundly structured liquidity posi tion, a balanced wholesale funding depend ence and sufficientliquid reserves to meet potential net outflows in a stressed scenario.	• SEB's primary funding sources are customer deposits and wholesale funding. • The funding base is diversified in terms of maturities and currencies to ensure that payment obligations are met as they fall due.
Aggregated risk and capital adequacy	Maintain satisfactory capital strength in orderto sustain aggregated risks, and guarantee the bank's long-term survival and its position as a financial counterparty, while operating safely within regulatory require ments and meeting rating targets.	• SEB is strongly capitalised in relation to regulatory capitalrequirements, internaltargets and peers. • The aim is to hold capital adequacy of around 150 basis points above the regulatory requirement.

The implementation of new regulations in the financial industry continues to be intensive and a number ofregulatory requirements take effectin 2018. After several years of dialogue,the Basel Committee published its revised Basel IIIframework. While the revised framework reduces the degree offreedom in the internal modelling of capitalrequirements,the outcome was not as negative forthe banking industry as initially apprehended.

Digitalisation in the banking industry is accelerating driven by technological advances, customers' expectations and regulations. Newtypes of competitors are emerging and amovementtowards Open Banking and sharing ofinformation and infrastructurewill reshape the current playing field for banks.Apartfromthe strate gic risk this entails, cyberthreats are expected to continue to

evolve as attacks becomemore technically sophisticated and the attack surface expandswith the progress of digitalisation.

Stable credit portfolio with little change in total corporate lending

SEB's credit portfolio,totalling SEK2,151bn (2,143),remained stable during the yearwith growthmainly in Swedish householdmortgage lending and financing to housing co-operative associations, aswell as in private and corporate lending in theBaltic region.

In the prevailing market environment, large corporate cus tomers took advantage of attractive capitalmarkets forrefinancing, which led to a subdued demand fortraditional bank lending. SEB's corporate portfolio remained almost unchanged at SEK 1,030bn

SEB's key risk development Measurement	5-year average1)	2017	Peer average 4) Measurement	2017
Credit portfolio (SEK bn) Net creditloss level (%)	2,063 0.07	2,151 0.05	Net creditloss level (%)	0.10
TradingVaR average (SEK m)	112	91	TradingVaR average 5) (SEK m)	149
Operational losses 2) /income (%)	0.58	0.45	Operational losses 2)/income (%)	0.72
Liquidity coverage ratio (%) Core gap ratio (%)	127 113	145 108	Liquidity coverage ratio 3) (%)	151
Risk exposure amount (SEK bn) Common equity tier 1 ratio (%) Leverage ratio (%) Creditrating	605 17.7 4.6 n.a.	611 19.4 5.2 Aa3/A+	Common equity tier 1 ratio (%) Leverage ratio (%)	20.2 5.3

1) The number of measuring points during the period vary

2) Fourth quarter 2016–third quarter 2017, ORX

3) SHB, Nordea and Swedbank, who calculate according to the Swedish FSA's method 4) Danske Bank, SHB, Nordea, Swedbank and DNB 5) Danske Bank, SHB, Nordea and Swedbank. Average VaR recalculated to 10-day 99% confidence interval

(1,029) as of year-end,representing 48 per cent ofthe credit portfolio. SEB is unique among peers in thatits corporate portfolio consists primarily oflarge counterparties – mainly Nordic and German customers in a wide range ofindustries,the largest being manufacturing. The exposure to small and medium-sized compa nies (SME) accounts for 12 per cent (11) ofthe bank's corporate portfolio, and is mainly in Sweden. Exposure to this segment was unchanged during the year.

Strong growth in the Baltics

The Baltic economies developed favourably as a result of growing exports, investments and private consumption. SEB's Baltic portfolio continued to grow steadily, particularly in Estonia and Lithuania, and opportunities arose from the consolidation ofthe banking market. At year-end,the Baltic portfolio amounted to SEK 166bn (148). The portfolio consists mainly of corporate and household exposures, while the real estate management portfolio is limited.

Swedish household mortgage portfolio

SEB takes a long-term, sustainable perspective in its household mortgage lending. Lending is based on the borrower's repayment capacity, including the ability to manage an interestrate of seven per cent, and new mortgage loans cannot normally exceed five times the household's gross income. SEB was the first Swedish bank to introduce amortisation requirements for mortgages with loan-to-value (LTV) ratios above 70 per centin 2015. In 2017, 83 per cent of all new loans with an LTV above 50 per cent contained an amortisation plan.

SEB's Swedish household mortgage portfolio grew by 4 per cent overthe year, compared to market growth of 7 per cent. The portfolio, which amounted to SEK 478bn (461), is of high asset quality with strong repayment ability among customers, low historical creditlosses and sound LTV ratios. Property values are continuously assessed and monitored.

The Swedish housing market

The Swedish residential housing market has been characterised by urbanisation, limited supply of new housing and low interestrates. As a result, housing prices have risen quickly especially in the pastfive years and household indebtedness is high in a global comparison. Accordingly, public debate has focused on overheating risks. In the second half ofthe year, the Swedish housing market saw signs of normalisation, driven by a larger supply of homes for sale as newly produced homes came to the market and the Swedish FSA's announcement of a furthertightening of amortisation requirements which willtake effectin March 2018. Although households in Sweden gener ally have a high level ofindebtedness,they have low default probability. Household borrowing has increased but so has savings, leaving households with strong balance sheets while interest expenses as a portion of household income is at a record -low level. In addition, according to Swedish regulations, debtin excess of collateral value is not written offin the case of default, which makes borrowers likely to continue to amortise. A price fall is more likely to affect private consumption and thus the economy as a whole.

High quality real estate portfolio

SEB's residentialreal estate portfolio is mainly in Sweden and consists of high quality, private and publicly owned real estate companies as well as institutional investors in the sector. The portfolio was stable at SEK 108bn as of year-end (109).

Credit demand was lowerin the commercialreal estate sector due to favourable financing opportunities in the capital markets. SEB's exposure to commercialreal estate consists mainly of strong counterparties with sound financing structures in the Nordic region. The value ofthe portfolio declined to SEK 179bn (185) due to a strategic reduction in Germany.

For several years, SEB has governed its exposure to the real estate sector by a group-wide risk tolerance levelforthe com mercialreal estate portfolio, divisional volume growth limits as well as a firm creditreal estate policy set by the Board.

High asset quality

Asset quality of the credit portfolio remained high and credit losses continued to be low at SEK 808m (993) or a net credit loss level of 5 basis points (7). Non-performing loans amounted to SEK 8.3bn (7.6), corresponding to 0.5 per cent of total lending.

Low marketrisk in relatively calm financial markets

The risk in the customer-driven trading is measured as Value-at-Risk (VaR), which averaged SEK 91m (112) in 2017. This means that, on average,the bank is not expected to lose more than this amount during a period often trading days, with 99 per cent probability. VaR was relatively stable during the year as the volatility across all asset classes continued to be limited while exposure from equity options was reduced. Towards the end ofthe year,tighter credit spreads and smaller FX exposures also contributed to lower VaR.

Main marketrisk in life insurance operations lies with customers

SEB's life insurance business consists mainly of unit-linked products, where the marketrisk remains with the customer. In 2017, unit-linked products represented 67 per cent oftotal premium income. SEB also offers traditional insurance, occupational pension and private health insurance in Sweden and Denmark. In the traditional insurance portfolios, buffers consisting of assets less guaranteed benefits serve as protection againstinsurance risk for SEB. The buffers increased throughoutthe year as a result of assetreturns and new business. An agreementto sellthe Danish life insurance business was signed in 2017.See p. 35.

A sound liquidity and funding strategy

Access to liquidity and funding markets is vital in all circumstances. SEB's liquidity and funding strategy is managed from three perspectives: (1) optimising the liquidity structure ofthe balance sheetto ensure thatless liquid assets are matched with stable funding, (2) monitoring wholesale funding dependence,

Each business unitis responsible forthe risks ittakes – the firstline of defence. Long-term customerrelationships and a sound risk culture provide a solid foundation for SEB's risk-taking decisions. Initialrisk assessments are made of both the customer and the proposed transaction. The business units ensure thattransactions are correctly priced and thatthe assumed risks are managed throughoutthe life ofthe transaction. Largertransactions are reviewed by a credit committee. The business units are responsible for ensuring thatthe activities comply with applicable group-wide policies and instructions and are supported by a clear decision-making hierarchy. Three lines of defence in risk management 1

The risk and compliance functions constitute the second line of defence. These units are independentfrom the business. The risk function is responsible foridentifying, measuring, monitoring and reporting risks. Risks are measured both on detailed and aggregated levels. Internal measurement models have been developed forthe majority ofthe credit portfolio as well as for market and operationalrisk and are approved by the Swedish FSA for calculating capitalrequirements. Risks are controlled through limits attransactional, desk and portfolio levels. Asset quality and the risk profile are monitored continuously,for example through stress testing.

The compliance function works proactively to ensure the quality of compliance at SEB, and focuses on issues such as customer protection, conductin the financial market, prevention of money laundering and financing ofterrorism as well as regulatory systems and controls.

Internal Auditis the third line of defence. SEB's risk managementis regularly reviewed and evaluated by Internal Audit to ensure thatitis adequate and effective. The internal auditors are in turn evaluated by the external auditor. Based on the evaluations ofthe third line of defence,the processes in the first and second lines of defence are continuously strengthened. SEB's governance framework, sound risk culture and business acumen constitute the cornerstones of effective risk management.

and (3) ensuring thatthe bank has sufficientliquidity to withstand a severely stressed scenario.

In 2017, SEB saw continued strong market demand forits new issues of short- and long-term funding. SEB's liquidity reserve, as defined by the Swedish Bankers' Association, amounted to SEK 340bn (427) at year-end. The size and composition ofthe liquidity reserve is regularly analysed and assessed against estimated needs.

The Swedish FSA's Liquidity Coverage Ratio (LCR) measures to what extentliquid assets are sufficientto cover short-term cash outflows in a stressed scenario. SEB's ratio amounted to 145 per centin aggregate (168), and 284 (305) and 217 (272) for US dollars and euros,respectively. This is in compliance with the Swedish FSA's minimum requirement of 100 per cent.

The Core Gap Ratio, which is SEB's internal measure ofthe extentto which long-term lending is matched by long-term fund ing, was 108 per cent (114), which is well within the bank's risk tolerance of a sound liquidity structure. SEB also manages its liquidity position in line with the upcoming regulatory Net Stable Funding Ratio (NSFR) requirement of 100 per cent, which is now anticipated to be effective as of 2021.

A high creditrating is important as it sets the costfor SEB's marketfinancing. SEB's creditrating is currently Aa3/A+.

Low losses from operational incidents

Operationalrisks are an inherent part of all businesses. SEB continuously works to minimise operational losses and, in particular,to avoid largerloss incidents. By continuously improv ing governance and risk practices in the operationalrisk managementframework,the bank strives to mitigate both existing and emerging risks. Important processes and tools include a New Product Approval Process (NPAP), business continuity management,risk and control self-assessments, as well as identity access management. In addition, employees are continuously trained within important areas such as information security, fraud prevention, anti-money laundering and Know-Your- Customer (KYC) processes.

SEB's reputation is built on long-term customerrelationships and a strong risk culture based on business acumen and professional conduct. SEB's Code of Conduct and core values, manda tory training, and dialogues on ethical and value-related dilemmas strengthen awareness ofthe importance of conduct among employees. Through an external whistle-blowing procedure, employees and others are encouraged to report unethical and illegal incidents.

Netlosses from operational incidents amounted to SEK 185m (263) in 2017. Benchmarking against members ofthe Operational Risk Data eXchange Association (ORX) shows that SEB's opera tional losses are below peer average.

Cyber security and IT risk management

Reliable and secure services and products are a key priority for SEB. Digital channels mustrun without disruption and transac tions must be processed correctly and safely. Customer data must be handled in a safe way. SEB is continuously developing and modernising the IT environmentto supportthe increasing digitalisation of services.

In its "always open" ambition,the bank is working on several measures to reduce and preventthe risk of downtime. Among otherthings,firebreaks are builtinto the IT infrastructure, which help limit a potential problem to one system only.

SEB's approach to meeting cyber and other security threats is to prioritise technical protection and to raise awareness among both employees and customers. Necessary security updates, system upgrades, and implementation of new features are per formed on a regular basis.

The regulatory framework for personal data protection (GDPR) is becoming stricter and atthe same time rules (PSD2) on open ing bank systems for access in new ways are being introduced in 2018. SEB is continuously adjusting to existing and upcoming requirements in these areas.See p. 50.

Sustainability and climate-related risks in focus

Extreme weather conditions, as well as long-term climate-related changes are becoming an increasingly importantrisk factorin the financial sector.Moretransparencyon climate-relatedrisks is requestedby customersandinvestors, andregulators are expected to take environmentalrisks into accountin their supervision.

Environmental, social and governance (ESG) risks have always been considered in SEB's credit analysis and credit granting. In 2017, SEB continued to develop tools forits ESG risk analysis. Since several years, SEB applies a number of sector policies that limitlending to companies in certain sectors, such as fossilfuels, mining and metals. SEB does not provide new financing of coal mining and coal power plants. SEB's fund company continued to reduce the coal exposure in its funds in 2017.

The bank alsoworked to influence power companies to find other sources of energy than combustion coal. SEBhas signed the international climate agreementMontreal Carbon Pledge,where part ofthe commitmentis to reportthe carbon footprintfrom equity funds annually, and since2017, SEBis reporting carbon emissions related to themajority ofits equity funds.See p.71.

Risk related to violation of human rights

Respecting and promoting human rights is an obligation of all responsible businesses. SEB assesses the risk for violation of human rights, and acts to prevent and remedy possible related negative consequences. A customer with poor human rights ambitions can quickly become a high creditrisk forthe bank. There is also a high reputationalrisk in investing in such compa nies forfund management purposes. This risk is monitored in the KYC-process, in screening of new suppliers, as well as in the bank's financing and investment processes.

Preventing corruption,

money laundering and terrorism financing

SEB actively counteracts allforms of corruption, in line with rules and regulations, and does nottolerate to be involved in or associated with bribes. Itis of utmostimportance for SEB to know its customers and to understand the risk of being used for money laundering and terrorism financing.

The bank believes that a diligentKYC process is the bestmethod for preventingmoney laundering and financing ofterrorism. Enhanced due diligence is applied for customers, products and countrieswhere the bank is believed to bemost exposed. Following EU's FourthAnti-Money LaunderingDirective, SEB has updated

and strengthened internal controls and procedures aswell as increased its focus on employee training. SEB uses a globalmonitoring systemto detect suspicious transactions and behaviours in defined higherrisk areas. Information fromthe business is of great importance and remains the leading source in the reporting to the relevant authorities. The number ofreports to the financial intelligence unit ofthe Swedish policewas around 500 in 2017.

Capital adequacy exceeds requirements

Despite strong risk management and risk culture, unexpected losses occurin banking. SEB's capital management shall ensure thatthe bank has sufficient capitalto absorb such unexpected losses. The Board of Directors sets SEB's capitaltargettaking into consideration financial stability requirements by the regulators, debtinvestors, business counterparties, as well as the Board's view of capital need and debtrating ambitions. This needs to be balanced with the shareholders'required rate ofreturn.

The Swedish FSA's requirementforthe Common Equity Tier 1 (CET1) capitalratio consists of Pillar 1, which is a general minimum requirementfor all banks, and Pillar 2, which is a specific requirement based on an assessment of SEB's risk, liquidity and capital position made in the Supervisory Review and Evaluation Process.

Development ofrisk exposure amount (REA) SEK bn

SEB estimates the Swedish FSA's CET1 capitalrequirementto 17.2 per cent as of year-end 2017.

Other exposures Additionalrisk exposure amount

The Board's targetis to maintain a CET1 capitalratio of around 150 basis points above the Swedish FSA's requirement. This con stitutes a buffer against potential variability in the capital position deriving, in particular,from changes in foreign exchange rates and interestrate risk in the pension obligations. This means that the CET1 capitalratio target currently is around 18.7 per cent.

The CET 1 capital base increased to SEK 119bn (114) while the risk exposure amount (REA) increased slightly to SEK 611bn (610). The capitalrequirements for Swedish banks are currently signifi cantly higherthan EU minimum levels and the Swedish banks are well capitalised compared with banks elsewhere in Europe, both from a risk-weighted and non-risk-weighted perspective. At yearend SEB's CET1 capitalratio amounted to 19.4 percent (18.8), which is above regulatory requirements and the Board's target.

SEB's leverage ratio, a non risk-based ratio between Tier 1 capital and assets, was 5.2 per cent at year-end (5.1), above the proposed minimum requirement of 3 per cent.

Update on regulatory requirements affecting capital

IFRS 9 and IFRS 15

The new accounting standard, IFRS 9, Financial Instruments, is effective as ofthe beginning of 2018. It entails a change of methodology for creditimpairment accounting in which loan loss provisions are based on an 'expected loss' conceptratherthan the current'incurred loss', which increased the creditloss reserves. The new rules also led to valuation effects in some assets and liabilities.

The new accounting standard, IFRS 15, Revenues from Con tracts with Customers, is effective as ofthe beginning of 2018. Among otherthings, itlimits the amountthat can be recognised as deferred acquisition costs.

As a result ofthe adjustments that will be necessary, SEB's equity will decrease by around SEK 6bn.See box p. 37.

EU's Bank Recovery and Resolution

The EU's Bank Recovery and Resolution directive was imple mented into Swedish law in 2016. It sets the crisis management procedure forfailing banks. The law also covers the bail-in tool and introduces a minimum requirementfor own fund and eligible liabilities (MREL). In 2017,the Swedish National Debt Office (Riks gälden) presented the Swedish MREL framework, which includes

a requirementfor subordination of debtthat may be bailed-in. The requirementis effective from 2018 and banks are expected to progressively build up the required volume of subordinated liabilities until 1 January 2022 atthe latest. For SEB this would entail SEK 90bn.

Basel III

The major part ofthe revised Basel IIIframework was finalized in 2017,resulting in a limitation ofthe benefits in terms of capital requirement when using internalratings-based risk measurement models. SEB has started to assess the capital effect ofthe revised framework, but due to finalisation of certain issues,the adaptation to national supervisory regimes, and the long imple mentation period from 2022 to 2027,the final effectis still not clear.

In a parallel initiative,the European Banking Authority (EBA) is,together with national supervisors,trying to harmonise and reduce variation in the implementation ofinternal models. EBA proposes to introduce requirements on definitions and model parameters, and prescribe more detailed requirements on deci sion processes. Banks are expected to comply in one to three years.

Regulatory requirements

In 2017, the implementation of established new regulatory requirements

culminated, while the stream of proposed new rules receded. New anti-money laundering requirements were implemented at the same time as extensive work was done to prepare for MiFID II, MiFIR, IFRS 9, GDPR and PSD 2, which all started to apply in 2018.

SEB continuouslymonitors regulatory development atthe global, European and national levels. This work is conducted through own activities and through contacts with Swedish and foreign regula tors and legislators, as well as via Swedish and international industry organisations, such as the Swedish Bankers'Association, the Swedish SecuritiesDealersAssociation and the Institute ofInternational Finance.

In 2017,the bank worked with 26 large regulatory projects at an estimated total cost of atleast SEK 685m. In addition,the bank is implementing technicalrequirements and guidelines from the three European supervisory authorities for banking, insurance and securities markets.

Main areas and aims ofregulation

1 2 3 Financial stability Ensure thatthe finan cial system can withstand economic shocks and disturbances as well as preventthatthe failure of one financial institution leads to a systemic collapse.

Market conduct Promote efficient price setting and execution in financial markets, and prevent market manipulation through enhanced transparency and improved risk mitigation.

Consumer protection

Ensure fairtreatment of customers and increase theirfinancial literacy through relevant and correctinformation. This entails requirements in terms of marketing and packag ing offinancial services and investment advice services.

New regulatory requirements coming into force 2017–2018 1)

Financial stability
VINN – Reporting of securities
IFRS 9 – Accounting rules forfinancial instruments
IFRS 15 – Accounting rules forrevenue from contracts with customers
KRITA/AnaCredit – Reporting of corporate loans
IFRS 16 – Accounting rules forleases
BCBS 239 – Principles for Effective Risk Data Aggregation and Reporting
Market conduct
PAD – Payment Accounts Directive
AML 4 – Anti-Money Laundering Directive
MiFID II / MiFIR – Markets in Financial Instruments Directive & Regulation
Financial benchmarks regulation
PSD 2 – Payment Services Directive
MMF – Money Market Funds regulation
CSDR – Central Securities Depositories Regulation
IORP 2 – Institutions for Occupational Retirement Provisions Directive
SFTR – Securities Financing Transactions Regulation
Consumer protection
PRIIPs – Packaged Retail and Insurance-Based Investment Products Regulation
GDPR – General Data Protection Regulation
IDD – Insurance Distribution Directive
2017	2018

1) The implementation work continues through the phase-in period, if any, and sometimes beyond.

50 SEB Annual Report 2017

High-impact regulations

Certain new regulations – in the areas offinancial stability, market conduct and consumer protection – have particularly large impact on the bank's result as well as on its operations.

Financial stability 1

Accounting and valuation rules – IFRS 9

In 2018,the new internationalfinancialreporting standard, IFRS 9 – Financial Instruments, came into force. Based on the experience from the 2007–2008 financial crisis. Among many otherthings IFRS 9 requires banks to make reserves for its expected creditlosses through the life ofthe credit, with estimates based on probability of default and forward looking macroeconomic scenarios. As a consequence ofthe new

accounting rules,the reported results will be more dependent on assumptions aboutthe macroeconomic development and may be more volatile.

Implementing IFRS 9 is a major undertaking as it affects accounting and reporting systems throughoutthe bank.

Read more about the implementation of IFRS 9 on p. 37 and in note 1.

Market conduct

Protecting investors – MiFID II and MiFIR

In 2018, EU's Markets in Financial InstrumentsDirective and Regulation (MiFID and MiFIR) took effect1) They aim at strengthening the protection ofinvestors by increasing trans parency around costs and charges, ensuring that customers' financial literacy match theirrisk profiles, and increasing the information provided to customers. The new rules apply to all types of customers and services such as orderreception and execution, investment advice and portfolio management. MiFID 2 and MiFIR are among the most comprehensive regulatory overhauls in the history offinancial services. Theyhave an effectthroughoutthe bank. They enable the bank to furtherimprove the customer offering by providing an opportunity to interact with customers to a greater extent and thereby better understand how to meettheir needs. The bank has also improved and clarified its business and pricing models as a result ofthe regulations.

Payment services – PSD 2

In 2018, EU's Payment Services Directive(PSD 2) entered into force 1) . Itis designed to promote competition in the financial services industry – while ensuring customer secu rity. An importantfeature is the requirementto provide access to accounts and paymentinitiation based on customers' demand. This enables third party developers to build applications and services around customer and account information in a financial institution – so called Open Banking. Overtime this will likely transform the role of banks and banking-related services. SEB plays an active role in this development.

Consumer protection 3

Guarding customer data – GDPR

EU's General Data Protection Regulation (GDPR) will apply from mid-2018 1). As it willreplace 28 nationalregulations (in Sweden:the Swedish Personal Data Act, PuL – personuppgiftslagen),the GDPR willreduce complexity and legal uncertainty as well as administrative costs. The new privacy rules apply to all businesses, but will have a greater effect on banking since the financial sectorinvolves large volumes of personal data. One key requirementin the new rules is the rightto be forgotten – meaning that when a customer wants

1) Regulations automatically apply as law in each EU country whereas Directives apply through theirimplementation into national law.

to be forgotten, his/her data should be deleted – as long as otherlegalrequirements allow it. Furthermore, customers should be provided easier access to his or herindividual data, and getinformation on how that data is processed. It will also be easierfor customers to move personal data from SEB to other parties. Data protection must be builtin to all products and services by default. Allrequirements are subjectto sanctions with fines up to four per cent of a company's global annualturnover.

Corporate governance

During the year, accelerating technical develop ments, and the need for further digitalisation of SEB's services, have been deeply analysed by the Board. Further topics have included information and cyber security. At the same time, the growing regulatory environment in the financial sector has posed challenges and needs for resource planning and IT priorities. Other important areas for the Board have been succession planning, among other things due to the appointment of SEB's new CEO."

Marcus Wallenberg Chairman of the Board

To maintain the important societal function as a bank, it is of paramount importance for SEB that all stake holders have great confidence and trust in the bank's operations. Professional people who are guided by strong and proper business conduct are crucial as is maintaining a sound risk culture.

The importance of corporate governance

To maintain trust among customers, employees, shareholders and other stakeholders and prevent conflicts ofinterest,roles and responsibilities are clearly defined for shareholders, direc tors, management and other stakeholders.

SEB's work with corporate governance is focused on ensuring smooth and effective operations with high standards, sound risk management and robustinternal control.

Rules and regulations

As a Swedish public limited liability financial institution with secu rities listed on Nasdaq Stockholm, SEB is subjectto numerous rules and regulations. The externalframework for SEB's corpo rate governance includes the following rules and regulations:

the Companies Act
the Annual Accounts Act
the Nasdaq Stockholm Issuer Rules
the Swedish Corporate Governance Code
the Banking and Financing Business Act
the rules and guidelines issued by the Swedish Financial Supervisory Authority and other authorities.
See p. 50 forinformation about new regulatory requirements.

In addition, SEB applies an internalframework, which among otherthings includes the Articles of Association, adopted by the General Meeting of Shareholders. Policies and instructions that

define the division ofresponsibility within the group are tools for the Board and the President and Chief Executive Officer (the President) in their governing and controlling roles. Such policies and instructions include, among others:

Rules of Procedure forthe Board and the Instructions forthe Board Committees
Instructions forthe President and the Group's Activities
Group CreditInstruction and Risk Policy
Instruction for Handling of Conflicts ofInterest
Instruction for Procedures Against Money Laundering and Financing of Terrorism
Code of ConductSee sebgroup.com
Remuneration Policy
Information Security Policy
Corporate Sustainability PolicySee sebgroup.com
PoliciesonAssessmentofSuitabilityofDirectors,membersofthe GroupExecutiveCommittee(GEC)andotherkeyfunctionholders.

SEB's ethical and sustainability endeavours are an integral part of the business, and the Board continuously discusses these issues. SEB's Code of Conduct describes SEB's values, ethics and stand ards of business conduct and provides guidance on how to live by these values. Policies and guidelines for sustainability and various group-wide position statements and industry sector policies addressing environmental, social and governance issues are also of vital importance.

The Corporate Governance Report has been prepared in accordance with the Annual Accounts Act and the Swedish Cor porate Governance Code (the Code). SEB strives to follow the Code where appropriate and has no deviations to reportfor 2017.

More information about corporate governance is available on sebgroup.com

Shareholders and general meetings of shareholders

The shareholders' influence is exercised at general meetings of shareholders through, among otherthings, election of members ofthe Board and the bank's auditor.

SEB has approximately 269,000 shareholders. Around 172,000 ofthem own less than 500 shares, while 112 hold more than 1,000,000 shares, accounting for 82 per cent ofthe capital and votes. SEB's share capital consists oftwo classes of shares – A shares and C shares. Each Class A share carries one vote and each Class C share carries one-tenth of a vote.SEB's largest shareholders and the shareholder structure are shown on p. 29-30.

The Annual General Meeting (AGM) of shareholders is held in Stockholm, in Swedish. All shareholders listed in the shareholder register who have duly notified their attendance have the right to participate atthe AGM and to vote forthe full number oftheir shares. Shareholders who cannot attend may appoint a repre sentative. The 2017 AGM was held on 28 March. A total of 1,364 persons,representing 1,931 shareholders, were in attendance at the AGM. An electronic system fortelevoters was used atthe AGM.

The main resolutions made atthe AGM were:

approval ofthe dividend of SEK 5.50 per share
decrease ofthe number of directors to eleven
re-election often directors and election of one new director
re-election of Marcus Wallenberg as Chairman ofthe Board
re-election of PricewaterhouseCoopers as auditor
adoption of guidelines forremuneration ofthe President and the other members ofthe GEC
approval oftwo long-term equity programmes
issuance of a mandate to the Board concerning the acquisition and sale of own shares for SEB's securities business,forthe long-term equity programmes and for capital management purposes
issuance of a mandate to the Board to resolve on the issuance of convertibles.
The minutes from the AGM are available on sebgroup.com

Nomination Committee

The tasks of the Nomination Committee include submitting proposals to the AGM regarding the Chair man and directors of the Board as well as the auditor.

The Nomination Committee nominates the Chairman,the direc tors ofthe Board and the auditor as well as makes recommendations regarding directors'fees and fees for committee work. The Nomination Committee also reviews the evaluations ofthe Board and the Chairman ofthe Board.

Pursuantto a decision by the AGM,the Nomination Committee is to be composed ofthe Chairman ofthe Board along with repre sentatives ofthe bank's fourlargest shareholders that are inter ested in appointing a member. One ofthe independent directors shall be appointed as an additional member ofthe Nomination Committee.

The composition ofthe Nomination Committee meets the requirements laid outin the Code. The Nomination Committee has access to relevantinformation aboutthe bank's operations and financial and strategic position provided by the Chairman of the Board and the additional member.

An important principle is thatthe size and composition ofthe Board shall be such as to serve the bank in the best possible way. Therefore, as the starting pointforits work,the Nomination Com mittee is tasked with assessing the degree to which the Board meets the demands that will be placed on the Board as a result of

Nomination committee forthe 2018AGM

appoint a member ofthe Nomination Committee.

		Votes (%)
Member	Representing	31Aug. 2017
Petra Hedengran, ordförande	Investor	20.8
Magnus Billing	Alecta	7.0
Lars Heikensten	Trygg-Stiftelsen	5.3
Javiera Ragnartz	AMF Försäkring och Fonder	3.4
Marcus Wallenberg	SEB, Chairman ofthe Board
		36.5

Tomas Nicolin, additional member, appointed by the Board. Swedbank Robur Fonder, which is the bank's fourth largest shareholder, has declined to

Board of Directors

	Marcus Wallenberg	Sven Nyman	Jesper Ovesen	Johan H. Andresen

Position	Chairman since 2005	Vice Chairman since 2017	Vice Chairman since 2014	Director
Committee	l RCC l ACC l RemCo		l RCC l ACC
Year elected	2002	2013	2004	2011
Born	1956	1959	1957	1961
Education	B.Sc. (Foreign Service)	B.Sc. (Business and Econ.)	B.Sc. (Econ.) and MBA	B.A. (Government and Policy Studies) and MBA
Other assignments	Chairman of Saab and FAM. Vice Chairman ofInvestor. Director of AstraZeneca Plc., Temasek Holdings Ltd and the Knut and Alice Wallenberg Foundation.	Chairman of RAM Rational Asset Management. Director of RAM ONE, Ferd AS (Norway), Nobel Foundation's Investment Committee, Stockholm School of Economics, Stockholm School of Economics Association and of Axel and Margaret Ax:son Johnson's Foundation.	Director of Sunrise Communi cation Group AG (Switzerland), Lundbeck A/S (Denmark) and ConvaTec Group Plc. (UK).	Owner and Chairman of Ferd AS (Norway). Chairman of Council on Ethics forthe Government Pension Fund Global (Norway). Director of SWIX Sport AS (Norway), NMI-Nordic Microfi- nance Initiative and Junior Achievement Europe.
Background	Citibank in New York (USA), Deutsche Bank (Germany), S G Warburg Co (UK), Citicorp (Hong Kong), SEB (Germany) and Stora Feldmühle (Germany). Executive Vice President ofInvestor and CEO of Investor. Several assignments as Chairman and Director of large public companies.	Broad experience from the finan cial business field. Managerial positions within Investor. CEO and founder of Lancelot Asset Management and Arbitech. Several directorships.	Price Waterhouse. Vice Presi- dent and later CEO of Baltica Bank A/S. Vice President and Head of Finance of Novo Nord isk A/S. CEO of Kirkbi Group. CFO of Den Danske Bank A/S, LEGO Holding A/S and TDC A/S. Several directorships.	International Paper Co. Partner of Ferd AS. CEO of Ferd AS.
Nationality	Swedish	Swedish	Danish	Norwegian
Own and closely related persons' shareholdings	753,584 Class A shares and 720 Class C shares	10,440 Class A shares and 10,200 Class C shares	25,000 Class A shares	100,000 Class A shares
Independentin relation to bank/major share- holders	Yes/No	Yes/Yes	Yes/Yes	Yes/Yes
Attendance at Board/ 1) Committee meetings	25 of 25 / 29 of 30	23 of 25	24 of 25 / 21 of 21	23 of 25
Remuneration, Board meetings, SEK	2,850,000	900,000	900,000	675,000
Remuneration, Committeemeetings ,SEK	790,000	–	950,000	–

lChairman

lDeputy Chairman

l Member

1) Only meetings that are possible forthe directorto attend, without any conflicts ofinterest, are reflected.

Urban Jansson, Birgitta Kantola and Annika Falkengren left the Board in connection with the AGM 2017.

Johan Torgeby was elected new member of the Board.

the bank's operations, organisation and future direction. The Board's size and composition is discussed and reviewed in terms of whetherthey have adequate knowledge, skills and experience, both in the financial and other sectors. The directors should also have sufficienttime to perform their duties and understand the business and the main risks ofthe bank.

The composition ofthe Board shall adhere to applicable laws and regulations and to the Policy onDiversity andAssessment of Suitability ofDirectors, adopted by the Board. The Nomination Committee shall ensure diversity within the Board in terms of educational and professional background, gender, age and geographical provenance ofthe directors.

Furthermore,the Nomination Committee discusses succession matters with particular emphasis on continuity and long-termper spective in ensuring the Board's competence and composition.

The Nomination Committee forthe 2018 AGM was appointed in the autumn of 2017. No specialfee has been paid to the members ofthe Nomination Committee.TheNomination Committee's proposals for decisions, including motivated account as regards directors is available on sebgroup.com

Board of Directors

The Board has overallresponsibility forthe organisation, management and operations ofthe group.

The Board has adopted Rules of Procedure thatregulate the Board's role and ways of working as well as special instructions forthe Board's committees.

Signhild Arnegård Hansen Samir Brikho Winnie Fok Tomas Nicolin

Chairman of SnackCo of America Corp. Vice Chairman ofthe Swedish-Ameri can Chamber of Commerce (SACC) (USA). Director of Magnora, SACC New York, Business Sweden, ESBRI and King Carl XVI Gustaf's Foundation for

Young Leadership.

Director	Director	Director	Director
l RemCo	l RCC	l ACC	l RCC
2010	2013	2013	2009
1960	1958	1956	1954
B.Sc. (Human Resources) and journalism studies	M.Sc. (Engineering, Thermal Technology)

UK Business Ambassador.

Co-Chairman ofthe UK-UAE Business Council and the UK-ROK CEO Forum. Member of Advisory Boards of Stena. Chairman ofthe Step Change Charity.

Bachelor of Commerce	B.Sc. (Econ.) and M.Sc.

Director of Volvo Car Corporation, G4S plc (UK). Member ofthe Investment Committee of HOPU Investments Co, Ltd. (Asia), senior advisor to FAM and WFAB.

(Management)
Chairman of Centre for Justice. Director of Nordstjernan, Nobel Foundation and Axel and Margaret Ax:son Johnson's Foundation. Member ofthe Investment

Committee of Niam Property Fund.

Broad experience in the financial sector as CEO of Alecta, Third National Swedish Pension Fund and E. Öhman J:or Fondkommission as well as a leading position in Handels banken. Several directorships.

President ofthe family-owned company Svenska LantChips. Chair man ofthe Confederation of Swedish Enterprise. Vice Chairman of Business Europe. Director ofInnventia, IFL at Stockholm School of Economics, Research Institute ofIndustrial Economics, Loomis Sverige and University of Lund.

Broad international experience from management and leadership, espe cially within the industrial sector. Leading positions within ABB, e.g. as Division Head and CEO of significant subsidiaries. Member ofthe GEC of ABB Ltd, (Switzerland). CEO of Amec Foster Wheeler plc, (UK).

Broad experience from the financial business field. Certified Public Accountantin Australia and in Hong Kong. Member ofthe Institute of Chartered Accountants in England and Wales. Industrial advisor and senior advisorto Investor and Husqvarna. CEO and Senior Partner of EQT Partners Asia Ltd and CEO of New Asia

		Partners Ltd.
Swedish	Swedish, Swiss	British	Swedish
5,387 Class A shares	0 shares	3,000 Class A shares	66,000 Class A shares
Yes/Yes	Yes/Yes	Yes/Yes	Yes/Yes
24 of 25 / 8 of 8	24 of 25 / 6 of 9	21 of 25 / 7 of 8	25 of 25 / 13 of 14
675,000	675,000	675,000	675,000
387,500	345,000	250,000	345,000

The Board has the following duties, among others:

deciding on the objective, strategy and framework forthe business activities as well as the business plan
regularly following up and evaluating the operations in relation to the objectives and guidelines established by the Board
ensuring thatthe business is organised in such a way thatthe accounting,treasury management and the risks inherentin the business as well as financial conditions in all otherrespects are controlled in a satisfactory mannerin accordance with external and internalrules
deciding on major acquisitions and divestments as well as other majorinvestments
appointing or dismissing ofthe President,the members ofthe GEC,the ChiefRiskOfficer (CRO), and theHead ofGroup Internal Audit, aswell as setting the remuneration ofthese individuals.

The Chairman ofthe Board organises and directs the work ofthe Board and ensures among otherthings thatthe directors on a regular basis receive information and education on changes in rules concerning the activities of SEB and on responsibilities of directors of a listed financial company. Educational and specialisation seminars are held each year, and new directors are offered seminars with information on and discussions aboutthe group's various operations, including information aboutthe controlfunctions.

The directors are elected by the shareholders atthe AGM for a one-yearterm. Since the 2017 AGM the Board has consisted of eleven AGM-elected directors, without deputies, and oftwo directors and two deputies who serve as employee representatives and are appointed by the trade unions. In orderfor a quorum to exist at a Board meeting, more than half ofthe directors must

Board of Directors (continued)

Portfolio Manager & Macro Economist (Swedbank), Executive Director, Financial Sponsors Group Private Equity at Morgan Stanley in London, Head of Client Coverage, Merchant Banking. Co-head of Vice President Product Development, Niche cars, at Volvo Cars, Senior Vice President Research and Development at Bonnier, Founder ofthe consultancy network MindMill Network and CEO at Differ Strategy Consulting.

		division Large Corporates & Financial Institutions.	Differ Strategy Consulting.
Nationality Swedish		Swedish	Swedish
Own and closely related persons' shareholdings	12,500 Class A shares	5,567 Class A shares, 73,729 share rights and 81,247 conditional share rights	1,150 Class A shares
Independentin relation to bank/major share- holders	Yes/No	No/Yes	No/No
Attendance at Board/ Committee meetings	1) 24 of 25 / 8 of 8	14 of 14	24 of 25 / 5 of 5
Remuneration, Board meetings, SEK	675,000	–	675,000
Remuneration,	250,000	–	75,683

Committeemeetings,SEK

lChairman

lDeputy Chairman l Member

1) Only meetings that are possible forthe directorto attend, without any conflicts ofinterest, are reflected.

2) As of 16 August 2017, Sara Öhrvall participated in SEB's operational digitalisation work and,forthatreason, she resigned from the work in RemCo. The remuneration forthe assigment amounted to SEK 1,050,230.

be present. The Presidentis the only AGM-elected director employed by the bank. The Nomination Committee has assessed the directors' independence in relation to the bank and the bank's management as well as in relation to shareholders controlling 10 per cent or more ofthe shares or votes and has found thatthe composition ofthe Board meets the requirements ofthe Code.

Background Financial analyst at Goldman Sachs and

ment Manager atInvestor.

Investor, CFO at Syncron International and Hallvarsson and Halvarsson. Invest-

The work ofthe Board follows a yearly plan. In 2017,the Board held 25 meetings. The President attends all board meetings exceptthose dealing with matters in which the President has an interestthat may be in conflict with the interests ofthe bank, such as when the President's work is evaluated. Other members of management participate wheneverrequired.

Directors' fees

SEB's AGM in 2017 settotalfees of SEK 12,887,500 forthe members ofthe Board and decided how these fees should be distributed among the Board and its committees. Directors' fees are paid on a running basis during the mandate period.

Following a recommendation by the Nomination Committee,the Board has adopted a policy thatrecommends that directors use 25 per cent oftheirfee to purchase and hold SEB shares up to an amount corresponding to one year's fee.

Board committees

The Board's overallresponsibility cannot be delegated. However, the Board has established committees to handle certain defined issues and to prepare such issues for decision by the Board. At present,there are three committees:the Risk and Capital Committee (RCC),the Audit and Compliance Committee (ACC), and the Remuneration and Human Resources Committee (RemCo). These committees reportto the Board on a regular basis. An important principle is that as many directors as possible shall participate in committee work. The Chairman ofthe Board serves as deputy chair ofthe three committees. Neitherthe President nor any other officer ofthe bank is a member ofthe committees.

Appointed by the employees

Director, appointed by the employees. Director, appointed by the employees. Deputy Director, appointed by the employees. Deputy Director, appointed by the employees. 2016 20153) 20164) 2015 1962 1968 1967 1959 University studies in mathematics, statistics and law. Engineering logistics. University studies in working environment. LLB Chairman of Financial Sector Union of SEB group and Financial Sector Union Western section in SEB, Direc tor EB-SB Fastigheter and EB-SB Holding. Chairman ofthe Association of University Graduates at SEB. First deputy Chairman of Financial Sector Union of SEB and Financial sector union regional club Group Operations of SEB. Vice Chairman ofthe Association of University Graduates at SEB. Direc tor ofthe Foundation of Alma Detthows. Office manager and various other positions in SEB. Various specialist and leaderroles within Trygg-Hansa. Director of SEB's Profit Sharing Foundation. Sales manager at Trygg-Hansa in the property insurance business. SEB in various positions in systems management and IT development, currently Systems Management Advisor. Employed at Fixed Income, group operations. Director of SEB's Profit Sharing Foundation and Result Premium Foundation. Various client executive positions in several divisions and subsidiaries in the SEB. Presently client executive at Private Banking, Foundations. Swedish Swedish Swedish Swedish 0 shares and ⁸⁰⁵ conditional share rights 3,748 Class ^A shares and ⁸⁰⁵ conditional share rights ¹⁷⁹ Class ^A shares and 1,610 conditional share rights 5,001 Class ^A shares and 805 conditional share rights –––– 24 of 25 25 of 25 21 of 25 22 of 25 –––– ––––

Anna-Karin Glimström Håkan Westerberg Annika Isenborg Charlotta Lindholm

3) Deputy director 2011–2014 4) Deputy director 2014

Evaluation ofthe Board of Directors,the President and the Group Executive Committee

The Board uses an annual self-assessment method, which among otherthings includes a questionnaire,followed by discussions within the Board. Through this process the activities and work methods ofthe Board,the Chairman ofthe Board and the respective committees are evaluated. Among the issues examined are:

the extentto which the individual directors take an active partin Board and committee discussions
whether directors contribute independent opinions
whetherthe meeting atmosphere facilitates open discussions.

The outcome ofthe evaluation is presented to and discussed by the Board and the Nomination Committee. The evaluation process and its outcome contribute to furtherimprovement of the Board's work and help the Nomination Committee to deter mine the appropriate size and composition ofthe Board.

The Chairman ofthe Board formally evaluates each individual director's work once a year. Marcus Wallenberg does not participate in the evaluation ofthe Chairman's work, which in 2017 was directed by Tomas Nicolin. The Board evaluates the work ofthe President and theGEC on a continuous basis, without participation by the President or any other member oftheGEC.

Forthe RemCo, appointing the new CEO, succession and competence planning as well as regulatory change were the key areas of attention in 2017. Appointment ofthe new CEO and other succession matters were prepared based on the committee's continuous focused work to secure an appropriate succession order, an important part of which is to monitorthe bank's total competence pool. The committee also monitored SEB as an employer. Having a reputation as an inclusive and attractive employeris increasingly importantto secure a diverse workforce leading the bank into the future. In 2017,the committee also addressed a new set ofregulatory require ments that affectthe bank's remuneration of employees."

Signhild Arnegård Hansen,

Chairman of RemCo

Remuneration and Human Resources Committee

The RemCo prepares,for decision by the Board, appointments ofthe President and the members ofthe GEC. The Committee develops, monitors and evaluates SEB's remuneration system and remuneration practice, incentive programmes and risk adjustment of deferred variable pay. Further, RemCo monitors and evaluates how the guidelines established by the AGM for remuneration ofthe President and the members ofthe GEC are applied. An independent auditor's review report on the adher ence of SEB's remuneration system to the Remuneration Policy is presented to the Committee annually.

The RemCo reviews, in consultation with the RCC, SEB's Remuneration Policy and ensures thatthe bank's remuneration structure takes into accountthe risks and the cost of capital and liquidity. The analysis is among otherthings based on the risk analysis performed jointly by Group Risk, Group Compliance and Group HR.

In addition,the Committee oversees the group's pension obligations and,together with the RCC,the measures taken to secure the overall pension obligations ofthe group, including developments in the bank's pension foundations. The RemCo held eight meetings in 2017.

The President,together with theHead ofGroupHR,makes p resentations to the Committee onmatters in which there are no conflicts ofinterest.See the Remuneration Report on p. 64.

RemCo members

Signhild Arnegård Hansen (Chairman), Marcus Wallenberg (Deputy Chairman) and Sara Öhrvall (until 15 August 2017.)

The RemCo's work in 2017:

proposed appointment of new CEO
reviewed the Remuneration Policy including the definition of employees in positions with a material impact on SEB's risk profile
proposed remuneration guidelines forthe President and members ofthe GEC
developed long-term equity-based programmes
proposed remuneration ofthe President and members ofthe GEC in accordance with the guidelines adopted by the AGM
proposed remuneration ofthe Head of Group Internal Audit, the CRO and the Head of Group Compliance in accordance with the Remuneration Policy
followed up remuneration principles, variable remuneration programmes and pension obligations
followed up the annual group talentreview and supported a framework on diversity and inclusion
reviewed and discussed adaptations and implementation ofregulations affecting the bank's remuneration structure.

On the Board's agenda in 2017

Q1	Q2		Q3		Q4
• AGM notification and AGM proposals	• Review ofthe Large Corporates & Financial Institutions Division		• Follow-up of compliance with new regulations focusing on	Authority	• Meeting with the Director General ofthe Swedish Financial Supervisory
• Appointment of new CEO	• Macroeconomic review	inter alia MiFID II and GDPR • Review of digitalisation and transformation work within the		• Review ofIT projects
• Macroeconomic review	• Internal capital and liquidity
• Balance sheet, capital and dividend policy	assessment • Remuneration Policy		Large Corporates & Financial Institutions Division	• Review ofthe Corporate & Private Customers division
• Annual Report 2016	• Deep analysis ofIT and digitalisation work	• Deep analysis ofIT and digitalisation work • Review of savings and	• Review of operations and reorganisation in Germany
• Internal and external auditreports as well as Group Compliance	• IT competence • Follow-up of compliance with new regulations • Review ofthe Baltic division.		• Recovery and Resolution plan
report • Financial governance model		investment offerings		• Deep analysis ofIT and digitalisation work • Business plan,financial plans and forecasts • Risk strategy
and financialtargets		• Review of competence matters
• Remuneration ofthe CEO,the		• Risk seminar
GEC and controlfunctions
• Statutory meeting					• Annualreview of policies and
• Group talentreview and				instructions
succession planning					• SEB's Code of Conduct
				• Board evaluation
					• Diversity and inclusion

In addition to the above, SEB's quarterly report, a reportfrom the Board committees and a summary of SEB's risk position, asset quality, credit portfolio and liquidity position are on the Board's agenda each quarter.

Jesper Ovesen, Chairman of both the RCC and the ACC

Forthe RCC,regulatory development of capitalrequirements has continued to be a focus area in 2017. Otherimportant areas addressed include monitoring ofthe credit portfolio,the Swedish household mortgage market and specific market segments such as the oil, gas and offshore industry. The RCC has also overthe yearfollowed up on a number of currently running projects to implement new regulatory requirements that will come into effectin 2018, including IFRS 9 which has had a significantimpact on the financialreporting work during the year. The effect on capital adequacy will however be limited."

Within the work of ACC, we note that since the lastfinancial crisis, we have seen a large number of new regulations impacting banks and financial institutions. The need for internal control ofregulatory compliance has increased and an in-depth understanding of potentialrisks in financialreporting, as a result of new IFRS requirements, has required extra attention from ACC. Other key issues for ACC during the year have been IT security, including access and authority controls, and preparatory work on procurement of new external auditorto meetthe requirement of auditorrotation according to the EU Auditing Regulation."

Risk and Capital Committee

The RCC supports the Board in ensuring that SEB is organised and managed in such a way that allrisks inherentin the group's busi ness are controlled in accordance with the Board's risk tolerance as well as with external and internalrules. The RCC also monitors the group's capital situation on a continuous basis.

The RCC sets the principles and parameters for measuring and allocating risk and capital within the group and oversees risk management systems and the risk tolerance and strategy forthe short and long term. The RCC prepares a recommenda tion forthe appointment and dismissal of the CRO. It also decides on individual credit matters of majorimportance or of impor tance as to principles and assists the RemCo in providing a riskand capital-based view on the remuneration system. The RCC held 14 meetings in 2017.

The group's Chief Financial Officer (CFO) has the overall responsibility forinforming and submitting proposals to the RCC on matters related to capital and funding. The CRO has the same overallresponsibility regarding risk and credit matters. The Presi dent,the CFO and the CRO regularly participate in the meetings. The CRO function is described on p. 62. Information on risk,

liquidity and capital management is provided on p. 44.

RCC members

Jesper Ovesen (Chairman), Marcus Wallenberg (Deputy Chairman), Tomas Nicolin and Samir Brikho.

The RCC's work in 2017:

monitored the implementation ofinternalrules including the credit policy and instruction
monitored risk development
monitored the macroeconomic development
prepared matters concerning market and liquidity risk limits
reviewed significant changes in the credit portfolio and ofthe credit process
reviewed models and methods forrisk measurement
discussed adaptation to new capitalrequirements
reviewed the overall capital and liquidity strategy and position including internal capital and liquidity assessment
prepared matters concerning the group's capital goals and capital management, such as the dividend
reviewed reports from internal audit and compliance
held strategic discussions on holistic financial and balance sheet management.

Audit and Compliance Committee

The ACC supports the Board in its work with quality assurance of the bank's financialreporting,the internal control overthe finan cialreporting and the reporting to supervisors. When required, the ACC also prepares,for decision by the Board, a recommendation forthe appointment or dismissal ofthe Head of Group Inter nal Audit. The Committee maintains regular contact with the bank's external and internal auditors and discusses the co-ordi nation oftheir activities. The Committee also ensures that any remarks and observations from the auditors are addressed, and evaluates the external auditor' s work and independence.

When required, a proposalfrom the President's on appoint ment or dismissal ofthe Head of Group Compliance is subjectto the Committee's approval.

The ACC held eight meetings in 2017. The CFO,the external auditors,the Head of Group Internal Audit and the Head of Group Compliance submit matters and reports forthe Committee's con sideration. The President,the CFO and the CRO regularly partici pate in the meetings.See p. 66 for The Report on Internal Control over Financial Reporting.

ACC members

Jesper Ovesen (Chairman), Marcus Wallenberg (Deputy Chairman), Winnie Fok and Helena Saxon.

The ACC's work in 2017:

reviewed the annual accounts and interim reports as well as auditreports
prepared for procurement of new external auditor
monitored the group's internal audit
monitored compliance issues
monitored internal control overfinancialreporting
monitored internal control over supervisory reporting
monitored services, otherthan auditing services, procured from the external auditor
drafted a recommendation to the Nomination Committee for election ofthe external auditor by the AGM
adopted an annual audit plan forthe Internal Auditfunction, co-ordinated with the external audit plan
approved the annual Group Compliance plan
held discussions with representatives ofthe external auditor on several occasions, withoutthe President or any other member ofthe bank's management being present.

Group Executive Committee

	Position	GEC member since	SEB employee since				Nationality Own and closely related persons' shareholdings1)
Johan Torgeby	President and CEO since 2017	2014	2009			Swedish	5,567 Class A shares, 73,729 sr and 81,247 csr.
Magnus Carlsson	Deputy President & CEO since 2014	2005				Swedish	54,998 Class A shares , 68,297 sr and 158,801 csr.
Magnus Agustsson	Chief Risk Officer since 2017	2017	2009			and Finnish	8,744 Class A shares, 1,448 sr and 30,890 csr.
Jeanette Almberg	Head of Group Human Resources since 2016	2016				Swedish	10,343 Class A shares, 22,683 sr and 38,537 csr.
Joachim Alpen	Executive Vice President. Head of the Large Corporates & Financial Institutions division since 2017	2014	2001	1967	MBA, M.A. (International relations)	Swedish	6,112 Class A shares, 113,999 sr and 78,347 csr.
Jan Erik Back	Executive Vice President, Chief Financial Officer since 2008	2008	2008			Swedish	60,968 Class A shares, 124,711 sr and 168,985 csr.
Viveka Hirdman-Ryrberg	Head ofGroup Communications andGroupMarketing since2009. Chairman ofthe Corporate Sustainability Committee.	2009			Sc. (Econ.)	Swedish	62,761 Class A shares, 43,633 sr and 56,231 csr.
Martin Johansson	Head of Business Support since 2011	2009	2005			Swedish	236 Class A shares, 46,255 sr and 139,219 csr.
Christoffer Malmer	Executive Vice President, Co-head ofthe Corporate & Private Customers division since 2016	2014	2011	1975	B.A. (Interna- tional busi ness)	Swedish	59,321 Class A shares and 74,437 csr.
David Teare	Head ofthe Life & Investment Management division since 2017	2011				Canadian	54,675 Class A shares, 60,652 sr and 75,811 csr.
Mats Torstendahl	ExecutiveVice President, Co-head ofthe Corporate & Private Customers division since 2016	2009	2009	1961	M.Sc. (Engi- neering Physics)	Swedish	104,218 Class A shares, 56,913 sr and 168,046 csr.
Riho Unt	Head ofthe Baltic division since 2016	2016	2001	1978	MBA,MA (PublicAdmi nistration)	Estonian	43,485 Class A shares, 7,336 sr and 32, 617 csr.
members
Johan Andersson	Country Manager SEB Germany since 2016	2009	1980			Swedish	50,800 Class A shares, 22 Class C shares and 747 csr.
Peter Høltermand	Country Manager SEB Denmark since 2002	2011				Danish	179 Class A shares, 17,493 sr, 32,415 csr and 53,524 cps.
Rasmus Järborg	Chief Strategy Officer since 2015	2015	2008			Swedish	5,598 Class A shares, 28,386 sr and 60,153 csr.
Marcus Nystén	Country Manager SEB Finland since 2010	2014				Finnish	119,847 Class A shares, 22,924 csr and 37,583 cps.
William Paus	Country Manager SEB Norway since 2010	2011	1992				Norwegian 52,900 Class A shares, 30,456 csr and 32,029 cps.
	Additional					Born Education 1974 B.Sc. (Econ.) 1993 1956 B.Sc. (Econ.) 2008 1965 B.Sc. (Econ.) 1961 B.Sc. (Econ.) 1990 1963 B.Sc. and Lic. 1962 B.Sc. (Econ.) 2006 1963 B. Comm. 1957 B.Sc. (Econ.) 1997 1963 B.Sc. (Econ.) 1976 M.Sc. (Econ.) 1998 1960 M.Sc. (Econ.) 1967 M.Sc. (Econ.)	1973 C.Sc and M.Sc Icelandic

1) Abbrevations in the table: sr = share rights, csr = conditional share rights, cps = conditional phantom shares

The President

The Board has adopted an instruction forthe President's duties and role. The President, who is also the Chief Executive Officer, is responsible for administrating the bank's business and risk in accordance with the strategy, guidelines, policies and instruc tions established by the Board. The Presidentreports to the Board and submits at each board meeting a report on, among otherthings,the performance ofthe business in relation to decisions made by the Board.

The President appoints the Heads of Divisions,the Head of Business Support and Heads ofthe various staff and support functions thatreport directly to the President.

The President's committees

The President has three main committees at his disposalforthe purpose of managing the operations:

The Group Executive Committee (GEC)

To safeguard the interests ofthe group as a whole,the President consults with the GEC on matters of majorimportance or of importance as to principles. The GEC deals with, among other things, matters of common concern to several divisions, strategic issues, sustainability, business plans as well as financialforecasts and reports. The GEC held 31 meetings in 2017.

The Asset and Liability Committee (ALCO)

The ALCO, chaired by the President and with the CFO as deputy chair, is a group-wide decision-making, monitoring and consultative body. The ALCO, which held eleven meetings in 2017, handles the following matters, among others:

financial stability, particularly in the new regulatory framework
strategic capital and liquidity issues, including internal capital
allocation and principles forinternal pricing • structural issues and issues related to the bank's balance sheet and business volumes
financing of wholly-owned subsidiaries
the balance sheet and funding strategy forthe SEB group.

The Group Risk Committee (GRC)

The GRC, chaired by the President and with the CRO as deputy chair, is a group-wide, decision-making committee that addresses alltypes ofrisk at group level in orderto evaluate portfolios, products and customers from a comprehensive risk perspective. The GRC held 61 meetings in 2017.

The GRC is tasked with:
making important credit decisions
ensuring that allrisks inherentin the group's activities are identified, defined, measured, monitored and controlled in accordance with internal and externalrules
supporting the Presidentin ensuring that decisions regarding the group's long-term risk tolerance are followed in the business organisation
ensuring thatthe Board's guidelines forriskmanagement and risk control are implemented and thatthe necessary rules and policies forrisk-taking in the group aremaintained and enforced.

Divisions and business areas

The Board regulates the activities ofthe group through an instruction concerning the group's operations and has laid down rules establishing how the group's divisions, including the international activities conducted through branches and subsi diaries, are to be governed and organised.

SEB's business is organised in four divisions. Each division is responsible forthe subsidiaries designated to the division. The Head or Co-heads of Division have overallresponsibility forthe activities in the business areas and appoint, after consultation with the President, heads ofthe business areas within the division.

A Country Manageris appointed in a country outside Sweden where SEB operates. The Country Manager co-ordinates the group's business locally and reports to a specially designated member ofthe GEC.

Sustainability aspects

An operational steering committee has been assigned by the Presidentto take responsibility for and monitorthe bank's sustainability work. The committee is chaired by the Head of Group Communications, who is a member ofthe Group Executive Committee. Seniorrepresentatives from the divisions and group functions are also members. The committee is supported by the Group Sustainability function, which drives and co-ordinates the overall sustainability agenda. Responsi bility forthe daily sustainability work lies with the heads of business areas and group functions as well as local sustainability committees. Special committees may be formed to deal with specific sustainability matters when needed.

Business support and staff functions

Business Supportis a cross-divisionalfunction established to leverage economies of scale in processes, IT and Information Security. Business Support covers such areas as transaction processing, development, maintenance and operation ofIT systems, and management of SEB's IT portfolio.

SEB's stafffunctions have globalresponsibility and support the organisation.

The CRO function

The CRO function is independentfrom the business and is responsible foridentifying, measuring, analysing and controlling SEB's risks.

The Chief Risk Officer (CRO) is appointed by the Board and reports to the President. The CRO keeps the Board,the RCC,the ACC,the GEC,the ALCO and the GRC regularly informed aboutrisk matters. The CRO has globalfunctionalresponsibility, and the activities ofthe CRO are governed by and set outin an instruction adopted by the Board. The CRO function is organised in two units: Group Risk and Group Credits.

Group Risk handles the group's risks. It aggregates and analy ses risk data across risk types and the group's credit portfolios, handles models forrisk-weighting as well as general matters surrounding risk governance and risk disclosure.

Group Credits is responsible for managing the credit approval process,for certain individual credit decisions and for monitoring compliance with policies set by the RCC and the Board. Its activities are regulated by the group's CreditInstruction, adopted by the Board. The chairs ofthe respective divisional credit commit-

On the GEC agenda in 2017

macroeconomic updates
discussion on new regulations, such as MiFID II, IFRS 9, GDPR, AML4 and PSD II
annual accounts and quarterly reports
AGM preparations
review ofthe bank's various businesses and home markets
follow up of current Business Plan 2016-2018 and discussion on new Business Plan
discussion on capitalrequirements, asset quality and risk
review of, and discussion on,the digitalisation work including development and launch of enhanced customer functionality as well as internal automation initiatives
review and discussion on IT, including investments and security
discussion on strategic investments and co-operation with fintech and digitalisation companies
discussion on customer satisfaction, branding and image position as well as customerinsight work
review of SEB's Code of Conduct
employee Insight survey 2017 discussion of survey result and actions
development of corporate sustainability
review of outsourced activities
discussion on Open Banking
review process for handling of customer complaints
annualreview of policies and instructions
discussion on inclusion, diversity and #metoo
review of competence and leadership development
workshop on risks

tees have the rightto veto credit decisions. Material exceptions to the group's Credit Policy must be escalated to a higherlevel in the decision-making hierarchy.

The Head of Group Risk and the Group Credit Officer are appointed by the President, upon recommendation by the CRO, and reportto the CRO.Forinformation aboutrisk, liquidity and capital management see p. 44.

Group Compliance

The Compliance function in the SEB group (Group Compliance) is independentfrom the business organisation. The tasks of Compli ance are to inform, control and follow up on compliance matters. The Group Compliance function also advises the business and management,thereby securing that SEB's business is carried out in compliance with regulatory requirements, and promote trust from customers, shareholders and the financial markets.

Special areas ofresponsibility are:
customer protection
conduct on the financial market
prevention of money laundering and financing ofterrorism
regulatory systems and controls.

The Head of Group Compliance, who is appointed by the Presi dent after approval by the ACC,reports regularly on compliance matters to the President,the GEC and the ACC, and annually to the RCC and the Board. Based on an analysis ofthe group's risks in this area,the President adopts, after approval by the ACC, an annual compliance plan. The Instruction for Compliance is adopted by the Board.

One compliance matterin 2017 was that SEB was subjectto a disciplinary action from Nasdaq related to the resignation of Annika Falkengren as CEO; breaching insiderinformation rules by not preparing an insiderregister atthe propertime during a weekend (when the stock exchange was closed).

Group Internal Audit

Group Internal Auditis a group-wide controlfunction commis sioned by the Board to independently evaluate the group's activities. The Head of Group Internal Auditis appointed by the Board.

The main task of Group Internal Auditis to evaluate and give assurance to the Board and the Presidentthat governance,risk management and internal controls are adequate and effective. The work is done with a risk-based approach in accordance with the methodology developed by the Institute ofInternal Auditors.

Each yearthe ACC adopts a plan forthe work ofInternal Audit. The Head ofInternal Auditreports the findings of completed audits, actions taken and the status of previously reported find ings to the ACC and also provides reports to the RCC and the Board.

Auditor Peter Nyllinge PricewaterhouseCoopers

Peter Nyllinge

Born 1966; Auditor of SEB, Partnerin charge as of 2012. Authorised Public Accountant, President of PwC Sweden. Other major assignments: Electrolux and Fagerhult. Previous major assignments: Ericsson, Securitas and Assa Abloy.

Information about the auditor

According to SEB's Articles of Association,the bank shall have atleast one and not more than two auditors with at most an equal number of deputies. A registered accounting firm may be appointed auditor.

PricewaterhouseCoopers AB has been the bank's auditor since 2000 and was re-elected in 2017 forthe period up to and including the 2018 AGM.

The fees charged by the auditorforthe auditing of 2016 and 2017 financial years and for other assignments invoiced during these periods are shown in the table below.

Fees to the auditor
	2017	2016
Audit assignment	30	27
Audit-related services	21	16
Tax advisory	12	11
Other	5	4
1) Total	69	58

1) Of which PricewaterhouseCoopers SEK 65m (55).

The President and GEC are regularly informed aboutinternal audit matters. Group Internal Audit's work is evaluated in a quality assessment, atleast every fifth year, by an independent party. Group Internal Audit co-ordinates its work covering the bank's financialreporting with the bank's external auditor. The bank's external auditorrelies to some extent on the work of Group Inter nal Auditin its assignmentto review the group's financialreporting. This requires thatthe external auditor evaluates Group Inter nal Audit's work. The conclusion ofthis evaluation is reported to the ACC and Group Internal Audit.

SEB's organisation

	President & CEO
Large Corporates & Financial Institutions	Corporate & Private Customers	Baltic
Life & Investment Management
Business Support (IT Service Delivery, IT Services and Operations)
Group Staff & Control Functions (CFO, CRO, Strategy, HR, Legal, Marketing and Communications)

Remuneration report

SEB aims to attract and retain committed and competent employ ees who are eagerto develop and contribute to the bank's longterm success. Employee remuneration should encourage high performance, sound and responsible behaviour based on SEB's values, and risk-taking thatis aligned with the level ofrisk toler ance set by the Board of Directors. The ambition is to promote the employees' long-term commitmentto creating sustainable value for customers and shareholders.

The totalremuneration reflects the complexity,responsibility and leadership skills required in each position aswell as the per formance ofthe individual employee. SEB applies a performance and development process thatis based on transparent and individual goals and is used as a foundation for setting employee remuneration. Performance is evaluated on the basis offinancial and non-financial goals,with SEB's values as a starting point.

Remuneration Policy

Remuneration principles for SEB are laid outin SEB'sRemuneration Policy,which is revised annually. The Board'sRemuneration and HumanResources Committee (RemCo) drafts revisions for adoption by the Board. The policy stipulates thatremuneration shall be alignedwith the bank's strategy, goals, values and long-terminter ests, and assurances shall bemade that conflicts ofinterest are avoided. The policy also reflects Swedish and internationalrules and regulations.Forinformation onRemCo, see p. 58.

In consultation with the Board's Risk and Capital Committee, RemCo reviews the Remuneration Policy and verifies thatthe remuneration structure takes into accountthe bank's risks, longterm earnings capacity, and cost ofliquidity and capital. This review is based on, among otherthings, a risk analysis performed jointly by Group Risk, Group Compliance and Group Human Resources.

The Remuneration Policy lays outthe principles foridentifying employees in positions with a material impact on the group's risk profile (Identified Staff), who are subjectto specialrules on how remuneration is to be set and paid out. In 2017 a total of 989 positions (1,167) at SEB were categorised as Identified Staff. The pol icy also specifies how the bank identifies and compensates employees who can impactthe risk profiles of mutualfunds, who provide investment advice or have a material impact on the services and products offered.

Finally,the Policy stipulates that employees in controlfunctions shall be remunerated in a mannerthatis independent ofthe business areas thatthey oversee and is commensurate with their key roles in the organisation, as well as is based on goals that are compatible with theirfunctions.

Remuneration structure

The bank's remuneration structure consists mainly of base salary and variable remuneration as well as pensions and other benefits.

Base salary

The base salary, which accounts for most of an employee's remuneration, shall be competitive and commensurate with the employee's experience,responsibility and long-term performance. It shall also be in line with industry peers in the respective geographical markets in which SEB operates.

Variable remuneration

Variable remuneration consists oflong-term equity-based programmes and,to a limited extent, individual cash-based variable remuneration.

All variable remuneration is based on SEB's risk-adjusted per formance. The variable remuneration models are adapted to applicable rules governing, among otherthings,the maximum share ofthe employee's base salary,the deferred portion of remuneration, and the rightto reduce and withhold deferred remuneration that has not yet been paid out. ForIdentified Staff, variable remuneration may not exceed 100 per cent oftheir base salary.

The variable remuneration models are based on financial and non-financial key ratios at group level. Individual variable remuneration is also based on the performance ofthe employee's unit and includes an annual evaluation of performance and behav iours atthe individual level. Non-financial goals take into account such factors as development of customer satisfaction, compli ance and sustainability factors with respectto the bank's own environmental impact as well as the integration of sustainability into the business model. Atthe individual level, key parameters are compliance with rules and policies forrisk-taking in the group, SEB's Code of Conduct and demands on internal controls ofthe business areas.

Long-term equity-based programmes

Equity-based remuneration is a means to attract and retain staff with key competence. Itis also an incentive for employees to become shareholders of SEB, which creates a long-term commitmentthatis aligned with the shareholders' interests. Regulatory requirements forfinancial institutions require that variable remuneration shall consistlargely of equity or equity-related instruments. SEB's long-term equity programmes are evaluated on a continuous basis throughoutthe year by RemCo, which also monitors the employees' participation in the programmes. SEB conducts a dialogue with institutional investors on the structure and content ofthe programmes.

The 2017 Annual General Meeting (AGM) resolved on two sep arate programmes forthe year,the SEB All Employee Programme 2017 (AEP) and the SEB Share Deferral Programme 2017 (SDP).

In both programmes there is a possibility ofrisk adjustmentfor both current and future risks. The final outcome may therefore subsequently be reduced partially or completely in accordance with currentrules, among otherthings taking into accountthe bank's earnings and the capital and liquidity required forthe business operations.

Individual cash-based variable remuneration Approximately ten per cent of employees are eligible forindivid ual cash-based variable remuneration (short-term incentive

Remuneration in SEB in 2017 SEK thousands

	Base salary	Cash-based variable remuneration	Expensed amount long-term equity based programmes	Benefits		P Total ensions
President and CEO Johan Torgeby 1)	7,125		1,523	112	8,760	2,625
2) President and CEO Annika Falkengren	2,875			168	3,043	1,250
3) Other members ofthe GEC	49,225		15,489	1,854	66,568	16,918
Total	59,225	0	17,012	2,134	78,371	20,793
SEB excluding GEC	8,014,211	665,751	599,238	89,940	9,369,141	1,333,007
SEB Total	8,073,436	665,751	616,250	92,074	9,447,512	1,353,800

1) President and CEO as of 29 March. All amounts referto the period 29 March -31 December. During this time J. Torgeby did not exercise any rights.

2) President and CEO up until 28 March. All amounts referto the period 1 January - 28 March. During this time A. Falkengren did not exercise any rights.

3) The number and composition differ somewhat during the year but on average eleven members are included. The GEC, excluding the President, exercised rights to a value of SEK 23,030,558.

programme, STI), and only in operations in which itis standard market practice, such as investment banking. STI is used only when it entails low or no residualrisk for SEB. For employees who receive variable remuneration above a certain level, a portion of this remuneration must be deferred. In 2017, STI accounted for 2 per cent (3) of SEB's total staff costs.

Remuneration ofthe President and members ofthe Group Executive Committee

SEB's Board of Directors decides on the remuneration ofthe President and other members ofthe Group Executive Committee (GEC) based on a recommendation by RemCo. Theirremunera tion shall be in line with the guidelines set by the AGM.

Totalremuneration forthe members ofthe GEC is based on the main components of base salary, long-term equity-based remuneration (SDP), and pensions and other benefits. No cash-based variable remuneration is paid, and the members ofthe GEC are not eligible forthe AEP. Pension plans for members ofthe GEC are defined-contribution solutions, with the exception of a defined benefit component provided under collective agreements. The pension plans are in line with the SEB group's Pension Policy. A maximum offive days of vacation can be accumulated per year.

The SEB All Employee Programme (AEP) 2017 is a

profit-sharing programme for employees in most ofthe countries where SEB operates. Half ofthe outcome is paid in cash, and the other halfis deferred forthree years. The deferred amountis paid outin SEB Class A shares orin cash, adjusted forthe totalreturn on SEB Class A shares. Payment ofthe deferred part normally requires thatthe individualremains employed during the three years ofthe programme. The programme's targets are setin SEB's business plan and consist ofthe financialtargets forreturn on equity and the bank's cost development, and ofthe non-financialtargetfor customer satisfaction.

All Employee Programmes

	20171)	20162)
Number of participants	15,000	15,000
Outcome in relation to maximum amount 3), %	56	56
Shares allotted,thousands	2,538	2,666
Market value per 31 December, SEKm	244	255
4) Total cash per participant	42,000	42,000

Payout year: 1) 2020, 2) 2019, 3) SEK 75,000, 4) in Sweden

Fortermination of employmentinitiated by the bank, a maximum of 12 months' severance pay is payable, afterthe notice period. SEB has the rightto deductincome earned from other employmentfrom any severance pay.

RemCo evaluates the guidelines for salary and other benefits paid to the President and other GEC members on a continuous basis throughoutthe year. To perform this evaluation, RemCo obtains information from the Head of Group Human Resources, the Head of Group Internal Audit and the external auditor, and with respectto GEC members, also from the President. In addition, comparative studies are made yearly with relevant sectors and markets. The result of such studies is a significantfactorin setting the total level ofremuneration for members ofthe GEC. This internal and external information facilitates RemCo in its work on ensuring thatremuneration at SEB is aligned with the market and is competitive.

Priorto the 2017 AGM the bank's external auditorissued a statementto the Board assuring that SEB has adhered to the guidelines for salary and otherremuneration forthe President and other GEC members set by the 2016 AGM.

Forfurtherinformation about SEB's remuneration structure, see note 9 and the AGM information on sebgroup.com.

The SEB ShareDeferral Programme (SDP) 2017 is a pro-

gramme for members of GEC, certain other senior managers and a number of other key employees, up to 2,000 in total. The participants are granted an individually determined number of conditional share rights based on the fulfilment of predetermined group, business unit and individualtargets outlined in SEB's business plan. In addition to the AEP targets, the SDP is based on parameters such as compliance, employee commitment, sustainability work and risk management. The remuneration normally requires thatthe individual remains employed during the three years ofthe programme. In addition is a period of up to three years with restricted right of disposal. The reward may be forfeited ifthe performance on which it was initially based subsequently needs to be revised downward and/orthe individual is found to be responsible for actions that are incompatible with internal rules and guidelines.

Share Deferral Programmes

	2017	2016
Number of participants	1,448	1,374
Shares allotted,thousands	4,646	5,611
Market value per 31 December, SEKm	447	536

Ownership transferred to the individual after 3 or 5 years.

Internal control overfinancialreporting

Internal Control over Financial Reporting (ICFR) is a well-established process designed to provide reasonable assurance regarding the reliability of financial reporting and reduce the risk for misstatements. ICFR is based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and is conducted by SEB in a yearly cycle as described below.

Perform risk assessment Per

In orderto identify and understand which risks exist, financialresults and balance sheets are analysed at SEB group and unitlevels. These risk assessments are used to determine which units, processes and systems are to be covered by the ICFR process in the coming year according to the materiality principle. 1 ord finan g t b

Identify risks and expected controls Ide

People with expertise in the business and finance functions evaluate ifthe controls are effective, if new risks have been identified and if new controls need to be in place to coverthe risks more effectively. The controls are communicated to involved parties within the bank in orderto clarify expectations and responsibilities. The framework consists of group-wide controls as well as controls of processes and IT – for example, analysis ofthe balance sheet and income statement, account reconciliations and controls of system access. 2 Peop e b t

Plan Pla

Every year a plan is prepared based on the risk assessments and expected controls. The plan clarifies who is responsible for evaluating the respective controls within each unit, what type of evaluation should be conducted and how the results are to be reported. At this stage the plan is coordinated with the plans of internal and external audit. 3 Ever men res with cond

Evaluate controls Ev

The controls are evaluated on a continuous basis throughoutthe year by the control owners through self-assessments. In this way the bank's weaknesses can be identified, compensating controls can be implemented and improvements can be made. Furthermore,reporting is done quarterly by financial managers to gain an assurance ofthe reported figures from each unit. The evaluation describes material financialreporting risks (ifthere are any) and comments on material deviations compared with earlier quarters. 4 Ththr sel b imp

Report Re

The results ofthe evaluations of controls are analysed to assess the risk for misstatements in the financial reporting. ICFR monitoring reports are submitted on a quarterly basis to SEB's group CFO in connection with the quarterly externalfinancialreporting. Reporting is also done to the Audit and Compliance Committee (ACC) once a year. The group-level ICFR reportincludes a description ofthe residualrisk, an assessment ofidentified control gaps and whether they are compensated by other controls, and how the work with gap remediation activities is progressing. The report contributes to transparency in the SEB organisation and enables prioritisation ofimprovement activities based on the residualrisk. 5 r as a repo qu t

In addition to this process, Internal Auditindepen dently tests controls within the ICFR framework.

The 2017 main focus areas

In addition to the ongoing work during 2017,the following main areas were in focus within the ICFR framework:

The reporting standard IFRS 9 Financial Instruments took effect on 1 January 2018 and replaced IAS 39 Financial Instruments. The new standard has a significantimpact on the bank's reported results,the ways of working and the system support. In 2017 new controls were developed to follow up the transition and to ensure thatthe new reporting is fair and reliable.
Variable remuneration and pensions are complex areas, which were prioritised during the year. New controls were developed in 2016 and were followed up and evaluated in 2017.

Sustainability Report 2017

About this report

This report describes how the SEB Group works with sustainability as stipulated by the Swedish Annual Accounts Act, more specifically in the areas:

Human rights
Labourrights and socialrelations
Anti-corruption
Environment.

The report covers SEB Group,thatis,the parent company Skandinaviska Enskilda Banken AB (publ) and its subsidiaries (see note 25). Key aspects of SEB's sustainability work, such as risk management, corporate governance and staff composi tion,remuneration and benefits, are included in other parts of SEB's Annual Report. The policy on diversity applied forthe Board is also described in the corporate governance reportsee p. 54. SEB reports according to the framework Global Reporting Initia tive, GRI Standards, core option.

For a general description ofthe sustainability work, see

SEB's Sustainability Overview 2017, which includes the GRI Index. SEB's auditor, PwC, has been engaged to perform limited assur ance procedures for both SEB's Sustainability Report 2017 and SEB's Sustainability Overview 2017.

About SEB's business

SEB is a leading Nordic financial services group, guided by a strong beliefthat entrepreneurial minds and innovative compa nies are key to creating a better world.

In Sweden and the Baltic countries, SEB offers financial advice and a wide range offinancial services to corporates and private individuals. In Denmark, Finland, Norway, Germany and in the United Kingdom the bank's operations focus on a full-service offering to corporate and institutional customers. The bank strives to provide customers with services that are insightful, transparent and accessible on theirterms.Read more about SEB's business model on p. 6–7.

Approach to sustainability

In the course ofits business, SEB directly and indirectly impacts the markets and communities where it operates. The most importantimpactis presented first, being it direct orindirect.

SEB defines corporate sustainability as its delivery oflongterm value in economic, ethical, social and environmentalterms. Therefore, SEB integrates corporate sustainability in its activities by taking a broad business approach and targeting three areas – Responsible Business, People and Community, and Environment.

SEB believes that maintaining trust among relevant stakeholders is of paramountimportance. Equally, SEB recognises the importance ofintegrating sustainability aspects into its own business as well as contributing to sustainable development globally and thus supporting,for example,the United Nations' Sustainable Development Goals (SDG). During 2017, sustainability aspects were further strengthened in SEB's business planning,risk and credit processes, and were increasingly included in product development.

The bank adheres to applicable laws and regulations and maintains high ethical standards. SEB's Corporate Sustainability Policy,the Code of Conduct as well as internalrules and proce dures are in place, supported by a culture based on openness, business acumen and SEB's core values.

Policies and guidelines

SEB has adopted global initiatives and international codes of conduct which guide business decisions and the overall sustainability work. These include:

UN Global Compact
UN Universal Declaration of Human Rights
The eightILO Core Conventions on Labour Standards
UN Guiding Principles on Business and Human Rights
Children's Rights and Business Principles
OECD Guidelines for Multinational Enterprises
UN-supported Principles for Responsible Investments (PRI)
UN Environment Programme Finance Initiative (UNEPFI)
Equator Principles.

In the area of sustainability, SEB abides by the Corporate Sustainability Policy,the Environmental Policy,the Human Rights Policy, Code of Conduct, Code of Conductfor suppliers and the Tax Policy. SEB has three position statements (Child Labour, Climate Change and Fresh Water) and six sector polices (Arms and Defence, Forestry, Fossil Fuel, Mining and Metals, Renewable Energy and Shipping). These provide guidelines on best practice as well as on the international conventions and standards that the bank adheres to and encourages its customers to follow. SEB aims to work with customers and portfolio companies towards improved business practices.

The table below shows which SEB policies and position statements that are particularly applicable to each ofthe four sections in this report.

	Human rights	Labour rights and social relations	Anti- corruption	Environ ment
Corporate Sustainability Policy	✔	✔	✔	✔
Environmental Policy				✔
Human rights Policy	✔	✔	✔
Tax policy		✔
Code of Conduct	✔	✔	✔
Code of conduct for suppliers	✔	✔	✔	✔
Position statement on child labour	✔	✔
Position statement on fresh water				✔
Position statement on climate change				✔

The Corporate Sustainability Policy provides a description of how the bank reviews the adherence to the Corporate Sustainability Policy, otherrelated polices and international commitments.

Principles applicable forthe four sections in this report

Asset management

SEB's investmentmanagement strategy is based on continuous engagementwith the companies that SEBinvests in. Thismeans that SEB,through positive selection, includes companies that excel in environmental, social and governance aspects. In addition, SEB can also exclude companies that do not abide by SEB's sustainability criteria.All SEBmutualfunds exclude companies involved in production ormarketing of controversialweapons and the develop ment or production of nuclearweapons programmes. Furthermore, SEB's sustainable and ethicalfunds do notinvestin companies that failto respectinternational conventions and guidelines.

SEBengagesdirectlyin adialoguewith companies'managements andboardsofdirectors regarding howtomakeimprovements in issues relatedtohumanrights, labourrights andsocialrelations, anti-corruptionandenvironment.SEBalsoworks incollaboration witheachrespectivefundmanager.As regards international compa nies,SEBcollaborateswithotherinvestorsaswellaswithpartners likeHermes EOS,InstitutionalInvestorsGrouponClimateChange (IIGCC),CarbonDisclosureProject (CDP) andPRIClearinghouse.

Mutualfunds fromsuppliersotherthanSEB(externalfunds)are evaluatedbyaspecialfundanalystteam.Allnewexternalfund management companiesarerequiredtosignthePrinciples for ResponsibleInvestment (PRI)ortofollowanequivalent sustainabilityframework internally,andtoexcludecontroversialweapons.

Financing andcredit granting

SEBtakes great care to knowits customerswell and views responsible financing and credit granting as a cornerstone ofits business, creating sustainable customer and shareholder value. SEBincludes risks and opportunities related to environmental, social and governance aspects in the creditreview. In the customer dialogues,the bank engages on the same aspects on a regular basis.These aspects include human rights, labourrights and socialrelations, anti-corruption and environment. The aimis to understand the customers' challenges and opportunities so that SEBcanmake the appropriate credit considerations and be a better business partner.

During the year,the creditrisk rating processwas further strengthened to bemore automatedwhen it comes to data gathering,reports and data storage. In addition, sustainability factors have been included in the systemsupportforthis process. For project financing, SEBhas adhered to the EquatorPrinciples since2007, requiring the project ownerto conduct due diligence in the appraisal phase ofthe project.

Suppliers

SEBhasestablished,andmaintains,procedures toevaluateand select suppliersandcontractors,basedonfinancial,environmental andsocialaspects.This includeshumanrights, labourrights, social relationsandanti-corruption.Theseaspectsaretakenintoaccountin procurementdecisionsalongwithcommercialaspects.SEBmonitors suppliers'processesandperformancewhereappropriate.Read moreaboutSEB'sprocessat sebgroup.com

HumanRights

SEB's approach to human rights issuesparticularly influences how itmanages employees, suppliers andrelationshipswith customers andportfolio companies.Itis an intrinsicpart ofSEB's commitment to ethicalbusiness.SEB's aimis to avoidcausing, contributing to, or being complicitthroughdirectlinkage to adverse human rights impact.Respecting andpromoting human rights supportsSEB's business strategy andrelationshipswith key stakeholders.SEB

requires the same commitmentto human rights fromits corporate customers andworks toidentifypotential human rights abusewithin its own operations andin itsbusiness relationships.SEB's starting pointis to use its leverage toprevent andmitigatepotentialrisks.

Initsbusiness,SEBisguidedbyglobalinitiatives, international standards,SEB'spoliciesandpositionstatements,alllistedonp.67.

Indirect impact

Areas where SEB can potentially contribute or have linkage to indirectimpact are categorised into asset management,financing and credit granting, and suppliers. SEB assesses these areas in orderto detect possible violations against human rights. Based on prioritisation, proportionality and leverage,findings are acted upon to prevent, mitigate and remediate potential impact. SEB expects its customers and portfolio companies to follow the Universal Declaration of Human Rights.

Asset management

In addition to SEB's general principles regarding assetmanagement outlined to the left, specifically in the area of human rights, SEB funds do notinvestin companies thatfailto respectinternational conventions and guidelines, such as theUniversalDeclaration of HumanRights and theUNGlobalCompact.

In2017, particularfocuswas on the human rights in the extractive sector and on access tomedicine in developing countries.

Financing andcredit granting

In addition to SEB's general principles regarding financing and credit granting outlined to the left, it shall be noted that human rights aspects are a crucial part.The bank engageswith customers on a regular basis on aspects concerning human rights in orderto under stand their challenges and opportunities so that SEBcanmake the appropriate credit considerations and be a better business partner.

Direct impact

Customers

The righttoprivacy is one oftheUN'sUniversalHumanRights.The trust ofSEB's customers is the foundation forthebank's activities andisbasedon respectfor andprotection ofthe customers'privacy. SEBisworking actively tobe compliantwith theGeneralData ProtectionRegulation (GDPR),the reformed data protection legislation thatwill enterinto force in all EUmember countries in2018.The GDPRwill strengthen the individuals'rights in terms of howtheir data ismanagedby companies.See p.51.

Employees

As an employer, SEBhas a responsibility to ensure that all employees are treated equally andwith respect. Everyone should be given the same opportunities for professional and personal development. SEBrejects allforms of discrimination and harassment,whether this is based on an individual's ethnic or national origin, gender, skin colour,faith,religion, citizenship, age, disability, civil status or sexual orientation. This is equally importantin relation to customers and other stakeholders as in relation to colleagues.

SEBperforms an employee survey each yearwhere all employees getthe opportunity to anonymously rate the company in various areas such aswork environment, employee engagement, and internal collaboration.

KPI	2017	2016
SEB funds managed with human rights criteria,
as share of Fund Company AuM, per cent:	100	14

Labourrights andsocialrelations

SEB works proactively to achieve a sound workplace. A healthy work environmentis essentialto the well-being ofthe bank's employees and thereby lays the foundation for successful busi ness results. Values and mindset as well as individual ability, development and potential are importantlong-term success factors for being part of SEB's team. The business shall be under pinned by strong ethics and good governance, long-term relationships and highly committed people who, based on the core values, work towards the corporate strategy.

In its business, SEB is guided by global initiatives, international standards, SEB's policies and position statements.See p. 67.

Direct impact

Labourrights

All of SEB's employees are covered by collective orlocal agree ments orlabourlaw. A continuous dialogue is carried on with employees, employee representatives and with trade unions. SEB has had a European Works Council (EWC) since 2003. The representatives are elected in accordance with Swedish legislation and are in proportion to the number of employees employed in each EEA (European Economic Area) country where SEB is represented. The EWC gives the employee representatives the opportunity to consult with each other and develop a common transnational mindset and view. Employees are also represented on SEB's Board of Directors through two directors and two deputy directors. All organisational changes in Sweden are negotiated with employee representatives.

Health and safety

A safe and sound work environment combined with good health and work/life balance form the foundation for SEB's employees' performance and job satisfaction. In SEB, managers have overall responsibility to promote well established working conditions. In Sweden, SEB has strengthened its supportfor managers with employees on sick leave,related to stress and workload, by offer ing professionaltelephone support. All employees are responsi ble for contributing to a sound balance between work and leisure time in orderto limit stress-related problems. An annual work environmentinspection together with the manageris mandatory within all parts of SEB. The bank follows national health and safety legislation in the countries where it operates as well as the European Framework Directive on Safety and Health at Work.

Inclusion and diversity

Inclusion and diversity among employees are importantfactors to build relationships with an increasingly diverse customer base and to improve the capacity forinnovation. SEB believes that different perspectives enhance creativity and problem solving and contribute to good decisions. All employees shall be offered equal opportunities to develop individually,regardless of gender, ethnicity, age, sexual orientation orreligion. SEB strives to achieve gender balance at every level within the organisation and to increase the share of employees with an international background. The bank is working actively, both in terms of structures and processes and in specific initiatives,to increase the number of women in higher operative roles and in seniorleaderroles.

In 2017, SEB initiated a process to furtherfocus on inclusion and diversitywithin the bank. The Board ofDirectors adopted a strategy describing theway forward for strengthening inclusion and diversity in SEB. The implementationwill begin in2018.

Learning and development

Continuous learning is an important prerequisite forthe ability to adaptto newcircumstances.The bank has awide range of programmes that are accessible through a digital platform,which provides courses that are specific for SEBaswell as courses offered by external suppliers.Atotal of600courses are offered in categories such as IT, projectmanagement, service design, languages, finance, sales, leadership, sustainability and communication. Identifying talents and promoting competence development are part of a manager's responsibilities. Employees also have individualresponsibility fortheir development.This ismonitored atleast yearly in the individualPerformance andDevelopmentDiscussions (PDDs) that are conducted by employees and theirmanagers.

Indirect impact

Asset management

In addition to SEB's general principles regarding assetmanagement outlined on p.68, specifically in the area oflabourrights and social relations,the funds do notinvestin companies thatfailto respect international conventions and guidelines, such as theUN Global Compact and the eightILOCore Conventions on Labour Standards.

Financing and credit granting

In addition to SEB's general principles regarding financing and credit granting outlined on p.68, it shall be noted thatthe area of labourrights and socialrelations are a crucial part. The bank engageswith customers on a regular basis on aspects concerning labourrights and socialrelations in orderto understand their challenges and opportunities so that SEBcanmake the appropriate credit considerations and be a better business partner.

Direct and indirect impact

Corporate citizenship

SEB sees the need for knowledge sharing in societies where the bank operates. SEB can thereby empower people to make more informed financial decisions and contribute to betterfunctioning societies. SEB supports local communities and shares both time and money, working with carefully chosen partners. Focus is on future generations in the areas ofinnovation and entrepreneurship,financial literacy and social inclusion.

KPI	2017	2016
Employees with collective orlocal bargaining agreement or covered by labourlaw, per cent	100	100
Gender by managementtype (male/female), per cent
All managers, per cent	53/47	54/46
Senior managers, per cent	69/31	69/31
Group Executive Committee, per cent	83/17	75/25

Anti-corruption

SEB's reputation is built on insightful customerrelationships, where a strong risk culture based on business acumen and professional conductis essential. SEB's Code of Conduct and core values, mandatory training, and dialogues on ethical and value related dilemmas strengthen awareness ofthe importance of conduct. SEB actively counteracts allforms of corruption, in line with rules and regulations. These include external as well as inter nal incidents, processes and behaviours related to corruption.

In its business, SEB is guided by global initiatives, international standards, SEB's policies and position statements.See p. 67.

Direct impact

SEB aims to detect and preventfinancial crime such as fraud, money laundering and financing ofterrorism as well as insider trading and market manipulation.

SEB is committed to continuously strengthen the capability to detect and preventfinancial crime across the whole group. The bank monitors officialregisters ofindividuals and organisations that could be linked to money laundering,fraud and terrorism. Sophisticated systems are used to monitortransactions for sus picious behaviour associated with money laundering,financing of terrorism and market abuse. Suspicious activities are reported to the relevant authorities.

SEB believes that a strong Know-Your-Customer (KYC) process is the best method of preventing money laundering and financing ofterrorism. The bank shall always ensure the identity ofthe cus tomers and any person acting on behalf of a customer as well as understand the control and ownership structure ofits customers. SEB monitors ongoing business relationships by verifying and documenting thattransactions carried out match the customer's risk profile, business and source offunds. Enhanced due diligence is applied for customers, products and countries where there is a higherrisk thatthe bank can be used for money laundering and financing ofterrorism.

Bribery

SEB does not tolerate the bank becoming involved in or associ ated with bribery under any circumstances. No SEB employee, board member, independent contractor, consultant or other party associated with SEB may be involved directly orindirectly in offering, promising, giving, soliciting, or accepting a bribe. A bribe means any payment or other benefit that is intended or can reasonably be expected to influence a person's performance of their duty. In case employees encounterthem, they should report them to theirline manager and Group Compliance. SEB does not pay so-called facilitation payments (i.e., payments not stipulated in law or otherregulations that are levied by public officials forthe formal handling of cases at courts or other authorities).

Employee training

SEB's employees play a key role in the ability to discover suspi cious behaviour and transactions, and thereby preventthese types of crimes. SEB offers various types oftraining for employees, including an education package with e-learning,films and working material. Four digitaltraining sessions are mandatory for all employees – the Code of Conduct (including work against corruption), Anti-money laundering, Prevention offraud and Cyber security. All new employees must complete these sessions within the firstthree months of employment. Existing employees are required to complete them every three years.

Whistleblowing process

SEB has a whistleblowing process forreporting irregularities. If an employee or other person should discover possible unethical or unlawful behaviour,the observation should be reported. The identity ofthe reporter will be kept confidential during the subse quentfollow-up, enquiries and discussions relating to the matter, provided thatthe bank is not obliged by law to disclose it.

Notifications come from employees, but could also come from customers, suppliers and other stakeholders.

In 2017, SEB's whistleblowing process was strengthened and it is now also possible to report via an external digital service, called WhistleB. The service is entirely outside of SEB and meets the most stringent security requirements regarding encryption, data security and protection of the whistleblower's identity.

Indirect impact

SEB engages directly with its customers and portfolio companies on issues related to environmental, social and governance aspects, including anti-corruption issues.

Asset management

In addition to SEB's general principles regarding asset management outlined on p. 68, specifically in the anti-corruption area the funds do not invest in companies that fail to respect interna tional conventions and guidelines, such as the UN Global Compact and the OECD Guidelines for Multinational Enterprises.

Financing and credit granting

In addition to SEB's general principles regarding financing and credit granting outlined on p. 68, it shall be noted thatthe area of anti-corruption is a crucial part. The bank engages with customers on a regular basis on ethical aspects, including anti-corrup tion, in orderto understand their challenges and opportunities so that SEB can make the appropriate credit considerations and be a better business partner.

KPI	2017	2016
SEB employees that have completed the code of conducttraining (including anti
corruption), per cent	91	63
Suspicious AML activity reports, number	504	489

Environment

Among environmentalrisks and opportunities, global climate change is the most serious challenge. SEB recognises the impor tance oflimiting the average globaltemperature rise to well below the 2°C target, which makes a transition to a low-carbon economy vital. SEB is working to reduce both its direct and indirectimpact.

In its business, SEB is guided by global initiatives, international standards, SEB's policies and position statements.See p. 67.

Indirect impact

Climate- and environmentrelated issues are becoming increas ingly importantfinancialrisk factors. Rightly managed,they can also be opportunities. Extreme weather, sea levelrise and longterm climate change affect billions of people in rural areas as well as in cities. As a bank, SEB's largest environmental impactis indirectthrough its asset management business, and its financing and credit granting.

Asset management

In addition to SEB's general principles regarding asset management outlined on p. 68, SEB's focus is on reducing carbon emissions in its investment management activities. SEB has put a cap on coal and does notinvestin companies involved in thermal coal extraction, i.e., mining activities in which thermal coal accounts for more than 20 per cent ofthe company's or group's turnover. SEB is actively engaged with European energy companies, where coal as an energy source exceeds 10 per cent,to reduce carbon emissions by using otherfuel alternatives. Since 2017, SEB is also engaged,together with Institutional Investors Group on Climate Change, (IIGCC),targeting the world's 100 largest carbon emitters in orderto reduce emissions globally.

SEB is continuously developing its mutualfund offering. The sustainability funds exclude companies that extract coal, gas and oil and focus on positive selection in the portfolio management, i.e., inclusion of companies with effective waste management, low carbon emissions and good water usage.

Financing and credit granting

In addition to SEB's general principles regarding financing and credit granting outlined on p. 68,the bank engages with customers on a regular basis on environmental aspects (climate, waste, effluents, emissions, biodiversity and resource usage). The aim is to understand the customers' challenges and opportunities so that SEB can make the appropriate credit considerations and be a better business partner.

SEB has a strong focus on green financing solutions, such as green bonds. Per 2017, SEB is the third largest green bond under writerin the world. In 2017, SEB issued its first own green bond of EUR 500 million. The capital is earmarked forloans for green initiatives and solutions and is offered to large companies and finan cial institutions, municipalities, county councils and housing associations. Major categories in SEB's green bond is hydropower, wind power, clean transportation and sustainable forestry. In 2018, SEB willreport on the impactfrom the green bond to the investors.

SEB has established a green framework in orderto have a clear definition of whatis "green". This Green Bond Framework and Strategy,together with SEB's Environmental Policy and the accompanying sector policies, provide a robust basis for ensuring that SEB's Green Bonds promote low-carbon and climate change resilientinvestments.

SEB has decided to shift away from coal. Since 2015, SEB does not provide financing for new coal-fired power plants. Financing can only be considered for new coal-fired plants with committed use oftechnologies, such as "carbon capture", which substan tially reduce greenhouse gas emissions. SEB can supportlegacy customers in making environmentally beneficial improvements in theirtransformation away from coal.

Transparency and reporting

SEB believes it is important that businesses understand and respond to climate risks as well as seize opportunities to contrib ute to building a more resilient and sustainable global economy. Regulators in the EU and Sweden increasingly take environmentalrisks into consideration in their monitoring. G20 Finance Ministers and Central Bank Governors have instructed the Financial Stability Board (FSB) to review how the financial sector can take climate-related issues into account. The FSB has established an industry-led task force: the Task Force on Climate-related Financial Disclosures (TCFD) to support informed investment, lending, and insurance underwriting decisions and improve understanding and analysis of climate-related risks and opportunities. SEB has followed this work closely. SEB intends to draw on the knowledge from the report and develop internal processes in orderto transparently describe climate related financialrisks.

SEB has signed the Montreal Carbon Pledge international cli mate agreement and thereby commits to annually report on its carbon footprint. Since 2017, 92 per cent of SEB's equity funds are annually measured and reported on SEB's website. As one of the first banks, SEB has started to report on the climate footprint ofits mutualfunds from allthree central emission areas (scope 1–3) according to the Greenhouse Gas Protocol, which gives a more accurate picture. The calculations are based on the Fund Management Association's guidelines forfund companies operating in the Swedish market.

Direct impact

Although SEB's major environmental impactis indirect,the bank recognises the importance of and works actively to also reduce its direct environmental impact. Between 2008 and 2015,the bank reduced its carbon emissions by 54 per cent. The targetis a further 20 per centreduction of emissions and electricity consumption forthe period 2016 to 2020. Business travel is the most challenging source of carbon emissions. Even though there has been a reduction in emissions from company cars and paper use,the increase in travelling in 2017 resulted in a status quo when comparing the total SEB carbon emissions with 2016.

Business travel

Compared with 2016, emissions from business travel increased by 3 per centin 2017. Airtravel distance has increased as well as train travel distance. This shows thatthe initiatives SEB has taken to encourage alternative ways of meeting are not enough. Further efforts must be made into making alternatives to physicaltravelling available.

Energy use

SEB's electricity consumption decreased by 7 per centin 2017. The major part of electricity used is based on renewable sources, 91 per cent (88). The use of district heating has increased in 2017, resulting in a slight decrease of about 1 per cent of SEB's total energy usage. The emissions from energy use are aboutthe same in 2017 as in 2016.

Paper consumption

In 2017, SEB reduced total paper consumption by 10 per cent. The bank continued to digitalise annual statements to private customers, e.g.forfund accounts as well as for saving accounts. This has resulted in a decrease of 47 per cent,from 14.8 million to 7.7 million paper sheets.

Company cars

Carbon emissions from company cars decreased by 15 per cent in 2017 compared to 2016. During the same period, carbon emissions from the average SEB company car decreased by 1 per cent.

KPI	2017	2016
SEB equity funds where carbon emission is meas
ured, per cent	92	N/A
SEB's total carbon emissions 1),tonnes	20,537	20,437
Total carbon emissions 1)/employee,tonnes	1.37	1.34

1) Include the areas business travel, energy use, paper consumption and company cars.

Financial statements – Contents

Note		Page
	The SEB Group
	Income Statement	73
	Statement of comprehensive income	74
	Balance sheet	75
	Statement of changes in equity	76
	Cash flow statement	77
	Skandinaviska Enskilda Banken
	Income Statement	78
	Statement of comprehensive income	79
	Balance sheet	80
	Statement of changes in equity	81
	Cash flow statement	82
	Notes to the financial statements
	Corporate information	83
1	Accounting policies	83
1a	Significant changed accounting policies applicable from 1 January 2018	90
2	Operating segments	94
3	Geographical information	95
4	Netinterestincome	96
5	Netfee and commission income	97
6	Netfinancial income	98
7	Net otherincome	98
8	Administrative expenses	99
9	Staff costs	100
9a	Remuneration	100
9b	Pensions	103
9c	Remuneration to the Board and the Group Executive Committee	106
9d	Share-based payments	107
9e	Number of employees	109
10	Other expenses	109
11	Depreciation, amortisation and impairment of tangible and intangible assets	110
12	Gains less losses tangible and intangible assets	110
13	Net creditlosses	110
14	Appropriations	111
15	Taxes	111
16	Earnings per share	113
17	Risk disclosures	113
17a	Creditrisk	113
17b	Marketrisk	118

Note		Page
17c	Operationalrisk	120
17d	Business risk	121
17 e	Insurance risk	121
17f	Liquidity risk	121
18	Cash and cash equivalents	127
19	Loans	127
20	Capital adequacy	132
21	Fair value measurement of assets and liabilities	135
22	Financial assets atfair value through profit orloss	140
23	Available-for-sale financial assets	141
24	Investments in associates	141
25	Shares in subsidiaries	142
26	Interestin unconsolidated structured entities	143
27	Related parties	144
28	Tangible and intangible assets	145
29	Other assets	148
30	Liabilities to policyholders	148
31	Financial liabilities atfair value through profit orloss	149
32	Otherliabilities	149
33	Provisions	150
34	Subordinated liabilities	150
35	Untaxed reserves	151
36	Pledged assets	151
37	Obligations	152
38	Current and non-current assets and liabilities	153
39	Financial assets and liabilities by class	154
40	Financial assets and liabilities subjectto offsetting or netting arrangements	156
41	Debt securities by issuers	157
42	Derivative instruments	158
43	Future minimum lease payments for operational leases	160
44	Finance leases	160
45	Assets and liabilities distributed by main currencies	161
46	Life insurance operations	162
47	Assets in unit-linked operations	163
48	Non-current assets and disposal groups classified as held for sale	163
49	Items affecting comparability	163
	Five-year summary
	The SEB Group	164

Skandinaviska Enskilda Banken 165

Income Statement

SEB Group

Interestincome 36,472 35,202 4 Interest expense –16,580 –16,464 1 Netinterestincome 4 19,893 18,738 6 Fee and commission income 23,196 22,500 3 Fee and commission expense –5,472 –5,872 –7 Netfee and commission income 5 17,725 16,628 7 Netfinancial income 6 6,880 7,056 –3 Dividends 77 170 –55 Profit and loss from investments in associates –38 218 Gains less losses from investment securities 203 371 –45 Other operating income 870 70 Net otherincome 7 1,112 829 34 Total operating income 45,609 43,251 5 Staff costs 9 –14,025 –14,422 –3 Other expenses 10 –6,947 –6,619 5 Depreciation, amortisation and impairment oftangible and intangible assets 11 –964 –771 25 Total operating expenses –21,936 –21,812 1 Profit before creditlosses 23,672 21,439 10 Gains less losses from tangible and intangible assets 12 –162 –150 8 Net creditlosses 13 –808 –993 –19 Operating profit before items affecting comparability 22,702 20,296 12 Items affecting comparability 49 –1,896 –5,429 –65























Operating profit 20,806 14,867 40
Income tax expense 15 –4,562 –4,249 7
NET PROFIT 16,244 10,618 53
Attributable to shareholders 16,244 10,618 53
Basic earnings per share, SEK 16 7.49 4.88
Diluted earnings per share, SEK 16 7.46 4.85

1) Items affecting comparability restated, see note 49.

Statement of comprehensive income

SEB Group

SEKm	2017	2016	Change, %
NET PROFIT	16,244	10,618	53
Items that may be reclassified subsequently to profit orloss: Valuation gains (losses) during the year Income tax on valuation gains (losses) during the year Transferred to profit orloss forthe year1) Income tax on transfers to profit orloss forthe year	–2,166 397 1,122 –261	968 –84 103 3
Available-for-sale financial assets	–909	990	–192
Valuation gains (losses) during the year Income tax on valuation gains (losses) during the year Transferred to profit orloss forthe year2) Income tax on transfers to profit orloss forthe year	–1,536 338 –11 2	–1,064 234 24 –5	44 44
Cash flow hedges	–1,207	–811	49
Translation offoreign operations Taxes on translation effects	–17 313	327 423	–26
Translation offoreign operations	296	750	–61
Items that will not be reclassified to profit orloss: Remeasurement of pension obligations, including special salary tax Valuation gains (losses) on plan assets during the year Deferred tax on pensions	–528 2,556 –1,244	–3,624 1,183 566	–85 116
Defined benefit plans	784	–1,875
OTHERCOMPREHENSIVE INCOME	–1,036	–946	10
TOTAL COMPREHENSIVE INCOME	15,208	9,672	57
1)Otherincome.

2) Netinterestincome.

Attributable to shareholders	15,208	9,672	57

The method used to hedge currency risks related to foreign operations creates a tax expense (tax income) in the parent company. Fair value changes on the hedging instruments impactthe taxable result contrary to the currency revaluation ofthe foreign operations. In the Group this tax effectis reported in Other comprehensive income.

Balance sheet

SEB Group

31December, SEKm	Note	2017	2016	Change, %
Cash and cash balances at central banks	18	177,222	151,078	17
Otherlending to central banks		12,778	66,730	–81
Loans to creditinstitutions	18, 19	34,715	50,527	–31
Loans to the public	19	1,484,803	1,453,019	2
Securities held fortrading		157,885	162,516	–3
Derivatives held fortrading		98,281	198,271	–50
Derivatives held for hedging		6,587	14,084	–53
Financial assets – designated atfair value through profit orloss		313,203	410,155	–24
Financial assets atfair value through profit orloss	22	575,955	785,026	–27
Fair value changes of hedged items in a portfolio hedge		93	111	–16
Available-for-sale financial assets	23	27,776	35,747	–22
Investment accounted for using the equity method		472	268	76
Otherinvestments in associates		842	970	–13
Investments in subsidiaries and associates	24, 25	1,314	1,238	6
Intangible assets		10,718	11,405	–6
Property and equipment		1,130	908	24
Investment properties		203	7,845	–97
Tangible and intangible assets	28	12,052	20,158	–40
Current tax assets		5,255	5,978	–12
Deferred tax assets		260	1,329	–80
Tax assets	15	5,515	7,307	–25
Trade and clientreceivables		13,040	7,635	71
Otherfinancial assets		19,007	29,239	–35
Other non-financial assets		11,316	12,244	–8
Other assets	29	43,362	49,118	–12
Non-current assets and disposal groups classified as held for sale	48	184,011	587
TOTALASSETS		2,559,596	2,620,646	–2
Deposits from central banks and creditinstitutions		89,076	119,864	–26
Deposits and borrowing from the public		1,004,721	962,028	4
Liabilities to policyholders – investment contracts		284,291	296,618	–4
Liabilities to policyholders – insurance contracts		18,911	107,213	–82
Liabilities to policyholders	30	303,202	403,831	–25
Debt securities issued		614,033	668,880	–8
Liabilities held fortrading		28,879	38,845	–26
Derivatives held fortrading		84,571	173,348	–51
Derivatives held for hedging		863	1,303	–34
Financial liabilities atfair value through profit orloss	31	114,313	213,496	–46
Fair value changes of hedged items in a portfolio hedge		1,046	1,537	–32
Current tax liabilities		1,463	2,184	–33
Deferred tax liabilities		8,079	8,474	–5
Tax liabilities	15	9,542	10,658	–10
Trade and client payables		13,142	8,926	47
Otherfinancial liabilities		33,766	30,609	–100
Other non-financial liabilities		18,720	16,889
Otherliabilities	32	65,629	56,424	16
Provisions	33	3,009	2,233	35
Subordinated liabilities	34	32,390	40,719	–20
Liabilities of disposal groups classified as held for sale	48	178,710
Total liabilities		2,415,671	2,479,670	–3
Share capital		21,942	21,942
Otherreserves		4,403	5,439	–19
Retained earnings		117,581	113,595	4
Shareholders' equity		143,925	140,976	2
Total equity		143,925	140,976	2
TOTAL LIABILITIESANDEQUITY		2,559,596	2,620,646	–2

Statement of changes in equity

SEB Group

SEKm	Otherreserves
2017	Share capital 3)	Available-for- sale financial assets	Cash flow hedges	Translation offoreign operations	Defined benefit plans	Retained earnings	Total Shareholders' equity 4)
Opening balance Net profit	21,942	1,638	2,399	–1,193	2,595	113,595 16,244	140,976 16,244
Other comprehensive income (net oftax)		–909	–1,207	296	784		–1,036
Total comprehensive income		–909	–1,207	296	784	16,244	15,208
Dividend to shareholders 1) Equity-based programmes 2) Change in holding of own shares						–11,935 –246 –78	–11,935 –246 –78
CLOSINGBALANCE	21,942	729	1,192	–897	3,379	117,581	143,925

2016

Opening balance Change in valuation ofinsurance contracts	21,942	648	3,210	–1,943	4,470	114,471 –440	142,798 –440
Adjusted opening balance	21,942	648	3,210	–1,943	4,470	114,031	142,358
Net profit Other comprehensive income (net oftax)		990	–811	750	–1,875	10,618	10,618 –946
Total comprehensive income		990	–811	750	–1,875	10,618	9,672
Dividend to shareholders 1) Equity-based programmes 2) Change in holding of own shares						–11,504 433 17	–11,504 433 17
CLOSINGBALANCE	21,942	1,638	2,399	–1,193	2,595	113,595	140,976

1)Dividend paid in 2017 for 2016 was SEK 5.50 (5.25) per ClassAshare and SEK 5.50 (5.25) per Class C share. Proposed dividend for 2017 is SEK 5.75. Furtherinformation can be found in the chapter Shareholders and the SEB share on page 29–31.Dividend to shareholders is reported excluding dividend on own shares.

2)As of 31 December 2015 SEB owned 0.9 million ClassAshares forthe long-termincentive programmes. In 2016 5.5 million ClassAshares were sold as stock options were exercised.During 2016, SEB also repurchased 29.8million ClassAshares.As of 31December 2016 SEB owned 25.2 million ClassAshares with a market value of SEK 2,406m. Another 5.0 million ClassAshares have been sold during 2017 as stock options were exercised.During 2017, SEB repurchased 7.0 million ClassAshares. As of 31December 2017 SEB owned 27.1 million ClassAshares with a market value of SEK 2,612m.

3) 2,170,019,294 ClassAshares (2,170,019,294); 24,152,508 Class C shares (24,152,508).

4) Information about capitalrequirements can be found in Note 20 Capital adequacy.

Cash flow statement

SEB Group

SEKm	2017	2016	Change, %
Interestreceived	37,724	35,507	6
Interest paid	–17,690	–17,515	1
Commission received	23,196	22,500	3
Commission paid	–5,472	–5,872	–7
Netreceived from financialtransactions	14,748	–7,621
Otherincome	197	74	166
Paid expenses	–21,200	–21,464	–1
Taxes paid	–4,560	–3,159	44
Cash flow from the income statement	26,943	2,450
Increase (–)/decrease (+) in portfolios	–8,683	62,438
Increase (+)/decrease (–) in issued short-term securities	–55,228	31 344
Increase (–)/decrease (+) in lending to creditinstitutions and central banks	69,280	–31,024
Increase (–)/decrease (+) in lending to the public	–34,853	–104,145	–67
Increase (+)/decrease (–) in liabilities to creditinstitutions	–30,773	1,361
Increase (+)/decrease (–) in deposits and borrowings from the public	43,010	78,243	–45
Increase (–)/decrease (+) in insurance portfolios	–180	329
Change in other assets	17,343	3,281
Change in otherliabilities	21,141	–866
Cash flow from operating activities	48,000	43,411	11
Sales of shares and bonds	761	1,075	–29
Sales ofintangible and tangible fixed assets	70	110	–36
Dividends received	77	170	–55
Investments/divestments in shares and bonds	–86	–52	65
Investments in intangible and tangible assets	–259	–451	–43
Cash flow from investing activities	564	852	–34
Issue of subordinated loans		17,682	–100
Repayment of subordinated loans	–7,169	–9,196	–22
Dividend paid	–11,935	–11,504	4
Cash flow from financing activities	–19,104	–3,018
NET CHANGE IN CASHANDCASHEQUIVALENTS	29,460	41,245	–29

Cash and cash equivalents at beginning of year	158,315	110,770	43
Exchange rate differences on cash and cash equivalents	–3,346	6,300
Netincrease in cash and cash equivalents	29,460	41,245	–29
CASHANDCASHEQUIVALENTSAT ENDOF PERIOD1)	184,429	158,315	16

1) Cash and cash equivalents are disclosed in note 18.

Reconciliation ofliabilities from financing activities

TOTAL LIABILITIES FROM FINANCINGACTIVITIES	32,390	40,719	–20
Non-cash flow, interest accruals	–233	40
Non-cash flow,fair value changes	–600	–335	79
Non-cash flow, currency exchange	–327	1,156
Cash flows	–7,169	8,486
Opening balan ce	40,719	31,372	30

Income Statement

In accordance with the Swedish Financial SupervisoryAuthority regulations

Skandinaviska Enskilda Banken

SEKm	Note	2017	2016	Change, %
Interestincome	4	32,285	29,022	11
Leasing income	4	5,481	5,443	1
Interest expense	4	–17,750	–15,223	17
Dividends		6,981	6,581	6
Fee and commission income	5	12,153	11,648	4
Fee and commission expense	5	–2,596	–2,805	–7
Netfinancial income	6	4,493	4,642	–3
Otherincome	7	1,342	817	64
Total operating income		42,390	40,125	6
Administrative expenses	8	–14,252	–15,039	–5
Depreciation, amortisation and impairment oftangible and intangible assets	11	–6,377	–5,775	10
Total operating expenses		–20,629	–20,814	–1
Profit before creditlosses		21,761	19,311	13
Net creditlosses	13	–749	–789	–5
Impairment offinancial assets1)		–1,497	–3,841	–61
Operating profit		19,515	14,681	33
Appropriations	14	1,885	2,437	–23
Income tax expense	15	–3,633	–2,877	26
Othertaxes	15	43	137	–69
NET PROFIT		17,811	14,378	24

1)As a result ofimpairmenttestin SEBGroup, impairment of shares in subsidiaries has affected the parent company inQ1 2016 with an amount of SEK 2,687m.

Statement of comprehensive income

Skandinaviska Enskilda Banken

SEKm	2017	2016	Change, %
NET PROFIT	17,811	14,378	24
Items that may be reclassified subsequently to profit orloss: Valuation gains (losses) during the year Income tax on valuation gains (losses) during the year Transferred to profit orloss forthe year1) Income tax on transfers to profit orloss forthe year	–1,920 314 933 –205	982 –85 299 –66
Available-for-sale financial assets	–878	1,130
Valuation gains (losses) during the year Income tax on valuation gains (losses) during the year Transferred to profit orloss forthe year2) Income tax on transfers to profit orloss forthe year	–1,536 338 –11 2	–1,064 234 24 –5	44 44
Cash flowhedges	–1,207	–811	49
Translation offoreign operations	–8	25
Translation offoreign operations	–8	25
OTHERCOMPREHENSIVE INCOME	–2,093	344
TOTAL COMPREHENSIVE INCOME	15,718	14,722	7

1)Otherincome.

2) Netinterestincome.

Balance sheet

Skandinaviska Enskilda Banken

31December, SEKm	Note	2017	2016	Change, %
Cash and cash balances at central banks	18	97,741	70,671	38
Loans to creditinstitutions	18, 19	192,591	287,059	–33
Loans to the public	19	1,196,824	1,172,095	2
Securities held fortrading		157,628	162,335	–3
Derivatives held fortrading		97,640	147,124	–34
Derivatives held for hedging		6,580	12,649	–48
Otherfinancial assets atfair value through profit and loss		9	87	–90
Financial assets atfair value through profit and loss	22	261,857	322,195	–19
Fair value changes of hedged items in a portfolio hedge		32
Available-for-sale financial assets	23	10,521	12,063	–13
Investments in associates	24	1,032	1,025	1
Shares in subsidiaries	25	50,567	50,611
Intangible assets		1,597	2,023	–21
Property and equipment		34,487	35,163	–2
Tangible and intangible assets	28	36,084	37,186	–3
Currenttax assets		1,999	2,990	–33
Tax assets		1,999	2,990	–33
Trade and clientreceivables		12,871	7,234	78

Otherfinancial assets		22,282	29,177	–24
Other non-financial assets		7,761	7,538	3
Other assets	29	42,914	43,949	–2
TOTALASSETS		1,892,163	1,999,844	–5
Deposits from central banks and creditinstitutions		127,539	168,852	–24
Deposits and borrowing from the public		822,151	782,584	5
Debt securities issued		610,292	664,186	–8
Liabilities held fortrading		28,879	38,845	–26
Derivatives held fortrading		86,127	132,861	–35
Derivatives held for hedging		863	972	–11
Financial liabilities atfair value through profit and loss	31	115,869	172,678	–33
Currenttax liabilities		684	855	–20
Deferred tax liabilities		336	677	–50
Tax liabilities		1,020	1,532	–33
Trade and client payables		11,782	7,945	48
Otherfinancial liabilities		34,350	29,922	15
Other non-financial liabilities		10,466	8,211	27
Otherliabilities	32	56,598	46,078	23
Provisions	33	113	80	41
Subordinated liabilities	34	32,390	40,719	–20

Total liabilities		1,765,972	1,876,709	–6
Untaxed reserves	35	21,429	21,761	–2
Share capital		21,942	21,942
Restricted reserves		13,425	12,701	6
Otherreserves		1,476	3,571	–59
Retained earnings		50,108	48,782	3
Net profit		17,811	14,378	24
Total equity		104,762	101,374	3
TOTAL LIABILITIES,UNTAXEDRESERVESANDTOTAL EQUITY		1,892,163	1,999,844	–5

Statement of changes in equity

Skandinaviska Enskilda Banken

SEKm		Restricted equity	Non-restricted equity 4)
2017	Share capital 3)	Restricted reserves	Available- for-sale financial assets	Cash flow hedges	Translation offoreign operations	Retained earnings	Total Equity
Opening balance Net profit Other comprehensive income (net oftax)	21,942	12,701	1,458 –878	2,400 –1,207	–287 –8	63,160 17,811	101,374 17,811 –2,093
Total comprehensive income			–878	–1,207	–8	17,811	15,718
Dividend to shareholders 1) Equity-based programmes 2) Change in holding of own shares Other changes		724				–11,935 –333 –62 –724	–11,935 –333 –62
CLOSINGBALANCE	21,942	13,425	580	1,193	–295	67,917	104,762
2016
Opening balance Net profit Other comprehensive income (net oftax)	21,942	12,260	328 1,130	3,211 –811	–312 25	60,351 14,378	97,780 14,378 344
Total comprehensive income			1,130	–811	25	14,378	14,722
Dividend to shareholders 1) Equity-based programmes 2) Change in holding of own shares Other changes		441				–11,504 342 34 –441	–11,504 342 34

CLOSINGBALANCE 21,942 12,701 1,458 2,400 –287 63,160 101,374

2)As of 31December 2015 SEB owned 0.9 million ClassAshares forthe long-term incentive programmes. In 2016 5.5 million ClassAshares were been sold as stock options were exercised.During 2016, SEB also repurchased 29.8 million ClassAshares.As of 31December 2016 SEB owned 25.2 million ClassAshares with a market value of SEK 2,406m. Another 5.0 million ClassAshares have been sold during 2017 as stock options were exercised. During 2017, SEB repurchased 7.0 million ClassAshares.As of 31December 2017 SEB owned 27.1 million ClassAshares with a market value of SEK 2,612m.

3) 2,170,019,294 ClassAshares (2,170,019,294); 24,152,508 Class C shares (24,152,508).

4) The opening balance is equivalenttoDistributable items according to Regulation (EU) No 575/2013 (CRR).

Cash flow statement

Skandinaviska Enskilda Banken

SEKm	2017	2016	Change, %
Interestreceived	30,730	29,464	4
Interest paid	–11,230	–11,028	2
Commission received	12,516	11,884	5
Commission paid	–2,965	–3,064	–3
Netreceived from financialtransactions	14,222	–7,811
Otherincome	–1,423	–3,634	–61
Paid expenses	–13,399	–14,050	–5
Taxes paid	–2,355	–3,531	–33
Cash flow from the profit and loss statement	26,096	–1,770
Increase (–)/decrease (+) in trading portfolios	–3,871	74,866
Increase (+)/decrease (–) in issued short-term securities	–54,279	33,673
Increase (–)/decrease (+) in lending to creditinstitutions	102,644	–122,367
Increase (–)/decrease (+) in lending to the public	–27,417	–93,180	–71
Increase (+)/decrease (–) in liabilities to creditinstitutions	–41,358	34,094
Increase (+)/decrease (–) in deposits and borrowings from the public	39,847	92,301	–57
Change in other assets	2,144	–5,987
Change in otherliabilities	8,733	–5,924
Cash flow from operating activities	52,540	5,706
Dividends received	6,981	6,581	6
Investments/divestments in shares and bonds	594	2,079	–71
Investments in intangible and tangible assets	–1,482	–742	100
Cash flow from investment activities	6,094	7,918	–23

Issue of subordinated loans		17,682	–100
Repayment of subordinated loans	–7,169	–9,196	–22
Dividend paid	–11,935	–11,504	4
Cash flow from financing activities	–19,104	–3,018
NET CHANGE IN CASHANDCASHEQUIVALENTS	39,530	10,606
Cash and cash equivalents at beginning of year	91,932	77,493	19
Exchange rate differences on cash and cash equivalents	–5,174	3,833
Netincrease in cash and cash equivalents	39,530	10,606
CASHANDCASHEQUIVALENTSAT ENDOF PERIOD1)	126,287	91,932	37

1) Cash and cash equivalents are disclosed in note 18.

Reconciliation ofliabilities from financing activities

Opening balan ce	40,719	31,372	30
Cash flows	–7,169	8,486
Non-cash flow, currency exchange	–327	1,156
Non-cash flow,fair value changes	–600	–335	79
Non-cash flow, interest accruals	–233	40
TOTAL LIABILITIES FROM FINANCINGACTIVITIES	32,390	40,719	–20

Notes to the financial statements

SEKm, unless otherwise stated.

Corporate information

The SEB Group provides corporate,retail, investment and private banking services. The Group also provides asset management and life insurance services.

Skandinaviska Enskilda Banken AB (publ.) is the parent company ofthe Group. The parent company is a Swedish limited liability company with its registered office in Stockholm, Sweden.

The parent company is included in the Large Cap segment ofthe NASDAQ Stockholm stock exchange.

The consolidated accounts forthe financial year 2017 were approved for publication by the Board of Directors on 20 February and will be presented for adoption atthe 2018 Annual General Meeting.

Exchange rates used for converting main currencies in theGroup Consolidation

	Income statement			Balance sheet
	2017	2016	Change, %	2017	2016	Change, %
DKK	1.295	1.272	2	1.319	1.286	3
EUR	9.633	9.470	2	9.822	9.558	3
NOK	1.033	1.020	1	1.000	1.051	–5
USD	8.538	8.561	0	8.190	9.054	–10

1 Accounting policies

Significant accounting policies forthe Group

STATEMENT OF COMPLIANCE

The Group's consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) and interpretations of these standards as adopted by the EU. The accounting also follows the Annual Accounts Actfor CreditInstitutions and Securities Companies (1995:1559) and the regulation and general guidelines issued by the Swedish Financial Supervisory Authority, Annual Reports in CreditInstitutions and Securities Companies (FFFS 2008:25). In addition to this the Supplementary Accounting Rules for Groups RFR 1 and the additional UFR statements issued by the Swedish Financial Reporting Board have been applied.

BASIS OF PREPARATION

The consolidated accounts are based on amortised cost, exceptforthe fair value measurement of available-for-sale financial assets,financial assets and liabilities measured atfair value through profit orloss including deriva tives and investment properties measured atfair value. The carrying amount offinancial assets and liabilities subjectto hedge accounting atfair value has been adjusted for changes in fair value attributable to the hedged risk. The financial statements are presented in million Swedish kronor (SEKm) unless indicated otherwise.

CONSOLIDATION

Subsidiaries

The consolidated accounts combine the financial statements ofthe parent company and its subsidiaries. Subsidiaries are companies, over which the Group has control. The Group controls an entity when it has power over an investee, is exposed to, or has rights to, variable returns from its involvement and has the ability to use its powerto affectthe amount ofthe returns. Con trol is deemed to exist when the parent company holds, directly orindirectly, more than 50 per cent ofthe voting rights, unless there is evidence that anotherinvestor has the practical ability to unilaterally directthe relevant activities ofthe entity. Companies in which the parent company orits subsidi aries hold more than 50 per cent ofthe votes, but are unable to exercise control due to contractual orlegalreasons, are notincluded in the consolidated accounts. The Group also assesses if control exists when it holds less than 50 per cent ofthe voting rights. This may arise ifthe Group has contractual arrangements with other vote holders. The size and dispersion of holdings of other vote holders may also indicate thatthe Group has the practical ability to directthe relevant activities ofthe investee.

When voting rights are notrelevantin deciding who has power over an

entity, such as interests in some funds or special purpose entities (SPE), all facts and circumstances are considered in determining ifthe Group controls the entity. In the assessment whetherto consolidate SPEs and any entities where there is notimmediately clear where controlrests, an analysis is made to identify which party has power overthe activities which most affects the returns ofthe entity and ifthat party is significantly exposed or have signifi cantrights to the returns from that entity.

The financial statements ofthe parent company and the consolidated sub sidiaries referto the same period and have been drawn up according to the accounting policies applicable to the Group. A subsidiary is included in the consolidated accounts from the time of acquisition, being the date when the parent company gains control overthe subsidiary. The subsidiary is included in the consolidated accounts untilthe date when control overthe company ceases to exist.

The consolidated accounts are prepared in accordance with the acquisition method. The acquisition value is measured as the fair value ofthe assets given, equity instruments issued and liabilities incurred or assumed.

The identifiable assets acquired and the liabilities and contingentliabilities assumed in a business combination are measured initially attheirfair values on acquisition date, irrespective of any minority interest. The excess ofthe consideration transferred forthe acquisition overthe fair value ofthe Group's share ofthe identifiable acquired net assets is recorded as goodwill. Ifthe consideration transferred is less than the fair value ofthe net assets ofthe acquired subsidiary,the difference is recognised directly against profit orloss.

Goodwill is allocated between the cash-generating units or groups of units which are expected to generate cash flows. The cash-generating units to which goodwill is allocated correspond to the lowestlevel within the Group in which goodwill is monitored forinternal management purposes.

Intra-group transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated. The minority interest ofthe profitin subsidiaries is included in the reported profitin the consolidated income statement, while the minority share of net assets is included in equity.

Associated companies

The consolidated accounts also include associated companies that are com panies in which the Group has significantinfluence, but not control. Significant influence means thatthe Group can participate in the financial and operating policy decisions ofthe company, whilst not determining or controlling such financial and operating policies. A significantinfluence is generally deemed to existifthe Group, directly orindirectly, holds between 20 and 50 per cent ofthe voting rights of an entity.

According to the main principle, associated companies are consolidated

in accordance with the equity method. This means thatthe holding is initially reported atits acquisition cost. Associated companies are subsequently car ried at a value that corresponds to the Group's share ofthe net assets. How ever,the Group has chosen to designate investments in associates held by the Group's venture capital organisation atfair value through profit orloss on the basis thatthese are managed and evaluated based on fair value.

ASSETS HELD FOR SALE

Assets (or disposal groups) are classified as held for sale atthe time when a non-current asset or group of assets (disposal group) are available forimmediate sale in its present condition and its sale is deemed to be highly probable. Atthe time ofthe classification, a valuation ofthe asset or disposal group is made atthe lower ofits carrying amount and fair value, less costs to sell. Any subsequentimpairmentlosses orrevaluations are recognised directly in profit orloss. No gains are recognised in excess of accumulated impairment losses ofthe assetrecognised previously. From the time of classification, no depreciation is made for property and equipment orintangible assets originating from assets held for sale. Assets and liabilities held for sale are reported separately in the balance sheet untilthey are sold.

SEGMENT REPORTING

An operating segmentis identified on the basis ofinternalreports about com ponents ofthe Group that are regularly reviewed by the chief operating deci sion makerin orderto allocate resources to the segments and to assess their performance. The business divisions are identified as separate operating seg ments. Business Support, Group Staff, Group Treasury and Group wide items are included in the segment Other. In the context of defining the segments the President and Chief Executive Officer (CEO) is the Group's chief operating decision maker.

FOREIGN CURRENCY TRANSLATION

Foreign currency transactions are translated into the appropriate functional currency using the exchange rates prevailing atthe dates ofthe transactions. On subsequent balance sheet dates monetary items in foreign currency are translated using the closing rate. Non-monetary items, which are measured in terms of historical costin foreign currency, are translated using the exchange rate on the date ofthe transaction. Non-monetary items, which are measured atfair value in a foreign currency, are translated applying the exchange rate on the date on which the fair value is determined.

Gains and losses arising as a result of exchange rate differences on settlement ortranslation of monetary items are recognised in profit orloss. Trans lation differences on non-monetary items, classified as financial assets or financial liabilities atfair value through profit orloss, are included in the change in fair value ofthose items. Translation differences from non-monetary items, classified as available-for-sale financial assets, are recognised in other comprehensive income. Exchange rate differences referring to monetary items comprising part of a netinvestmentin a foreign operation are reported in other comprehensive income.

The income statements and balance sheets of Group entities, with a functional currency otherthan the Group's presentation currency, are translated to SEK in the consolidated accounts. Assets and liabilities in foreign Group entities are translated atthe closing rate and income and expenses in the income statement are translated atthe average exchange rate forthe year. The exchange rate differences are recognised as a separate component of other comprehensive income.

Goodwill arising in conjunction with acquisitions offoreign Group entities, as well as adjustments to the fair value of assets and liabilities made in con junction with acquisitions are included in the assets and liabilities ofthe for eign entity in question and are translated atthe closing rate.

FINANCIAL ASSETS AND LIABILITIES

Financial assets

Financial assets are recognised on the balance sheet when the Group becomes a party to the contractual provisions ofthe instrument and are measured atfair value on initialrecognition. Transaction costs are included in the fair value on initialrecognition exceptforfinancial assets atfair value through profit orloss where transaction costs are expensed in profit orloss. Financial assets are derecognised when the rights to receive cash flows have expired orthe Group has transferred substantially allrisks and rewards. Transfers offinancial assets with retention of all or substantially allrisks and rewards include for example repurchase transactions and securities lending transactions.

The Group classifies its financial assets in the following categories:financial instruments atfair value through profit orloss; loans and receivables and available-for-sale financial assets.

Financial assets are recognised on the balance sheet on the trade date, with exception ofloans and receivables, which are recognised on the settlement date.

Financial assets at fair value through profit and loss

Financial assets atfair value through profit orloss consist offinancial assets classified as held fortrading and financial assets which, upon initialrecognition, have been designated atfair value through profit orloss (fair value option). Financial assets are classified as held fortrading ifthey are held with the intention to be sold in the short-term and forthe purpose of generating profits. Derivatives are classified as held fortrading unless designated as hedging instruments.

The fair value option can be applied to contracts including one or more embedded derivatives, investments that are managed and evaluated on a fair value basis and situations in which such designation reduces measurement inconsistencies. The nature ofthe financial assets which have been desig nated atfair value through profit orloss and the criteria for such designation are described in the relevant notes to the financial statements.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or deter minable payments that are not quoted in an active market. Loans and receiva bles are measured at amortised cost using the effective interest method. The balance sheetitems Cash balances with central banks, Loans to creditinstitu tions and Loans to the public are included in this category.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and are not classified into any ofthe other categories described above. Available-for-sale financial assets are measured atfair value. Gains and losses arising from changes in fair value are reported in other comprehensive income and accumulated in equity. In the case of sale or impairment of an available-for-sale financial asset,the accumulated gains or losses previously reported in equity are recognised in profit orloss. Interest on interest-bearing available-for-sale financial assets is recognised in profit or loss, applying the effective interest method. Dividends on equity instruments, classified as available-for-sale, are also recognised in profit orloss.

Investments in equity instruments without a quoted market price in an active market are measured, if possible, atfair value on the basis of a recog nised valuation method. Investments in equity instruments without a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost.

Financial liabilities

Financial liabilities are measured atfair value on initialrecognition. In the case offinancial liabilities measured atfair value through profit orloss,transaction costs directly attributable to the acquisition orthe issuance ofthe financial liability are recognised in profit orloss. For otherfinancial liabilities direct transaction cost are recognised as a deduction from the fair value.

Financial liabilities are derecognised when extinguished,thatis, when the obligation is discharged, cancelled or expired.

Financial liabilities at fair value through profit or loss

Financial liabilities atfair value through profit orloss are either classified as held fortrading or designated as fair value through profit orloss on initialrec ognition (fair value option). The criteria for classification offinancial liabilities underthe fair value option are the same as forfinancial assets. Liabilities to policyholders and some Debt securities are included in this category. Financial liabilities held fortrading are primarily short positions in interest-bearing securities, equities and derivatives not designated as hedging instruments.

Other financial liabilities

The category otherfinancial liabilities primarily include the Group's shortterm and long-term borrowings. Afterinitialrecognition otherfinancial liabili ties are measured at amortised cost, using the effective interest method. The balance sheetitems Deposits from creditinstitutions, Deposits and borrow ings from the public and Debt securities are included in this category.

Offsetting financial transactions

Financial assets and liabilities are offset and the net amountreported in the balance sheet when there is a legalrightto offsettransactions and an inten tion to settle net orrealise the asset and settle the liability simultaneously.

Embedded derivatives

Some combined contracts contain both a derivative and a non-derivative component. In such cases,the derivative componentis termed an embedded derivative. Where the economic characteristics and risks ofthe embedded derivatives are not closely related to those ofthe host contract, and the host contractitselfis not carried atfair value through profit orloss,the embedded derivative is bifurcated and reported atfair value with gains and losses being recognised in the income statement.

Certain combined instruments are classified as financial assets orfinancial liabilities atfair value through profit orloss according to the fair value option. The designation implies thatthe entire combined instrumentis measured at fair value through profit and loss.

Repurchase agreements

Securities may be lent or sold subjectto a commitmentto repurchase them

(a 'repo') at a fixed price and at a predetermined date. Such securities are retained on the balance sheet and in addition included separately as collateral pledged for own liabilities when cash consideration is received. Depend ing on the counterparty, paymentreceived is recognised under Deposits by creditinstitutions or as Deposits and borrowing from the public.

Similarly, where the Group borrows or purchases securities subjectto a commitmentto resellthem (a 'reverse repo'),the securities are notincluded in the balance sheet. Payments made are recognised as Loans to creditinsti tutions or as Loans to the public.

The difference between sale and repurchase price is accrued overthe life ofthe agreements using the effective interest method.

Securities borrowing and lending

Securities borrowing and lending transactions are entered into on a collateralised basis. Fair values of securities received or delivered are monitored on a daily basis to require or provide additional collateral. Cash collateral deliv ered is derecognised from the balance sheet and a corresponding receivable is recognised. Cash collateralreceived is recognised in the balance sheet and a corresponding obligation to return it, is recognised. Securities lentremain on the balance sheet and are in addition reported as pledged assets. Borrowed securities are notrecognised as assets. When borrowed securities are sold (short position), an amount corresponding to the fair value ofthe securities is booked as a liability. Securities received in a borrowing orlending transaction are disclosed as obligations.

Fair value measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly market between market participants atthe measurement date.

The fair value offinancial instruments quoted in an active marketis based on quoted market prices. Ifthe asset orliability measured atfair value has a bid price and an ask price,the price within the bid-ask spread thatis most representative offair value in the circumstances is used.

The fair value offinancial instruments that are not quoted in an active mar ketis determined by applying various valuation techniques with maximum use of observable inputs. The valuation techniques used are for example discounted cash flows, option pricing models, valuations with reference to recenttransactions in the same instrument and valuations with reference to otherfinancial instruments that are substantially the same. When valuing financial liabilities atfair value own credit standing is reflected.

Any differences between the transaction price and the fair value calcu lated using a valuation technique with unobservable inputs,the Day 1 profit, is amortised overthe life ofthe transaction. Day 1 profitis then recognised in profit orloss either when realised through settlement or when inputs used to calculate fair value are based on observable prices orrates.

Fair value is generally measured forindividualfinancial instruments. In addition portfolio adjustments are made to cover marketrisks and the credit risk of each ofthe counterparties on groups offinancial assets and liabilities on the basis ofthe net exposure to these risks. When assets and liabilities have offsetting marketrisks mid-market prices are used for establishing fair value ofthe risk positions that offset each other. To reflect counterparty risk and own creditrisk in OTC derivatives, adjustments are made based on the net exposure towards each counterpart.

Hedge accounting

Derivatives are used to hedge interestrate, exchange rate and equity exposures. Where derivatives are held forrisk management purposes and when transactions meetthe required criteria,the Group applies fair value hedge accounting, cash flow hedge accounting or hedging of a netinvestmentin a foreign operation as appropriate to the risks being hedged. The Group documents and designates, atinception,the relationship between the hedged item and the hedging instrument as well as the risk objective and hedge strategy. The Group also documents its assessment, both atinception and on an ongoing basis, whetherthe derivatives used are both prospectively, and retrospec tively highly effective in offsetting the hedged risk. As part ofthe prospective testthe Group also assesses and documents thatthe likelihood offorecasted transactions to take place is highly probable.More information regarding hedge accounting can be found in note 7Net otherincome.

Hedge accounting is applied when derivatives are used to reduce risks such as interestrate risks and currency risks in financial instruments. Furthermore, hedge accounting can be applied to liabilities hedging currency risk in net investments in subsidiaries. The Group applies different hedge accounting models depending on the purpose ofthe hedge:

– Hedges offair value ofrecognised assets orliabilities (fair value hedge)

Hedges ofthe fair value ofthe interestrate risk of a portfolio (portfolio hedge)
Hedges of highly probable future cash flows attributable to recognised assets orliabilities (cash flow hedge)
Hedges of a netinvestmentin a foreign operation (netinvestment hedge).
The Group discontinues hedge accounting when:
The derivative has ceased to be highly effective as a hedging instrument;
The derivative expires, is sold,terminated, or exercised;
The hedged item matures, is sold orrepaid; or
The forecasttransaction is no longer deemed highly probable.

Fair value hedge

Fair value hedges are used to protecttheGroup against undesirable exposures to changes in the market prices ofrecognised assets orliabilities. Changes in fair value of derivatives that qualify and are designated as hedging instruments are recorded in the income statement,together with changes in the fair value ofthe hedged asset orliability that are attributable to the hedged risk as Net otherincome.

Where the Group hedges the fair value ofinterestrate exposure in a portfolio including financial assets orfinancial liabilities, so called portfolio hedging ofinterestrate risk,the gains orlosses attributable to the hedged item are reported as a separate item under assets or as a separate item underliabili ties in the balance sheet.

When hedge relationships are discontinued, any adjustmentto the carrying amount ofthe hedged item is amortised to profit orloss overthe period to maturity ofthe hedged item.

Cash flow hedge

Cash flow hedging is applied forthe hedging of exposure to variations in future interest payments on assets orliabilities with variable interestrates. The portion ofthe gain orloss on the hedging instrumentthatis determined to be an effective hedge is recognised in other comprehensive income. The ineffective portion ofthe gain orloss on the hedging instrumentis recognised in profit orloss as Net otherincome.

Gains orlosses on hedging instruments that have been accumulated in equity are recognised in profit orloss in the same period as interestincome and interest expense from the hedged asset orliability.

When cash flow hedges are discontinued butfuture cash flows still are expected to occur, accumulated gains orlosses from the hedging instrument willremain as a separate item in equity untilthe hedged future cash flows occur. Accumulated gains orlosses are subsequently reported in profit or loss in Netinterestincome in the same period in which the previously hedged interestflows are recognised in profit orloss.

Net investment hedge

Hedge of a netinvestmentis applied to protectthe Group from translation differences due to netinvestments in foreign subsidiaries. Foreign currency loans constitute the major portion of hedging instruments in these transac tions. The translation differences arising on the hedging instruments are rec ognised in other comprehensive income and accumulated in equity as transla tion offoreign operations,to the extentthe hedge is effective. Any ineffective partis recognised as Netfinancial income. When a foreign operation is par tially disposed of or sold, exchange differences accumulated in equity are recognised in the income statement as part ofthe gain orloss on the sale.

OPERATING INCOME

Interest income and interest expense

The effective interest method is applied to recognise interestincome and interest expenses in profit orloss forfinancial assets and financial liabilities measured at amortised cost.

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating interestincome and interest expenses. The effective interestrate is the rate that discounts estimated future cash payments orreceipts through the expected life ofthe financial instrumentto the net carrying amount ofthe financial instrument. When calculating future payments, all payments included in the terms and conditions ofthe contracts, such as advance payments, are taken into consideration. However,future creditlosses are nottaken into account. The calculation of the effective interestrate includes fees and points to be received and paid that are an integral part ofthe effective interestrate.

Once a financial asset or a group of similarfinancial assets has been written down as a result of an impairmentloss, interestincome is subsequently recognised applying the rate ofinterest used to discountthe future cash flows forthe purpose of measuring the impairmentloss.

Fee and commission income

Commission income and income in the form offees on financial instruments are accounted forin different ways, depending upon the financial instrument from which the income is derived. When commission income and fees are included in the calculation ofthe effective interestrate of a financial instrument measured at amortised cost, such interest and fees are allocated over the expected tenor ofthe instrument applying the effective interest method and presented in Netinterestincome.

Commission income and fees from asset management and advisory ser vices are reported in accordance with the economic substance of each agree ment. This income is recognised during the period in which the service is provided. Commission and fees from negotiating a transaction for a third party, such as arrangement of acquisitions or purchase or sale of a business, is recognised on completion ofthe transaction. Performance-based fees are reported when the income can be reliably calculated.

Fees from loan syndications in which SEB acts as arranger are reported as income fee when the syndication is completed and the Group has retained no part ofthe loan orretained a part ofthe loan atthe same effective interest rate as other participants.

Expenses that are directly related to the generation offee and commission income are recognised as fee and commission expense.

Net financial income

Gains and losses arising from changes in fair value offinancial assets and lia bilities measured atfair value through profit orloss are reported in the income statement on an ongoing basis underthe item Netfinancial income.

Dividend income

Dividends are recognised when the entity's rightto receive paymentis established.

IMPAIRMENT OF FINANCIAL ASSETS

Allfinancial assets, exceptthose classified atfair value through profit orloss, are tested forimpairment.

At each balance sheet date the Group assesses whetherthere is objective evidence thatfinancial assets not carried atfair value through profit orloss are impaired. A financial asset or a group offinancial assets are impaired and impairmentlosses are incurred ifthere is objective evidence ofimpairment as a result of one or more events occurring afterthe initialrecognition ofthe asset, and ifthatloss event will have an impact on the estimated future cash flows ofthe financial asset or a group offinancial assets that can be reliably measured.

Examples of objective evidence that one or more events have occurred which may affect estimated future cash flows include:

significantfinancial difficulty ofthe issuer or obligor,
concession granted to the borrower as a consequence offinancial difficulty, which normally would not have been granted to the borrower,
a breach of contract, such as a default or delinquency in the payment of interest or principal,
the probability thatthe borrower will go bankrupt or undergo some other kind offinancialreconstruction
deterioration in the value of collateral and
a significant or prolonged decline in the fair value of an equity instrument below its cost

An impairmentloss is reported as a write off, ifitis deemed impossible to col lectthe contractual amounts that have not been paid and/or are expected to remain unpaid, orifitis deemed impossible to recoverthe acquisition cost by selling any collateral provided. In other cases, a specific provision is recorded in an allowance account. As soon as the non-collectible amount can be deter mined and the assetis written off,the amountreported in the allowance accountis dissolved. Similarly,the provision in the allowance accountis reversed ifthe estimated recovery value exceeds the carrying amount.

Assessment of impairment

Individual assessment of impairment

Loss events indicating objective evidence ofimpairment ofindividually assessed assets are when scheduled payments are past due by more than 90 days, orifthe counterparty is expected to be in default or any other com bination of events that are deemed so negative thatthere will be a probable payment defaultin the foreseeable future. The debtinstrumentis impaired if the cash flows including the value ofthe collateral does not cover outstanding exposure.

Collective assessment of impairment when assets are not individually impaired Assets assessed forimpairment on an individual basis and found notimpaired are included in a collective assessed, ofincurred but notidentified, impairment. The collective assessment ofincurred but notidentified creditlosses is based on the SEB counterpartrating scale.

Loans assessed on a portfolio basis

Loans with limited value and similarrisk, homogenous groups, are assessed forimpairment on a portfolio basis. In assessing collective impairmentthe Group uses statistical models based on the probability of default and the amount ofloss incurred, considering collaterals and recovery rates. The out come is adjusted for management's judgement as to whether current eco nomic and credit conditions are such thatthe actual losses are likely to be greater orless than suggested by the models. Defaultrates and loss rates are regularly benchmarked against actual outcomes to ensure thatthey remain appropriate.

Recognition of impairment loss on assets carried at amortised cost

An impairment of an individually assessed financial assetin the category loans and receivables carried at amortised costis calculated on the basis of the original effective interestrate ofthe financial instrument. The amount of the impairmentis measured as the difference between the carrying amount ofthe asset and the present value of estimated future cash flows (recovera ble amount). Ifthe terms of an asset are restructured or otherwise modified due to financial difficulties on behalf ofthe borrower orissuer, impairmentis measured using the original effective interestrate before modification ofthe terms and conditions. Cash flows relating to short-term receivables are not discounted ifthe effect ofthe discounting is immaterial. The entire outstand ing amount of each loan for which a specific provision has been established is included in impaired loans, i.e. including the portion covered by collateral.

Recognition of impairment loss on Available-for-sale financial assets

When there is a decline in the fair value and there is objective evidence of impairmentin an available-for-sale financial instrument,the accumulated loss shall be reclassified from equity to profit orloss. Equity instruments are con sidered impaired when a significant or prolonged decline in the fair value has occurred. The amount ofthe accumulated loss thatis transferred from equity and recognised in profit orloss is equalto the difference between the acquisition cost and the currentfair value, with a deduction of any impairmentlosses on thatfinancial asset which had been previously recognised in profit orloss.

The incurred impairment of unquoted equities, measured at acquisition cost, is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted atthe current mar ketrate ofreturn for similar equities.

Impairmentlosses on bonds or otherinterest-bearing instruments classi fied as available-for-sale are reversed via profit orloss ifthe increase in fair value can be objectively attributed to an eventtaking place subsequentto the write-down. Impairmentlosses for equity instruments classified as availablefor-sale are notreversed through profit orloss following an increase in fair value but are recognised in other comprehensive income.

Restructured loans

Portfolio assessed loans that would have been considered past due more than 60 days ifthey were notrestructured.

SEIZED ASSETS

Seized assets are assets taken overto protect a claim. SEB may refrain from a loan receivable and instead seize the assetthat served as collateralforthe loan. Seized assets may consist offinancial assets, properties and othertan gible assets. Seized asset are recognised on the same line item in the balance sheet as similar assets that have been acquired otherwise. Seized financial assets are categorised as Available-for-sale financial assets. Atinception seized assets are measured atfair value. The fair value atinitialrecognition becomes the acquisition value. Subsequently seized assets are measured according to type of asset with the exception ofimpairment on tangible seized assets that is reported as Gains less losses from tangible and intangible assets ratherthan as Depreciation, amortisation and impairment oftangible and intangible assets. The purpose is to betterreflectthe similar character of impairment of assets that are taken overto protect claims on counterparties and creditlosses.

TANGIBLE ASSETS

Tangible assets, with the exception ofinvestment properties held in insurance operations, are measured at cost and are depreciated according to plan on a straightline basis overthe estimated useful life ofthe asset. The maximum depreciation period for buildings is 50 years. The depreciation period for othertangible assets is between 3 and 8 years.

Tangible assets are tested forimpairment wheneverthere is an indication ofimpairment.

LEASING

A finance lease is a lease thattransfers,from the lessorto the lessee, sub stantially allrisks and rewards incidentalto the ownership of an asset. In the Group, essentially all leasing contracts in which the Group is the lessor are classified as finance leases. Finance leases are reported as lending, which implies thatthe leasing income is reported within netinterestincome.

INVESTMENT PROPERTIES

Investments in properties held in orderto receive rental income and/orfor capital appreciation are reported as investment properties. The recognition and measurement of such properties differs, depending upon the entity own ing the property. Investment properties held in the insurance operations, used to match liabilities providing a yield directly associated with the fair values of specified assets, including the investment properties themselves, are accounted for using the fair value model. Holdings ofinvestment properties in the banking operations are measured at depreciated cost.

INTANGIBLE ASSETS

Intangible assets are identifiable, non-monetary assets without physical substance. For an intangible assetto be recognised an entity must be able to demonstrate control ofthe intangible asset, which implies thatthe entity has the ability to ensure thatthe future economic benefits flowing from the under lying resource will accrue to the company. Intangible assets, otherthan good will, are only recognised in the balance sheetifitis probable thatthe future economic benefits attributable to the asset will accrue to the Group and ifthe acquisition cost ofthe asset can be measured in a reliable manner.

Intangible assets are measured initially at acquisition cost, and thereafter at costless any accumulated amortisation and any accumulated impairment losses.

Intangible assets with finite useful lives, i.e. all intangible assets except goodwill, are amortised on a straightline basis overtheir useful lives and tested forimpairment annually and whenever events or changes in circumstances indicate thatthe carrying amount may not be recoverable. Internally generated intangible assets, such as software development, are amortised over a period of between 3 and 8 years.

Intangible assets with indefinite useful lives, i.e. goodwill, are not amortised buttested forimpairment annually and wheneverthere is an indication that the intangible asset may be impaired. As regards goodwill, an impairmentloss is recognised in profit orloss wheneverthe carrying amount, with respectto a cash-generating unit or a group of cash-generating units to which the goodwill is attributed, exceeds the recoverable amount. Impairmentlosses attributa ble to goodwill are notreversed,regardless of whetherthe cause ofthe impairment has ceased to exist.

The recoverable amount of an intangible asset is determined if there is indication of a reduction in the value ofthe asset. An impairmentloss is recog nised ifthe carrying amount exceeds the recoverable amount ofthe asset.

PROVISIONS

Provisions are recognised for present obligations arising as consequences of past events where itis more likely than notthat a transfer of economic benefit will be necessary to settle the obligation, and it can be reliably estimated. Provisions are determined by discounting the expected future cash flows at pre tax rate thatreflects current market assessments ofthe time value of money and, where appropriate,the risks specific to the liability.

Provisions are made for undrawn loan commitments and similarfacilities if itis probable thatthe facility will be drawn by a debtorin financial difficulties.

Provisions are evaluated at each balance sheet date and are adjusted as necessary.

FINANCIAL GUARANTEES

Financial guarantees are contracts thatrequire the Group to make specified payments to reimburse the holderfor a loss itincurs because a specified debtorfails to make payment when due in accordance with the terms of a debtinstrument. Financial guarantee liabilities are initially recognised attheir fair value, which most often equals the premium received. The initialfair value is amortised overthe life ofthe financial guarantee. The guarantee liability is subsequently carried atthe higher ofthis amortised amount and the best esti mate ofthe expenditure required to settle any financial obligation arising as a result ofthe guarantee atthe balance sheet date. Provisions and changes in provisions are recognised in the income statement as Net creditlosses. The contractual amounts according to financial guarantees are notrecognised in the balance sheet but disclosed as obligations.

EMPLOYEE BENEFITS

Pensions

There are both defined contribution and defined benefit pension plans within the Group, of which most have plan assets. A defined benefit plan is a pension plan that defines an amount of pension benefitthat an employee will get on retirement depending on factors such as age, years of service and compensa tion. A defined contribution plan is a pension plan where the Group pays a contribution to separate entities and has no further obligation once the contribution is paid.

The pension commitments ofthe Group with respectto defined benefit plans are covered by the pension funds ofthe Group orthrough insurance solutions.

The defined benefit obligation is calculated quarterly by independent actuaries using the Projected Unit Credit Method. The assumptions upon which the calculations are based are found in note 9b addressing Staff costs.

All changes in the net defined benefitliability (asset) are recognised as they occur, as follows: (i) service cost and netinterestin the income state ment; and (ii) remeasurements of both defined benefit obligations and plan assets in other comprehensive income.

Pension costs for defined contribution pension plans are recognised as an expense during the period the employees carry outthe service to which the paymentrelates.

Share-based payments

The Group operates a number of share-based incentive programmes, under

which it awards SEB equity instruments to its employees. Equity-settled share-based incentive programmes entitle employees to receive SEB equity instruments. Cash-settled share-based incentive programmes entitle employees to receive cash based on the price or value of equity instruments of SEB. Fair value ofthese rights is determined by using appropriate valuation models,taking into accountthe terms and conditions ofthe award and the Group's estimate ofthe number ofrights that will eventually vest, which is reassessed at each reporting date. Social security costs are accounted for overthe vesting period and the provision for social security costs is reassessed on each reporting date to ensure thatthe provision is based on the rights'fair value atthe reporting date.

The cost of equity-settled share-based incentive programmes is measured by reference to the fair value of equity instruments on the date they are granted and recognised as an expense on a straight-line basis overthe vesting period with a corresponding increase in equity. The vesting period is the period thatthe employees have to remain in service in SEB in orderfortheir rights to vest. For cash-settled share-based incentive programmes,the ser vices acquired and liability incurred are measured atthe fair value ofthe lia bility and recognised as an expense overthe vesting period, during which the employees render service. Until settlement,the fair value ofthe liability is remeasured, with changes in fair value recognised in the income statement.

TAXES

The Group's tax forthe period consists of current and deferred tax. Current tax assets and liabilities forthe current and prior periods are measured atthe amount expected to be paid to orfrom tax authorities using the tax rates and tax laws that have been enacted or substantively enacted atthe balance sheet date. Currenttax is calculated based on the taxable results forthe period. Deferred tax arises due to temporary differences between the tax bases of assets and liabilities and their carrying amounts.

Currenttax and deferred tax are generally recognised in profit orloss. However,tax thatrelates to items recognised in other comprehensive income is also reported directly in other comprehensive income. Examples of such items are changes in the fair value of available-for-sale financial assets and gains orlosses on hedging instruments in cash flow hedges.

Deferred tax assets are recognised in the balance sheetto the extentthat itis probable thatfuture taxable profits will be available against which they can be utilized. The Group's deferred tax assets and tax liabilities have been calculated atthe tax rate of 22 per cent (22 per cent) in Sweden and at each respective country's tax rate forforeign companies.

INSURANCE AND INVESTMENT CONTRACTS

Insurance contracts are contracts under which the Group accepts significant insurance risk – defined as a transfer of an absolute risk of minimum 5 per cent ofthe underlying value – from the policyholder by agreeing to compensate the policyholder or other beneficiaries on the occurrence of a defined insured event. Investment contracts are financial instruments that do not meetthe definition of an insurance contract, as they do nottransfer significantinsurance risk from the policyholderto the Group.

Insurance contracts

Insurance contracts are classified as short-term (non-life) orlong-term (life). Short-term insurance comprise sickness, disability, health-care, and rehabili tation insurance. Long-term insurance comprises mainly traditional life insur ance. In the Group accounts short-term and long-term insurance are pre sented aggregated as Insurance contracts.

Measurement of short-term insurance contracts (non-life)

The provision for unearned premiums is intended to coverthe anticipated cost of claims and operating expenses arising during the remaining policy period ofthe insurance contracts in force. The provision for unearned premiums is usually strictly proportional overthe period ofthe insurance contracts. If premiums are judged to be insufficientto coverthe anticipated costfor claims and operating expenses,the provision for unearned premiums is strengthened with a provision for unexpired risks.

For anticipated future claims that have been incurred but not yet paid, pro vision for claims outstanding is recognised. The provision is intended to cover the anticipated future payment of all claims incurred, including claims incurred but notreported (IBNR provisions). This provision should also cover all costs for claims settlement. The provision for claims outstanding is not dis counted, with the exception of provisions for sickness annuities, which are discounted using standard actuarial methods.

Measurement of long-term insurance contracts (life)

Forlong-term life insurance contracts, a liability for contractual benefits that are expected to be incurred in the future is recorded when the premiums are recognised. The liability equals the sum ofthe discounted value of expected benefit payments and future administration expenses, less any outstanding future contractual premium payments. Liabilities forlong-term life insurance are discounted using standard actuarial methods.

Liability adequacy test

Swedish actuarial procedures involve performing liability adequacy tests on insurance liabilities. This is to ensure thatthe carrying amount ofthe liabilities is sufficientin the light of estimated future cash flows. The carrying amount of a liability is the value ofthe liability itselfless any related intangible asset or assetfor deferred acquisition costs. The current best estimates offuture con tractual cash flows, as well as claims handling and administration costs, are used in performing these liability adequacy tests. These cash flows are dis counted and compared to the carrying amount ofthe liability. Any deficitis immediately recognised in profit orloss.

Revenue recognition

Premiums forinsurance contracts are recognised as revenue when they are paid by the policyholders. For contracts where insurance risk premiums received during a period are intended to coverinsurance claims arising in that period those premiums are recognised as revenue proportionally during the period of coverage.

Recognition of expenses

Costs forinsurance contracts are recognised as an expense when incurred, with the exception of commissions and other variable acquisition costs that vary with and are directly related to securing new contracts and the renewal of existing contracts. These costs are capitalised as deferred acquisition costs. These costs are mainly incremental acquisition costs paid to sales per sonnel, brokers and other distribution channels. Deferred acquisition costs are amortised as the related revenue is recognised. The assetis tested for impairment every accounting period, ensuring thatthe economic future benefits expected to arise from the contracts exceed its face amount. All other costs, such as non-incremental acquisition costs or maintenance costs, are recognised in the accounting period in which they arise. Insurance compensa tion is recorded as an expense when incurred.

Reinsurance

Contracts with re-insurers, whereby compensation forlosses is received by the Group, are classified as ceded reinsurance. For ceded reinsurance,the benefits to which the Group is entitled underthe terms ofthe reinsurance con tract are reported as the re-insurers' share ofinsurance provisions. Amounts recoverable from re-insurers are measured consistently with the amounts associated with the reinsurance contracts and in accordance with the terms of each reinsurance contract.

Investment contracts

The majority ofthe Group's unitlinked insurance is classified as investment contracts where no significantinsurance risk is transferred from the policyholderto the Group. A minor part ofthe Group's unitlinked insurance business is classified as insurance contracts.

Measurement

Investment contracts are financial commitments whose fair value is dependent on the fair value ofthe underlying financial assets. The underlying assets and related liabilities are designated atfair value through profit orloss (fair value option). The choice to use the fair value option has been made forthe purpose of eliminating the measurementinconsistency that would occurif different bases for measurement would have been used for assets and liabili ties. The fair value ofthe unitlinked financial liabilities is determined using the fair value ofthe financial assets linked to the financial liabilities attributed to the policyholder on the balance sheet date. However, ifthe liability is subject to a surrender option,the fair value ofthe financial liability is neverless than the amount payable on surrender.

Revenue recognition

Amounts received from and paid to policyholders are reported in the balance sheet as deposits or withdrawals. Fees charged for managing investment con tracts are recognised as revenue. The revenue forthese management services is evenly distributed overthe tenor ofthe contracts.

Recognition of expenses

Variable expenses directly attributable to securing a new investment contract are deferred. These costs are primarily variable acquisition costs paid to sales personnel, brokers and other distribution channels. Deferred acquisi tion costs are reported in profit orloss as the related revenue is recognised. The assetis tested forimpairment during each accounting period to ensure thatthe future economic benefits expected to arise from the contract exceed the carrying amount ofthe asset. All other costs, such as fixed acquisition costs or ongoing administration costs, are recognised in the accounting period in which they arise.

CONTRACTS WITH DISCRETIONARY PARTICIPATION FEATURES (DPF)

Some traditional pension saving contracts include a discretionary participa tion feature. This feature entitles the policyholderto receive, as a supplement to guaranteed benefits, additional benefits or bonuses. All contracts that include a discretionary participation feature are reported as insurance con tracts. The amounts referring to the guaranteed element and to the discretionary participation feature are reported as liabilities to policyholders.

CHANGES IN ACCOUNTING POLICIES IMPLEMENTED 2017

The following changes have been implemented in 2017: IAS 12 Income Taxes has been amended regarding recognition of deferred tax assets for unrealised losses. IAS 7 Statements of Cash flows has been amended with new disclosure requirements. Within the annual improvement cycle 2014–2016 the scope ofIFRS 12 Disclosures of interests in other entities has been clarified. The amendment ofIFRS 12 is not yet endorsed by the EU.

The Group changed the presentation ofthe income statementin the fourth quarter 2017 by adding a line, Items affecting comparability. The Group also added a line with the net of operating income and operating expenses, Operating profit before items affecting comparability. The purpose ofthe change is to simplify reporting and facilitate the comparison of operating profit between time periods. Items that management considers affectthe compara bility significantly or are relevantforthe understanding ofthe financialresult, are identified and presented separately,for example impairment of goodwill, restructuring, net profitfrom divestments and otherincome or costs that are notrecurring, are reported as items affecting comparability. The change applies as of 1 January 2017 and comparative numbers have been restated.

These changes have not had a material effect on the financial statements ofthe Group or on capital adequacy and large exposures.

CHANGES IN IFRSs NOT YET APPLIED

Consideration will be given in the future to the implications, if any, ofthe following new and revised standards and interpretations.

IFRS 9 Financial Instruments – IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement. The standard includes a revised modelfor classification and measurement offinancial instruments, a new impairment model based on expected creditloss and an amended approach for hedge accounting. The standard is endorsed by the EU and should be applied from 1 January 2018. SEB has not adopted IFRS 9 in previous reporting periods. For transitional purposes the quantitative indicator used for assessing significant increase in creditrisk forimpairment purposes is based on risk class or equiv alent. The Group has elected to continue applying the principles in IAS 39 relating to hedge accounting. As permitted by the transitional provisions, SEB will notrestate comparative periods with regards to IFRS 9. The application ofIFRS 9 related to impairmentresults in increased provisions by SEK 1.6bn before tax and an overallreduction ofretained earnings of SEK 1.2bn. An effectfrom applying classification and measurementis that a positive market valuation of SEK 0.3bn is removed when classification is changed to amortised cost. Further, within the German business the classification of some issued debtinstruments is changed from amortised costto fair value through profit orloss with a negative impact of SEK 1.8bn in equity. The overall effect from IFRS 9 will decrease the Common Equity Tier 1 (CET1) capitalratio by 34 basis points as of 1 January 2018. Large exposures are not affected. The Group has decided notto apply the possibility underthe transitionalrules in the Capital Requirements Regulation (CRR), allowing a phase in ofthe impact from impairment on CET1 capitalratio. For SEB's accounting policies related to IFRS 9 see section 1a below.

IFRS 15 Revenue from Contracts with Customers – IFRS 15 replaces all previ ous revenue standards and related interpretations including IAS 11 Construction Contracts and IAS 18 Revenue but does not apply to financial instruments, insurance contracts orleasing contracts. IFRS 15 establishes the principles forreporting information aboutthe nature, amount,timing and uncertainty ofrevenue and cash flows from contract with customers. The standard is endorsed by EU and should be applied from 1 January 2018. SEB has identified thatthe treatment of contract costs forinvestment contracts within Life will change and as a result ofthe new more specific requirements, a smaller part of deferred acquisition costs will be recognised as an asset. The change will resultin a decrease ofthe deferred acquisition costin the balance sheet of SEK 2.6bn. SEB has chosen to apply IFRS 15 retrospectively to each prior reporting period presented. The effect willtherefore be recognised as a reduction ofretained earnings as of 1 January 2017. There will also be a restatement ofthe netfees and commissions in the income statementfor 2017 in the amount of SEK –47m. The changes will not have a material effect on capital adequacy and large exposures. For SEB's accounting policies related to IFRS 15 see section 1a below.

IFRS 16 Leases replaces IAS 17 Leases and related interpretations and was published in January 2016. The most significant effect ofthe new requirements is that a lessee willrecognise a lease asset (right-of-use asset) and a financial liability,representing mainly the present value ofleased premises, in the balance sheet. In the income statement,the straight-line operating lease expense will be replaced by a depreciation charge forthe lease asset and an interest expense on the financial liability. Currently the lessees' operating leases are notrecorded in the balance sheet. The accounting forlessors is in practice unchanged. SEB's current assessmentis thatthe new standard

mainly will increase the Group's balance sheettotal in the accounting for property leases. The Standard should be applied from 1 January 2019 and is endorsed by EU.

IFRS 17 Insurance Contracts was published in May 2017. This standard should be applied from 1 January 2021 and has not been endorsed by EU. IFRS 17 establishes principles forthe recognition, measurement, presentation and disclosure ofissued insurance contracts. It also requires similar princi ples to be applied to held reinsurance contracts and issued investment con tracts with discretionary participation features. IFRS 17 replaces IFRS 4. SEB is currently evaluating the impact ofthe change to the financial statements of the Group.

IFRS 4 Insurance Contracts has been amended regarding applying IFRS 9 Financial Instruments together with IFRS 4 Insurance Contracts. The amend ment allows a temporary exemption from IFRS 9 for a limited period forinsur ers whose activities are predominantly connected with insurance. An insurer applying the temporary exemption continues to apply IAS 39 ratherthan applying IFRS 9. SEB has chosen to not apply the exemption in the Life division. Within the annual improvement cycle 2014–2016 IAS 28 Investments in associates and Joint Ventures have been clarified regarding the measurement of an associate orjoint venture atfair value. These amendments should be applied from 1 January 2018 and have been endorsed by EU. The changes will not have a material effect on the financial statements ofthe Group or on capital adequacy and large exposures.

IFRS 2 Share-based Payment has been amended regarding classification and measurement of share-based paymenttransactions. IAS 40 has been amended with clarification when transfers ofinvestment property can be made. IFRIC 22 Foreign Currency Transactions and Advance Consideration has been issued clarifying which exchange rate to use in transactions thatinvolve advance consideration paid orreceived in a foreign currency. These amend ments and interpretations should be applied from 1 January 2018 and have not been endorsed by EU. The changes will not have a material effect on the financial statements ofthe Group or on capital adequacy and large exposures.

IFRIC 23 Uncertainty overIncome Tax Treatments has been issued and specifies how to reflectthe effects of uncertainty in accounting forincome taxes. IAS 28 Interests in Associates and Joint Ventures has been amended so compa nies should apply IFRS 9 Financial Instruments to long-term interests in an associate orjoint venture thatform part ofthe netinvestmentin the associate orjoint venture. Amendments have been made to IFRS 9 Financial Instruments regarding prepaymentfeatures with negative compensation. IAS 23 Borrow ing Costs, IAS 12 Income Taxes, IFRS 3 Business Combinations and IFRS 11 Joint Arrangements have been amended within the Annual improvement cycle 2015–2017. These amendments and interpretations should be applied from 1 January 2019 and have not been endorsed by the EU. The changes will not have a material effect on the financial statements ofthe Group or on capital adequacy and large exposures.

Significant accounting policies ofthe parent company

Skandinaviska Enskilda Banken (SEB) AB is a public limited liability company with corporate number 502032-9081 and with registered office in Stock holm, Sweden.

The financial statements ofthe parent company are prepared in accordance with the Annual Accounts Actfor CreditInstitutions and Securities Companies (1995:1559),the regulation and general guidelines issued by the Swedish Financial Supervisory Authority, Annual Reports in CreditInstitu tions and Securities Companies (FFFS 2008:25) and statements from the Swedish Financial Reporting Board, RFR 2 and the additional UFR statements.

In accordance with the Financial Supervisory Authority's regulation,the parent company applies statutory IFRS. This means thatthe International Financial Reporting Standards (IFRS) and interpretations ofthese standards as adopted by the EU have been applied to the extentthatis possible within the framework of Swedish legislation and considering the close tie between financialreporting and taxation. The accounting principles ofthe parent com pany differ, in certain aspects,from the accounting principles applied by the SEB Group. The essential differences are described below.

CHANGED ACCOUNTING POLICIES

The changed Group accounting policies and future accounting developments also applies to the parent company. The Swedish Annual Accounts Actfor CreditInstitutions and Securities Companies has been updated where the main change is new requirements to publish a sustainability and diversity report. In all other material aspects the accounting policies, basis for preparation and presentation forthe parent company are unchanged in comparison with the annualreportfor 2016.

With effectfrom 1 January 2018 the regulations and general guidelines issued by the Swedish Financial Supervisory Authority have been updated. The changes are mainly related to the implementation ofIFRS 9 and IFRS 15, e.g.the presentation of differentitems in the income statement and classification of seized assets.

PRESENTATION FORMAT

The presentation formatforthe balance sheet and the profit and loss account according to the Annual Accounts Actfor CreditInstitutions and Securities Companies is notin conformity with IFRS. Creditinstitutions and securities companies applying IFRS as adopted by the EU in their consolidated financial statements have the option to deviate from the presentation formatforthe balance sheet as stipulated by law, but may not deviate from the stipulated profit and loss account.

HOLDINGS IN SUBSIDIARIES AND ASSOCIATED COMPANIES

Shares and participating interests in subsidiaries and associated companies are measured at cost. Dividends on shares in subsidiaries and associated companies are recognised as income in profit orloss. Merger of subsidiaries through absorption are accounted for at consolidated values. The merger effectis reported in equity.

LEASING

Leasing contracts which are classified as finance leases in the consolidated accounts are accounted for as operating leases in the parent company.

PENSIONS

The parent company does not apply the provisions ofIAS 19 concerning accounting for defined benefit plans. Instead, pension costs are calculated on an actuarial basis in the parent company in accordance with the provisions of the Act on Safeguarding Pension Obligations and the Swedish Financial Super visory Authority's regulations. In Sweden, actuarial pension commitments are guaranteed by a pension foundation.

The recognised net cost of pensions is calculated as pensions paid and pen sion premiums less any compensation from the pension foundation. The net pension costforthe yearis reported under Staff costs in the parent compa ny's profit and loss account. Excess amounts as a result ofthe value ofthe plan assets exceeding the estimated pension obligations are notrecognised as an assetin the parent company's balance sheet. Deficits are recognised as a liability.

GOODWILL AND OTHER INTANGIBLE ASSETS

In accordance with IAS 38, goodwill is not amortised in the consolidated financial statements. In the parent company financial statements, goodwill is amortised as any otherintangible asset on a straightline basis.

TAXES

In the parent company, untaxed reserves are recognised as a separate item in the balance sheet. Untaxed reserves comprise accelerated depreciation undertax regulations, including the deferred tax component. In the consoli dated financial statements, untaxed reserves are reported in retained earnings and deferred tax liability.

GROUP CONTRIBUTIONS

The net of Group contributions received and paid is reported in the parent company as appropriations.

Critical judgements in applying the accounting policies

Applying the Group's accounting policies requires in some cases the use of estimates and assumptions that have a material impact on the amounts reported in the financial statements. The estimates are based on expert judgements and assumptions that management believes are true and fair. The management continuously evaluates these judgements and estimates. The most significant assumptions and estimates are associated with the areas described below:

CONSOLIDATION OF MUTUAL LIFE INSURANCE COMPANIES AND FUNDS

Within the life insurance operations ofthe SEB Group Gamla Livförsäkrings AB SEB Trygg Liv operates as a mutual life insurance company. The entity is not consolidated, as the judgement ofthe Group is thatit does not have control of the entity. Control is seen to imply the powerto govern the financial and operating policies of an entity in orderto affectthe amount ofits returns from the entity. Life insurance entities operated as mutual life insurance companies cannot pay dividends which is why the Group deems thatit cannot obtain ben efits. In Gamla Livförsäkrings AB SEB Trygg Liv there are specific policies specifying the composition ofthe board, which implies thatthe SEB Group is not able to govern the financial and operating policies ofthe entity.

In the assessment whetherto consolidate funds, an assessmentis made whetherthe Group is considered to be an agent or a principal. The Group is considered a principal, and hence controls the fund, when itis the fund manager, cannot be removed without cause, has significantrightto returns from the fund by holding units and earning fee income and has the practical ability to influence its return by using its power. Funds managed by the Group in which entities within the Group owns more than 20 per cent are analysed furtherfor consolidation.

The policyholders in SEB's unit-linked company choose to investin a variety offunds. The insurance company providing unit-linked products invests in the funds chosen by the customers. By doing so SEB might, in some cases, hold more than 50 per cent ofthe funds, which it holds on behalf ofthe customers for whom it acts as investment manager. Due to the legislation regarding fund operations, SEB considers thatit does not have the powerto govern the financial and operating policies of such investmentfunds to obtain benefits. This applies irrespective of whetherthe funds held on behalf of customers are greater orless than 50 per cent of a fund. Itis the policyholders who carry the investmentrisk, not SEB. Consequently,the policyholders are entitled to all ofthe returns generated by the funds. SEB only charges fees, on market conditions,for managing the funds. SEB has come to the conclusion thatthese funds which it manages should not be consolidated. However,the shares that the Group holds in such funds on behalf ofits customers are recognised in the balance sheet.

FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS

The objective ofthe fair value measurementis to arrive atthe price at which an orderly transaction would take place between market participants atthe measurement date under current market conditions. The best evidence offair value is a quoted price forthe instrument being measured in an actively traded market. Where the marketfor a financial instrumentis not active,fair value is calculated using an established valuation technique. These valuation techniques involve a degree of estimation,the extent of which depends on the instrument's complexity and the availability of market-based data. When val uing financial liabilities atfair value own credit standing is reflected. Given the uncertainty and subjective nature of valuing financial instruments atfair value, itis possible thatthe outcomes in the nextfinancial year could differ from the assumptions used.

For some ofthe Group's financial assets and liabilities, especially for cer tain derivatives, quoted prices are not available, and valuation models are used to estimate fair value. As part ofthe fair value measurement, valuation adjustments are made when valuing derivative financial instruments,to incor porate counterparty and own creditrisk. The methodologies for estimating valuation adjustments are continuously revised as a result of changing market practices in response to regulatory and accounting policy changes, as well as general market developments.

The Group has an established control environmentforthe determination offair values offinancial instruments thatincludes a review, independently from the business, of valuation models and prices. Ifthe validation principles are not adhered to,the Head of Group Finance shall be informed. Exceptions with material and principal importance require approvalfrom the Valuation Committee and the SEB ARC (Accounting Policy and Financial Reporting Committee). For disclosure purposes, fair values are classified in ^a fair value hierarchy according to the level of observability of the inputs, see note ²¹ Fair value measurement.

IMPAIRMENT TESTING OF FINANCIAL ASSETS AND GOODWILL Financial assets

When calculating loan impairment allowances on both individually assessed and collectively assessed loans critical judgements and estimates are applied. Assessing financial assets individually forimpairmentrequires judge mentto establish the counterparty's repayment capacity and the realisable value of any collateral. The mostimportant aspect when testing a group of financial assets collectively forimpairmentis to identify the events thatindicate incurred losses. In assessing collective impairmentthe Group uses sta tistical models based on the probability of default and the amount ofloss incurred, considering collaterals and recovery rates. The outcome is adjusted for management's judgement as to whether current economic and credit con ditions are such thatthe actual losses are likely to be greater orless than sug gested by the models. Defaultrates and loss rates are regularly benchmarked against actual outcomes to ensure thatthey remain appropriate.

Adjusting models for collective impairmenttesting to current market situa tion also require a high degree of expertjudgementto ensure a reliable estimate. The assessment and assumptions are regularly reviewed by the credit organisation ofthe Group.

Goodwill

Judgementis involved in determining the cash-generating units. The annual impairmenttest of goodwill is based on the value in use with forecasted cash flows forfive years. The cash flows beyond five years are determined based on sustainable growth.

The estimation offuture cash flows and the calculation ofthe rate used to discountthose cash flows involves a number ofjudgmental areas:the prepa ration of cash flow forecasts for periods that are beyond the normalrequirements of managementreporting and the assessment ofthe discountrate appropriate to the business.

Note ²⁸ describe tangible and intangible assets in more detail.

CALCULATION OF INSURANCE LIABILITIES

Calculation ofthe Group's insurance liabilities is based on a number of estima tions and assumptions, both financial and actuarial, such as interestrates, mortality, health, expenses, inflation and taxes. One ofthe importantfinancial assumptions is the interestrate used for discounting future cash flows.

Assumption on interestrates is based on regulations from each local Financial Supervisory Authority (FSA). All other assumptions are based on inter nally acquired experience.

FAIR VALUE OF INVESTMENT PROPERTY

Investment properties in the insurance operations are fair valued with the assistance of external expertise. The valuation method applied means that the related expected cash flows are discounted to present value. The assumptions concerning expected cash flows are based on assumptions on future rents, vacancy levels, operating and maintenance costs, yield requirement and marketinterest. Assumptions are in line with the assessments that the market can be expected to make under current market conditions. The yield requirementis based on local analysis of comparable property pur chases.

VALUATION OF DEFERRED TAX ASSETS

Deferred tax assets that are relying on future profitability can be recognised only to the extentthey can be offset againstfuture taxable income and the valuation of deferred tax assets is influenced by management's assessment of SEB's future profitability,future taxable profits and future reversals of existing taxable temporary differences. The expected outcome of uncertain tax positions is determined as the single mostlikely outcome.

PROVISIONS

Judgementis involved in determining whether a present obligation exists, and in estimating the probability,timing and amount of any outflows. Provisions for claims in civil lawsuits and regulatory matters typically require a higher degree ofjudgementthan othertypes of provisions.

ACTUARIAL CALCULATIONS OF DEFINED BENEFIT PLANS

The calculation ofthe Group's expense and obligations for defined benefit plans is based on actuarial, demographic and financial assumptions that have a significantimpact on the recognised amounts. One ofthe importantfinancial assumptions is the interestrate used for discounting future cash flows. The estimation ofthe discountrate is subjectto uncertainty around whether corporate bond markets are deep enough, of high quality and also in connection to the extrapolation of yield curves to relevant maturities. The discount rate is based on high quality corporate bonds in a deep market, in Sweden covered bonds. The covered bonds in Sweden are atleast AAA-rated and the maturity is in line with the estimated maturity of obligations for post-employ ment benefits. The discountrate forthe defined benefit obligation is revised quarterly and other assumptions are revised each year or when a significant change has occurred.

Note 9b describing staff costs contain ^a list of the most critical assumptions used when calculating the defined benefit obligation.

1a Significant changed accounting policies applicable from ¹ January ²⁰¹⁸

Significant accounting policies forthe Group

TRANSITION

IFRS 9 Financial Instruments

The Group adopted IFRS 9 Financial Instruments with a date oftransition 1 January 2018. The standard covers three areas; classification and measure ment, impairment and hedge accounting. The Group has elected to continue applying the principles in IAS 39 relating to hedge accounting. Fortransitional purposes the quantitative indicator used for assessing significantincrease in

creditrisk forimpairment purposes is based on risk class or equivalent. As permitted by the transitional provisions in IFRS 9,the Group has elected not to restate comparative figures. Any adjustments to the carrying amounts of financial assets and liabilities atthe date oftransition are recognised in the opening retained earnings and otherreserves as at 1 January 2018.

IFRS 15 Revenue from Contracts with Customers

The Group adopted IFRS 15 Revenue from Contracts with Customers with a date oftransition 1 January 2018. The Group chose to apply the standard retrospectively to each priorreporting period presented. The transition effect is therefore recognised as a reduction ofthe opening retained earnings, as at 1 January 2017.

FINANCIAL ASSETS AND LIABILITIES

Financial assets

Financial assets are recognised on the balance sheetwhen theGroup becomes a party to the contractual provisions ofthe instrument and are measured at fair value on initialrecognition. Transaction costs are included in the fair value on initialrecognition exceptforfinancial assets atfair value through profit or loss where transaction costs are expensed in profit orloss. Financial assets are derecognised when the rights to receive cash flows have expired,the Group has transferred substantially allrisks and rewards and upon substan tial modification. Transfers offinancial assets with retention of all or substan tially allrisks and rewards include for example repurchase transactions and securities lending transactions. Financial assets atfair value are recognised on the balance sheet on trade date, with exception ofloans and reversed repos which are recognised on settlement date. Financial assets measured at amortised cost are recognised on settlement date.

The Group classifies and subsequently measures its financial assets in the following categories:financial instruments atfair value through profit orloss; fair value through other comprehensive income and amortised cost. The clas sification will depend on ifthe financial assetis a debtinstrument, an equity instrument or a derivative.

Debt instruments (Loans and debt securities)

The classification is based on a combination of assessing the business model for managing the financial assets and whetherthe contractual cash flow characteristics consist of solely payments of principal and interest ('SPPI'). The business model assessmentis performed for homogenous portfolios identified based on how the business is managed in the divisions ofthe Group. The assessmentis based on reasonable scenarios taking into consideration how the portfolio is evaluated and reported to management;the risks affecting the performance ofthe portfolio and how these risks are managed; how man agers are compensated; and the frequency, value and timing of sales including the reasons forthe sales. In determining ifthe cash flows consist solely of principal and interest,the principal is defined as the fair value ofthe debt instrument atinitialrecognition, which can change overthe life ifthere are repayments or capitalisation ofinterest. Interest cash flows are consistent with components per a basic lending arrangementincluding consideration for time value of money, creditrisk, liquidity risk as well as administrative costs and profit margin. Ifthere are contractualfeatures introducing an exposure to otherrisks or volatility, itis not considered to consist of solely payments of principal and interest. Debtinstruments are presented in the balance sheet items; Cash and cash balances with central banks, Loans to creditinstitutions, Loans to the public and Debt securities, and include instruments in the following measurement categories.

Fair value through profit orloss: Debtinstruments are classified in this category if not meeting the criteria for amortised cost orfair value through other comprehensive income. This is the case ifthe business model is held fortrading; where financial assets are considered held fortrading ifthey are held with the intention to be sold in the short-term and forthe purpose of generating profits. Debtinstruments are mandatorily measured atfair value through profit orloss ifthe assets are managed and evaluated on a fair value basis or the assets are held with an intention to sell alternatively ifthe cash flows do not consist of solely payments of principal and interest. Debtinstruments that would otherwise be classified as fair value through other comprehensive income or amortised cost are also included in this category if, upon initial recognition, designated atfair value through profit orloss (fair value option). The fair value option can be applied only in situations where such designation reduces measurementinconsistencies.

Fair value through other comprehensive income: Debtinstruments are clas sified in this category if both ofthe following criteria are met (a) the business model objective is to both hold assets to collect contractual cash flows and to sellthe assets (b) the contractual cash flow characteristics consist of solely payments of principal and interest. The assets are measured atfair value and gains and losses arising from changes in fair value are reported in other com prehensive income and accumulated in equity. The cumulative gain orloss is reclassified from equity to profit orloss upon derecognition ofthe debtinstrument. Interest calculated by applying the effective interest method on inter est-bearing financial assets and expected creditlosses are recognised in profit orloss.

Amortised cost: Debtinstruments are classified in this category if both ofthe following criteria are met (a) the business model objective is to hold assets to collect contractual cash flows and (b) the contractual cash flow characteristics consist of solely payments of principal and interest. The gross carrying amount ofthese assets is measured using the effective interest method and adjusted for expected creditlosses.

Equity instruments

Equity instruments are per default classified as financial assets atfair value

through profit orloss. An irrevocable election can be made on initialrecogni tion to classify equity instruments (not held fortrading) atfair value through other comprehensive income.

Derivatives

Derivatives are classified as fair value through profit orloss (held fortrading) unless designated as hedging instruments. If designated as hedging instruments,the principles for hedge accounting are applied.

Modification

The Group may renegotiate loans and modify contractualterms. Ifthe new terms are substantially differentfrom the originalterms,the Group derecog nises the originalfinancial asset and recognises a new asset. The Group also assesses whetherthe new financial assetis credit-impaired atinitialrecogni tion. Ifthe terms are not substantially different,the modification does not resultin derecognition and the Group recalculates the gross carrying amount based on the new cash flows using the original effective interestrate ofthe financial asset and recognises a modification gain orloss.

Reclassification

In rare circumstances debtinstruments (financial assets) excluding those designated atfair value through profit orloss on initialrecognition, can be reclassified ifthere has been a change in the business modelfor managing the financial asset.

Financial liabilities

Financial liabilities are measured atfair value on initialrecognition. In case the financial liabilities are measured atfair value through profit orloss,transac tion costs directly attributable to the acquisition orthe issuance ofthe financial liability are recognised in profit orloss. For otherfinancial liabilities direct transaction cost are recognised as a deduction from the fair value.

Financial liabilities are derecognised when extinguished,thatis, when the obligation is discharged, cancelled or expired.

Financial liabilities at fair value through profit or loss

Financial liabilities atfair value through profit orloss are either classified as held fortrading or designated as fair value through profit orloss on initial recognition (fair value option). The fair value option can be applied for classi fication offinancial liabilities if meeting either ofthe following criteria;the contracts include one or more embedded derivatives,the instruments are managed and evaluated on a fair value basis orin situations where such desig nation reduces measurementinconsistencies. Liabilities to policyholders and some debt securities are included in this category. Financial liabilities held for trading are primarily short positions in interest-bearing securities, equity instruments and derivatives not designated as hedging instruments.

Other financial liabilities

The category otherfinancial liabilities primarily include the Group's short term and long-term borrowings. Afterinitialrecognition otherfinancial liabili ties are measured at amortised cost, using the effective interest method. The balance sheetitems Deposits from creditinstitutions, Deposits and borrow ings from the public and Debt securities are included in this category.

Offsetting financial transactions

Embedded derivatives

Some combined contracts contain both a derivative and a non-derivative component. In such cases,the derivative componentis termed an embedded derivative. Ifthe host contractis a financial assetin scope ofIFRS 9 the con tractis assessed for classification in its entirety and the embedded derivative is not separated. For other hybrid instruments (i.e.the host contractis not a financial assetin scope ofIFRS 9) where the economic characteristics and risks ofthe embedded derivatives are not closely related to those ofthe host contract, ,the embedded derivative is bifurcated and reported atfair value with gains and losses being recognised in the income statement. This does not apply ifthe host contractis carried atfair value through profit orloss.

Certain combined instruments are classified as financial liabilities atfair value through profit orloss according to the fair value option. The designation implies thatthe entire combined instrumentis measured atfair value through profit and loss.

Repurchase agreements

Securities may be lent or sold subjectto a commitmentto repurchase them (a 'repo') at a fixed price and at a predetermined date. Such securities are retained on the balance sheet and in addition included separately as collateral pledged for own liabilities when cash consideration is received. Depend ing on the counterparty, paymentreceived is recognised under Deposits by creditinstitutions or as Deposits and borrowing from the public.

Securities borrowing and lending

Fair value measurement

For accounting principles relating to fair value measurement,referto principles in Note 1.

Hedge accounting

The Group has elected to continue applying the principles in IAS 39 relating to hedge accounting,referto principles in Note 1.

OPERATING INCOME

Interest income and interest expense

The effective interest method is applied to recognise interestincome and interest expenses in profit orloss forfinancial assets and financial liabilities measured at amortised cost.

The effective interest method is a method of calculating the gross carrying amount of a financial asset orthe amortised cost of a financial liability and of allocating interestincome and interest expenses. The effective interestrate is the rate that discounts estimated future cash payments orreceipts through the expected life ofthe financial instrumentto the net carrying amount of the financial instrument. When calculating future payments, all payments included in the terms and conditions ofthe contracts, such as advance pay ments, are taken into consideration. The calculation ofthe effective interest rate includes fees and points to be received and paid that are an integral part ofthe effective interestrate. However, expected creditlosses are nottaken into account.

If a financial asset subsequently has become creditimpaired the interest income is recognised applying the effective interestrate to the amortised cost, i.e. gross carrying amount adjusted forthe loss allowance. In case a financial assetis credit-impaired atinitialrecognition,the expected credit losses are included in the estimated cash flows to calculate a credit adjusted effective interestrate which then is applied to recognise the interest income.

Fee and commission income

The recognition ofrevenue from contracts with customers is reported as fee and commission income. This does not apply forrevenue from leasing con tracts, insurance contracts orfinancial instruments and other contractual obligations within the scope ofIFRS 9 Financial Instruments.

Fees that are included in the calculation ofthe effective interestrate of a financial instrument measured at amortised cost, such as loan origination fees, are allocated overthe expected tenor ofthe instrument applying the effective interest method and presented in Netinterestincome.

Fee and commission income is recognised to depictthe transfer of promised services to the customers in an amountthatreflects the consideration to which SEB expects to be entitled in exchange forthe service. The major types offees are described below.

Fee and commission income for asset custody and asset managementto customers is recognised as revenue overthe period in which the services are provided. Performance based fees are recognised when itis highly probable that a significantreversal ofrecognised revenue will not occur, which is most often when the performance criteria are fulfilled.

Fee and commission income from loan syndications in which SEB acts as arranger are recognised as income when the syndication is completed and the Group has retained no part ofthe loan orretained a part ofthe loan atthe same effective interestrate as other participants. Brokerage fees, commission and fees from negotiating a transaction for a third party, such as arrange ment of acquisitions or purchase or sale of a business, are recognised on com pletion ofthe transaction.

Expenses that are directly related to the generation offee and commission income are recognised as fee and commission expense.

Net financial income

Gains and losses arising from changes in fair value offinancial assets and liabilities measured atfair value through profit orloss are reported under the item Netfinancial income. Forfinancial liabilities designated atfair value through profit orloss the change in fair value relating to change in own credit risk is accounted forin other comprehensive income.

Dividend income

Dividends are recognised when the entity's rightto receive paymentis established.

EXPECTED CREDIT LOSS

Measurement

The impairmentrequirements are based on an expected creditloss (ECL) model. The guiding principle ofthe ECL model is to reflectthe general pattern of deterioration orimprovementin the credit quality offinancial instruments. Allfinancial assets measured at amortised cost and fair value through other comprehensive income, as well as lease receivables,financial guarantees contracts, contract assets and certain loan commitments are in scope for expected creditloss.

ECLs on financial assets measured at amortised cost and lease receivables are presented as allowances, i.e., as an integral part ofthe measurement of those assets in the balance sheet. The allowance reduces the gross carrying amount. ECLs on loan commitments and financial guarantee contracts are presented as provisions, i.e., as a liability, in the balance sheet. Adjustment to the loss allowance and provision due to changes in ECLs is recognised in the income statement as net expected creditlosses.

The assessment of creditrisk, and the estimation of ECL, shall be unbiased and probability-weighted, and shall incorporate all available information which is relevantto the assessment, including information about past events, current conditions and reasonable and supportable forecasts offuture events and economic conditions atthe reporting date. SEB uses both models and expert creditjudgement (ECJ) for calculating ECLs.

The ECL model has a three-stage approach based on changes in the credit risk. A 12-month ECL (Stage 1) applies to all items, unless there is a significant increase in creditrisk since initialrecognition. Foritems where there is a sig nificantincrease in creditrisk (Stage 2) orin default (Stage 3), lifetime ECL applies.

Significant increase in credit risk

Atthe end of each reporting period the Group performs an assessment of whether creditrisk has increased significantly since initialrecognition. The assessment of whetherthere has been a significant change in creditrisk is based on quantitative and qualitative indicators. Indicators include payments that are past due >30 days and <90 days and financial assets that have been classified as watch-list or with forbearance measures (loans whose contrac tualterms have been revised due to the customer's financial difficulties). A quantitative indicatoris calculated based on the change in lifetime probability of default (PD) by comparing the scenario-weighted annualised lifetime PD atthe reporting date with the scenario-weighted annualised lifetime PD at initialrecognition. In case there has been a significantincrease in creditrisk since initialrecognition, an allowance forlifetime ECL shall be recognised and the financial instrumentis transferred to Stage 2. The approach is symmetrical, meaning thatin subsequentreporting periods, ifthe credit quality ofthe financial instrumentimproves such thatthere is no longer a significant increase in creditrisk since initialrecognition,the financial assets moves back to Stage 1.

Definition of default

Financial instruments in default are in Stage 3. SEB applies a definition of defaultfor accounting purposes thatis consistent with how itis defined in the capitalrequirements regulation, which includes financial assets past due more than 90 days.Allfinancial assets in Stage 3 are considered credit-impaired.

Modelling

The ECL is calculated as a function ofthe probability of default (PD),the exposure at default (EAD) and the loss given default (LGD), as well as the timing of the loss. The Group's IFRS 9 methodology for ECL measurementis based on existing internalrating-based risk models (IRB) to the extent allowed under IFRS 9. As the objectives ofthese frameworks differ,the mannerin which the expected creditlosses are calculated also differs and appropriate adjustments are made to the IRB parameters to meetIFRS 9 requirements. Adjustments include the conversion ofthrough-the-cycle and downturn parameters used in IRB risk models to point-in-time parameters used underIFRS 9 that considers forward-looking information.

PD represents the likelihood that a loan will not be repaid and will go into defaultin either a 12-month orlifetime horizon. The expected PD for each individual instrumentincorporates a consideration of past events, current market conditions and reasonable and supportable information aboutfuture eco nomic conditions. SEB uses IFRS 9 specific PD models. The models are calibrated based on a combination of geography, assets class and producttype. EAD represents an estimate ofthe outstanding amount of credit exposure at the time a default may occur. For off-balance sheet amounts, EAD includes an estimate of any further amounts to be drawn atthe time of default. ForIFRS 9, EAD models are adjusted for a 12-month orlifetime horizon. LGD is the amount that may not be recovered in the event of default. LGD takes into consideration the amount and quality of any collateral held. SEB uses existing LGD models adjusted to meetIFRS 9 requirements.

When measuring ECL, SEB uses the maximum contractual period during which SEB is exposed to risk. All contractualterms are considered when determining the expected life, including prepayment options and extension and rollover options. Forrevolving facilities, such as credit cards, and retail mortgage facilities the expected life is modelled based on historical behaviour.

Forward-looking information

The Group uses internally developed macroeconomic forecasts as the basis forthe forward-looking information incorporated in the ECL measurement. In orderto ensure an unbiased estimation of creditlosses underIFRS 9, atleast three scenarios shall be used. One ofthe scenarios shall be the base case sce nario,representing the mostlikely outcome, which is also applied in the regu larfinancial planning and budgeting process, while other case scenarios shall represent more optimistic or pessimistic outcomes.

Forward-looking scenarios shall be prepared by SEB's Research Department. The base scenarios shall be benchmarked to various external sources of similarforward-looking scenarios, e.g.from OECD, IMF, EU Commission and National Statistics Offices, and shall be used as inputs to the scenarios applied. The scenarios shall be approved by the Group Risk Committee.

A scenario shall consist of a qualitative description ofthe macroeconomic development and a quantitative part, where the development of key macro economic drivers is shown on a yearly basis as well as the likelihood of occur rence (scenario-weight). The quantitative part shall coverthe current macroeconomic environment and forecasts up to three years. In general, scenarios shall be reviewed on a quarterly basis. In case of significant changes in the macroeconomic environment and outlook,the scenarios shall be updated.

Expert Credit Judgement

The Group uses both models and expert creditjudgement (ECJ) in orderto determine ECLs. The degree ofjudgementthatis required to estimate ECL depends on the model outcome, materiality and the availability of detailed information. The model provides guidance and transparency as to how eco nomic events could affectthe impairment offinancial assets. ECJ may be applied to the modelled outcome to incorporate an estimated impact offac tors not captured by the model. Such judgemental adjustmentto the model generated ECLs may be applied to significant exposures at a counterparty level. The adjustments are decided by the relevant credit committee using the model ECLs as guidance. In addition there may be a need for adjustments at a portfolio level, which is decided by the Group Risk Committee.

INSURANCE AND INVESTMENT CONTRACTS

Insurance contracts are contracts under which the Group accepts significant insurance risk – defined as a transfer of an absolute risk of minimum 5 percent ofthe underlying value – from the policyholder by agreeing to compensate the policyholder or other beneficiaries on the occurrence of a defined insured event. Investment contracts are financial instruments that do not meetthe definition of an insurance contract, as they do nottransfer significantinsur ance risk from the policyholderto the Group.

Insurance contracts

For accounting principles relating to insurance contracts,referto principles in Note 1.

Investment contracts

Measurement

Investment contracts are financial commitments whose fair value is depend ent on the fair value ofthe underlying financial assets. The underlying assets are mandatorily measured atfair value through profit orloss and the related liabilities are designated atfair value through profit orloss (fair value option). The choice to use the fair value option has been made forthe purpose of elimi nating the measurementinconsistency that would occurif different bases for measurement would have been used for assets and liabilities. The fair value ofthe unitlinked financial liabilities is determined using the fair value ofthe financial assets linked to the financial liabilities attributed to the policyholder on the balance sheet date. However, ifthe liability is subjectto a surrender option,the fair value ofthe financial liability is neverless than the amount payable on surrender.

Revenue recognition

Amounts received from and paid to policyholders are reported in the balance sheet as deposits or withdrawals. Fees charged for managing investment contracts are recognised as revenue. The revenue forthese management services is evenly distributed overthe tenor ofthe contracts.

Recognition of expenses

Incremental costs of obtaining investment contracts with customers are deferred ifthey are expected to be recovered. Incremental costs are costs to obtain a contract with a customerthat would not have been incurred ifthe contract had not been obtained. These costs are up-front acquisition costs in the form of sales commissions paid for obtaining investment contracts. They are expected to be recovered from the fee income earned from the investment contracts. Deferred acquisition costs are reported in profit orloss as the related revenue is recognised. The assetis tested forimpairment during each accounting period to ensure thatthe future economic benefits expected to arise from the contract exceed the carrying amount ofthe asset. All other costs, such as commissions to brokers paid during the tenor ofthe investment contracts or commission to own staff acting as sales agents or ongoing admin istration cost, are recognised in the accounting period in which they arise.

Significant changed accounting policies of the parent company applicable 1 January 2018

FINANCIAL ASSETS AND LIABILITIES

The changed Group accounting policies also applies to the parent company, with the exception offinancial liabilities designated as fair value through profit orloss where the change in fair value relating to change in own credit risk is accounted forin profit orloss.

New and amended critical judgements forIFRS 9 and IFRS 15 from 2018

EXPECTED CREDIT LOSS MODEL

When calculating expected creditloss (ECL) there are a number of key con cepts thatrequire a high level ofjudgement. Estimating expected creditloss is, by its very nature, uncertain and the accuracy ofthese estimates depends on many factors, e.g. macroeconomic forecasts and involves complex model ling and judgements. The assessment of significantincrease in creditrisk is a new concept underIFRS 9 Financial Instruments and willrequire significant judgement. Atthe end of each reporting period the Group shall perform an assessment of whether creditrisk has increased significantly since initial recognition by considering the change in the risk of default occurring overthe remaining life ofthe financial instrument, using key risk indicators that are used in the Group's existing risk management processes. Another area requiring significantjudgementis the incorporation offorward-looking information and macroeconomic scenarios. IFRS 9 requires an unbiased and probability weighted estimate of creditlosses by evaluating a range of possible out comes thatincorporates forecasts offuture economic conditions. SEB uses internally developed macroeconomic forecasts as the basis forthe forward looking information in the ECL measurement. SEB uses both models and expert creditjudgement (ECJ) in orderto determine ECLs. The objective of applying ECJ is to incorporate the estimated impact offactors not captured in the modelled ECL. The degree ofjudgementthatis required to estimate expected creditlosses depends on the outcome from calculations, material ity and the availability of detailed information. The models, assessment and assumptions are regularly reviewed by the risk organisation ofthe Group and approved by the Group Risk Committee.

FEE AND COMMISSION INCOME

In recognising fee and commission income SEB makes judgements to deter mine the amount and timing ofrevenue from contracts with customers.

When SEB performs e.g. custody, asset management or administration of clients investment policies the fees are based on the time period the service is provided and/or on the amounts of underlying assets. SEB's judgementis thatthe customer simultaneously receives and consumes the service and SEB's obligations are therefore satisfied overthe time the service is provided.

When SEB performs e.g. brokerage, negotiations oftransactions forthird parties such as arrangement of acquisitions or purchase or sale of businesses or acts as an arrangerin loan syndications SEB's judgementis thatthe cus tomer obtains control ofthe asset and SEB's obligations are satisfied atthe time ofthe completion ofthe transaction.

When fees are based on SEB's performance SEB recognise revenue based on judgements when itis highly probable that a significantreversal ofrecog nised revenue will not occur, which is most often when the performance crite ria are fulfilled.

ASSETS RECOGNISED FROM THE COSTS TO OBTAIN OR FULFIL A CONTRACT, DEFERRED ACQUISITION COSTS

SEB recognise as an asset, costs to obtain contracts that would not have incurred ifthe contract had not been obtained, mainly sales commissions to obtain insurance and investment contracts.

The amortisation period forthe assetis based on assumptions about average lifetime ofthe contracts including assumptions about surrenders and lapses.

2 Operating segments

Group business segments

	Large Corporates &Financial	Corporate &Private		Life& Investment	1)
Income statement, 2017	Institutions	Customers	Baltic	Management	Other	492 6 Eliminations –	472 36 Total
Interestincome Interest expense	14,066 –6,022	11,794 –2,352	2,616 –243	–3 –87	14,491 –14,415	540 6 ,	580 16 , –
Netinterestincome	8,043	9,442	2,373	–90	76	430 6 , 48 –	23 196 , 19,893
Fee and commission income	11,366	7,565	1,852	8,708	135	6 376 ,	472 5 , –
Fee and commission expense	–5,130	–1,887	–532	–4,190	–108	,	,
Netfee and commission income	6,236	5,678	1,320	4,519	27	–54	17,725
Netfinancial income Net otherincome	3,465 573	441 87	231 –10	1,674 17	1,008 448	60 –4	6,880 1,112

Total operating income	18,318	15,648	3,914	6,120	1,558	51 51	45,609
of which internally generated	–1,773	2,742	53	–2,386	1,312
Staff costs	–3,862	–3,298	–724	–1,561	–4,616	35	–14,025
Other expenses Depreciation, amortisation and impairment	–5,046	–3,872	–965	–963	3,984	–85	–6,947
oftangible and intangible assets	–59	–57	–78	–37	–734		–964
Total operating expenses	–8,967	–7,226	–1,766	–2,561	–1,365	–51	–21,936
Gains less losses on disposals oftangible and
intangible assets	1		–164		1		–162
Net creditlosses	–529	–276	–7		4		–808
Operating profit before items affecting comparability	8,823	8,146	1,977	3,558	198		22,702
Items affecting comparability					–1,896		–1,896
OPERATINGPROFIT	8,823	8,146	1,977	3,558	–1,698		20,806
Business equity, SEK bn	65.8	40.6	8.0	11.0
Return on business equity, % Risk exposure amount, SEK bn	10.1 376	15.0 120	21.9 74	27.8 4	37		611
Lending to the public 2), SEK bn	551	744	129		6		1,430
Deposits from the public 2), SEK bn	416	384	114		86		999
20163)
						052 5 064 –	202 35
Interestincome Interest expense	12,640 –4,333	10,378 –1,396	2,509 –364	–3 –57	14,730 –15,378	5 ,	16 464 , –
Netinterestincome	8,307	8,982	2,145	–60	–648	5 776 , 12 –	22 500 , 18,738
Fee and commission income	11,722	7,117	1,671	7,641	125	5 630 ,	872 5 – ,
Fee and commission expense	–5,627	–1,703	–500	–3,582	–90	,	,
Netfee and commission income	6,095	5,414	1,171	4,059	35	–146	16,628
Netfinancial income Net otherincome	4,187 389	394 55	218 –23	1,764 –17	332 437	161 –12	7,056 829

Total operating income of which internally generated	18,978 –1,138	14,845 7,545	3,511 –5	5,746 –2,231	156 –4,186	15 15	43,251

Staff costs Other expenses	–3,922 –4,972	–3,339 –3,713	–755 –959	–1,560 –984	–4,895 4,073	49 –64	–14,422 –6,619
Depreciation, amortisation and impairment
oftangible and intangible assets	–34	–69	–66	–45	–557		–771
Total operating expenses	–8,928	–7,121	–1,780	–2,589	–1,379	–15	–21,812
Gains less losses on disposals oftangible and
intangible assets			–156		6		–150
Net creditlosses	–563	–376	–56		2		–993
Operating profit before items affecting comparability	9,487	7,348	1,519	3,157	–1,215		20,296
Items affecting comparability	–354		–68		–5,007		–5,429
OPERATINGPROFIT	9,133	7,348	1,451	3,157	–6,222		14,867
Business equity, SEK bn	62.4	37.3	7.9	11.6
Return on business equity, % Risk exposure amount, SEK bn	11.3 375	15.2 117	16.2 67	23.5 4	47		610
Lending to the public 2), SEK bn	546	710	117		2		1,375
Deposits from the public 2), SEK bn	404	372	106		79		961

1) Profit and loss fromassociated companies accounted for underthe equitymethod are recognised in Net otherincome at an amount of SEK13m(19). The aggregated investments are SEK334m(229).

2) Excluding repos and debt securities.

3) Items affecting comparability restated, see note 49.

Balance sheet, 2017

Assets Liabilities Investments	1,175,651 1,098,360 164	829,749 779,589 151	160,683 150,880 121	1,942	514,139 1,135,275 500,695 1,142,048 1,186	–1,255,900 –1,255,900	2,559,596 2,415,671 3,563
2016
Assets Liabilities Investments	1,315,760 1,235,317 46	808,608 761,015 145	150,496 141,797 164	1,162	492,705 1,222,051 479,199 1,231,316 726	–1,368,974 –1,368,974	2,620,646 2,479,670 2,243

Note 2 continued Operating segments

Parent company business segments

2017	Large Corporates &Financial Institutions	Corporate &Private Customers	Baltic	Life& Investment Management	Other	Eliminations	Total
Gross income Assets Investments	26,664 964,428 162	15,544 753,406 145	22 169	295 252	20,795 896,077 1,176	–584 –722,169	62,736 1,892,163 1,483
2016
Gross income Assets Investments	25,089 1,074,815 41	13,645 734,433 62	16 1,452	241	29,088 231 1,011,986 649	–9,926 –823,073	58,153 1,999,844 752

Business segment

The Business segments are presented on a managementreporting basis. The different divisions assist different groups of customers. The customers' demands decide the type of products that are offered. Large Corporates & Financial Institutions offers wholesale and investment banking services to large corporations and institutions. Corporate & Private Customers offers products and private banking services mainly to retail customers (private

customers and small and medium-sized corporates). Division Baltic offers products mainly to retail customers (private customers and small and medium-sized corporates) and private banking services in the Baltic countries. Life & Investment Management performs asset management and offers life, sickness, healthcare and pension insurance. Other consists of business support units,treasury and staff units. Eliminations ofinternaltransactions between the business segments are reported separately.

Gross income by productfor external customers

	Group		Parent company
	2017	20161)	2017	2016
Core banking	35,672	33,920	24,191	22,691
Capital market	12,477	13,158	11,283	11,199
Asset management	8,483	7,580	2,279	2,114
Life insurance and pension	3,445	3,572
Other	7,583	7,357	24,983	22,149
TOTAL	67,660	65,587	62,736	58,153

1) Items affecting comparability restated, see note 49.

Core banking consists ofloan, leasing, card and paymentrelated products. Capital market consists oftrading and issues on financial markets. Asset man agement consists of advisory, custody and fund management. Life insurance

and pension consists of unit-linked and traditional life insurance products. Other consists ofincome from treasury operations and other activities.

3 Geographical information

Group by country
			2017					2016
	Gross Income1)	Operating	profit 2) Income tax expense 3)	Assets	Invest ments	Gross Income1) 7)	Operating	profit 2) Income tax expense 3)	Assets	Invest ments
Sweden	43,466	12,333	–2,703	2,046,020	2,103	41,662	4,916	–1,845	2,138,812	1,488
Norway	5,206	1,859	–433	102,138	94	5,178	2,366	–622	115,284	26
Denmark	3,775	1,918	–359	302,548	991	3,467	2,142	–417	324,547	299
Finland	2,313	1,171	–224	89,619	72	2,110	1,043	–217	80,469	10
Estonia6)	1,658	927	–72	54,815	64	1,528	916	–47	50,405	58
Latvia	1,207	371	–79	36,297	8	1,180	468	–57	33,738	48
Lithuania	2,134	1,014	–155	75,218	68	2,013	831	–58	71,098	76
Germany 4)	2,517	–433	2	30,459		3,312	507	–420	34,454	3
Great Britain	1,962	1,076	–225	68,997	5	1,799	727	–196	70,291	5
Poland	156	15	–14	8,224	2	165	31	–14	5,305	2
Ukraine	54	3	–2	498		58	7	–4	700
China	631	162	–50	24,097		407	98	–18	23,045	3
Ireland	588	181	2	70,730	139	567	171	–29	66,154	139
Luxembourg	1,484	385	–65	53,155	5	2,644	322	–39	73,747	6
Russia	370	28	–16	5,300	2	313	26	–15	3,950	2
Singapore	679	66	–16	24,619	1	573	94	–23	27,488	1
United States 6)	2,508	–131	–31	82,345		1,603	55	–310	109,109
Other countries 5) 6)	3,109	–139	–122	198,502	10	3,098	147	82	209,357	77
Group eliminations	–6,155			–713,987		–6,090			–817,307
TOTAL	67,660	20,806	–4,562	2,559,596	3,563	65,587	14,867	–4,249	2,620,646	2,243

1)Gross income in theGroup is defined as the sumofInterestincome, Fee and commission income, Netfinancial income and Net otherincome according to IFRS. The basis for the income allocation is SEB's presence in each country,with the exception ofwhen the local companies / branches serve as sales offices and receive commission payments and the transaction is booked in the central unit.

2) Before tax.

3) For more information abouttax see note 15.

4) Excluding treasury operations.

5) Cayman Island,Hong Kong, Netherlands, Switzerland and treasury operations inGermany.

6)Until and including 2017, no income tax is paid in Estonia unless profitis distributed as dividend.On Cayman Island,the parent company is represented by a branch office which is aUnited States tax resident entity, why tax expense related to Cayman income is reported inUS.

7) Items affecting comparability restated, see note 49.

Note 3 continued Geographical information

Parent company by country

	2017			2016
	Gross Income1)	Assets	Investments	Gross Income1)	Assets	Investments
Sweden	49,760	1,661,054	1,297	46,702	1,754,444	696
Norway	3,090	56,656	94	3,402	55,616	26
Denmark	1,920	67,499	3	1,979	76,074	3
Finland	1,278	5,927	71	1,168	9,888	9
Other countries	6,688	101,027	18	4,902	103,822	18
TOTAL	62,736	1,892,163	1,483	58,153	1,999,844	752

1)Gross income in the parent company is defined as the sumofInterestincome, Leasing income,Dividends, Fee and commission income, Net Financial income andOtherincome according to SFSAaccounting regulations. The basis forthe income allocation is SEB's presence in each country, with the exception of when the local companies / branches serve as sales offices and receive commission payments and the transaction is booked in the central unit.

Transfer pricing

The internaltransfer pricing objective in the SEB Group is to measure net interestincome,to transferinterestrate risk and liquidity and to manage liquidity. The internal price is based on SEB's actual orimplied market-based cost offunds for a specific interest and liquidity term. Transactions between Business segments are conducted at arm's length.

4 Net interest income

	Group			Parent company
2017	Average balance	Interest	Interestrate	Average balance	Interest	Interestrate
Loans to creditinstitutions and central banks Loans to the public Interest earning securities 1)	418,258 1,500,385 191,328	2,198 26,734 1,884	0.53% 1.78% 0.98%	582,286 1,168,445 180,355	1,994 20,156 1,696	0.34% 1.73% 0.94%
Total interest earnings assets	2,109,970	30,815	1.46%	1,931,086	23,847	1.23%
Derivatives and other assets	741,644	5,657		311,886	8,439
Total assets	2,851,614	36,472		2,242,972	32,285
Deposits from creditinstitutions Deposits and borrowing from the public Debt securities issued 2) Subordinated liabilities	150,001 1,134,017 714,896 41,494	–686 –4,450 –10,594 –1,646	–0.46% –0.39% –1.48% –3.97%	222,199 929,878 676,672 41,628	–1,028 –2,493 –10,613 –1,646	–0.46% –0.27% –1.57% –3.95%
Total interest bearing liabilities	2,040,408	–17,376	–0.85%	1,870,377	–15,780	–0.84%
Derivatives and otherliabilities Equity	670,178 141,028	796		273,473 99,122	–1,970
Total liabilities and equity	2,851,614	–16,580		2,242,972	–17,750
Netinterestincome		19,893			14,536
Net yield on interest earning assets			0.94%			0.75%
1) of which, measured atfair value 2) of which, measured atfair value		1,648 –755			1,702 –706

<-- PDF CHUNK SEPARATOR -->

Note 4 continued Netinterestincome

	Group			Parent company
2016	Average balance	Interest	Interestrate	Average balance	Interest	Interestrate
Loans to creditinstitutions and central banks Loans to the public Interest earning securities 1)	408,155 1,430,412 221,880	1,233 25,360 1,916	0.30% 1.77% 0.86%	619,500 1,040,096 211,324	1,349 18,694 1,731	0.22% 1.80% 0.82%
Total interest earnings assets	2,060,447	28,509	1.38%	1,870,920	21,774	1.16%
Derivatives and other assets	773,214	6,693		410,818	7,248
Total assets	2,833,661	35,202		2,281,738	29,022
Deposits from creditinstitutions Deposits and borrowing from the public Debt securities issued 2) Subordinated liabilities	186,347 1,071,015 719,551 34,270	–372 –3,760 –10,799 –1,463	–0.20% –0.35% –1.50% –4.27%	280,008 926,570 675,678 33,796	–838 –1,880 –10,859 –1,463	–0.30% –0.20% –1.61% –4.33%
Total interest bearing liabilities	2,011,183	–16,394	–0.82%	1,916,052	–15,040	–0.78%
Derivatives and otherliabilities Equity	686,312 136,166	–70		272,383 93,303	–183
Total liabilities and equity	2,833,661	–16,464		2,281,738	–15,223
Netinterestincome		18,738			13,799
Net yield on interest earning assets			0.91%			0.74%
1) of which, measured atfair value 2) of which, measured atfair value		1,641 –664			1,735 –705

In the table above Loans and Deposits are presented excluding debt securities. This is differentfrom the Income statement and Balance sheetin which the classification is done based on accounting category.

Netinterestincome

	Parent company
	2017	2016
Interestincome	32,285	29,023
Income from leases 1)	5,481	5,443
Interest expense	–17,750	–15,223
Depreciation ofleased equipment 1)	–4,817	–4,704
TOTAL	15,200	14,539

1) In theGroup Netincome fromleases is classified as interestincome. In the parent company depreciation ofleased equipmentis reported asDepreciation, amortisation and impair ment oftangible and intangible assets.

5 Net fee and commission income

	Group		Parent company
	2017	2016	2017	2016
Issue of securities	724	484	1,035	838
Secondary market	2,125	2,878	1,436	1,670
Custody and mutualfunds	8,040	7,264	3,690	3,391
Securities commissions	10,890	10,626	6,161	5,899
Payments	1,850	1,677	1,512	1,334
Card fees	3,610	3,526	505	392
Payment commissions	5,460	5,203	2,017	1,726
Life insurance commissions	1,707	1,653
Advisory	443	316	393	282
Lending	2,254	2,527	1,889	2,065
Deposits	276	221	71	59
Guarantees	541	527	380	353
Derivatives	439	475	400	530
Other	1,186	952	843	734
Other commissions	5,140	5,018	3,975	4,023
Fee and commission income	23,196	22,500	12,153	11,648
Securities commissions	–2,001	–2,248	–1,217	–1,378
Payment commissions	–2,006	–1,940	–619	–604
Life insurance commissions	–598	–614
Other commissions	–866	–1,070	–760	–823
Fee and commission expense	–5,472	–5,872	–2,596	–2,805
Securities commissions, net	8,889	8,378	4,944	4,521
Payment commissions, net	3,454	3,263	1,398	1,122
Life insurance commissions, net	1,109	1,039
Other commissions, net	4,273	3,948	3,215	3,200
TOTAL	17,725	16,628	9,557	8,843

6 Net financial income

	Group		Parent company
	2017	2016	2017	2016
Gains (losses) on financial assets and liabilities held fortrading, net Gains (losses) on financial assets and liabilities designated atfair value	6,239	6,026	5,563	5,425
through profit and loss, net	–1,087	–857	–1,069	–783
Otherlife insurance income, net	1,738	1,919
Impairments of available-for-sale financial assets	–10	–32
TOTAL	6,880	7,056	4,493	4,642

Gains (losses) on financial assets and liabilities held fortrading, net

Equity instruments and related derivatives	1,388	1,149	1,333	1,165
Debt securities and related derivatives	740	1,109	640	1,017
Currency related	4,024	3,699	3,512	3,186
Other	88	69	79	57
TOTAL	6,239	6,026	5,563	5,425

Gains (losses) on financial assets and liabilities held for trading are pre sented on different rows based on type of underlying financial instrument. Changes in the treasury result are due to changes in interest rates and credit spreads. The net effect from trading operations is fairly stable over time,

but shows volatility between rows. There were effects from structured products offered to the public in the amounts of approximately SEK 235m (555) in equity related derivatives and a corresponding effect in debt securities of SEK –340m (–180).

Gains (losses) on financial assets and liabilities designated atfair value through profit and loss, net

	Group		Parent company
	2017	2016	2017	2016
Equity instruments Debt securities	22 –1,109	24 –881	–1,069	–783
TOTAL	–1,087	–857	–1,069	–783

Valuation changes arising from counterparty creditrisk and own credit standing

Derivatives – counterparty risk	421	–190	434	–189
Derivatives – own credit standing Issued securities designated atfair value through profit orloss	–180	21	–141	13
– own credit standing	–31	–50	–57	–50
TOTAL	210	–219	236	–226

7 Net other income

	Group		Parent company
	2017	20163)	2017	2016
Dividends1)	77	170
Investments in associates	–38	218
Gains less losses from investment securities	203	410	624	217
Gains less losses from tangible assets 2)			27	14
Gains less losses from divestment of shares in subsidiaries		–39
Otherincome	870	70	691	586
TOTAL	1,112	829	1,342	817

1) Reported separately in the Income Statementfor parent company.

2) See note 12 fortheGroup.

3) Items affecting comparability restated, see note 49.

Dividends

Available-for-sale investments Investments in associates	77	170	51 514	51 70
Dividends from subsidiaries			6,416	6,460
TOTAL	77	170	6,981	6,581

Note 7 continued Net otherincome

Gains less losses from investment securities

	Group		Parent company
	2017	2016	2017	2016
Available-for-sale financial assets – Equity instruments	722	148	614	178
Available-for-sale financial assets –Debt securities	90	529
Loans			10	40
Gains	812	677	624	218
Available-for-sale financial assets – Equity instruments	–93	–131
Available-for-sale financial assets –Debt securities	–7	–14
Loans	–508	–122		–1
Losses	–609	–267		–1
TOTAL	203	410	624	217
Otherincome
Fair value adjustmentin hedge accounting	205	–260	792	–323
Operating resultfrom non-life insurance,run off	283	158
Otherincome	382	172	–102	909
TOTAL	870	70	690	586
Fair value adjustmentin hedge accounting
Fair value changes ofthe hedged items	3,939	298	3,757	316
Fair value changes ofthe hedging derivatives	–3,721	–650	–2,936	–658
Fair value hedges	218	–352	822	–342
Fair value changes ofthe hedged items	75	261	–52	135
Fair value changes ofthe hedging derivatives	–79	–182	33	–129
Fair value portfolio hedge ofinterestrate risk	–3	79	–20	6
Cash-flow hedges – ineffectiveness	–10	13	–10	13
TOTAL	205	–260	792	–323

Fair value hedges and portfolio hedges

The Group hedges a portion ofits existing interestrate risk in financial assets, payments and financial liabilities with fixed interestrates against changes in fair value due to changes in the interestrates. Forthis purpose the Group uses interestrate swaps, cross-currency interestrate swaps and in some situa tions also options. The hedges are executed eitheritem by item or grouped by maturity.

ing with floating interestrates are expected to be amortised to profit orloss during the period 2018 to 2037.

Net investment hedges

The Group hedges the currency translation risk of netinvestments in foreign operations through currency borrowings and currency forwards. Borrowing in foreign currency at an amount of SEK 33,357m (39,001) and currency for wards at an amount of SEK 0m (2,507) were designated as hedges of net investments in foreign operations. Ineffectiveness in the hedges has been reported in Netfinancial income (note 6).

Cash flow hedges

The Group uses interestrate swaps to hedge future cash flows from deposits and lending with floating interestrates. Interestflows from deposits and lend-

8 Administrative expenses

	Group		Parent company
	2017	20161)	2017	2016
Staff costs Other expenses	–14,025 –6,947	–14,422 –6,619	–9,335 –4,918	–10,466 –4,573
TOTAL	–20,972	–21,041	–14,252	–15,039

1) Restructuring activities in 2016 reclassified to Items affecting comparability, see note 49.

9 Staff costs

	Group		Parent company
	2017	20163)	2017	2016
Base salary Cash-based variable remuneration Long-term equity-based remuneration	–8,073 –666 –616	–8,105 –684 –702	–5,431 –428 –462	–5,402 –541 –637
Salaries and other compensations	–9,355	–9,491	–6,321	–6,580
Social charges Defined benefitretirement plans 1) Defined contribution retirement plans 1) Benefits and redundancies 2) Education and other staffrelated costs	–2,543 –472 –881 –271 –502	–2,638 –313 –1,055 –444 –481	–1,861 –643 –169 –340	–1,955 –686 –766 –160 –319
TOTAL	–14,025	–14,422	–9,335	–10,466

1) Pension costs in theGroup are accounted for according to IAS 19 Employee benefits. Pension costs in Skandinaviska Enskilda Banken are calculated in accordance with theAct on Safeguarding PensionsObligations and the Swedish Financial Supervisory Authority's regulations. Non-recurring costs of SEK 196m (172m) for early retirement have been charged to the pension funds ofthe bank.

2) Includes costs forredundancies of SEK 179m (350) fortheGroup and SEK 126m(113) forthe parent company.

3) Restructuring activities in 2016 reclassified to Items affecting comparability, see note 49.

9a Remuneration

Presented in note 9a is the statement ofremuneration forthe Consolidated situation and significant units within the Group according to Regulation on prudentialrequirements for creditinstitutions and investmentfirms. In the SEB

Group 989 (1,167) positions are defined as Identified Staff. SEB has chosen to include the remuneration also in the insurance operations that are not part of the SEB consolidated situation but part ofthe SEB Group.

Remuneration by division 5)

	Group				Parent company
	Fixed1)			Variable1)		Fixed1)		Variable1)
2017	Remuneration	FTEs	Remuneration	FTEs	Remuneration	FTEs	Remuneration	FTEs
Large Corporates & Financial Institutions	–2,511	2,049	–613	1,979	–1,994	1,707	–565	1,637
Corporate & Private Customers	–2,375	3,531	–153	3,521	–1,654	2,818	–121	2,808
Baltic	–481	2,431	–61	2,431
Life & Investment Management	–1,120	1,478	–103	1,458
Other 2)	–4,532	5,457	–352	5,432	–2,595	4,182	–204	4,084
TOTAL	–11,019	14,946	–1,282	14,821	–6,243	8,707	–890	8,529
whereof collective variable pay 3)			–546	14,821
2016
Large Corporates & Financial Institutions	–2,658	2,134	–688	2,009	–1,990	1,689	–625	1,620
Corporate & Private Customers	–2,353	3,667	–192	3,647	–1,665	2,920	–152	2,920
Baltic	–502	2,565	–64	2,565
Life & Investment Management	–1,115	1,468	–108	1,432
Other 2)	–3,429	5,445	–334	4,663	–3,359	4,147	–401	3,517
TOTAL	–10,057	15,279	–1,386	14,316	–7,014	8,756	–1,178	8,057
whereof collective variable pay 3)			–573	14,316

			SEBAG,Germany		SEB PankAS, Estonia
	Fixed 1)		Variable1)		Fixed 1)		Variable1)
2017	Remuneration	FTEs	Remuneration	FTEs	Remuneration	FTEs	Remuneration	FTEs
Large Corporates & Financial Institutions	–304	240	–33	240
Baltic					–150	725	–20	725
Other4)	–1,523	220	–13	220	–88	316	–11	316
TOTAL	–1,827	460	–46	460	–238	1,041	–31	1,041
2016
Large Corporates & Financial Institutions	–509	323	–46	303
Baltic					–150	741	–18	734
Other4)	–378	250	–15	199	–79	308	–16	284
TOTAL	–887	573	–61	502	–229	1,049	–34	1,018

Note 9a continued Remuneration

		SEB BankaAS, Latvia	SEB bankasAB, Lithuania
	Fixed 1)		Variable1)		Fixed 1)		Variable1)
2017	Remuneration	FTEs	Remuneration	FTEs	Remuneration	FTEs	Remuneration	FTEs
Baltic Other4)	–123 –56	640 246	–16 –6	640 246	–186 –89	1,024 373	–24 –8	1,024 373
TOTAL	–179	886	–22	886	–275	1,397	–32	1,397
2016
Baltic Other4)	–132 –60	691 260	–16 –9	679 234	–193 –78	1,085 366	–27 –12	1,076 328
TOTAL	–192	951	–25	913	–271	1,451	–39	1,404

1)Variable pay is defined as short-termcash-based remuneration and long-termequity-based remuneration.All otherremuneration is reported as fixed remuneration and includes: base pay, pensions, severance pay,fees and benefits such as e.g. company car and domestic services, in accordancewith FFFS 2011:1. The reported remuneration does notinclude social charges.

2) Including Life & Investment Management and Baltic in the parent company.

3) Share Savings Programme and collective short-term and long-term remuneration. Collective short-term and long-termremuneration compared to expected outcome is reported in Other.

4) Including Life & Investment Managementin Baltic countries. In Lithuania also Large Corporates & Financial Institutions are included.

5) Including Items affecting comparability, see note 49.

Remuneration by category7)

	Group							Parent company
	Remuneration			FTEs				Remuneration		FTEs
2017	Identified Staff 6)	Other employees	Total	Identified Staff 6)	Other employees	Total	Identified Staff 6)	Other employees	Total	Identified Staff 6)	Other employees	Total
Fixed remuneration 1)	–1,140		–9,879 –11,019	989	13,957 14,946		–617	–5,626 –6,243		585	8,122	8,707
Variable pay 1)	–334	–948	–1,282	554	14,267 14,821		–166	–724	–890	311	8,218	8,529
whereof:
Short-term cash-based	–142	–524	–666				–64	–364	–428
Long-termequity-based2)	–192	–424	–616				–102	–360	–462
Deferred variable pay 3)	–218	–398	–616				–114	–348	–462
Accrued and paid
remuneration4)	–1,490		–9,936 –11,426				–785	–6,350 –7,135
Severance pay 5)			–622			547			–140			191
Agreed not yet paid
severance pay			–609			362			–147			170
Highest single amount			–2						–2

		2016

Fixed remuneration 1)	–1,173		–8,884 –10,057	1,080	14,199 15,279	–988	–6,026 –7,014	788	7,968 8,756
Variable pay 1)	–373	–1,013	–1,386	788	13,528 14,316	–313	–865 –1,178	487	7,570 8,057
whereof:
Short-term cash-based	–167	–517	–684			–121	–420 –541
Long-termequity-based2)	–206	–496	–702			–192	–445 –637
Deferred variable pay 3)	–219	–495				–192	–445 –637
Accrued and paid
remuneration4)	–1,619	–9,897				–1,251	–6,998 –8,249
Severance pay 5)			–498		546		–122			130
Agreed not yet paid
severance pay			–436		266		–96			105
Highest single amount			–7				–3

	SEBAG,Germany						SEB PankAS, Estonia
		Remuneration			FTEs			Remuneration			FTEs
2017	Identified Staff 6)	Other employees	Total	Identified Staff 6)	Other employees	Total	Identified Staff 6)	Other employees	Total	Identified Staff 6)	Other employees	Total
Fixed remuneration 1) Variable pay 1) whereof:	–70 –16	–1,757 –30	–1,827 –46	53 29	407 431	460 460	–11 –2	–227 –29	–238 –31	16 6	1,025 1,035	1,041 1,041
Short-term cash-based Long-termequity-based 2) Deferred variable pay 3) Accrued and paid	–8 –8 –9	–4 –26 –26	–12 –34 –35				–2 –2	–15 –14 –14	–15 –16 –16
remuneration4) Severance pay 5)	–86	–941	–1,027 –429			157	–13	–256	–269 –1			20
2016
Fixed remuneration 1) Variable pay 1) whereof: Short-term cash-based Long-termequity-based 2) Deferred variable pay 3)	–90 –18 –9 –9 –9	–797 –43 –13 –30 –30	–887 –61 –22 –39 –39	71 37	502 465	573 502	–12 –1 –1 –1	–217 –33 –16 –17 –17	–229 –34 –16 –18 –18	15 6	1,034 1,012	1,049 1,018
Accrued and paid remuneration4) Severance pay 5)	–112	–840	–952 –307			114	–13	–250	–263 –3			42

Note 9a continued Remuneration

	SEB BankaAS, Latvia						SEB bankasAB, Lithuania
	Remuneration				FTEs			Remuneration			FTEs
2017	Identified Staff 6)	Other employees	Total	Identified Staff 6)	Other employees	Total	Identified Staff 6)	Other employees	Total	Identified Staff 6)	Other employ- ees	Total
Fixed remuneration1)	–8	–171	–179	15	871	886	–14	–261	–275	13	1,384	1,397
Variable pay 1) whereof:	–1	–21	–22	9	877	886	–3	–29	–32	4	1,393	1,397
Short-term cash-based		–9	–9					–13	–13
Long-term equity-based 2)	–1	–12	–13				–3	–16	–19
Deferred variable pay 3)	–1	–12	–13				–3	–16	–19
Accrued and paid
remuneration 4)	–9	–192	–201				–17	–290	–307
Severance pay 5)			–4			72			–8			58
2016
Fixed remuneration 1)	–16	–176	–192	29	922	951	–17	–254	–271	23	1,428	1,451
Variable pay 1) whereof:	–2	–23	–25	13	900	913	–3	–36	–39	12	1,392	1,404
Short-term cash-based		–11	–11					–17	–17
Long-term equity-based 2)	–2	–12	–14				–3	–19	–22
Deferred variable pay 3)	–2	–12	–14				–3	–19	–22
Accrued and paid
remuneration 4)	–18	–199	–217				–20	–290	–310
Severance pay 5)			–2			53			–15			111

1)Variable pay is defined as short-term cash-based remuneration and long-termequity-based remuneration.All otherremuneration is reported as fixed remuneration and includes: base pay, pensions, severance pay,fees and benefits such as e.g. company car and domestic services, in accordance with FFFS 2011:1. The reported remuneration does notinclude social charges.

2) Long-term equity based remuneration encompasses four different programmes; a Share Savings Programme andAll Employee Programme and also a Share Matching Programme and a ShareDeferral Programme for a selected group of key employees.

3) The deferred variable pay is locked the first year. Short-term cash-based remuneration can thereafter be paid pro rata overthree orfive years after a possible risk adjustment. Long-term equity-based programmes are locked for a minimum ofthree years.

4) InAccrued and paid remuneration amounts paid within the first quarter afterthe accrual is included.Deferred variable pay has been subjectto risk adjustment.

5) The amount also includes sign-on.

6) Employees with material impact on SEB's risk profile, in accordance with FFFS 2011:1.

7) Including Items affecting comparability, see note 49.

Loans to Executives

	Group		Parent company
	2017	2016	2017	2016
ManagingDirectors andDeputy ManagingDirectors 1)	113	94	27	20
Boards ofDirectors 2)	426	407	111	120
TOTAL	539	501	138	140

1) Comprises current President andDeputy Presidentin the parent company and ManagingDirectors andDeputy ManagingDirectors in subsidiaries. Total number of executives was 47 (53) of which 14 (12) female.

2) Comprises current Board members and their substitutes in the parent company and subsidiaries. Total number of persons was 156 (181) of which 43 (55) female.

Pension commitments to Executives

Pension disbursements made	112	136	45	64
Change in commitments	48	56	19	20
Commitments at year-end	1,839	1,871	870	848

The above commitments are covered by the bank's pensions funds orthrough bank-owned endowment assurance schemes. They include active and retired Presidents and vice Presidents in the parent company and Managing directors

and Deputy Managing directors in subsidiaries, in total 115 persons (118).

9b Pensions

Retirement benefit obligations

The Group has established pension schemes in the countries where business is performed. There are both defined benefit plans and defined contribution plans. The major pension schemes are final salary defined benefit plans and are funded. The defined benefit plan in Sweden is closed to new employees and a defined contribution plan was established during 2013. The defined contribution plans follow the local regulations in each country. Multiemployer defined benefit plans exist for employees in some parts of the Group. These plans are accounted for as defined contribution plans since sufficient informa tion of SEB's share of the liability/asset and cost is not available.

Defined benefit plans

The major defined benefit plans exist in Sweden and Germany and cover most employees in these countries. Independent actuarial calculations according to the Projected Unit Credit Method (PUCM) are performed quarterly to decide the value of the defined benefit obligation. The benefits covered include retirement benefits, disability, death and survivor pensions according to the respective countries' collective agreements. The plan assets are kept separate in specific pension foundations. In case of a deficit in the pension obligation according to local rules SEB is obliged to meet this with contribution to the foundation or insure a deficit. The asset allocation is determined to meet the various risks in the pension obligations and is decided by the board/trustees in the pension foundations. The assets are booked at market value. The pension and interest costs are presented in Staff costs.

Defined contribution plans

Defined contribution plans exist both in Sweden and abroad. In Sweden a smal ler part of the closed collective retirement agreement is defined contribution based. Over a certain salary level the employees could also choose to leave the defined benefit plan and replace it by a defined contribution plan. The current plan for new employees is fully contribution based. Most other countries have defined contribution plans except for the Baltic countries where the company to a limited extent contributes to the employees retirement. The defined con tribution plans are not recognised in the balance sheet but accounted for as an expense among Staff costs.

DEFINEDBENEFIT PLANS IN SEBGROUP

		2017		2016
Net amountrecognised in the Balance sheet	Sweden1)	Foreign 1)	Group 1)	Sweden1)	Foreign 1)	Group 1)
Defined benefit obligation atthe beginning ofthe year	23,287	5,794	29,081	19,693	5,366	25,059
Curtailment, acquisitions and reclassification2)		891	891
Service costs	509	39	548	442	38	480
Interest costs	556	95	651	606	127	733
Benefits paid	–735	–321	–1,056	–691	–277	–968
Exchange differences		177	177		153	153
Remeasurements of pension obligation	755	–227	528	3,237	387	3,624
Defined benefit obligation atthe end ofthe year	24,372	6,448	30,820	23,287	5,794	29,081
Fair value of plan assets atthe beginning ofthe year	27,201	5,076	32,277	25,252	4,982	30,234
Curtailment, acquisitions and reclassification					37	37
Calculated interest on plan assets	645	85	730	783	118	901
Benefits paid/contributions	–686	–242	–928		–277	–277
Exchange differences		140	140		199	199
Valuation gains (losses) on plan assets	2,492	64	2,556	1,166	17	1,183
Fair value of plan assets atthe end ofthe year	29,652	5,123	34,775	27,201	5,076	32,277

Change in the net assets or netliabilities
Defined benefit obligation atthe beginning ofthe year	3,914	–718	3,196	5,559	–384	5,175
Curtailment, acquisitions and reclassification		–891	–891		37	37
Total expense in staff costs	–420	–49	–469	–265	–47	–312
Pension paid	735	321	1,056	691	277	968
Benefits paid/contributions	–686	–242	–928		–277	–277
Exchange differences		–37	–37		46	46
Remeasurements	1,737	291	2,028	–2,071	–370	–2,441
NETAMOUNTRECOGNISEDIN THE BALANCE SHEET	5,280	–1,325	3,955	3,914	–718	3,196

1) The net defined benefit obligation is recognised in the balance sheet either as an asset orliability depending on the situation for each legal entity.

2) In 2017 an agreement was signed to transfer most part ofthe pension obligations underthe defined benefit plan in SEBAGtoVersicherungsverein des Bankgewerbes a.G(BVV). In connection with the signing the obligation was revaluated to the value atthe transferin 2018, which resulted in a value change of SEK 891m.

In 2017 a contribution of SEK 39m (38) was paid to the German pension foundation. Contribution to the foundations cannot be ruled outin 2018.

Note 9b continued Pensions

Principal actuarial assumptions used

	2017		2016
	Sweden	Foreign	Sweden	Foreign
Discountrate	2.2%	1.9%	2.4%	1.7%
Inflation rate	1.5%	1.8%	1.5%	1.8%
Expected rate of salary increase	3.5%	2.5%	3.5%	2.5%
Expected rate ofincrease in the income basis amount	3.0%		3.0%

The discountrate is based set on high-quality corporate bonds in a deep mar ket, in Sweden covered bonds which are atleast AAA-rated. An extrapolation ofthe maturity ofthe covered bonds is made based on government bonds and checked against swaps. This extrapolated maturity is in line with the estimated maturity of obligations for post-employment benefits. Life expectancy assumptions in Sweden for 2016 are established by the Actuarial Research Board (FTN) and are based on DUS14 for white-collar workers. 2015 the Swedish life expectancy assumptions followed the insurance supervisory authority (FFFS 2007:31) regulations which are based on DUS06 forthe entire population. In Germany the Heubeck Sterbetafeln is used. Weighted average duration forthe obligation is 23 years in Sweden and 14 years in Germany.

A decrease ofthe discountrate for Sweden of 0.5 per cent would imply an increase ofthe Swedish pension obligation by SEK 2,404m while the same change in the inflation assumption for Sweden would have the opposite effect and decrease the obligation by SEK 1,753m. An increase ofthe discountrate by same ratio would reduce the obligation with SEK 2,077m and an increased inflation rate of 0.5 per cent gives an increased obligation of SEK 2,043m. A decrease in assumption for expected salary increase in Sweden of 0.5 per cent would have a positive effect on the obligation by SEK 314m an increase would have a negative effect of SEK 373m.

The obligation in Germany would increase by SEK 432m ifthe discountrate was reduced by 0.5 per cent. An increase by the same percentage would decrease the obligation by SEK 384m. Ifthe inflation assumption for Germany increases by 0.25 per centthe pension obligation would increase by SEK 73m and corresponding decrease would be SEK 70m at a lowerinflation assumption. A change in expected salary increases in Germany by 0.25 per cent would with a higherrate give an increase ofthe obligation by SEK 92m and with a lowerrate reduce the obligation by SEK 111m.

Allocation of plan assets

	2017		2016
	Sweden	Foreign	Group	Sweden	Foreign	Group
Cash and cash equivalents	573	60	633	873	50	923
Equity instruments with a quoted market price in an active market	18,357		18,357	15,239		15,239
Equity instruments notlisted in an active market	5,068	1,063	6,131	6,520	887	7,407
Debtinstruments with a quoted market price in an active market		400	400		630	630
Debtinstruments notlisted in an activemarket	3,405	3,600	7,005	2,355	3,509	5,864
Properties	2,249		2,249	2,214		2,214
TOTAL	29,652	5,123	34,775	27,201	5,076	32,277

The pension plan assets include SEB shares with a fair value of SEK 1,209m (1,199). Buildings in Sweden are occupied by SEB.

Amounts recognised in Income statement

	2017		2016
	Sweden	Foreign	Group	Sweden	Foreign	Group
Service costs Interest costs Calculated interest on plan assets	–509 –556 645	–39 –95 85	–548 –651 730	–442 –606 783	–38 –127 118	–480 –733 901
INCLUDEDIN STAFF COSTS	–420	–49	–469	–265	–47	–312

Amounts recognised inOther comprehensive income

Remeasurements of pension obligation	–755	227	292 –528	–3,237	–387	440 –3,624
where of experience adjustments	180	112	820 –	262	178	237 3 –
where of due to changes in financial assumptions	–935	115		–2,672	–565	827 , –
where of due to changes in demographic assumptions				–827
Valuation gains (losses) on plan assets	2,492	64	2,556	1,166	17	1,183
Deferred tax pensions	–382	–862	–1,244	456	110	566
INCLUDEDIN OTHERCOMPREHENSIVE INCOME	1,355	–571	784	–1,615	–260	–1,875

DEFINEDCONTRIBUTION PLANS IN SEBGROUP

	2017			2016
Net amountrecognised in Income statement	Sweden	Foreign	Group	Sweden	Foreign	Group
Expense in Staff costs including special salary tax	–943	–239	–1,182	–812	–243	–1,055

Note 9b continued Pensions

DEFINEDBENEFIT PLANS IN SKANDINAVISKAENSKILDABANKEN

	Parent company
Net amountrecognised in the Balance sheet	2017	2016
Defined benefit obligation atthe beginning ofthe year	23,417	22,699
Imputed pensions premium	299	330
Interest costs and other changes	1,017	902
Early retirement	196	172
Pension disbursements	–716	–686
DEFINEDBENEFITOBLIGATION AT THE ENDOF THEYEAR	24,213	23,417

Fair value of plan assets atthe beginning ofthe year	26,249	24,368
Return on assets	3,058	1,881
Benefits paid	–686
FAIRVALUEOF PLAN ASSETSAT THE ENDOF THEYEAR	28,621	26,249

The above defined benefit obligation is calculated according to Tryggande lagen. Skandinaviska Enskilda Banken consequently adopts the discountrate set by the Swedish FSA before year-end. The obligation is fully covered by assets in the pension foundation and is notincluded in the balance sheet. The assets in the foundation are mainly equity related SEK 22,606m

(20,998) and to a smaller extentinterest earning SEK 3,838m (3,115). The assets include SEB shares at a market value of SEK 1,167m (1,157) and buildings occupied by the company valued at SEK 2,170m (2,136). The return on assets was 12 per cent (8) before pension compensation.

Amounts recognised in Income statement

	Parent company
	2017	2016
Pension disbursements Compensation from pension foundations	–716 686	–686
TOTAL	–30	–686
Principal actuarial assumptions used
Gross interestrate Interestrate aftertax	0.6% 0.5%	0.7% 0.6%

The actuarial calculations are based on salaries and pensions on the balance sheet date.

DEFINEDCONTRIBUTION PLANS IN SKANDINAVISKAENSKILDABANKEN

	Parent company
Net amountrecognised in Income statement	2017	2016
Expense in Staff costs including special salary tax	–643	–766

Pension foundations

	Pension commitments		Market value of asset
	2017	2016	2017	2016
SEB-Stiftelsen, Skandinaviska Enskilda Bankens Pensionsstiftelse SEB KortAB:s Pensionsstiftelse	24,213 959	23,417 916	28,621 1,031	26,249 952
TOTAL	25,172	24,333	29,652	27,201

9c Remuneration to the Board and the Group Executive Committee

Guidelines for remuneration

The guidelines forremuneration to the President and the other members of the Group Executive Committee (GEC) were prepared by the Board of Direc tors and its Remuneration and Human Resources Committee and approved by the Annual General Meeting 2017.

The remuneration structure forthe President and the other members of the GEC is in accordance with the remuneration policy forthe bank. No mem ber ofthe GEC has been entitled to cash based variable remuneration since 2009. Thus,the remuneration is based upon three main components; base

pay, equity based remuneration and pensions. Other benefits may also be included, such as company car and domestic services.

For more information, see page 60–61.

Identified staff

The President and all other members ofthe GEC are considered employees who have a material impact on SEB's risk profile according to the Swedish Financial Supervisory Authority regulations (FFFS 2011:1).

Remuneration to the Board 1), SEK

2017	Base pay	Directors'fee	Benefits 2)	Total
Chairman ofthe Board, Marcus Wallenberg		3,640,000		3,640,000
Other members ofthe Board 3)		9,128,183		9,128,183
President and CEO, Johan Torgeby (29 March–31December)	7,125,000		112,318	7,237,318
President and CEO,Annika Falkengren (1 January–28 March)	2,875,000		168,307	3,043,307
TOTAL	10,000,000	12,768,183	280,625	23,048,808
2016
Chairman ofthe Board, Marcus Wallenberg		3,520,000		3,520,000
Other members ofthe Board 3)		10,190,000		10,190,000
President and CEO,Annika Falkengren	11,500,000		1,425,479	12,925,479
TOTAL	11,500,000	13,710,000	1,425,479	26,635,479

1) The number of Boardmembers decided by theAGM in 2017 is eleven (thirteen).

2) Includes benefits as domestic services and company car.

3)Directors'fee to the Board members on individual level is presented on page 54–57.

Member ofthe Board SaraÖhrvall has furtherinvoiced SEK 1,050,230 for consultancy services.

WhenAnnika Falkengren leftthe bank in July 2017, accrued holiday pay of SEK 7,366,637 was paid.

Remuneration to theGEC, SEK 1)

	Base pay	Benefits	Total
2017	49,224,511	1,853,522	51,078,033
2016	48,854,904	1,649,688	50,504,592

1)GEC excluding the President and CEO. The members partly differ between the years butin average eleven (eleven) members are included.Atthe end ofthe yearthe number of members were eleven (eleven).Additional members are notincluded.

Long-term equity programmes

Under the Share Deferral Programme members of the GEC may be granted an individual number of conditional share rights based on the fulfilment of pre-determined Group, business unit and individual target levels as outlined in SEB's business plan. The targets are set on an annual basis as a mix of the financial targets Return on Equity/Return on Business Equity and cost development and the non-financial target customer satisfaction among others. For GEC the initial allotment may not exceed 100 per cent of the base pay.

Ownership of 50 per cent of the share rights are transferred to the partici pant after a qualification period of three years, 50 per cent after a qualification period of five years. After each respective qualification period there is an additional holding period of one year after which the share rights can

be exercised. Each share right carries the right to receive one Class A-share in the bank. There is normally a requirement for vesting that the participant remains with SEB during the first three years, but some exemption apply. A further requirement for vesting is that the participant holds shares in SEB equal to a predetermined amount, for GEC equivalent to one year salary net of taxes, acquired no later than on a pro-rata basis during the initial three year vesting period.

The Share Matching Programme (SMP) 2014 vested in 2017 with 63% matching. GEC is not participating in the SMP 2012–2014 nor the All Employee Programme (AEP) except for outstanding rights earned before being member of GEC.

Long-term equity programmes (expensed amounts for ongoing programmes), SEK

2017	Share matching	Share deferral	Total
President and CEO, Johan Torgeby Other members oftheGEC 1)		1,522,952 15,489,205	1,522,952 15,489,205
TOTAL		17,012,157	17,012,157
2016
President and CEO,Annika Falkengren Other members oftheGEC 1)	1,524,005	6,342,656 20,472,638	6,342,656 21,996,643
TOTAL	1,524,005	26,815,294	28,339,299

Some oftheGEC members that have been appointed during the year have previously received rights in theAll Employee Programme and participated in the Share Savings Programme. The corresponding calculated costs and number of outstanding rights/shares are notincluded in the tables.

WhenAnnika Falkengren leftthe position as President and CEO,the outstanding not vested LTI programmes vested on a pro-rata basis. The corresponding costs forthe bank in 2017 was SEK 1,936,588.

Note 9c continued Remuneration to the Board and theGroup Executive Committee

Number outstanding by 2017-12-31

	Number outstanding
	President and CEO Johan Torgeby	Other members oftheGEC	Total	First day of exercise	Performance criteria
2012: Share matching rights	22,107	28,713	50,820	20152)	final vesting 100%1)
2013: Share matching rights	34,129	60,682	94,811	20162)	final vesting 92%
2014: Share matching rights	17,493	24,604	42,097	20172)	final vesting 63%
2012: Conditional share rights		272,042	272,042	2016;20183)	–
2013: Conditional share rights		201,942	201,942	2017;20193)	–
2014: Conditional share rights		197,454	197,454	2018;20203)	–
2015: Conditional share rights	11,572	232,636	244,208	2019;20213)	–
2016: Conditional share rights	39,476	327,647	367,123	2020;20223)	–
2017: Conditional share rights	29,942	216,784	246,726	2021;20233)

1) Share Matching Programme 2012 vested in 2015 with 100% matching, since the programme had reached its cap the outcome after adjustmentrelated to the cap was 92%. 2)As soon as practically possible following the end ofthe performance period.

3) The qualification period ends afterthree orfive years respectively and are followed by a holding period of one year,thereafterthere is normally an exercise period ofthree years.

During the yearthe President and CEOhas exercised rights to a value of SEK 0 (6,398,251). The corresponding value fortheGEC excluding the Presidentis SEK 23,030,558 (8,181,695).

Pension and severance pay

The pension agreement ofthe Presidentis contribution-based and inviolable. The pension contribution is a fixed amount.

Termination of employment by the bank is subjectto a maximum 12-month period of notice and entitles to a severance pay of 12 months' salary.

As regards pension benefits and severance pay the following is applicable

to the members ofthe GEC excluding the President. The pension plans are inviolable and defined contribution-based exceptfor a portion in the collective agreement.

Termination of employment by the bank is subjectto a maximum 12-month period of notice and entitles to a severance pay of 12 months' salary.

Pension costs (service costs, interest costs and defined contribution premiums), SEK

	President and CEO, Johan Torgeby	President and CEO, Annika Falkengren	Other members of theGroup Executive committee1)	Total
2017	2,625,000	1,250,000	16,917,548	20,792,548
2016		5,000,000	15,347,119	20,347,119

Forinformation aboutrelated parties see note 27.

9d Share-based payments

Long-term equity-based programmes

2017	All employee programme	Share deferral programme	Share matching programme1)	Share savings programme	Performance shares
Outstanding atthe beginning ofthe year	10,142,015	14,046,597	2,957,797		1,274,019
Granted 2)	2,991,591	5,520,433	1,011,633
Forfeited 3)	–610,833	–1,070,225	–5,540
Exercised 4)	–1,958,674	–746,094	–1,996,529		–1,165,121
Expired					–108,898
OUTSTANDINGAT THE ENDOF THEYEAR	10,564,099	17,750,711	1,967,361
of which exercisable		589,659	1,967,361

2016
Outstanding atthe beginning ofthe year	7,807,319	8,614,625	3,044,974	2,120,938	2,135,647

of which exercisable		433,324	2,642,985		1,274,019
OUTSTANDINGAT THE ENDOF THEYEAR	10,142,015	14,046,597	2,957,797		1,274,019
Expired				–668	–15,414
Exercised 4)	–260,354	–264,494	–3,183,722	–2,120,270	–978,067
Forfeited 3)	–541,269	–451,853	–25,963		–1,773
Granted 2)	3,136,319	6,148,319	3,122,508		133,626

1) Numbers include investments done by participants, as well as allocated matching share rights.

2) Including compensation for dividend.

3) Weighted average exercise price forfeited SMP, SDP SEK 0.00 (0.00).

4)Weighted average exercise price exercised SMP, SDPSEK0.00(0.00) andPSPSEK10.00(10.00).Weighted average share price forPSP, SMPand SDPat exercise SEK104.09(80.85).

Note 9d continued Share-based payments

Total Long-term equity-based programmes

	Original no of holders3) 4)	No ofissued (maximum outcome)	No of outstanding 20174) 5)	No of outstanding 20164) 5)	A-share per option/ share	Exercise price	Validity	First date of exercise
2010: Performance shares	698	18,900,000		1,274,019	1	10	2010–2017	20131)
2012: Share matching programme	432	7,024,168	874,084	1,545,814	4		2012–2019	20152)
2013: Share matching programme	213	3,485,088	702,408	1,097,171	4		2013–2020	20162)
2014: Share matching programme	96	1,300,288	390,869	314,812	4		2014–2021	20172)
2012: Share deferral programme – equity settled	86	1,199,504	854,226	1,019,822	1		2012–2021	2015/20173)
2013: Share deferral programme – equity settled	263	1,361,861	1,126,673	1,457,480	1		2013–2022	2016/20183)
2014: Share deferral programme – equity settled	622	1,909,849	1,993,157	1,912,528	1		2014–2023	2017/20193)
2015: Share deferral programme – equity settled	816	2,603,843	2,478,718	2,546,169	1		2015–2024	2018/20203)
2015: Share deferral programme – cash settled	513	1,717,150	1,622,652	1,674,045			2015–2021	2018/20203)
2016: Share deferral programme – equity settled	874	3,593,155	3,355,003	3,494,730	1		2016–2025	2019/20213)
2016: Share deferral programme – cash settled	500	2,017,622	1,913,887	1,941,823			2016–2022	2019/20213)
2017: Share deferral programme – equity settled6)	1,373	4,439,824	4,210,294		1		2017–2026	2020/20223)
2017: Share deferral programme – cash settled	75	206,125	196,101				2017–2023	2020/20223)
2013:All employee programme – equity settled	8,347	1,255,838		1,171,517	1		2013–2016	2017
2013:All employee programme – cash settled	5,358	532,184		435,600			2013–2016	2017
2014:All employee programme – equity settled	8,709	1,786,471	1,599,693	1,684,487	1		2014–2017	2018
2014:All employee programme – cash settled	5,216	964,436	765,734	824,822			2014–2017	2018
2015:All employee programme – equity settled	8,319	2,290,359	2,103,704	2,221,704	1		2015–2018	2019
2015:All employee programme – cash settled	6,745	1,220,463	1,041,755	1,138,059			2015–2018	2019
2016:All employee programme – equity settled	8,209	1,731,922	1,640,581	1,731,922	1		2016–2019	2020
2016:All employee programme – cash settled	6,517	933,905	874,726	933,905			2016–2019	2020
2017:All employee programme – equity settled	7,954	1,613,740	1,613,740		1		2017–2020	2021
2017:All employee programme – cash settled	6,867	924,166	924,166				2017–2020	2021

TOTAL 76,281,181 30,282,171 28,420,429

1)As soon as practically possible following the end ofthe performance period,the establishing ofthe final outcome and registration ofthe final number of Performance shares in Equate plus.

2)As soon as practically possible following the end ofthe performance period,the establishing ofthe outcome of number of Matching Shares and the allocation oftheA-shares and, if applicable,the Matching Shares.

3)As soon as possible following the end ofthe performance period the outcome is established. Forthe equity-settled programmes the ownership ofthe performance shares is transferred upon registration, butthe shares are withheld for one additional year. Cash-settled programmes are paid outin connection with the following payrollrun. 4) In total approximately 11,000 individuals (10,900) participated in any ofthe programmes,All Employee Programme excluded.

5) Including additional deferralrights for dividend compensation.

6) The exercise period forGEC members is extended during the period thatthey areGEC members.

Long-term equity-based programmes

TheAnnualGeneralmeeting 2017 decided on two Long-termequity based pro grammes, one Share Deferral Programme and one All Employee Programme. The first Share Deferral Programme was introduced in 2012 fortheGroup

Executive Committee and certain other executive managers and key employees with critical competences. The participants are granted an individual num ber of conditional share rights based on pre-determined Group, division/business unit and individualtargetlevels, both financial (Return on Equity/Return on Business Equity and cost development) and non-financial (customer satis faction), set on an annual basis.

For GEC members and other senior executives 50 per cent ofthe share rights ownership is transferred after a qualification period ofthree years and 50 per cent after a qualification period offive years. For other participants the qualification period is three years. The requirementfor vesting is normally thatthe participantremains with SEB during the firstthree years and thatthe participant holds shares in SEB equalto a predetermined amount, acquired no laterthan on a pro-rata basis during the initialthree year period. After each respective qualification period there is an additional holding period of one year after which the share rights can be exercised, normally during a period ofthree years. Each share right carries the rightto receive one Class A-share in the bank. In countries mainly outside Europe the participants receives so called phantom shares that gives the rightto receive cash adjusted fortotal shareholderreturn ofthe SEB A-share atthe end ofthe holding period.

The holders are compensated for dividends to the shareholders. Thus,the number of share rights will be recalculated, afterthe Annual General Meeting each year,taking the dividend into account. The share rights are not securities that can be sold, pledged ortransferred to others. However, an estimated value per share right has been calculated for 2017 to SEK 83 (67) (based upon an average closing price of one SEB Class A-share atthe time of grant).

In 2013 an All Employee Programme was introduced for most employees, where 50 per cent ofthe outcome is paid in cash and 50 per centis deferred forthree years and paid in SEB A-shares. Deferrals will normally only be obtained underthe condition thatthe employee remains with SEB. In Sweden the deferred partis paid outin SEB A-shares, adjusted for dividends. In all other countries the deferred partis paid outin cash adjusted fortotal share holderreturn ofthe SEB A-share. The initial outcome is capped at a maximum amount, which was adjusted in 2016,for each geography and is based on the fulfilment of pre-determined Group targets outlined in SEB's business plan, both financial (Return on Equity and cost development) and non-financial (customer satisfaction). The outcome in 2017 year's programme was

56 per cent (56) ofthe maximum amount. In Sweden the maximum amount is SEK 75,000, up until 2015 it was SEK 55,000.

Previously allotted programmes

From 2005 to 2010 the programmes were based on performance shares. They all have a maximum term of seven years, a vesting period ofthree years and an exercise period offour years. The number of allotted performance shares that can be exercised depends on the development oftwo predetermined performance criteria of equal importance. All programmes are vested and the exercise period forthe 2010 years programme ended in 2017.

Between 2008 and 2012 a Share Savings Programme for all employees in selected countries has been run. In the Share Savings Programmes the partici pants saved a maximum offive per cent oftheir gross base salary during a twelve months period. Forthe savings amount, Class A-shares were pur chased at current stock exchange rate fourtimes a yearfollowing the publica tion ofthe bank's interim reports. Ifthe shares are retained by the employee forthree years and the employee remains with SEB,the employee receives one Class A-share for each retained share. All programmes are vested and the exercise period forthe 2012 years programme ends in 2017.

Between 2009 and 2014 a Share Matching Programme for a number of selected senior executives and other key employees has been run. The pro grammes are based on performance, have a vesting period ofthree years and are settled with SEB ClassA-shares.All programmes require own investment in SEB shares. The investment amountis pre-determined and capped for each participant.Afterthree years, if still employed,the participantreceives one ClassA-share for each invested share and a conditional number of performance based matching shares for each invested share. From 2012 the settlementis in the form of share rights with an exercise period offour years. The 2014 programme was closed in 2017 with 63 per cent matching.

In the 2014 years programme the number of performance based matching shares depend on the development oftwo pre-determined performance cri teria; measured as total shareholderreturn (TSR) in relation to the markets required return based on the interest of Swedish government 10 year bonds i.e. long-term risk free interestrate (LTIR),two thirds, and the total share holderreturn in relation to SEB's competitors, one third. Maximum outcome forthe participants is three performance based matching shares. The out come is also subjectto risk adjustment.

The holders are compensated for dividends to the shareholders during the exercise period. Thus,the number of share rights will be recalculated, afterthe Annual General Meeting each year during the exercise period,taking the dividend into account.

Matching rights are not securities that can be sold, pledged ortransferred to another party. However, an estimated value per matching right has been calculated for 2014 to SEK 65 and forthe performance based matching rights to SEK 39. Otherinputs to the options pricing model are; exercise price SEK 0; volatility 46 (based on historical values); expected dividend approximately 4 per cent;risk free interestrate 1.13 and expected early exercise of 3 per

9e Number of employees

cent due to staffturnover. In the value ofthe option the expected outcome ofthe performance criteria described above are taken into account.

The programme is subjectto a cap, ifthe share price atthe time of vesting has more than doubled the number of matching shares and performance based matching shares that are transferred to a participant will be reduced proportionately so thatthe value corresponds to the doubled share price capped value.

Further details of the outstanding programmes are found in the table above.

Average number of employees	Group			Parent company
2017	Men	Women	Total	Men	Women	Total
Sweden	3,957	4,097	8,053	3,393	3,476	6,869
Norway	242	160	402	199	101	300
Denmark	365	247	612	171	68	238
Finland	154	137	291	109	91	200
Estonia	293	920	1,212
Latvia	415	1,111	1,526	156	276	432
Lithuania	772	1,703	2,475	341	476	817
Germany	289	201	490
Poland	14	29	43	14	29	43
Ukraine	20	38	58
China	10	32	42	10	32	42
Great Britain	82	44	126	82	44	126
Ireland	54	71	124
Luxembourg	121	104	225
Russia	23	64	87
Singapore	34	72	106	31	63	94
United States	31	18	49	24	17	41
Other countries1)	16	13	28	16	13	28
TOTAL	6,889	9,057	15,946	4,546	4,686	9,232

2016
Sweden	4,046	4,175	8,221	3,542	3,568	7,110
Norway	259	167	426	206	97	303
Denmark	379	261	640	166	70	236
Finland	154	148	302	109	94	203
Estonia	305	928	1,233
Latvia	413	1,102	1,515	131	239	370
Lithuania	727	1,650	2,377	278	405	683
Germany	359	258	617	2		2
Poland	17	38	55	14	30	44
Ukraine	22	40	62
China	12	33	45	12	33	45
Great Britain	93	49	142	94	49	143
Ireland	55	64	119

Luxembourg 123 106 229 Russia 24 67 91 Singapore 36 66 102 31 58 89 United States 33 20 53 24 18 42 Other countries1) 17 14 31 14 9 23 TOTAL 7,074 9,186 16,260 4,623 4,670 9,293

1) Brazil andHong Kong.

10 Other expenses

	Group		Parent company
	2017	20163)	2017	2016
Costs for premises 1)	–1,644	–1,568	–1,260	–1,133
Data costs	–3,479	–2,992	–2,372	–1,962
Travel and entertainment	–387	–387	–277	–278
Consultants	–842	–637	–652	–440
Marketing	–301	–339	–144	–161
Information services	–549	–549	–476	–470
Other operating costs 2)	254	–147	264	–129
TOTAL	–6,947	–6,619	–4,918	–4,573
1)Of which rental costs	–1,158	–1,160	–954	–895

2) Net after deduction for capitalised costs, see also note 28.

3) Restructuring activities in 2016 reclassified to Items affecting comparability, see note 49.

Note 10 continued Other expenses

Fees and expense allowances to appointed auditors and auditfirms 1)

	Group		Parent company
	2017	2016	2017	2016
Audit assignment	–29	–26	–12	–10
Auditrelated services	–21	–16	–1	–2
Tax advisory	–12	–10	–5	–8
Other services	–4	–3	–2	–3
PricewaterhouseCoopers2)	–65	–55	–20	–23
Audit assignment	–1	–1
Tax advisory	–1	–1
Other services	–2	–1
Other auditfirms	–3	–3
TOTAL	–69	–58	–20	–23

1) The parent company includes the foreign branches.

2) Fees to PricewaterhouseCoopersAB from companies in the SEB group amountto SEK 22.9m.Out ofthis amount, SEK 15.8m is related to the audit and SEK 7.1mto other services.

Audit assignmentis defined as the audit of annualfinancial statements,the administration ofthe Board of Directors and the President, othertasks resting upon the auditor as well as consulting and other assistance, which have been initiated by the findings in performing audit work orimplementation of such tasks. The auditrelated services include quarterly reviews,regulatory reporting and services in connection with issuing of certificates and opinions. Tax advisory include general expatriate services and othertax services work. Other services include consultation on financial accounting, services related to mergers and acquisitions activities, operational effectiveness and assessments ofinternal control.

11 Depreciation, amortisation and impairment of tangible and intangible assets

	Group		Parent company
	2017	20162)	2017	2016
Depreciation oftangible assets	–222	–271	–127	–106
Depreciation of equipmentleased to clients1)			–4,817	–4,704
Amortisation ofintangible assets	–607	–489	–462	–410
Impairment oftangible assets	–4	–3
Impairment ofintangible assets	–101		–870
Impairment of goodwill				–200
Retirement and disposal ofintangible assets	–30	–8	–102	–355
TOTAL	–964	–771	–6,377	–5,775

1) In theGroup Netincome from leases is classified as interestincome. In the parent company depreciation ofleased equipmentis reported asDepreciation, amortisation and impairment oftangible and intangible assets.

2) Restructuring activities and impairment of goodwill due to the implementation of a new customer-oriented organisation in 2016 reclassified to Items affecting comparability, see note 49.

12 Gains less losses tangible and intangible assets

	Group
	2017	2016
Properties Othertangible assets	62 8	94 16
Gains	70	110
Properties Othertangible assets	–229 –3	–254 –6
Losses	–232	–260
TOTAL	–162	–150

13 Net credit losses

	Group		Parent company
	2017	2016	2017	2016
Provisions: Net collective provisions forindividually assessed loans Net collective provisions for portfolio assessed loans Specific provisions Reversal of specific provisions no longerrequired Net provisions for contingentliabilities	423 168 –1,309 760 –30	–218 260 –734 338 43	441 –12 –1,190 625 –47	–202 14 –407 102 21
Net provisions	12	–311	–183	–472
Write-offs: Total write-offs Reversal of specific provisions utilized for write-offs	–1,367 318	–1,480 584	–797 180	–471 60
Write-offs not previously provided for Recovered from previous write-offs	–1,050 230	–896 214	–617 51	–411 94
Net write-offs	–820	–682	–566	–317
TOTAL	–808	–993	–749	–789

14 Appropriations

	Parent company
	2017	2016
Group contribution Accelerated tax depreciation	1,554 332	732 1,705
Appropriations	1,885	2,437
TOTAL	1,885	2,437

15 Taxes

	Group		Parent company
Major components oftax expense	2017	2016	2017	2016
Currenttax Deferred tax	–4,554 –145	–4,052 –161	–3,633	–2,877
Tax for current year Currenttax for previous years	–4,699 137	–4,213 –36	–3,633 43	–2,877 137
INCOME TAXEXPENSE	–4,562	–4,249	–3,590	–2,740

Relationship between tax expenses and accounting profit

Net profit	16,244	10,618	17,811	14,378
Income tax expense	4,562	4,249	3,590	2,740

Accounting profit before tax	20,806	14,867	21,401	17,118
Currenttax at Swedish statutory rate of 22.0 per cent	–4,577	–3,271	–4,708	–3,766
Tax effectrelating to othertax rates in otherjurisdictions	429	246
Tax effectrelating to nottax deductible expenses	–641	–1,422	–788	–990

Tax effectrelating to non-taxable income	519	464	1,863	1,879
Tax effectrelating to a previously recognised tax loss,
tax credit ortemporary difference	156	476
Tax effectrelating to a previously unrecognised tax loss,
tax credit ortemporary difference	–440	–545

Currenttax	–4,554	–4,052	–3,633	–2,877

Tax effectrelating to origin and reversal oftax losses,
tax credits and temporary differences	–156	–475
Tax effectrelating to a previously unrecognised tax loss,
tax credit ortemporary difference	11	314

Deferred tax	–145	–161
Currenttax for previous years	137	–36	43	137
INCOME TAXEXPENSE 1)	–4,562	–4,249	–3,590	–2,740

1) Total income tax expense was SEK 4,562m (4,249). The effective tax rate forthe year was 21.9 per cent (28.5). Excluding the items that affect comparability,the effective tax rate was 21 per cent (21). This was in line with SEB's expected tax rate.

Deferred tax income and expense recognised in income statement

Accelerated tax depreciation	–30	300
Pension plan assets, net	178	–163
Tax losses carry forwards	–133	–322
Othertemporary differences	–161	24
TOTAL	–145	–161

Deferred tax assets and liabilities, where the change is not reported as a change in deferred tax, amount to SEK –418m (125) and is mainly explained by reclassification of SEB Pension in Denmark to held for sale.

Note 15 continued Taxes

Currenttax assets
	Group		Parent company
	2017	2016	2017	2016
Other	5,252	5,976	1,999	2,990
Recognised in profit and loss	5,252	5,976	1,999	2,990
Other	2	2
Recognised in Shareholders' equity	2	2
TOTAL	5,255	5,978	1,999	2,990

Deferred tax assets

271
480

853
–4
849

1,329

1) Temporary differences are differences between the carrying amount of an asset orliability in the balance sheet and its tax base. Taxable temporary differences give rise to deferred tax assets and liabilities.

Deferred tax assets on tax losses carried forward relates mainly to the Baltic countries and are based on SEB's assessment offuture earnings in respective entity.

Tax losses carried forward in the SEB Group for which the tax assets are notrecognised in the balance sheet amountto SEK 4,662m (4,537) gross.

These are notrecognised due to the uncertainty in the possibility to use them. This includes losses where the amount can only be used fortrade tax. The potentialtax asset notrecognised is SEK 919m (920).

All losses carried forward except SEK 122m in Latvia due 2023, are without time limit.

Currenttax liabilities

	Group		Parent company
	2017	2016	2017	2016
Other	1,463	2,184	684	694
Recognised in profit and loss	1,463	2,184	684	694
Group contributions				161
Recognised in Shareholders' equity				161
TOTAL	1,463	2,184	684	855

Deferred tax liabilities

Accelerated tax depreciation Unrealised profits in financial assets atfair value Pension plan assets and obligations, net Othertemporary differences 1)	6,388 –211 144	6,525 23 –32 293
Recognised in profit and loss	6,321	6,809
Pension plan assets and obligations, net Unrealised profits in cash flow hedges Unrealised profits in available-for-sale financial assets	1,372 336 49	44 1,526 95	336	677
Recognised in Shareholders' equity	1,758	1,665	336	677
TOTAL	8,079	8,474	336	677

Until and including 2017, no income tax is paid in Estonia unless profitis dis tributed as dividend. No deferred tax liability is recognised related to possible future tax costs on dividends from Estonia. The tax rate applicable to divi-

dends in Estonia is 20 per cent (20).

16 Earnings per share

		Group
	2017	2016
Net profit attributable to shareholders, SEKm Weighted average number of shares, millions Basic earnings per share, SEK	16,244 2,168 7.49	10,618 2,178 4.88
Net profit attributable to shareholders, SEKm Weighted average number of diluted shares, millions Diluted earnings per share, SEK	16,244 2,178 7.46	10,618 2,188 4.85
Dilution1)
Weighted average number of shares, millions Adjustmentfor diluted weighted average number of	2,168	2,178
additional ClassA-shares, millions Weighted average number of diluted shares, millions	10 2,178	10 2,188

1) Calculated dilution based on the estimated economic value ofthe long-term incentive programmes.

17 Risk disclosures

SEB's profitability is directly dependent upon its ability to evaluate, manage and price the risks encountered, while maintaining an adequate capital and liquidity position to meet unforeseen events. Risk, liquidity and capital man agement are integral parts of SEB's long-term strategic and business planning processes.

17a Credit risk

Definition

Creditrisk is the risk ofloss due to the failure of an obligorto fulfil its obliga tions towards SEB. The definition also comprises counterparty risk derived from the trading operations, country risk, settlementrisk, and credit concentration risk.

The main risk in SEB is creditrisk, which arises in the lending and commitments to customers, including corporates,financial institutions, public sector entities and private individuals. This is referred to as the credit portfolio. SEB's total credit exposure consists ofthe credit portfolio as well as debtinstruments and repos.

Risk management

Credit policy and approval process

The main principle in SEB's credit policy is that all lending is based on credit analysis and is proportionate to the customer's cash flow and ability to repay. The customer shall be known by the bank and the purpose ofthe loan shall be fully understood.

A credit approval is based on an evaluation ofthe customer's creditworthiness and the type of credit. Relevantfactors include the customer's current and anticipated financial position and protection provided by covenants and collateral. A credit approvaltakes the proposed transaction into account as well as the customer's total business with the bank. The process differs depending on the type of customer (e.g.,retail, corporate orinstitutional),risk level, and size and type oftransaction. Independent and professional credit analysis is particularly importantforlarge corporate customers. For private individuals and small businesses,the credit approval is often based on credit scoring models. Every credit decision of significance requires approvalfrom an independent credit officer.

Credit decision-making is based on a hierarchical structure, with the Group Risk Committee being the highest credit granting body, subjectto limited exceptions. Below the Group Risk Committee,there are divisional credit com mittees and, in turn, local credit committees depending on the location ofthe customer, with small approval authorities for certain bank officers. The approval mandates for each level are set on a risk-adjusted basis using both quantitative and qualitative criteria.

SEB's credit policies reflectthe Group's approach to sustainability as described in the Corporate Sustainability Policy,the Environmental Policy, and the Credit Policy on Corporate Sustainability. Position statements on climate change, child labour, and access to fresh water, as well as a number ofindustry sector policies shall be considered in the credit granting process and are also used in customer dialogues. Environmental, social and governance risks shall be considered in the credit analysis.

Limits and monitoring

To manage the creditrisk forindividual customers or customer groups, a limitis established thatreflects the maximum exposure that SEB is willing Furtherinformation about SEB's risk, liquidity and capital managementis available on pages 44–49, notes 19–20 and in SEB's report under Pillar 3: Capital Adequacy and Risk Management Report (available on www.sebgroup.com).

to accept. Limits are also established fortotal exposure in countries in certain risk classes, certain customer segments and for settlementrisks in the trading operations.

SEB continuously reviews the quality ofits credit exposures. Alltotal limits and risk classes are reviewed atleast annually by a credit approval body (a credit committee consisting of atleasttwo bank officers as authorised by the Group's CreditInstruction, adopted by the Board). Weak orimpaired exposures are subjectto more frequentreviews. The objective is to identify credit exposures with an elevated risk ofloss at an early stage and to work together with the customertowards a solution that enables the customerto meetits financial obligations and SEB to avoid orlimit creditlosses.

Loans where the contractualterms have been amended in favour ofthe customer due to financial difficulties are referred to as forborne loans. For bearance measures range from amortisation holidays (the most common measure) to refinancing with new terms and debtforgiveness. Changes in contractualterms may be so significantthatthe loan can also be considered impaired. A relevant credit approval body shall approve the forbearance measures as well as the classification ofthe loan as being forborne or not. In its core markets, SEB maintains local workoutteams that are engaged in problem exposures. These are supported by a global workoutfunction with overall responsibility for managing problem exposures.

Impairment provisioning process

Provisions are made for probable creditlosses on individually assessed loans and for portfolio assessed loans. Loans to corporate,real estate and institu tional counterparties are primarily individually assessed and specific provi sions are made foridentified impaired loans (individually assessed impaired loans).

Loans that have not been deemed to be impaired on an individual basis and which have similar creditrisk characteristics are grouped together and assessed collectively forimpairment. Valuations ofloans to private individuals and small businesses are to a large extent made on a portfolio basis (port folio assessed loans). For ^a further description of the different categories of impaired loans,referto note ¹ and note 19.

The new accounting standard, IFRS 9 Financial Instruments, is effective as of 1 January 2018. It entails a change of methodology forimpairment of financial instruments accounting in which loan loss allowances are based on an expected loss modelratherthan an incurred loss model.Forfurther description of the new accounting policy forimpairment,referto note 1a.

Risk mitigation

SEB reduces risk in its credit portfolio through a number of creditrisk mitigation techniques. The method used depends on its suitability forthe product and the customerin question, its legal enforceability, and on SEB's experience and capacity to manage and controlthe particulartechnique. The mostimpor tant creditrisk mitigation techniques are collateral pledges, guarantees and

netting agreements. The most common types of pledges are real estate,float ing charges and financial securities. Forlarge corporate customers, creditrisk is often mitigated by the use of covenants. In the trading operations, daily margin arrangements are frequently used to mitigate net open counterparty exposures at any pointin time.

Credit portfolio analysis and stress tests

The risk organisation regularly reviews and assesses the aggregate credit portfolio based on industry, geography, risk class, product type, size and other parameters. Risk concentrations in geographic and industry sectors as well as in large single names are thoroughly analysed, both in respect of direct and indirect exposures and in the form of collateral, guarantees and credit derivatives. As of year-end, the 20 largest corporate exposures (in cluding real estate management) corresponded to 89 per cent of the capital base (86). Stress tests of the credit portfolio, including reverse stress tests, are performed regularly as a part of SEB's annual internal capital adequacy assessment process. Specific analyses and stress tests of certain sectors or sub-portfolios are performed as required.

Risk measurement

Credit risk is measured for all exposures, both in the banking book and the trading book. An internal ratings-based (IRB) risk classification system approved by the regulator is used for the majority of the bank's portfolios and reflects the risk of default on payment obligations. SEB received appro val for a significant amendment of its risk classification system for the non retail portfolio in the parent company at the end of 2015 and for SEB AG in 2016. Approval for the Baltic subsidiaries is still pending.

The risk classification system contains specific rating tools and PD (probability of default) scales for significant non-retail portfolios. The portfolios are measured on a risk class scale of 1–16 for the larger and mid-sized counter parties, while the SME portfolios are measured on a scale of 1–12. Defaulted counterparties are given the highest risk class, and the three risk classes prior to default are defined as "watch list". For each risk class scale, SEB makes individual one-year, through-the-cycle probability of default estimates, which are based on more than 20 years of internal and external data.

For private individuals and small businesses, SEB uses credit scoring sys tems to estimate PD for the customer. To achieve greater accuracy, SEB uses

Credit exposure by industry

Total credit exposure comprises the Group's credit portfolio (loans, leasing agreements, contingentliabilities and counterparty risks arising from deriva tive contracts),repos and debtinstruments. Exposures are presented before reserves. Interestrate and foreign exchange derivatives and repos are calcu lated using the internal model method. Other derivatives are reported after

different credit scoring models for different regions and product segments, as both data accessibility and customer characteristics normally vary by country and product.

The exposure weighted PD of the total credit portfolio decreased to 0.53 per cent at year-end (0.55).The risk distribution of the non-retail and household portfolios is shown on page 116.

Counterparty credit risk in derivative contracts

SEB enters into derivative contracts primarily to support customers in theman agement oftheirfinancial exposures. SEB also uses derivatives to protect cash flows and fair values offinancial assets and liabilities in its own book from mar ketfluctuations.

Counterparty creditrisk in derivative contracts is the risk of a counterparty notliving up to its contractual obligations where SEB has a claim on the counterparty. The claim on the counterparty corresponds to a net positive exposure in favour of SEB. Since the market value of a derivative fluctuates during the term to maturity,the uncertainty offuture market conditions must be taken into account. The potentialfuture exposure (PFE) is calculated by apply ing an add-on to current market value. The add-on is generated eitherthrough simulation (internal model method) or by applying a standard add-on which is set by a fixed value depending on producttype and time to maturity which reflects potential market movements forthe specific contract (standardised method).

Counterparty creditrisk in derivative contracts is reduced through the use of close-out netting agreements, where all positive and negative market val ues under an agreement can be netted atthe counterparty level, and through collateral arrangements.

SEB's simulation-based approach for calculating potentialfuture exposure (internal model method) is approved by the Swedish FSA for external capital reporting of counterparty creditrisk ofrepos, interestrate derivatives and FX derivatives in the parent company.

Counterparty creditrisk in derivative contracts affects the profit and loss through credit/debit valuation adjustments (CVA/DVA) reflecting the credit risk associated with derivative positions. These adjustments depend on mar ketrisk factors such as interestrate,foreign exchange rates and credit spreads. There is also a regulatory capitalrequirementfor credit valuation adjustments under Basel III.

netting of market values but before collateral arrangements and include standardised add-ons for potentialfuture exposure. Debtinstruments com prise all interest-bearing instruments at nominal amounts, considering credit derivatives and futures. Debtinstruments in the Life and Investment Management division are excluded.

	Loans		Contingentliabilities		Derivative instruments		Total
Group	2017	2016	2017	2016	2017	2016	2017	2016
Banks	41,505	50,475	22,577	25,284	26,323	31,025	90,405	106,784
Finance and insurance	70,462	65,282	40,336	39,056	25,963	28,715	136,761	133,053
Wholesale and retail	65,440	56,622	35,387	34,733	1,104	1,618	101,931	92,973
Transportation	29,976	26,961	24,071	19,913	1,968	2,226	56,015	49,100
Shipping	47,128	55,619	15,166	14,322	728	2,377	63,023	72,318
Business and household services	117,056	114,020	89,668	88,171	4,266	4,366	210,990	206,557
Construction	12,681	12,646	18,677	20,497	885	950	32,243	34,093
Manufacturing	85,633	87,152	143,416	148,604	7,154	15,390	236,204	251,146
Agriculture,forestry and fishing	17,019	13,208	3,292	2,213	325	407	20,636	15,828
Mining, oil and gas extraction	23,946	26,608	22,597	24,554	1,352	3,221	47,894	54,383
Electricity, gas and water supply	44,720	39,734	38,365	40,643	7,180	5,186	90,265	85,563
Other	26,176	26,357	6,920	7,171	448	734	33,543	34,262
Corporates	540,236	524,209	437,896	439,877	51,374	65,190	1,029,506	1,029,276
Commercialreal estate management	152,200	157,838	21,480	20,160	4,853	7,120	178,533	185,118
Residentialreal estate management	93,968	92,199	8,411	9,147	5,927	7,986	108,307	109,332
Real Estate Management	246,169	250,037	29,891	29,307	10,781	15,106	286,840	294,450
Housing co-operative associations	55,929	50,119	4,998	3,505	4	6	60,932	53,630
PublicAdministration	37,533	30,089	19,131	24,418	8,123	7,790	64,787	62,297
Household mortgage	504,885	482,531	30,446	30,859			535,331	513,390
Other	42,421	41,331	41,240	41,897	20	63	83,681	83,291
Households	547,306	523,862	71,687	72,756	20	63	619,013	596,681
Credit portfolio	1,468,678	1,428,791	586,180	595,147	96,625	119,180	2,151,483	2,143,118
Repos							1,846	386
Debtinstruments							156,000	167,969
TOTAL							2,309,329	2,311,473

Credit portfolio by industry and geography 1)

Total credit portfolio comprises theGroup's loans, leasing agreements, con tingentliabilities and counterparty risks arising fromderivative contracts. Exposures are presented before reserves. Interestrate and foreign exchange derivatives and repos are calculated using the internalmodelmethod.Other derivatives are reported after netting ofmarket values but before collateral arrangements and include standardised add-ons for potentialfuture exposure.

Group, 2017	Sweden	Denmark	Norway	Finland	Estonia	Latvia	Lithuania	Germany	Other	Total
Banks	57,160	1,824	3,761	4,109	280	89	623	3,308	19,252	90,405
Finance and insurance	87,949	1,098	3,966	1,875	714	92	157	23,640	17,271	136,761
Wholesale and retail	48,939	13,755	1,549	746	5,417	3,321	13,830	8,067	6,308	101,931
Transportation	31,439	1,169	2,785	1,638	1,624	2,826	4,093	10,227	213	56,015
Shipping	54,586	76	655	155	752	154	12		6,633	63,023
Business and household services	147,684	1,501	4,287	801	2,648	2,312	3,018	43,033	5,707	210,990
Construction	20,931	521	302	616	1,302	833	2,063	3,181	2,494	32,243
Manufacturing	153,926	5,100	5,373	11,233	5,021	2,570	5,247	31,242	16,492	236,204
Agriculture,forestry and fishing	13,266	226		51	1,862	2,682	2,449	93	7	20,636
Mining, oil and gas extraction	40,547	2	4,821	395	1,144	46	134	320	485	47,894
Electricity, gas and water supply	42,220	1,677	713	9,416	4,042	1,420	6,509	20,691	3,577	90,265
Other	27,286	707	1,303	789	273	232	217	2,655	81	33,543
Corporates	668,773	25,832	25,754	27,717	24,798	16,487	37,729	143,148	59,267	1,029,506
Commercialreal estate management Residentialreal estate management	130,156 103,849	140	2,243 25	1,624	7,360	5,988	8,727	22,277 4,433	18	178,533 108,307
Real Estate Management	234,005	140	2,267	1,624	7,360	5,988	8,727	26,710	18	286,840
Housing co-operative associations	60,932									60,932
PublicAdministration	36,764	42	590	1,781	3,247	392	1,261	20,710	1	64,787
Household mortgage Other	477,700 43,499	4,647	2,041 22,185	2,055	20,310 3,518	7,628 2,497	22,017 2,594	5	5,635 2,680	535,331 83,681
Households	521,199	4,647	24,226	2,055	23,828	10,125	24,611	5	8,316	619,012
TOTAL	1,578,833	32,486	56,598	37,286	59,513	33,081	72,950	193,881	86,855	2,151,483

2016
Banks	69,802	2,701	2,869	2,798	310	98	350	11,748	16,108	106,784
Finance and insurance	83,451	968	3,513	1,676	568	11	398	23,937	18,531	133,053
Wholesale and retail	43,811	9,380	1,665	784	5,807	2,771	11,986	9,199	7,570	92,973
Transportation	26,768	1,770	2,839	1,669	1,085	2,720	2,818	9,219	212	49,100
Shipping	61,597	1,285	1,059	163	244	179	1		7,790	72,318
Business and household services	144,116	3,754	6,857	801	2,146	2,692	3,129	39,790	3,272	206,557
Construction	22,319	852	1,579	614	994	788	1,523	3,231	2,193	34,093
Manufacturing	168,255	7,507	4,533	8,620	3,562	2,452	4,889	35,387	15,941	251,146
Agriculture,forestry and fishing	9,636	186	5	55	1,801	2,403	1,629	91	22	15,828
Mining, oil and gas extraction	46,480	5	5,711	402	1,163	59	129	1	433	54,383
Electricity, gas and water supply	43,164	845	1,063	10,046	2,447	1,222	6,635	19,325	816	85,563
Other	27,166	979	1,318	886	211	158	187	3,273	84	34,262
Corporates	676,763	27,531	30,142	25,716	20,028	15,455	33,324	143,453	56,864	1,029,276
Commercialreal estate management	128,736	141	2,274	1,775	7,445	4,294	8,695	31,756	2	185,118
Residentialreal estate management	103,397		49			280	5	5,601		109,332
Real Estate Management	232,133	141	2,323	1,775	7,445	4,574	8,700	37,357	2	294,450
Housing co-operative associations	53,608								22	53,630
PublicAdministration	26,870	11	698	1,340	3,753	629	895	28,098	3	62,297
Household mortgage	461,221		2,186		18,000	7,039	19,881		5,063	513,390
Other	42,880	4,547	23,111	1,993	3,133	2,392	2,445	16	2,774	83,291
Households	504,101	4,547	25,297	1,993	21,133	9,431	22,326	16	7,837	596,681
TOTAL	1,563,277	34,931	61,329	33,622	52,669	30,187	65,595	220,672	80,836	2,143,118

1) The geographical distribution is based on where the loan is booked.Amounts before provisions for creditlosses.

Note 17 a continued Creditrisk

Credit portfolio by PDrange

Group, 2017				Total, excluding households						Households
Category	Probability of Default (PD) range	S&P/Moody's 1)	Banks	Corporates	Real estate management	Housing Co-ops	Public Admin.	Total	Households 2) PDrange
Investment grade	0 < 0.01% 0.01 < 0.03% 0.03 < 0.12% 0.12 < 0.46%	AAA/Aaa AA/Aa A/A BBB/Baa	4.3% 43.4% 30.6% 12.5%	0.5% 11.3% 26.0% 39.1%	0.1% 5.0% 13.6% 50.0%	0.0% 0.0% 9.7% 85.9%	57.6% 28.2% 12.6% 1.4%	3.1% 12.3% 22.7% 39.8%	0 < 0.2% 0.2 < 0.4% 0.4 < 0.6%	65.2% 19.3% 0.3%
	0.46 < 1.74% 1.74 < 7%	BB/Ba B/B	4.7% 1.9%	17.1% 4.2%	29.6% 1.2%	4.4% 0.1%	0.3% 0.0%	17.5% 3.1%	0.6 < 1% 1 < 5%	7.4% 5.4%
Watch list	7 < 9% 9 < 22% 22 < 100%	B/B CCC/Caa C/C	0.6% 1.9% 0.0%	0.3% 0.7% 0.0%	0.0% 0.2% 0.1%	0.0% 0.0% 0.0%	0.0% 0.0% 0.0%	0.3% 0.6% 0.0%	5 < 10% 10 < 30% 30 < 50%	0.9% 0.9% 0.3%
Default	100%	D	0.0%	0.8%	0.3%	0.0%	0.0%	0.6%	50 < 100%	0.4%
TOTAL			100%	100%	100%	100%	100%	100%	TOTAL	100%

2016

Investment grade	0 < 0.01% 0.01 < 0.03% 0.03 < 0.12% 0.12 < 0.46%	AAA/Aaa AA/Aa A/A BBB/Baa	5.7% 46.3% 31.3% 9.7%	0.7% 12.1% 27.4% 36.8%	0.0% 4.1% 16.5% 48.5%	0.0% 0.1% 28.6% 68.0%	25.9% 60.9% 10.3% 2.4%	1.9% 14.5% 25.0% 36.8%	0 < 0.2% 0.2 < 0.4% 0.4 < 0.6%	66.1% 15.9% 0.3%
	0.46 < 1.74% 1.74 < 7%	BB/Ba B/B	3.5% 1.9%	18.0% 3.3%	28.1% 1.8%	2.7% 0.7%	0.1% 0.4%	17.6% 2.7%	0.6 < 1% 1 < 5%	10.8% 4.4%
Watch list	7 < 9% 9 < 22% 22 < 100%	B/B CCC/Caa C/C	0.2% 1.2% 0.1%	0.7% 0.5% 0.0%	0.1% 0.3% 0.1%	0.0% 0.0% 0.0%	0.0% 0.0% 0.0%	0.5% 0.5% 0.0%	5 < 10% 10 < 30% 30 < 50%	1.0% 0.7% 0.3%
Default	100%	D	0.0%	0.5%	0.4%	0.0%	0.0%	0.4%	50 < 100%	0.5%
TOTAL			100%	100%	100%	100%	100%	100%	TOTAL	100%

1) Estimated link between internal PDs and externalratings based on comparison of historical default outcomes.

2)Household exposure based on internalratings based (IRB) reported as exposure in the event of a default (EAD– exposure at default).

Credit portfolio protected by guarantees, credit derivatives and collaterals 1)

		Group
2017	Credit portfolio	Protection via guarantees and credit derivatives	Protection via pledged collaterals	Of which, financial collaterals	Credit portfolio	Protection via guarantees and credit derivatives	Protection via pledged collaterals	Of which, financial collaterals
Banks	90,405	2,579	17,106	16,266	84,682	645	16,652	14,678
Corporates, Real estate management
andHousing co-operative associations	1,377,278	33,517	460,390	32,170	1,080,154	27,040	389,263	29,934
PublicAdministration	64,787	5,234	7,716	3,495	37,023	3,615	5,536	2,598
Households	619,012	3,577	467,703	3,704	502,096	338	417,691	338
TOTAL	2,151,483	44,907	952,915	55,635	1,703,955	31,638	829,141	47,548
2016
Banks	106,784	3,582	9,415	7,793	92,923	1,434	7,461	6,585
Corporates, Real estate management
andHousing co-operative associations	1,377,356	50,102	475,067	30,360	1,080,970	47,719	398,257	28,090
PublicAdministration	62,297	30,601	611	611	27,273	24,291	7	7
Households	596,681	2,600	501,279	2,891	486,000		448,234
TOTAL	2,143,118	86,885	986,372	41,655	1,687,166	73,444	853,959	34,682

1)Only riskmitigation arrangements eligible in capital adequacy reporting are represented in the tables above.

Note 17 a continued Creditrisk

Loan portfolio by industry and geography 1)

The loan portfolio comprises the Group's loans and leasing agreements.

2017	Sweden	Denmark	Norway	Finland	Estonia	Latvia	Lithuania	Germany	Other	Total
Banks	22,855	319	1,197	471	264	30	579	1,026	14,765	41,505
Finance and insurance	51,858	147	1,452	123	632	86	14	9,149	7,001	70,462
Wholesale and retail	30,046	13,077	1,116	598	3,758	2,188	8,486	2,095	4,075	65,440
Transportation	13,828	685	1,948	1,492	1,269	1,951	3,450	5,335	17	29,976
Shipping	40,534	14	445	155	216	151	9		5,603	47,128
Business and household services	89,019	1,017	745	113	2,250	1,747	2,173	17,568	2,422	117,056
Construction	10,383	308	225	43	437	207	940	67	72	12,681
Manufacturing	52,154	3,339	1,328	2,821	3,547	1,852	3,242	7,616	9,734	85,633
Agriculture,forestry and fishing	10,920	12	0	51	1,737	2,321	1,977			17,019
Mining, oil and gas extraction	21,641	2	731	395	630	41	81	319	105	23,946
Electricity, gas and water supply	21,346	1,575	146	8,578	1,327	1,291	3,573	6,791	92	44,720
Other	21,686	707	585	592	250	218	188	1,931	19	26,176
Corporates	363,415	20,883	8,723	14,962	16,054	12,054	24,133	50,872	29,139	540,236
Commercialreal estate management	109,410	43	1,454	438	6,714	4,728	8,529	20,884		152,200
Residentialreal estate management	89,577		19					4,372		93,968
Real Estate Management	198,988	43	1,473	438	6,714	4,728	8,529	25,256		246,169
Housing co-operative associations	55,929									55,929
PublicAdministration	17,541	42	75	1,107	1,242	309	803	16,414		37,533
Household mortgage	448,886		2,041		19,745	7,479	21,617		5,117	504,885
Other	24,156	2,455	5,479	1,028	2,936	1,925	1,958	5	2,479	42,421
Households	473,042	2,455	7,520	1,028	22,682	9,404	23,575	5	7,596	547,306
TOTAL	1,131,770	23,742	18,988	18,006	46,955	26,525	57,620	93,573	51,500	1,468,678
Repos, creditinstitutions Repos, general public Debtinstruments Reserves										56 42,231 13,030 –4,476
TOTAL										1,519,518

²⁰¹⁶

Banks	29,647	271	414	425	260	82	285	7,447	11,644	50,475
Finance and insurance	45,506	339	1,006	204	252	10	194	9,344	8,427	65,282
Wholesale and retail	26,393	7,878	1,026	664	3,795	1,577	7,729	2,154	5,406	56,622
Transportation	13,331	649	2,052	1,499	778	1,668	2,330	4,590	64	26,961
Shipping	48,359	7	519	163	240	173	1		6,157	55,619
Business and household services	85,926	930	3,032	279	1,927	2,242	2,453	16,615	616	114,020
Construction	10,963	233	170	17	380	167	522	187	7	12,646
Manufacturing	55,434	2,729	861	3,698	2,330	1,823	3,150	7,487	9,640	87,152
Agriculture,forestry and fishing	8,097	15		53	1,683	2,054	1,304		2	13,208
Mining, oil and gas extraction	25,146	5	86	402	676	48	51		194	26,608
Electricity, gas and water supply	20,655	24	1	8,236	1,329	827	4,112	4,420	130	39,734
Other	21,006	937	579	591	188	137	161	2,734	24	26,357
Corporates	360,816	13,746	9,332	15,806	13,578	10,726	22,007	47,531	30,667	524,209
Commercialreal estate management	106,902	11	1,345	451	6,868	4,148	7,893	30,220		157,838
Residentialreal estate management	86,746		41			276	5	5,131		92,199
Real Estate Management	193,648	11	1,386	451	6,868	4,424	7,898	35,351		250,037
Housing co-operative associations	50,097								22	50,119
PublicAdministration	7,573	11	85	1,123	1,058	393	641	19,205		30,089
Household mortgage	431,245		2,186		17,596	6,944	19,497		5,063	482,531
Other	23,545	2,407	5,907	1,044	2,578	1,835	1,855	15	2,145	41,331
Households	454,790	2,407	8,093	1,044	20,174	8,779	21,352	15	7,208	523,862
TOTAL	1,096,571	16,446	19,310	18,849	41,938	24,404	52,183	109,549	49,541	1,428,791
Repos, creditinstitutions Repos, general public Debtinstruments Reserves										914 63,524 15,106 –4,789
TOTAL										1,503,546

1) The geographical distribution is based on where the loan is booked.

Note 17 a continued Creditrisk

Debtinstruments

At year-end 2017, SEB's credit exposure in the bond portfolio amounted to SEK 156bn (168). The exposure comprises all interest-bearing instruments at nominal amounts including certain credit derivatives and futures.

Distribution by geography

		Central&local governments	Corporates		Covered bonds		Asset-backed securities		Financials			Total
	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016
Sweden	19.8%	10.3%	0.8%	0.7%	15.7%	16.0%	0.0%	0.0%	0.2%	0.2%	36.5%	27.2%
Germany	20.6%	23.8%	0.1%	0.1%	0.2%	0.1%	3.9%	3.6%	4.4%	2.7%	29.2%	30.3%
Norway	3.5%	3.4%	0.3%	0.1%	3.9%	3.1%	0.0%	0.0%	0.9%	0.9%	8.7%	7.5%
Denmark	0.1%	2.7%	0.1%	0.1%	8.0%	9.5%	0.0%	0.0%	0.4%	0.7%	8.5%	13.0%
US	7.5%	7.1%	0.0%	0.0%	0.0%	0.0%	0.0%	0.2%	0.0%	0.0%	7.5%	7.3%
Finland	3.0%	2.8%	0.1%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.1%	3.1%	2.9%
Luxembourg	1.0%	3.3%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.3%	0.0%	1.3%	3.3%
Netherlands	0.4%	0.8%	0.0%	0.0%	0.0%	0.5%	0.0%	0.1%	0.0%	0.3%	0.4%	1.7%
Spain	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.4%	0.0%	0.1%	0.0%	0.5%
Ireland	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.1%	0.0%	0.0%	0.0%	0.1%
Italy	0.0%	0.1%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.1%
Portugal	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.1%	0.0%	0.0%	0.0%	0.1%
Greece	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%
Europe, other	3.0%	4.2%	0.0%	0.2%	0.0%	0.0%	0.0%	0.3%	0.0%	0.2%	3.1%	4.9%
Rest of world	1.7%	1.1%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	1.7%	1.1%
TOTAL	60.5%	59.6%	1.5%	1.2%	27.9%	29.2%	3.9%	4.8%	6.2%	5.2%	100.0%	100.0%
Distribution by rating
AAA	42.5%	38.6%	0.2%	0.1%	27.4%	28.3%	3.3%	3.4%	4.2%	2.6%	77.5%	73.0%
AA	11.7%	11.4%	0.0%	0.0%	0.2%	0.5%	0.0%	0.1%	0.9%	1.0%	12.8%	13.0%
A	0.9%	2.7%	0.1%	0.1%	0.0%	0.0%	0.6%	0.7%	0.1%	0.2%	1.7%	3.7%
BBB	0.0%	0.0%	0.2%	0.4%	0.0%	0.0%	0.0%	0.4%	0.1%	0.1%	0.3%	0.9%
BB/B	0.0%	0.0%	0.2%	0.0%	0.0%	0.0%	0.0%	0.2%	0.0%	0.0%	0.2%	0.2%

CCC/CC 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% No issue rating 1) 5.4% 6.9% 0.8% 0.6% 0.3% 0.4% 0.0% 0.0% 0.9% 1.3% 7.5% 9.2% TOTAL 60.5% 59.6% 1.5% 1.2% 27.9% 29.2% 3.9% 4.8% 6.2% 5.2% 100.0% 100.0%

1) MainlyGerman local governments (Bundesländer).

17b Market risk

Definition

Marketrisk is the risk oflosses in balance sheet positions and obligations, arising from adversemovements in market prices. Marketrisk can arise from changes in interestrates,foreign exchange rates, credit spreads, commodity and equity prices, implied volatilities, inflation and marketliquidity.Aclear dis tinction is made between marketrisks related to trading activity, i.e.,trading book risks, and structural market and netinterestincome risks, i.e., banking book risks. Whereas the trading book is under a daily mark-to-marketregime, positions in the banking book are typically held at amortised cost.

Risk management

Market risks in the trading book arise from SEB's customer-driven trading activities and in the liquidity portfolio. The trading activities are carried out by the Large Corporates & Financial Institutions division in its capacity as market maker in international foreign exchange, equity and debt capital mar kets. The liquidity portfolio, which is managed by the treasury function, is part of SEB's liquidity reserve and consists of investments in pledgeable and highly liquid bonds.

Marketrisk in the banking book arises as a result of balance sheet mismatches in currencies, interestterms and interestrate periods. The treasury function has overallresponsibility for managing these risks, which are con solidated centrally.

the defined benefit plans for employees as a result of mismatches between the market value of assets and liabilities. Marketrisks in the pension obliga tions and the life insurance business are notincluded in the marketrisk figures below.Referto note 17e forinformation on marketrisk in the life insurance business. The Board ofDirectors defines how much marketrisk is acceptable by set-

Marketrisk also arises in the bank's traditional life insurance operations and

ting the overall marketrisk limits and general instructions. The marketrisk tol erance and limits are defined forthe trading book, banking book and defined benefit plans. TheGroup Risk Committee delegates the marketrisk mandate to the divisions and the treasury function, which in turn further allocate the limits internally. The trading book risks are managed atthe differenttrading locations within a comprehensive set oflimits in VaR, stop-loss, sensitivities and stress tests.

The risk organisation measures,follows up and reports the marketrisk taken by the various units within theGroup on a daily basis. The risk organisa tion also independently verifies the valuation of positions held atfair value and calculates the capital bufferfor prudent valuation. The risk controlfunction is presentin the trading rooms andmonitors limit compliance and market prices at closing as well as valuation standards and the introduction of new products. Marketrisks are reported atleast on a monthly basis to theGroup Risk Com mittee and the Board's Risk and Capital Committee.

SEB is exposed to the following marketrisk types:

Risk type	Defined as the risk ofloss orreduced income due to	Source
Interestrate risk	Changes in interestrates	Inherentin all banking business
Credit spread risk	A change in the creditworthiness of an issuer of, forinstance, a bond or a credit derivative	Primarily presentin the bank's bond holdings
Foreign exchange risk	Variations in the exchange rates	Foreign exchange trading and the bank's operations in variousmarkets
Equity price risk	Variations in equity prices	Marketmaking and customer activity in equities and equity derivatives
Commodity price risk	Variations in commodity prices	Customer-driven activities in commodities
Volatility risk	Changes in implied volatility	Market making and customer activity of options across all asset classes
Inflation risk	Change in inflation	Bond holdings, value of assets on balance sheet
Marketliquidity risk	Bid-ask spread widenings	Sale of assets or closing of positions
Credit value adjustment1)	Variations in the counterparty creditrisk based on the expected future exposure	OTC derivative contracts

1) Credit value adjustmentis fundamentally creditrisk, butthe exposure is calculated using marketrisk drivers (interestrate, currency, etc.).

Note 17 b continued Marketrisk

Risk measurement

When assessing the marketrisk exposure, SEB uses measures that capture losses under normal and stressed market conditions. Marketrisks under nor mal market circumstances are measured using Value at Risk (VaR) as well as specific measures that are relevantforthe various risk types. These measures are complemented by stress tests and scenario analyses, in which poten tial losses under extreme market conditions are estimated. Since no method can cover allrisks at alltimes, several approaches are used, and the results are assessed based on judgment and experience.

Value at Risk and Stressed Value at Risk

VaR expresses the maximum potential loss that could arise during a certain time period with a given degree of probability. SEB uses a historical simulation VaR model with a ten-day time horizon and 99 per cent confidence intervalto

measure, limit and report VaR. The model aggregates marketrisk exposure for allrisk types and covers a wide range ofrisk factors in all asset classes. SEB also uses a stressed VaR measure, where VaR is calculated forthe cur rent portfolio using market data from a historic,turbulenttime period cover ing the Lehman Brothers' default. The VaR model is validated using backtesting analysis.

Alimitation of SEB'sVaR model is thatit uses historical data to estimate potentialmarket changes.As such it may not predict all outcomes, especially in a rapidly changing market.Also,VaR does nottake into account any actions to reduce risk as the model assumes thatthe portfolio is unchanged.

SEB'sVaR and stressedVaR models have been approved by the Swedish FSAfor calculation ofregulatory capitalrequirements for allthe general marketrisks in the bank's trading book in the parent bank and the subsidiary Skandinaviska Enskilda Banken S.A. in Luxembourg.

Value atRisk

	2017		31Dec	Average	Average
Trading Book (99%,ten days)	Min	Max	2017	2017	2016
Commodities risk	6	42	7	18	22
Credit spread risk	28	73	28	47	63
Equity price risk	12	61	12	29	26
Foreign exchange rate risk	6	54	39	28	32
Interestrate risk	38	82	54	58	72
Volatilities risk	10	38	15	19	17
Diversification			–79	–108	–120
TOTAL	64	119	76	91	112
Banking Book (99%,ten days)
Credit spread risk	37	61	38	48	60
Equity price risk	11	29	16	15	58
Foreign exchange rate risk		1
Interestrate risk	121	172	172	143	232
Diversification			–46	–45	–110
TOTAL	145	182	180	161	240

Stress tests and scenario analysis

Scenario analysis and stress tests are a key part ofthe risk management framework, complementing the VaR measure. In particular,they testthe portfolios using scenarios otherthan those available in the VaR simulation win dow, and coverlongertime horizons. SEB stresses its portfolios by applying extreme movements in marketfactors which have been observed in the past (historical scenarios) as well as extreme movements that could potentially happen in the future (hypothetical orforward-looking scenarios). Reverse stress tests are also used forthe totaltrading portfolio as well as forindivid ual divisions and business units,to identify scenarios that would lead to a given significantloss,forinstance,the breach of a stop-loss limit. This type

of analysis provides management with a view on the potential impactthat large market moves in individualrisk factors, as well as broader market sce narios, could have on a portfolio. The risk tolerance framework includes limits on different stress test scenarios.

Specific risk measures

VaR and stress tests are complemented by specific risk measures including Delta 1% forinterestrisk, and Single and Aggregated FX for currency risk.

In addition, all units that handle risk forfinancial instruments valued at mar ket are limited by a stop-loss limit. The stop-loss limitindicates the maximum loss a unit can incur before mitigating actions are taken.

CVA/DVAsensitivities

The credit and debit valuation adjustments (CVA/DVA) are sensitive to market movements, in particularto movements in interestrates, credit spreads and foreign exchange rates.

In orderto monitorthis sensitivity, SEB stresses these asset classes on a regular basis and calculates the impact on the valuation adjustments. This is done by comparing the original CVA/DVA numbers with the stressed CVA/DVA numbers where the currentrates and credit spreads have been moved up 100 basis points and where SEK has appreciated 5 per centto all other currencies compared with the currentlevel.

2017	CVA	DVA	Total
Interestrates + 100bp	104	49	153
Credit spreads + 100bp	–685	373	–312
SEK + 5%	11	–5	6

2016

Interestrates + 100bp	180	75	255
Credit spreads + 100bp	–928	384	–544
SEK + 5%	–22	6	–16

Note 17 b continued Marketrisk

Interestrate risk

Interestrate risk refers to the risk thatthe value ofthe Group's assets, liabili ties and interest-related derivatives will be negatively affected by changes in interestrates or otherrelevantrisk factors.

The majority ofthe Group's interestrate risks are structural and arise within the banking operations when there is a mismatch between the interest

Interestrate sensitivity in trading book pertime buckets

fixing periods of assets and liabilities, including derivatives.

The table below shows the sensitivity to a +100 basis point change in the interestrates on the banking and trading book by currency and in different buckets of maturity. This is calculated as the value change for a shift of 1 basis point and then scaled up to reflect a 100 basis point move.

2017 EUR SEK USD	< 3 months 20 37 –91	3–12 months –13 4 –37	1–2 years 88 –53 –140	2–5 years 227 213 –30	5–10 years 105 152 –32	>10 years –256 11 –5	Total 171 364 –336
Other	–2	–138	66	–232	–67	339	–33
TOTAL	–36	–184	–39	178	158	89	166
2016
EUR	11	182	–146	164	187	–124	275
SEK	23	246	–553	286	170	–74	98
USD	–112	17	–29	–17	–53	–10	–205
Other	–2	–111	24	–94	–124	155	–151
TOTAL	–80	335	–704	339	180	–54	17

Interestrate sensitivity in banking book pertime buckets 1)

2017	< 3 months	3–12 months	1–2 years	2–5 years	5–10 years	>10 years	Total
EUR SEK USD Other	16 –199 68 –15	–349 –715 29 –58	–16 –397 50 –5	–311 –643 15 –35	–7 –258 –4 –4	116 70 149	–551 –2,142 307 –117
TOTAL	–131	–1,093	–368	–973	–273	335	–2,503
2016
EUR SEK USD Other	30 –249 80 –26	–237 –597 107 –54	–86 –281 2 –16	–382 –524 25 –44	–47 –243 –3 –5	210 85 170	–512 –1,808 380 –145
TOTAL	–165	–781	–381	–925	–298	465	–2,085

1) by currency SEK m/100 bp

17c Operational risk

Definition

Operationalrisk is the risk ofloss resulting from inadequate orfailed internal processes, people and systems (e.g., breakdown ofIT systems, mistakes, fraud, other deficiencies in internal control) orfrom external events (natural disasters, external crime, etc.). The definition includes compliance, legal and financialreporting, information security, security and venture execution risk, but excludes strategic and reputationalrisk.

Risk management

Operationalrisk is inherentin all of SEB's operations and the responsibility to manage operationalrisks rests with all managers throughoutthe bank. SEB aims to maintain a sound risk culture with low operationalrisk and loss levelthrough an effective internal control environment by ensuring a struc tured and consistent usage ofrisk mitigating tools and processes.

All new or changed products, processes and/or systems as well as reorgan isations are evaluated in a group-common New Product Approval Process (NPAP). The aim is to identify potential operationalrisks and ensure that pro active measures are taken to protect SEB from entering into unintended risktaking that cannot be immediately managed by the organisation. The process is also used for yearly reviews of significant outsourcing arrangements in the Group.

All business units with significantrisk embedded in their operations shall regularly complete Risk and Control Self-Assessments (RCSA) according to a group-wide methodology. The assessments are designed to identify and mitigate significant operationalrisks embedded in SEB's various business and support processes. There is comprehensive participation by each business unitthroughoutthe organisation. The RCSA framework is used to analyse SEB's operationalrisk profile and help achieve operational excellence and high performance.

SEB ensures thatthe organisation is prepared to respond to and operate throughout a period of major disruption by identifying critical activities and maintaining updated,tested and communicated business continuity plans in a group-wide system forthis purpose.

All employees are required to escalate and registerrisk-related events orincidents so thatrisks can be properly identified, assessed, monitored, mitigated and reported. SEB uses a group-wide IT application to capture risk events and other operationalrisk data for analysis and benchmarking towards peers.

SEB conducts regulartraining and education in key areas, including manda tory training for all staffin information security,fraud prevention, anti-money laundering, know-your-customer procedures and SEB's Code of Business Conduct. SEB also has a formal whistle-blower procedure that encourages employees to reportimproprieties and unethical orillegal conduct.

Cyber- and other organized crime continue to evolve and SEB continuously works to enhance and improve its already well established processes for mitigating, evaluating and following up on existing and future cyberrisks.

The risk organisation is responsible for measuring and reporting SEB's operationalrisks. Significantincidents and the risk level, both on Group and divisional/site level, is analysed and reported monthly to the Group Executive Committee,the Group Risk Committee and the Board's Risk and Capital Com mittee as well as local/divisional management. In 2017,the total losses from operational incidents amounted to SEK 185m (263).

Risk measurement

SEB uses theAdvancedMeasurementApproach (AMA) to calculate the regula tory capitalrequirementfor operationalrisk.

17d Business risk

Definition

Business risk is the risk oflowerrevenues due to reduced volumes, price pressure or competition. Business risk includes venture decision risk (related to undertakings such as acquisitions, large IT projects,transformations, out sourcing, etc.). Strategic risk is close in nature to business risk, butfocuses on large-scale or structuralrisk factors. Reputationalrisk is the risk arising from negative perception of SEB orthe industry in general.

Risk management

Business, strategic and reputationalrisks are inherentin doing business. Digitalisation ofthe banking industry is accelerating and new types of com petitors are emerging. The extensive new regulatory framework for banking and financial institutions is significantly impacting the industry. Corporate sustainability plays an increasingly important part of a company's reputation. SEB continuously works to mitigate business, strategic and reputationalrisks in many ways,for example, with regular strategic business reviews, proactive cost management, an agile step-by-step IT development approach, an ambitious corporate sustainability agenda and active dialogues on regulatory matters.

17e Insurance risk

Definition

Insurance risk in SEB consists of allrisk related to theGroup's insurance opera tions. SEB's life insurance operations consist of unit-linked insurance and tradi tional life insurance. The main risks include marketrisk and underwriting risk.

Marketrisk in the insurance business is the risk forlosses on traditional life insurance policies with guaranteed benefits due to changes in fair value of assets and liabilities. Such changes in fair value can be caused by changes in interestrates, credit spreads, equity prices, property values, exchange rates and implied volatilities.

Underwriting risk pertains to the risk ofloss or of negative changes in the value ofinsurance liabilities (technical provisions) due to inadequate pricing and/or provisioning assumptions. Itincludes factors such as average mortality, longevity, disability/morbidity (including risks thatresultfrom fluctuation in the timing and amount of claim settlements), catastrophe risk (e.g., extreme orirregular events), expense risk and lapse risk (i.e., policyholder behaviour risk).

Risk management and measurement

In unit-linked insurance,the marketrisk is borne by the policyholder, while the underwriting risk is limited. However,there is an indirect exposure to market risk through the policyholders' investments, since a significant part ofthe future income stream ofthe life insurance business is based on assets under management. The profitability for existing and new business is closely monitored.

Marketrisk in the traditional life insurance products with guaranteed returns is mitigated through standard marketrisk hedging schemes and monitored through asset/liability management (ALM) risk measures and stress tests. This is supplemented by marketrisk tools such as VaR and scenario

analysis. In the traditional products,the difference between asset values and the guaranteed obligations constitutes a buffer which is intended to cover SEB's risk.

Underwriting risks are controlled through the use of actuarial analysis and stress tests ofthe existing insurance portfolio. Mortality and disability/mor bidity risks are reinsured forlarge individual claims orfor several claims attributable to the same event. Underwriting risk parameters are validated annually. Policyholders within certain traditional life insurance products are free to move their policies from SEB. The utilisation ofthis option has been very low historically. Nevertheless,to safeguard against unplanned cash outflows the bank maintains sufficientliquid investments. Furthermore, continuous cash flow analysis is conducted to mitigate this risk.

The risk organisation is responsible for measuring and controlling the risks inherentin SEB's life insurance operations. Measurement and monitoring of ALM risk measures, VaR, scenario analysis and stress tests are performed on a regular basis for each insurance company. The risk organisation also forms part ofthe independentrisk managementfunction in the respective insur ance companies from a Solvency II perspective. Key risks are reported to the Group Risk Committee,the Board's Risk and Capital Committee and to the boards of each insurance company.

Solvency II, effective as of 1 January 2016, is a harmonised regulatory framework with respectto governance, internal control and capitalrequire ments across insurance companies in the EU. Solvency II calculations are performed atleast monthly, and the required reporting is submitted to the financial supervisors on a quarterly basis. Calculations show that SEB's life companies are financially strong and resilientto different stressed scenarios.

17f Liquidity risk

Definition

Liquidity risk is the risk thatthe Group is unable to refinance its existing assets oris unable to meetthe demand for additional liquidity. Liquidity risk also entails the risk thatthe Group is forced to borrow at unfavourable rates oris forced to sell assets at a loss in orderto meetits payment commitments.

Liquidity management and risk measurement

The Board of Directors has established a comprehensive framework for man aging the bank's liquidity requirements in the short- and long-term. The aim of SEB's liquidity risk managementis to ensure thatthe Group has a controlled liquidity risk situation, with adequate volumes ofliquid assets in allrelevant currencies to meetits liquidity requirements in allforeseeable circumstances, withoutincurring substantial cost.

The liquidity risk is managed through the limits set by the Board and toler ances set by the Group Risk Committee. Liquidity limits are setforthe Group, branches and specific legal entities, as well as for exposures in certain currencies. The treasury function has the overallresponsibility forliquidity management and funding, supported by localtreasury centres in the Group's major markets. The risk function regularly measures and reports limit utilisation based on different market conditions and liquidity stress tests to the Group Risk Committee and the Board's Risk and Capital Committee.

Liquidity management and the structuring ofthe balance sheetfrom a liquidity point of view are built on three basic perspectives: (i) the structural liquidity perspective, in which stable funding is putin relation to illiquid assets; (ii) the bank's tolerance for short-term stress in the form of a shut down ofthe wholesale and interbank funding markets (wholesale funding

dependence); and, (iii) the bank's tolerance to a severe stress scenario (survival horizon) where, in addition to a limited funding market,the bank experiences a severe outflow of deposits.

Structural liquidity risk

In orderto maintain a sound structural liquidity position,the structure ofthe liability side should be based on the composition of assets. The more longterm lending and otherilliquid assets,the more stable funding is required. In SEB,this is measured as the Core Gap ratio, which is conceptually equivalent to the Basel Committee's Net Stable Funding Ratio (NSFR), i.e., a ratio between stable funding (over 1 year maturity) and illiquid assets (over 1 year maturity). The difference between the internal Core Gap ratio and the exter nal NSFR is thatthe Core Gap ratio is calculated on a more detailed level based on internal statistics, which results in different weightings of available and required stable funding.

Wholesale funding dependence

One way of measuring the capacity for deteriorating market conditions is to assess the time that SEB's liquid assets would lastifthe wholesale and inter bank fundingmarkets were closed. Thismeasure,the maturing funding ratio, captures the bank's liquid assets in relation to wholesale funding and netinterbank borrowings that come to maturity overthe comingmonths, or as the number of months it would take to deplete the liquid assets in a scenario where all maturing funding must be financed through liquid assets. Wholesale funding dependence is also measured as the loan to depositratio.

Stressed survival horizon

Severe stress can be modelled by combining assumptions of a limited wholesale funding market with assumptions of deposit outflows, drawdowns on com mitments and otherliquidity demanding events. The outcome is captured by the regulatory defined Liquidity Coverage Ratio (LCR) where, in a stressed scenario, modelled net outflows during a 30-day period are related to the amount oftotal liquid assets. SEB also measures the time it would take forthe liquid assets to be depleted in a severely stressed scenario, expressed as the stressed survival horizon. In addition, SEB monitors various rating agencies' survival metrics.

Internal liquidity adequacy assessment process

Liquidity risk is not primarily mitigated by capital. However,there are strong links between a bank's capital and liquidity position. Hence, an internal liquidity adequacy assessment process (ILAAP) complements the ICAAP. The ILAAP is designed to identify potential gaps against SEB's long-term desired level ofliquidity adequacy,taking into accountthat effective liquidity man agementis a continuous process.

Liquidity reserve 1)

	2017					2016
	SEK	EUR	USD	Other	Total	SEK	EUR	USD	Other	Total
Cash and holdings in central banks	5,680	79,653	57,802	46,865	190,000	61,808	83,837	55,755	16,409	217,809
Deposits in other banks available overnight	509	566	2,515	4,734	8,324	242	1,377	2,536	3,601	7,756
Securities issued or guaranteed by
sovereigns, central banks or multilateral
development banks	3,611	19,699	18,613	988	42,911	3,465	35,387	18,902	11,091	68,845
Securities issued or guaranteed by
municipalities or other public sector entities	2,202	14,329	6,610	862	24,004	5,307	3,347	7,411	171	16,236
Covered bonds issued by otherinstitutions	34,099	463	413	32,878	67,852	52,419	1,274	193	49,731	103,617
Covered bonds issued by SEB	–3,516				–3,516	2,212				2,212
Securities issued by non-financial
corporations	358				358		5,276			5,276
Securities issued by financial corporations
(notincluding covered bonds)	–114	5,341	4,284	287	9,797		2,923	2,559		5,482
TOTAL		42,828 120,052	90,236	86,614	339,730	125,453 133,421		87,356	81,003	427,233

1) The liquidity reserve is presented in accordance with the template defined by the Swedish Bankers'Association.Assets included in the liquidity reserve should comply with the following:Assets shall be underthe control ofthe Treasury function in the bank, not be encumbered and be pledgeable with central banks. Furthermore, bonds shall have a maximumrisk weight of 20% underthe standardised approach to creditrisk ofthe Basel IIframework and a lowestrating ofAa2/AA–.Assets are disclosed using market values.

Liquidity risk management measures

	2017	2016
CoreGap ratio1)	108%	114%
Loan to depositratio	143%	143%
Liquidity Coverage Ratio (defined by the Swedish FSA)	145%	168%

1) CoreGap ratio represents the parent company, SEBAG(Germany), SEB PankAS (Estonia), SEB BankaAS (Latvia) and SEB bankasAB (Lithuania).

Contractual maturities

The following tables present cash flows by remaining contractual maturities atthe balance sheet date and applies the earliest date on which the Group can be required to pay regardless of probability assumptions. The cash flows are

not discounted. Derivatives are reported atfair value. Obligations such as loan commitments are reported as when the obligation matures.

Group, 2017

Balance sheet (contractual maturity dates)	Payable on demand	< 3 months	1) 3–12 months	1–5 years	>5 years	Not distributed	Insurance 2)	Subtotal	Discount effect	Total
Cash and cash balances with central banks Loans to central banks Loans to creditinstitutions	177,222 373 1,243	12,088 20,266	300 5,428	6,314	749		553	177,222 12,761 34,553	17 162	177,222 12,778 56 34,715
of which repos		56						56
General governments	474	12,384	15,634	7,621	4,228			40,341	1,225	41,566
Households Corporates	13 1,796	41,138 241,063	145,955 152,922	320,558 355,844	45,084 83,660			552,748 835,285	23,535 31,668	576,283 866,953

Loans to the public of which eligible debt securities	2,283	294,585	314,511 4,419	684,024 7,491	132,972 985			1,428,375 12,895	56,428 285	180 13 1,484,803 42 230
of which repos		42,042						42,042	188	, ,
Debt securities		25,725	23,795	81,911	8,917		12,925	153,273	2,965	280 87 156,238
of which eligible debt securities of which other debt securities		19,476 5,694	9,768 14,015	42,691 39,178	5,272 3,640		8,485 4,379	85,692 66,906	1,588 1,377	68 283 ,
Equity instruments						50,445	8,758	59,203		, 59,203
Derivatives		29,756	13,798	30,490	29,822		1,002	104,868		104,868
Financial assets – policyholders bearing the risk							283,420	283,420		283,420
Financial assets atfair value		55,481	37,593	112,402	38,739	50,445	306,106	600,766	2,965	603,731
Other	1	33,571	446	1,496	218	24,462	186,110	246,304	43	32 140 246,347
of which otherfinancial assets		32,066			30	1		32,097	43	,
Total assets of which accrued interest loans	181,122	415,991	358,278	804,236	172,678	74,907 1,783	492,769	2,499,981 1,783	59,615	783 1 2,559,596 ,
of which accrued interest debt securities						812		812		812

Deposits from central banks and creditinstitutions	30,673	52,262	2,280	1,962	1,756		287	89,220	–144	731 89,076
of which repos		731						731	–1
General governments Households	8,359 273,661	4,700 19,500	114 6,111	189 1,090	3,636 5			16,998 300,367	–104 –48	16,894
Corporates	592,036	56,540	5,386	22,500	11,647			688,109	–601	300,319 687,508
Deposits and borrowings
from the public	874,056	80,740	11,611	23,779	15,288			1,005,474	–753	491 915 1,004,721
of which deposits	383,696	94,069	4,881	3,690	5,878			492,214	–299	6 364 ,
of which borrowing of which repos		6,216 5,889		20	138			6,374 5,889	–10 –6	883 5 ,
Liabilities to policyholders							284,291	284,291		, 284,291
Certificates		46,451	28,830	8,584				83,865	–796	83,069
Covered bonds Other bonds3)		9,687 21,810	64,469 14,564	230,748 163,499	41,232 4,306			346,136 204,179	–12,864 –6,487	333,272 197,692
Debt securities issued		77,948	107,863	402,831	45,538			634,180	–20,147	614,033
Debt securities		508	416	6,772	3,711			11,407	–598	10,809
Equity instruments						14,228		14,228		14,228
Derivatives		30,622	14,334	23,634	16,146		696	85,432		85,432
Otherliabilities		1,450	2,170	231				3,851	–9	3,842
Financial liabilities atfair value		32,580	16,920	30,637	19,857	14,228	696	114,920	–607	114,313
Other of which otherfinancial	238	51,065	1,099	530	180	21,454	202,337	276,903	–56	276,847 929 47
liabilities		47,902			17	4	62	47,985	–56	,
Subordinated liabilities		275			41,036			41,311	–8,921	32,390
Equity						143,925		143,925		143,925
Total Liabilities and Equity of which accrued interest	904,967	294,870	139,773	459,739	123,655	179,607	487,611	2,590,224	–30,628	2,559,596 328 1
deposits and borrowing						1,328		1,328		,
of which accrued interest issued securities						4,227		4,227		227 4 ,
Obligations
Loan commitments	13,129	106,972	47,541	223,644	7,307	100		398,693		398,693
Acceptances and other financialfacilities	12	22,890	37,497	23,213	30,671			114,283		114,283
Operating lease commitments		158	763	979		75		1,975		1,975
Total liabilities, equity
and obligations	918,108	424,890	225,574	707,575	161,633	179,782	487,611	3,105,175	–30,628	3,074,547

Group, 2016
-------------	--

Balance sheet (contractual maturity dates)	Payable on demand	<3 months	1) 3–12 months	1–5 years	>5 years	Not distributed	Insurance 2)	Subtotal	Discount effect	Total
Cash and cash balances with central banks Loans to central banks Loans to creditinstitutions of which eligible debt securities of which repos General governments	151,078 24 5,898 476	66,366 29,142 795 1,428	289 7,001 380 7,385	6,949 19,763	993 4,164	118 1	314 117	151,078 66,679 50,415 380 912 33,217	51 112 2 2 1,613	151,078 66,730 382 50,527 914 34,830
Households Corporates	793 44,124	62,012 161,309	167,270 148,752	258,432 375,423	40,261 101,650	182 3,211		528,950 834,469	20,227 34,543	549,177 869,012
Loans to the public of which eligible debt securities of which other debt securities of which repos Debt securities of which eligible debt securities of which other debt securities Equity instruments Derivatives Financial assets – policyholders bearing the risk	45,393	224,749 7 63,242 18,041 5,296 12,008 41,208	323,407 7 16,605 8,267 8,328 24,972	653,618 9,614 214 109,411 46,779 62,577 50,328	146,075 2,697 1,562 13,876 9,534 4,323 39,429	3,394 43,436	76,955 43,805 32,587 30,737 56,418 295,908	1,396,636 12,311 1,790 63,242 234,888 113,681 119,823 74,173 212,355 295,908	56,383 385 106 282 3,449 1,710 1,739	12 696 1,453,019 896 1 524 63 , , 391 115 , 238,337 121 562 , , 74,173 212,355 295,908
Financial assets atfair value		59,249	41,577	159,739	53,305	43,436	460,018	817,324	3,449	820,773
Other of which otherfinancial assets	44	37,883 36,717	390 14	1,575 44	178 52	32,079 3	6,341 126	78,490 36,956	29 29	985 36 78,519 ,
Total assets of which accrued interestloans of which accrued interest debt	202,437	417,389	372,664	821,881	200,551	79,027 2,093	466,673	2,560,622 2,093	60,024	2 093 2,620,646 1 516 ,
securities						1,516		1,516		,
Deposits from central banks and creditinstitutions of which repos	25,058	61,155 737	20,449	2,180	2,234		8,892 118	119,968 855	–104	855 119,864
General governments Households Corporates	26,590 239,979 536,292	2,884 29,446 64,501	1,676 6,214 9,111	438 1,135 23,609	4,255 2 16,749			35,843 276,776 650,262	–113 –52 –688	35,730 276,724 649,574
Deposits and borrowings from the public of which deposits of which borrowing of which repos Liabilities to policyholders Certificates	802,861 369,042 47	96,831 69,732 1,067 740 61,960	17,001 6,271 9 62,700	25,182 2,815 13 2,826	21,006 9,253 159		296,618	962,881 457,113 1,248 740 296,618 127,533	–853 –324 –5 –1 –1,058	789 456 962,028 243 1 739 , , 296,618 126,475
Covered bonds Other bonds3)		1,366 8,519	44,857 21,004	257,656 181,004	36,727 13,141			340,606 223,668	–13,621 –8,248	326,985 215,420
Issued securities Debt securities Equity instruments Derivatives Otherliabilities	47	71,845 155 41,687 1,338	128,561 53 21,073 1,656	441,486 6,270 41,146 16,378	49,868 3,661 24,203	10,071	46,542	691,807 10,139 10,071 174,651 19,372	–22,927 –590 –147	668,880 9,549 10,071 174,651 19,225
Financial liabilities atfair value Other	97	43,180 41,826	22,782 259	63,794 598	27,864 2,128	10,071 20,735	46,542 112,459	214,233 178,102	–737 –37	213,496 178,065
of which otherfinancial liabilities Subordinated liabilities Equity		38,768 510	54	282	1,240 52,231	2 140,976	76	40,422 52,741 140,976	–37 –12,022	40 385 , 40,719 140,976
Total Liabilities and Equity of which accrued interest deposits and borrowing of which accrued interest issued securities	828,063	315,347	189,052	533,240	155,331	171,782 1,971 4,772	464,511	2,657,326 1,971 4,772	–36,680	2,620,646 971 1 772 4 , ,
Obligations
Loan commitments Acceptances and other financialfacilities	12,715	116,411 49,228	38,625 26,064	228,258 15,771	23,420 20,436	39		419,429 111,538		419,429 111,538
Operating lease commitments Total liabilities, equity	109	286	441	912	44			1,792		1,792

1) Includes items available overnight.

2) The cash flows from insurance assets are monitored on a regular basis in orderto be sufficientto meetthe cash flows from the insurance liabilities at alltimes.

3) TheGroup issues equity index-linked bonds, which contains both a liability and an equity component. TheGroup has chosen to designate issued equity index-linked bonds, with a fair value amounting to SEK 24,388m (30,992), as atfair value through profit orloss, since they contain embedded derivatives. The corresponding amountforthe parent company is SEK 23,356m (28,940). This choice implies thatthe entire hybrid contractis measured atfair value through profit orloss. Fair value forthose financial instruments is calculated using a valuation technique, exclusively based on quoted market prices. TheGroup's contractual liability is SEK 22,190m(28,871) and forthe parent company SEK 21,323m (27,111). The accumulated impact from reflecting theGroup's own credit standing in the fair value measurement amounts to SEK 264m (230), of which SEK –33m(–53) relates to 2017. The corresponding amountforthe parent company is SEK 205m (148), of which SEK 57m (–50) relates to 2017.

and obligations 840,887 481,272 254,182 778,181 199,231 171,821 464,511 3,190,085 –36,680 3,153,405

Parent company, 2017

Balance sheet (contractual maturity dates)	Payable on demand	<3 months	1) 3–12 months	1–5 years	>5 years	Not distributed	Subtotal	Discount effect	Total
Cash and cash balances with central banks Loans to creditinstitutions of which repos	97,927	155,606 390	20,321	16,309	584		97,927 192,821 390	–186 –230	97,741 389 192,591
General governments Households Corporates	204	9,940 28,395 230,953	4,756 143,480 120,579	2,938 327,566 295,854	170 14,829 56,103		17,804 514,270 703,694	–244 –17,161 –21,538	17,560 497,108 682,156
Loans to the public of which eligible debt securities of which repos Debt securities of which eligible debt securities of which other debt securities Equity instruments Derivatives	204	269,288 135 42,413 23,531 18,334 5,197 29,649	268,815 4,477 23,555 6,772 16,783 14,585	626,358 2,562 65,631 24,518 41,113 30,459	71,102 7,537 3,370 4,166 29,527	100,665	1,235,767 7,174 42,413 120,254 52,994 67,260 100,665 104,220	–38,943 –164 –183 –2,194 –862 –1,332	010 7 1,196,824 42 230 , 52 132 , 118,060 928 65 , , 100,665 104,220
Financial assets atfair value Other of which otherfinancial assets		53,179 35,343	38,140	96,090	37,064 874	100,665 45,845 45,845	325,139 82,062 45,845	–2,194	322,946 845 45 82,062 ,
Total assets of which accrued interest loans of which accrued interest debt securities	98,131	513,417	327,276	738,757	109,625	146,510 1,521 689	1,933,716 1,521 689	–41,553	521 1 1,892,163 689 ,
Deposits by creditinstitutions	28,144	74,418	14,352	9,089	1,785		127,789	–250	730 127,539
of which repos General governments Households Corporates	2,088 214,857 516,502	730 4,298 9,555 62,527	2,163 2,187	362 3,413	1,421 4,372		730 7,808 226,938 589,001	–26 –445 –1,123	7,781 226,493 587,878
Deposits and borrowings from the public of which deposits of which borrowing of which repos Certificates Covered bonds Other bonds1)	733,446 708,714	76,380 94,896 6,215 4,913 46,387 9,689 21,652	4,351 4,351 28,844 62,040 14,572	3,775 3,775 8,601 231,032 163,630	5,794 5,794 41,459 3,588		823,746 817,529 6,215 4,913 83,833 344,219 203,442	–1,594 –1,590 –3 –2 –841 –13,578 –6,783	815 940 822,151 212 6 910 4 , , , 82,992 330,641 196,659
Issued securities Debt securities Equity instruments Derivatives Otherliabilities		77,728 833 31,215 1,121	105,457 83 14,919 2,491	403,263 6,531 23,887 229	45,047 3,361 16,969	14,228	631,495 10,809 14,228 86,990 3,842	–21,202	610,292 10,809 14,228 86,990 3,842
Financial liabilities atfair value Other of which otherfinancial liabilities Subordinated liabilities Untaxed reserves Equity		33,170 48,581 48,581 275	17,494	30,647	20,330 15 15 41,008	14,228 9,134 21,429 104,762	115,869 57,731 48,597 41,282 21,429 104,762	–8,892	115,869 48 597 57,731 , 32,390 21,429 104,762
Total Liabilities and Equity of which accrued interest deposits and borrowing of which accrued interest issued securities	761,590	310,552	141,654	446,774	113,979	149,553 826 7,016	1,924,102 826 7,016	–31,939	1,892,163 826 016 7 ,
Obligations
Loan commitments Acceptances and otherfinancialfacilities		36,566 22,256	42,616 34,846	184,404 19,859	3,818 26,098		267,403 103,059		267,403 103,059
Total liabilities, equity and obligations	761,590	369,502	219,630	657,421	145,764	149,553	2,303,460	–40,835	2,262,625

Parent company, 2016

Balance sheet (contractual maturity dates)	Payable on demand		< 3 months1) 3–12 months	1–5 years	>5 years	Not distributed	Subtotal	Discount effect	Total
Cash and cash balances with central banks Loans to creditinstitutions of which repos	70,805 21,453	173,899 1,237	34,792	57,157	205		70,805 287,506 1,237	–134 –447 –1	70,671 236 1 287,059
General governments Households	192 749	491 48,479	1,402 167,027	7,175 262,740	176 12,472		9,436 491,467	–354 –15,195	, 9,082 476,272
Corporates	46,693	146,375	126,379	320,381	71,977		711,805	–25,064	686,741
Loans to the public of which eligible debt securities of which other debt securities of which repos Debt securities of which eligible debt securities	47,634	195,345 63,809 14,232 2,835	294,808 12,378 3,939	590,296 6,992 229 95,325 27,282	84,625 1,872 12,287 7,400		1,212,708 6,992 2,101 63,809 134,222 41,456	–40,613 –302 –220 –286 –2,901 –1,057	690 6 1,172,095 881 1 523 63 , , 399 40 , 131,321 90 261 ,
of which other debt securities Equity instruments Derivatives		10,733 41,897	8,439 25,173	67,986 54,028	4,887 38,675	93,775	92,045 93,775 159,773	–1,784	, 93,775 159,773
Financial assets atfair value Other		56,129 36,507	37,551 77	149,353 267	50,962 585	93,775 47,714	387,770 85,150	–2,901	384,869 37 436 85,150
of which otherfinancial assets		36,507	77	267	585		37,436		,
Total assets of which accrued interestloans	139,892	461,880	367,228	797,073	136,377	141,489 1,627	2,043,939 1,627	–44,095	627 1 1,999,844 793 ,
of which accrued interest debt securities						793	793
Deposits by creditinstitutions	63,648	62,763	27,022	13,539	2,326		169,298	–446	737 168,852
of which repos General governments	21,110	738 109	338	229	2,179		738 23,965	–1 –75	23,890
Households Corporates	195,909 481,242	12,432 54,574	1,674 4,450	420 2,549	6,971		210,435 549,786	–408 –1,119	210,027 548,667
Deposits and borrowings from the public of which deposits of which borrowing	698,261 698,261	67,115 66,048 1,066	6,462 6,462	3,198 3,198	9,150 9,150		784,186 783,119 1,066	–1,602 –1,601 –1	781 518 782,584 1 065 739 , ,
of which repos Certificates Covered bonds Other bonds2)		739 61,939 1,366 8,417	62,704 44,878 20,942	2,825 255,635 181,042	36,682 11,413		739 127,468 338,561 221,814	–1,104 –14,123 –8,430	126,364 324,438 213,384
Issued securities		71,722	128,524	439,502	48,095		687,843	–23,657	664,186
Debt securities Equity instruments		178	29	6,037	3,305 24,879	10,072	9,549 10,072 133,833		9,549 10,072 133,833
Derivatives Otherliabilities		42,400 1,313	21,163 1,675	45,391 16,236			19,224		19,224
Financial liabilities atfair value Other of which otherfinancial liabilities		43,891 37,845 37,845	22,867 22 22	67,664	28,184	10,072 9,823	172,678 47,690 37,867		172,678 867 37 47,690 ,
Subordinated liabilities Untaxed reserves Equity		510			54,143	21,761 101,374	54,653 21,761 101,374	–13,934	40,719 21,761 101,374
Total Liabilities and Equity of which accrued interest deposits and	761,909	283,846	184,897	523,903	141,898	143,030	2,039,483	–39,639	1,999,844 223 1 768 4

Loan commitments Acceptances and otherfinancialfacilities		43,549 38,577	33,522 16,968	189,699 8,398	19,467 10,470	286,237 74,413		286,237 74,413
Total liabilities, equity and obligations	761,909	365,972	235,387	722,000	171,835	143,030 2,400,133	–39,639	2,360,494

1) Includes items available overnight.

2) TheGroup issues equity index-linked bonds, which contains both a liability and an equity component. TheGroup has chosen to designate issued equity index-linked bonds, with a fair value amounting to SEK 24,388m (30,992), as atfair value through profit orloss, since they contain embedded derivatives. The corresponding amountforthe parent company is SEK 23,356m (28,940). This choice implies thatthe entire hybrid contractis measured atfair value through profit orloss. Fair value forthose financial instruments is calculated using a valuation technique, exclusively based on quoted market prices. TheGroup's contractual liability is SEK 22,190m (28,871) and forthe parent company SEK 21,323m(27,111). The accumulated impactfromreflecting theGroup's own credit standing in the fair value measurement amounts to SEK 264m (230), of which SEK –33m(–53) relates to 2017. The corresponding amountforthe parent company is SEK 205m (148), of which SEK –57m (–50) relates to 2017.

	Group		Parent company
Average remaining maturity (years)	2017	2016	2017	2016
Loans to creditinstitutions	0.95	0.78	0.45	0.81
Loans to the public	2.63	2.72	2.26	2.36
Deposits from creditinstitutions	0.35	0.41	0.64	0.83
Deposits from the public	0.17	0.24	0.90	1.32
Borrowing from the public	0.34	1.39	0.13	0.13
Certificates	0.58	0.43	0.59	0.43
Covered bonds	3.25	3.38	3.33	3.37
Other bonds	2.65	3.04	2.65	2.99

18 Cash and cash equivalents

	Group		Parent company
	2017	2016	2017	2016
Cash Cash balances at central banks Other demand deposits 1)	1,960 175,262 7,207	1,957 149,121 7,237	132 97,609 28,546	156 70,515 21,261
TOTAL	184,429	158,315	126,287	91,932

1) Balance receivables on demand with creditinstitutions.

19 Loans

	Group		Parent company
	2017	2016	2017	2016
Loans to creditinstitutions 1) Loans to the public 1)	34,715 1,484,803	50,527 1,453,019	192,591 1,196,824	287,059 1,172,095
TOTAL	1,519,518	1,503,546	1,389,415	1,459,154

1) Including debtinstruments classified as Loans.

Loans
Performing loans	1,515,711	1,500,692	1,386,227	1,457,416
Individually assessed impaired loans	5,999	5,037	4,629	3,228
Portfolio assessed loans, past due > 60 days	2,273	2,597	667	720
Portfolio assessed loans,restructured	11	9
Non-performing loans	8,283	7,643	5,296	3,948
Loans priorto reserves	1,523,995	1,508,335	1,391,523	1,461,364
Specific reserves forindividually assessed loans	–2,187	–1,928	–1,384	–1,044
Collective reserves forindividually assessed loans	–1,120	–1,539	–455	–908
Collective reserves for portfolio assessed loans	–1,170	–1,322	–269	–258
Reserves	–4,476	–4,789	–2,108	–2,210
TOTAL	1,519,518	1,503,546	1,389,415	1,459,154

Specific and collective reserves	–4,476	–4,789	–2,108	–2,210
Contingentliabilities reserves	–75	–44	–47
TOTALRESERVES	–4,552	–4,833	–2,155	–2,210

Gross level ofimpaired loans	0.39%	0.33%	0.33%	0.22%
Netlevel ofimpaired loans	0.25%	0.21%	0.23%	0.15%
Specific reserve ratio forindividually assessed impaired loans	36.5%	38.3%	29.9%	32.3%
Totalreserve ratio forindividually assessed impaired loans	55.1%	68.8%	39.7%	60.5%
Reserve ratio for collectively assessed loans	51.2%	50.7%	40.3%	35.8%
NPL coverage ratio	54.9%	63.2%	40.7%	56.0%
NPL per cent oflending	0.54%	0.51%	0.38%	0.27%

Loans by category of borrower

Group, 2017	Credit institutions	Corporates	Real Estate Management andHousing co-operative associations	Public Administration	Households	Total
Performing loans	34,715	562,338	301,861	41,571	575,226	999 5 1,515,711
Individually assessed impaired loans Portfolio assessed loans, past due > 60 days Portfolio assessed loans,restructured Non-performing loans		5,328 223 5,551	578 14 592		92 2,037 11 2,139	2 273 , 11 , 8,283
Loans priorto reserves	34,715	567,889	302,453	41,571	577,366	1,523,994
Specific reserves forindividually assessed impaired loans Collective reserves forindividually assessed loans Collective reserves for portfolio assessed loans		–1,842 –1,042 –149	–282 –68 –6	–5	–63 –5 –1,014	–2,187 –1,120 –1,170
Reserves		–3,034	–355	–5	–1,083	–4,476
TOTAL	34,715	564,855	302,098	41,566	576,283	1,519,518

2016

Performing loans	50,527	567,810	299,617	34,835	547,903	037 5 1,500,692
Individually assessed impaired loans Portfolio assessed loans, past due > 60 days Portfolio assessed loans,restructured		3,812 163	1,066		159 2,434 9	2 597 9 , ,
Non-performing loans		3,975	1,066		2,602	7,643
Loans priorto reserves	50,527	571,785	300,683	34,835	550,505	1,508,335
Specific reserves forindividually assessed impaired loans Collective reserves forindividually assessed loans Collective reserves for portfolio assessed loans		–1,391 –1,446 –91	–441 –86	–5	–96 –2 –1,231	–1,928 –1,539 –1,322
Reserves		–2,928	–527	–5	–1,329	–4,789
TOTAL	50,527	568,857	300,156	34,830	549,176	1,503,546

Parent company, 2017	Credit institutions	Corporates	Real Estate Management andHousing co-operative associations	Public Administration	Households	Total
Performing loans	192,591	422,955	256,409	17,563	496,708	1,386,227
Individually assessed impaired loans Portfolio assessed loans, past due > 60 days Non-performing loans		4,534 65 4,599	36 14 51		59 588 647	629 4 667 , 5,296
Loans priorto reserves	192,591	427,553	256,460	17,563	497,355	1,391,523
Specific reserves forindividually assessed impaired loans Collective reserves forindividually assessed loans Collective reserves for portfolio assessed loans		–1,309 –451 –59	–32 –6	–4	–42 –204	–1,384 –455 –269
Reserves		–1,819	–38	–4	–246	–2,108
TOTAL	192,591	425,734	256,422	17,560	497,108	1,389,415
2016
Performing loans	286,936	440,508	245,092	9,086	475,794	228 3 1,457,416
Individually assessed impaired loans Portfolio assessed loans, past due > 60 days Non-performing loans	123 123	2,856 2,856	187 187		62 720 782	720 , 3,948
Loans priorto reserves	287,059	443,364	245,279	9,086	476,576	1,461,364
Specific reserves forindividually assessed impaired loans Collective reserves forindividually assessed loans Collective reserves for portfolio assessed loans		–880 –904	–118	–4	–46 –258	–1,044 –908 –258
Reserves		–1,784	–118	–4	–304	–2,210
TOTAL	287,059	441,580	245,161	9,082	476,272	1,459,154

Loans by geographicalregion 1)

Group, 2017	The Nordic region	Germany	The Baltic region	Other	Total
Performing loans	1,238,046	98,261	128,841	50,564	999 5 1,515,711
Individually assessed impaired loans Portfolio assessed loans, past due > 60 days Portfolio assessed loans,restructured	4,538 1,245	151	1,218 1,029 11	92	2 273 11 , ,
Non-performing loans	5,782	151	2,258	92	8,283
Loans priorto reserves	1,243,828	98,412	131,099	50,656	1,523,995
Specific reserves forindividually assessed impaired loans Collective reserves forindividually assessed loans Collective reserves for portfolio assessed loans	–1,394 –905 –537	–106 –67	–654 –142 –633	–34 –6	–2,187 –1,120 –1,170
Reserves	–2,836	–173	–1,428	–40	–4,476
TOTAL	1,240,992	98,239	129,671	50,616	1,519,518
2016

Performing loans	1,218,235	113,641	115,771	53,045	037 5 1,500,692
Individually assessed impaired loans Portfolio assessed loans, past due > 60 days Portfolio assessed loans,restructured	2,967 1,310	463	1,469 1,287 9	138	2 597 9 , ,
Non-performing loans	4,277	463	2,765	138	7,643
Loans priorto reserves	1,222,512	114,104	118,536	53,183	1,508,335
Specific reserves forindividually assessed impaired loans Collective reserves forindividually assessed loans Collective reserves for portfolio assessed loans	–985 –1,108 –535	–158 –69	–748 –236 –787	–37 –126	–1,928 –1,539 –1,322
Reserves	–2,628	–227	–1,771	–163	–4,789
TOTAL	1,219,884	113,877	116,765	53,020	1,503,546

Parent company, 2017	The Nordic region	Other	Total
Performing loans	1,347,709	38,518	629 4 1,386,227
Individually assessed impaired loans Portfolio assessed loans, past due > 60 days	4,538 667	92	667 ,
Non-performing loans	5,205	92	5,296
Loans priorto reserves	1,352,913	38,610	1,391,523
Specific reserves forindividually assessed impaired loans	–1,350	–34	–1,384
Collective reserves forindividually assessed loans	–450	–5	–455
Collective reserves for portfolio assessed loans	–269		–269
Reserves	–2,069	–39	–2,108
TOTAL	1,350,844	38,571	1,389,415
2016
Performing loans	1,413,794	43,622	228 3 1,457,416
Individually assessed impaired loans Portfolio assessed loans, past due > 60 days	2,967 720	261	720 ,
Non-performing loans	3,687	261	3,948
Loans priorto reserves	1,417,481	43,883	1,461,364
Specific reserves forindividually assessed impaired loans	–932	–112	–1,044

Collective reserves for portfolio assessed loans –258 –258 Reserves –1,973 –237 –2,210 TOTAL 1,415,508 43,646 1,459,154

Collective reserves forindividually assessed loans –783 –125 –908

1) The geographical distribution is based on where loans are booked.

Past due loans that are notimpaired

	Group				Parent company
2017	Corporates	Households	Other	Total	Corporates	Households	Other	Total
< 30 days 2) 31 – 60 days >60 days1)	4,855 154 316	4,219 423 322	48 2 3	9,122 579 641	2,126 67 114	2,870 228 99	6 2	5,001 295 214
TOTAL	5,325	4,965	52	10,342	2,306	3,197	7	5,510
2016
< 30 days 31 – 60 days >60 days1)	3,967 836 517	1,609 671 286	21 11	5,597 1,518 803	2,981 726 213	341 414 41	1	3,323 1,140 254
TOTAL	5,320	2,566	32	7,918	3,920	796	1	4,717

1) Excluding portfolio assessed loans past due more than 60 days which are included in previous table.

2) The increase in 2017 <30 days is mainly related to past due volumes less than 5 days. These volumes were notincluded in the figures for 2016.

Reserves,Group

	Loans to creditinstitutions		Loans to the public		Total
Specific loan loss reserves 1)	2017	2016	2017	2016	2017	2016
Opening balance Reversals for utilisation Provisions Reversals Exchange rate differences	0	0	–1,928 318 –1,309 760 –27	–2,044 584 –734 338 –72	–1,928 318 –1,309 760 –27	–2,044 584 –734 338 –72
Closing balance	0	0	–2,187	–1,928	–2,187	–1,928
Collective loan loss reserves 2)
Opening balance Net provisions Exchange rate differences	0	–7 7	–2,861 592 –21	–2,827 35 –69	–2,861 592 –21	–2,834 42 –69
Closing balance	0	0	–2,290	–2,861	–2,290	–2,861
Contingentliabilities reserves
Opening balance Net provisions Reversalfor utilisation	0	0	–44 –30	–81 43	–44 –30	–81 43
Exchange rate differences			–1	–6	–1	–6
Closing balance	0	0	–75	–44	–75	–44
TOTAL	0	0	–4,552	–4,833	–4,552	–4,833

1) Specific reserves forindividually appraised loans.

2) Collective reserves forindividually appraised loans,reserves forloans assessed on a portfolio basis and country risk reserves.

Reserves, parent company

	Loans to creditinstitutions		Loans to the public		Total
Specific loan loss reserves 1)	2017	2016	2017	2016	2017	2016
Opening balance Reversals for utilisation Provisions Reversals Exchange rate differences	0	0	–1,044 180 –1,190 625 45	–775 60 –407 102 –24	–1,044 180 –1,190 625 45	–775 60 –407 102 –24
Closing balance	0	0	–1,384	–1,044	–1,384	–1,044
Collective loan loss reserves 2)
Opening balance Net provisions Exchange rate differences	0	–8 7 1	–1,166 429 13	–962 –195 –9	–1,166 429 13	–970 –188 –8
Closing balance	0	0	–724	–1,166	–724	–1,166
Contingentliabilities reserves
Opening balance Net provisions	0	0	0 –47	–22 22	0 –47	–22 22
Closing balance	0	0	–47	0	–47	0
TOTAL	0	0	–2,155	–2,210	–2,155	–2,210

1) Specific reserves forindividually appraised loans.

2) Collective reserves forindividually appraised loans,reserves forloans assessed on a portfolio basis and country risk reserves.

Forborne loans

	Group		Parent company
	2017	2016	2017	2016
Totalforborne loans of which performing1)	14,640 6,995	11,990 6,327	10,948 5,373	6,927 3,883

1)According to EBAdefinition.

20 Capital adequacy

Capital management

SEB takes various types ofrisks in line with the bank's strategy and business plan. In orderto sustain these risks and guarantee SEB's long-term survival, the bank must maintain satisfactory capital strength. Atthe same time, SEB must balance the trade-off between financialreward and overallrisk toler ance. In particular, SEB's capital management balances the following dimensions:

1. regulatory:the minimum capital levels, and the supervisory expectation that banks operate safely above this minimum level, established by the EU directives through Swedish law on capital adequacy,
1. access to debtinvestors:the capitalisation levelrequired to support a certain rating level in orderto reach a debtinvestor base necessary for conducting SEB's business activities,
1. access to financial products:the capital levelrequired by corporate cli ents and other counterparties to facilitate the bank's activity in the capital markets, including derivatives and foreign exchange, and
1. optimalreturn on equity:the balance between the shareholders' expected return on capital and risks taken.

To meet expectations of shareholders, supervisors and market participants, SEB's capitalisation is based on an assessment of allrisks incurred in SEB's business, and forward-looking, aligned with long- and short-term business plans and with expected macroeconomic developments. Furthermore,the capitalisation is stress-tested to identify the potential effect of adverse changes to SEB's financial situation.

Internal capital adequacy assessment process

The internal capital adequacy assessment process (ICAAP) encompasses SEB's internal views on materialrisks and their development as well as risk measurement models,risk governance and risk mitigants. Itis linked to over all business planning and establishes a strategy for maintaining appropriate capital levels. Together with continuous monitoring and reporting ofthe capital adequacy to the Board,this ensures thatthe relationship between share holders' equity, economic capital,regulatory and rating-based requirements are managed so thatthe bank's survival is notjeopardised. Thus,the ICAAP is integrated with SEB's business planning, internal governance framework and internal control systems.

SEB's capital plan covers the strategic planning horizon and projects eco nomic and legal capitalrequirements, as well as available capitalresources and relevantratios. Itis forward-looking,taking into account current and planned business volumes as well as strategic initiatives. The capital plan is stress tested to potential down-turns in the macroeconomic environment,to strategic risk factors identified in the business planning, and to otherrelevant scenarios. The capital plan is established annually, and updated as needs arise during the year.

Economic capital constitutes an important part of capital adequacy assessment. Itis an internal measurement ofrisk, similarto the rules for capital adequacy in that many ofthe underlying risk components are the same. The economic capital calculation is based on a confidence level of 99.97 per cent, which is equivalentto the capitalrequirementfor a very high rating. The economic capital orinternally assessed capitalrequirementfor SEB Group including insurance risk amounted to SEK 64bn (63).

SEB employs an internal capital allocation framework for measuring return on risk, named business equity. Itis similarto regulatory capital models including Pillar 2 requirements and is calibrated with SEB's capitaltargets.

The regulatory supervisors annually assess SEB and its ICAAP in accordance with the parameters ofthe Supervisory Review and Evaluation Process (SREP). The assessment covers SEB's capital adequacy,risk measurement models and risk governance, among otherthings, and in the SREP 2017 it was concluded that SEB is sufficiently capitalised and adequately measures and manages risks.

Regulatory requirements

The requirements have evolved in the last few years, both in terms of which risks that are covered and in terms of the capital base components. The regu latory capitalrequirements are split in to Pillar 1 (general minimum requirements for all institutions) and Pillar 2 (requirements based on an individual assessment of each institution).

Pillar 1 requirements for CET1 is expressed as a REA ratio requirement and consists ofthe following components:

i) a legal minimum requirement of 4.5 per cent,
ii) a capital conservation buffer of 2.5 per cent,
iii) a systemic risk buffer of 3.0 per cent, and
iv) countercyclical buffers applied by the regulators in Sweden and Norway, together amounting to around 0.9 per centfor SEB.

The total Pillar 1 CET1 capitalrequirementfor SEB is at present 10.9 per cent.

As opposed to Pillar 1,the Pillar 2 requirements for CET1 are not calculated as a percentage ofthe total REA.As a result,the Pillar 2 requirements, expressed as capitalratio requirements (exceptthe systemic risk requirement), are likely to vary in relation to REAovertime. The Pillar 2 requirements consist ofthe following components:

v) specific own funds requirementfor systemic risk ("Systemic risk requirement") expressed as a pure CET1 ratio requirement of 2.0 per cent,
vi) risk weightfloorfor Swedish residential mortgages. The requirement corresponds to a capitalrequirement on the difference between REA using a 25 per centrisk weight on residential mortgage loans and actual Pillar 1 REA forthese loans (where the risk weightfor SEB is around 5 per cent, based on internal models), and
vii) other specific risks. The risks currently identified by the Swedish FSA that apply to all Swedish banks are a) credit concentration risks, b) inter estrate risk in the banking book, c) pension risk, d) sovereign creditrisk and e) risks related to corporate exposure. In addition to this, SEB-spe cific requirements for otherrisks can be added as part ofthe SREP.

Together with the Pillar 2 CET1 capitalrequirements SEB's total CET1 capital requirements currently amounts to 17.2 per cent.

Ratio requirement (explicit orimplicit)

Pillar 1	CET1	AT1	Tier 2	Total
Minimum requirement Capital conservation buffer Systemic risk buffer	4.5% 2.5% 3.0%	1.5%	2.0%	8.0% 2.5% 3.0%
Subtotal	10.0%	1.5%	2.0%	13.5%
Countercyclical buffer	0.9%			0.9%
TOTAL	10.9%	1.5%	2.0%	14.4%

Pillar 2	CET1	AT1	Tier 2	Total
Systemic risk requirement Mortgage floor Credit concentration risk Interestrate risk in the banking book Pension risk Corporate exposures – PDscale Corporate exposures – maturity floor TOTAL	2.0% 2.1% 0.3% 0.6% 0.5% 0.5% 0.3% 6.3%	0.2% 0.1% 0.1% 0.1% 0.0% 0.0% 0.5%	0.3% 0.1% 0.1% 0.1% 0.1% 0.1% 0.7%	2.0% 2.6% 0.5% 0.8% 0.7% 0.6% 0.4% 7.5%
Totalrequirement	17.2%	2.0%	2.7%	22.0%

Note 20 continued Capital adequacy

Capital adequacy analysis

	Consolidated situation		Parent company
	2017	2016	2017	2016
Own funds Common Equity Tier 1 capital Tier 1 capital Total own funds	118,204 132,127 147,849	114,419 129,157 151,491	101,810 115,733 131,328	97,144 111,882 134,384
Own funds requirement Risk exposure amount Expressed as own funds requirement Common Equity Tier 1 capitalratio Tier 1 capitalratio Total capitalratio	610,819 48,866 19.4% 21.6% 24.2%	609,959 48,797 18.8% 21.2% 24.8%	514,328 41,146 19.8% 22.5% 25.5%	515,826 41,266 18.8% 21.7% 26.1%
Own funds in relation to own funds requirement	3.03	3.10	3.19	3.26
Regulatory Common Equity Tier 1 capitalrequirementincluding buffer of which capital conservation bufferrequirement of which systemic risk bufferrequirement of which countercyclical capital bufferrequirement	10.9% 2.5% 3.0% 0.9%	10.7% 2.5% 3.0% 0.7%	8.2% 2.5% 1.2%	7.9% 2.5% 0.9%
Common Equity Tier 1 capital available to meet buffer 1)	14.9%	14.3%	15.3%	14.3%
Transitionalfloor 80% of capitalrequirement according to Basel I Minimum floor own funds requirement according to Basel I Own funds according to Basel I Own funds in relation to own funds requirement Basel I	89,774 149,030 1.66	86,884 151,814 1.75	72,415 131,977 1.82	69,864 134,158 1.92
Leverage ratio Exposure measure forleverage ratio calculation of which on balance sheet items of which off balance sheetitems Leverage ratio	2,519,532 2,140,093 379,439 5.2%	2,549,149 2,120,587 428,562 5.1%

1) CET1 ratio less minimumcapitalrequirement of 4.5 per cent excluding buffers. In addition to the CET1 requirements there is a total capitalrequirement of an additional 3.5 per cent.

Own funds

	Consolidated situation		Parent company
	2017	2016	2017	2016
Shareholders' equity Retained earnings Accumulated other comprehensive income and otherreserves Independently reviewed profitforthe year	21,942 60,066 45,673 16,244	21,942 65,190 43,226 10,618	21,942 52,644 30,551 16,340	21,942 52,443 31,485 12,477
Total equity according to balance sheet1)	143,925	140,976	121,476	118,347
Deductions related to the consolidated situation and otherforeseeable charges	–14,357	–14,303	–12,461	–11,929
Common Equity Tier 1 capital before regulatory adjustments 2)	129,568	126,673	109,016	106,418
Additional value adjustments Intangible assets Deferred tax assets thatrely on future profitability Fair value reserves related to gains orlosses on cash flow hedges Negative amounts resulting from the calculation of expected loss amounts	–663 –6,225 –75 –1,192 –1,307	–1,169 –6,835 –208 –2,400 –381	–283 –4,955 –1,192 –648	–1,136 –5,381 –2,400
Gains orlosses on liabilities valued atfair value resulting from changes in own credit standing Defined-benefit pension fund assets Direct and indirect holdings of own CET1 instruments Securitisation positions with 1.250% risk weight	99 –1,807 –193	–115 –920 –191 –35	66 –193	–131 –191 –35
Totalregulatory adjustments to Common Equity Tier 1	–11,364	–12,254	–7,205	–9,274
Common Equity Tier 1 capital	118,204	114,419	101,810	97,144
Additional TierI instruments Grandfathered additional Tier 1 instruments	13,922	9,959 4,779	13,922	9,959 4,779
Tier 1 capital	132,127	129,157	115,733	111,882
Tier 2 instruments Net provisioning amountforIRB-reported exposures Holdings of Tier 2 instruments in financial sector entities	18,171 126 –2,575	24,851 58 –2,575	18,171 –2,575	24,850 227 –2,575
Tier 2 capital	15,722	22,334	15,596	22,502
TOTAL	147,849	151,491	131,328	134,384

1) For parent bank Total equity includesUntaxed reserves net oftax.

2) The Common Equity Tier 1 capital is presented on a consolidated basis, and differs fromtotal equity according to IFRS. The insurance business contribution to equity is excluded and there is a dividend deduction calculated according to Regulation (EU) No 575/2013 (CRR).

Note 20 continued Capital adequacy

Risk exposure amount

	Consolidated situation					Parent company
		2017		2016		2017		2016
	Risk		Risk			Risk	Risk
Creditrisk IRB approach	exposure amount	Own funds requirement1)	exposure amount	Own funds requirement1)	exposure amount	Own funds requirement1)	exposure amount	Own funds requirement1)
Exposures to central governments or
central banks	9,319	745			3,725	298
Exposures to institutions	32,838	2,627	26,254	2,100	30,757	2,461	23,868	1,909
Exposures to corporates	326,317	26,105	335,413	26,833	218,878	17,510	226,254	18,100
Retail exposures	62,296	4,984	55,617	4,449	36,962	2,957	30,660	2,453
of which secured by immovable property of which retail SME	36,558 7,033	2,925 563	34,079 4,723	2,726 378	27,738 2,807	2,219 225	25,622	2,050
of which otherretail exposures	18,704	1,496	16,815	1,345	6,417	513	5,038	403
Securitisation positions	838	67	3,066	246	368	29	2,984	239
Total IRB approach	431,607	34,529	420,350	33,628	290,691	23,255	283,766	22,701
Creditrisk standardised approach
Exposures to central governments or
central banks	4,060	325	1,801	144			333	27
Exposures to regional governments or
local authorities			51	4
Exposures to public sector entities			29	2
Exposures to institutions	844	68	1,316	105	49,917	3,993	50,231	4,018
Exposures to corporates	18,197	1,456	16,422	1,314	8,039	643	7,428	594
Retail exposures Exposures secured by mortgages on	12,084	967	16,186	1,295	7,488	599	12,135	971
immovable property	2,539	203	3,803	304	846	68	2,081	166
Exposures in default	112	9	384	31		56 4	304	24
Exposures associated with particularly high risk	866	69	1,477	118	866	69	1,477	118
Securitisation positions	222	18	216	17
Exposures in the form of collective investment
undertakings (CIU)	41	3	66	5
Equity exposures Otheritems	1,972 7,801	158 624	2,119 8,880	170 711	41,436 5,946	3,315 476	40,807 6,390	3,264 511
Total standardised approach	48,739	3,899	52,750	4,220	114,594	9,167	121,186	9,693

Marketrisk
Trading book exposures where internal models
are applied	24,892	1,991	30,042	2,403	24,876	1,990	29,994	2,399
Trading book exposures applying
standardised approaches	9,881	790	9,398	752	9,786	783	8,884	711
Foreign exchange rate risk	4,022	322	3,773	302	3,964	317	3,756	301
Total marketrisk	38,794	3,104	43,213	3,457	38,626	3,090	42,634	3,411
Other own funds requirements
Operationalrisk advanced measurement
approach	48,219	3,858	47,901	3,832	35,014	2,802	33,696	2,697
Settlementrisk	38	3				38 3	1
Credit value adjustment	6,767	541	7,818	625	6,095	488	6,534	523
Investmentin insurance business	16,633	1,331	16,633	1,331	16,633	1,331	16,633	1,331
Other exposures Additionalrisk exposure amount2)	4,219 15,802	338 1,264	6,547 14,747	524 1,180	12,637	1,011	11,376	910
Total other own funds requirements	91,678	7,334	93,646	7,492	70,417	5,635	68,240	5,461

TOTAL	610,819	48,866	609,959	48,797	514,328	41,146	515,826	41,266

1)Own fund requirementis 8 per cent ofrisk exposure amount according to Regulation (EU) No 575/2013 (CRR). 2) Regulation (EU) No 575/2013 (CRR)Article 3.

Average risk-weight

	Consolidated situation		Parent company
	2017	2016	2017	2016
Exposures to central governments or central banks	3.3%		2.1%
Exposures to institutions	24.0%	25.1%	23.9%	22.5%
Exposures to corporates	31.6%	31.4%	26.5%	26.6%
Retail exposures	10.4%	9.9%	7.5%	6.6%
of which secured by immovable property	7.0%	6.9%	5.9%	5.7%
of which qualifying revolving retail exposures
of which retail SME	59.6%	73.4%	42.5%
of which otherretail exposures	30.7%	28.0%	37.2%	29.2%
Securitisation positions	10.6%	50.6%	12.7%	58.6%

The consolidated SEB Group must also comply with capitalrequirements con cerning combined banking and insurance groups, i.e.financial conglomerates. The combined capitalrequirementforthe SEB financial conglomerate was

SEK 130.7bn while the own funds amounted to SEK 198.4bn. In these totalfig ures, SEB Life and Pension Holding AB has contributed with Solvency IIfigures from September 30, 2017.

21 Fair value measurement of assets and liabilities

2017			Group		Parent company
Assets	Quoted prices in active markets	Valuation technique using observable	Valuation technique using non-observable		Quoted prices in active markets	Valuation technique using observable	Valuation technique using non-observable
	(Level 1)	inputs (Level 2)	inputs (Level 3)	Total	(Level 1)	inputs (Level 2)	inputs (Level 3)	Total
Financial assets – policyholders bearing the risk Equity instruments atfair value	275,737	7,053	630	283,420
through profit and loss Debt securities atfair value	51,971	3,493	1,787	57,251	47,599	599	181	48,379
through profit and loss	55,995	73,849	571	130,415	40,391	68,867		109,258
Derivatives – Interestrelated	127	52,514	686	53,327	127	51,282	761	52,170
Derivatives – Equity related	251	3,096	2	3,349	251	3,102	2	3,355
Derivatives – Currency related	786	37,118		37,904	73	38,421		38,494
Derivatives – Creditrelated		950		950		950		950
Derivatives – Commodities related		2,672		2,672		2,672		2,672
Derivatives –Otherrelated	86			86
Derivatives –Hedge accounting		6,580		6,580		6,580		6,580
Equity instruments available-for-sale	111	1,080	627	1,818	69	1,049	474	1,592
Debt securities available-for-sale	15,631	10,192		25,823	6,197	2,605		8,802
Non-current assets and disposal groups
classified as held for sale	89,229	63,657	29,550	182,436
Investmentin associates1)	251		592	843	250		592	842
TOTAL	490,175	262,254	34,445	786,874	94,957	176,127	2,010	273,094
Liabilities
Liabilities to policyholders
– investment contracts	276,482	7,185	624	284,291
Equity instruments atfair value
through profit and loss	13,984		244	14,228	13,984		244	14,228
Debt securities atfair value
through profit and loss	6,206	4,603		10,809	6,206	4,603		10,809
Derivatives – Interestrelated	179	37,531	799	38,509	179	38,382	799	39,360
Derivatives – Equity related	80	1,848		1,928	80	1,870		1,950
Derivatives – Currency related	565	40,103		40,668	71	41,367		41,438
Derivatives – Creditrelated		2,598		2,598		780		780
Derivatives – Commodities related		780		780		2,598		2,598
Derivatives –Otherrelated		863		863
Derivatives –Hedge accounting	86			86		863		863
Otherfinancial liabilities		3,842		3,842		3,842		3,842
Debt securities atfair value through profit and loss2)		24,388		24,388		23,356		23,356
Liabilities of disposal groups
classified as held for sale	21,055	42,536	8,899	72,490
TOTAL	318,637	166,277	10,566	495,480	20,520	117,661	1,043	139,224

2016			Group		Parent company
Assets	Quoted prices in active markets (Level 1)	Valuation technique using observable inputs (Level 2)	Valuation technique using non-observable inputs (Level 3)	Total	Quoted prices in active markets (Level 1)	Valuation technique using observable inputs (Level 2)	Valuation technique using non-observable inputs (Level 3)	Total
Financial assets under pooled schemes
and unit-linked investment contracts Equity instruments atfair value	275,894	15,589	4,425	295,908
through profit and loss	49,978	11,445	9,701	71,124	35,373	4,782	256	40,411
Debt securities atfair value
through profit and loss	86,584	117,276	1,779	205,639	25,347	96,665		122,012
Derivatives – Interestrelated	1,212	112,133	6,680	120,025	1,211	84,128	832	86,171
Derivatives – Equity related	192	4,790	7	4,989	192	3,536	6	3,734
Derivatives – Currency related	1,076	63,980		65,056	97	63,047		63,144
Derivatives – Creditrelated		918		918		918		918
Derivatives – Commodities related		5,805		5,805		5,805		5,805
Derivatives –Otherrelated	113	241	1,454	1,808
Derivatives –Hedge accounting		13,754		13,754
Equity instruments available-for-sale	172	1,770	611	2,553	100	1,735	432	2,267
Debt securities available-for-sale	16,310	16,388		32,698	6,461	2,848		9,309
Non-current assets and disposal groups
classified as held for sale		587		587
Investmentin associates 1)	181		789	970	182		753	935
Investment properties			7,401	7,401
TOTAL	431,712	364,676	32,847	829,235	68,963	263,464	2,279	334,706

Liabilities

Liabilities to policyholders
– investment contracts	276,666	15,542	4,410	296,618
Equity instruments atfair value
through profit and loss	9,798	2	271	10,071	9,798	2	271	10,071
Debt securities atfair value
through profit and loss	7,027	2,522		9,549	7,027	2,521		9,548
Derivatives – Interestrelated	1,375	93,804	1,774	96,953	1,375	60,451	941	62,767
Derivatives – Equity related	91	1,919		2,010	91	1,764		1,855
Derivatives – Currency related	1,229	63,192		64,421	75	61,339		61,414
Derivatives – Creditrelated		1,352		1,352		1,352		1,352
Derivatives – Commodities related		6,445		6,445		6,445		6,445
Derivatives –Otherrelated	113	192	1,862	2,167
Derivatives –Hedge accounting		1,303		1,303
Otherfinancial liabilities		19,225		19,225		19,225		19,225
Debt securities atfair value
through profit and loss2)		30,992		30,992		28,940		28,940
TOTAL	296,299	236,490	8,317	541,106	18,366	182,039	1,212	201,617

1)Venture capital activities designated atfair value through profit and loss.

2) Equity index link bonds designated atfair value through profit and loss.

Fair value measurement

The objective ofthe fair value measurementis to arrive atthe price at which an orderly transaction would take place between market participants atthe measurement date under current market conditions.

The Group has an established control environmentforthe determination offair values offinancial instruments thatincludes a review, independent from the business, of valuation models and prices. Ifthe validation principles are not adhered to,the Head of Group Finance shall be informed. Exceptions of material and principal importance require approvalfrom the GRMC (Group Risk Measurement Committee) and the ASC (Accounting Standards Commit tee).

In orderto arrive atthe fair value of a financial instrument SEB uses different methods; quoted prices in active markets, valuation techniques incorpo rating observable data and valuation techniques based on internal models. For disclosure purposes,financial instruments carried atfair value are classi fied in a fair value hierarchy according to the level of market observability of the inputs. Group Risk classifies and continuously reviews the classification offinancial instruments in the fair value hierarchy. The valuation process is the same forfinancial instruments in all levels.

An active marketis one in which transactions occur with sufficient volume and frequency to provide pricing information on an ongoing basis. The objec tive is to arrive at a price at which a transaction without modification or repackaging would occurin the principal marketforthe instrumentto which SEB has immediate access.

Fair value is generally measured forindividualfinancial instruments, in addition portfolio adjustments are made to coverthe creditrisk. To reflect counterparty risk and own creditrisk in OTC derivatives, adjustments are made based on the net exposure towards each counterpart. These adjustments are calculated on a counterparty level based on estimates of exposure at default, probability of default and recovery rates. Probability of default and recovery rate information is generally sourced from the CDS markets. For counterparties where this information is not available, or considered unreliable due to the nature ofthe exposure, alternative approaches are taken where the probability of defaultis based on generic creditindices for specific industry and/orrating. The impact from these adjustments are shown in Note 6 and Note 17f.

When valuing financial liabilities atfair value own credit standing is reflected. Fair values offinancial assets and liabilities by class can be found in Note 39.

In orderto arrive atthe fair value ofinvestment properties a market partici pant's ability to generate economic benefit by using the assetin its highest and best use are taken into account. The highest and best use takes into accountthe use ofthe assetthatis physically possible, legally permissible and financially feasible. The current use ofthe investment properties in SEB is in accordance with the highest and best use. The valuation ofinvestment properties is described in the accounting policies in note 1. The valuation of the investment properties is performed semi-annually,they are presented and approved by the board in each real estate company. The valuation princi ples used in all entities are in accordance with regulations provided by the local Financial Supervisory Authorities (FSA) which is in accordance with international valuation principles and in accordance with IFRS.

Level 1: Quoted market prices

Valuations in Level 1 are determined by reference to unadjusted quoted mar ket prices foridentical instruments in active markets where the quoted prices are readily available and the prices represent actual and regularly occurring markettransactions on an arm's length basis.

Examples of Level 1 financial instruments are listed equity securities, debt securities, and exchange-traded derivatives. Instruments traded in an active marketfor which one or more market participants provide a binding price quotation on the balance sheet date are also examples of Level 1 financial instruments.

Level 2: Valuation techniques with observable inputs

In Level 2 valuation techniques, all significantinputs to the valuation models are observable either directly orindirectly. Level 2 valuation techniques include using discounted cash flows, option pricing models,recenttransac tions and the price of anotherinstrumentthatis substantially the same.

Examples of observable inputs are foreign currency exchange rates, bind ing securities price quotations, marketinterestrates (Stibor, Libor, etc.), volatilities implied from observable option prices forthe same term and actual transactions with one or more external counterparts executed by SEB. An input can transferfrom being observable to being unobservable during the holding period due to e.g. illiquidity ofthe instrument.

Examples of Level 2 financial instruments are most OTC derivatives such as options and interestrate swaps based on the Libor swap rate or a foreign denominated yield curve. Other examples are instruments for which SEB recently entered into transactions with third parties and instruments for which SEB interpolates between observable variables.

Level 3: Valuation techniques with significant unobservable inputs

Level 3 valuation techniques incorporate significantinputs that are unobservable. These techniques are generally based on extrapolating from observable inputs for similarinstruments, analysing historical data or other analytical techniques. Examples of Level 3 financial instruments are more complex OTC derivatives, long dated options for which the volatility is extrapolated or derivatives that depend on an unobservable correlation. Other examples are instruments for which there is currently no active market or binding quotes, such as unlisted equity instruments and private equity holdings.

Ifthe fair value offinancial instruments includes more than one unobservable input,the unobservable inputs are aggregated in orderto determine the classification ofthe entire instrument. The level in the fair value hierarchy within which a financial instrumentis classified is determined on the basis ofthe lowestlevel ofinputthatis significantto the fair value in its entirety.

Significant transfers and reclassifications between levels

Transfers between levels may occur when there are indications that market conditions have changed, e.g. a change in liquidity. The Valuation/Pricing committee of each relevant division decides on material shifts between levels. As a result of the decision to divest SEB Pension a re-classifications in the balance sheet have been performed. All assets and liabilities belonging to SEB Pension have been re-classified to Assets- and liabilities held for sale in accordance with IFRS 5. The re-classifications was executed at the end of the fourth quarter 2017.

Changes in level 3

Group, 2017		Gain/loss	Gain/loss in Other com-				Transfers	Transfers		Exchange
Assets	Opening balance	in Income statement 1) 2)	prehensive income3)	Pur- chases	Sales	Settle ments	into Level 3	out of Level 3	Reclassi fication	rate diffe- rences	Total
Financial assets – policyholders
bearing the risk	4,425	–65		3	–1			–40	–3,735	43	630
Equity instruments atfair value
through profit and loss	9,701	140		1,055	–290			–229	–8,655	65	1,787
Debt securities atfair value through
profit and loss	1,779	29		184	–20			–227	–1,181	7	571
Derivatives – Interestrelated	6,680	–141				47			–5,948	48	686
Derivatives – Equity related	7	–5							–1	1	2
Derivatives –Otherrelated	1,454								–1,464	10
Equity instruments available-for-sale	611	100	–9	83	–219		61				627
Investmentin associates	789	129		74	–402					2	592
Investment properties	7,401								–7,454	53
TOTAL	32,847	187	–9	1,399	–932	47	61		–496 –28,438	229	4,895
Liabilities

Liabilities to policyholders – investment contracts	4,410	–66				–40	–3,724	44	624
Equity instruments atfair value
through profit and loss	271	–18	–14	3				2	244
Derivatives – Interestrelated	1,774	–1,003	–12		28			12	799
Derivatives –Otherrelated	1,862						–1,875	13
TOTAL	8,317	–1,087	–26	3	28	–40	–5,599	71	1,667

Group, 2016		Gain/loss in Income	Gain/loss in Other com- prehensive			Settle	Transfers into	Transfers out of	Reclassi	Exchange rate diffe
Assets	Opening balance	statement 1) 2)	income	Pur- chases	Sales	ments	Level 3	Level 3 3)	fication	rences	Total
Financial assets – policyholders
bearing the risk	2,607	–51		3,868	–2,128					129	4,425
Equity instruments atfair value
through profit and loss	10,286	224		1,631	–2,799			–46		405	9,701
Debt securities atfair value
through profit and loss	1,204	–130		871	–199			–8		41	1,779
Derivatives – Interestrelated	10,383	–4,292		231	–36	14				380	6,680
Derivatives – Equity related	90	–9		1				–74		–1	7
Derivatives –Otherrelated	756	732			–73					39	1,454
Equity instruments available-for-sale	648	–190	318	81	–217			–52		23	611
Investmentin associates	743	120		123	–188					–9	789
Investment properties	7,169	204		3	–287					312	7,401
TOTAL	33,886	–3,392	318	6,809	–5,927	14		–180		1,319	32,847

Liabilities

Liabilities to policyholders – investment contracts	2,602	–51	3,854	–2,124			129	4,410
Equity instruments atfair value
through profit and loss	445	90	–267				3	271
Derivatives – Interestrelated	10,159	–3,388	41		41	–5,299	220	1,774
Derivatives –Otherrelated	1,242	541	84	–65			60	1,862
TOTAL	14,448	–2,808	3,712	–2,189	41	–5,299	412	8,317

1) Fair value gains and losses recognised in the income statement are included in Netfinancial income and Net otherincome.

2)Gains/losses recognised in the income statementrelating to instruments held as of 31December are SEK 1,154m(–321).

3) Fair value gains and losses recognised in other comprehensive income are included as available for sale.

Changes in level 3

Parent company, 2017 Assets	Opening balance	Gain/loss in Income statement 1) 2)	Gain/loss in Other com- prehensive income	Pur- chases	Sales	Settle ments	Exchange rate diffe- rences	Total
Equity instruments atfair value
through profit and loss	256	–8			–72		5	181
Derivatives – Interestrelated	832	–140				63	6	761
Derivatives – Equity related	6	–5					1	2
Equity instruments available-for-sale	432	161	22	82	–218		–5	474
Investmentin associates	753	142		75	–380		2	592
TOTAL	2,279	150	22	157	–670	63	9	2,010
Liabilities
Equity instruments atfair value
through profit and loss	271	–18		–14	3		2	244
Derivatives – Interestrelated	941	–163		–12		28	5	799
TOTAL	1,212	–181		–26	3	28	7	1,043

Parent company, 2016	Opening balance	Gain/loss in Income	Gain/loss in Other com- prehensive	Pur- chases		Settle	Transfers into	Transfers out of	Reclassi	Exchange rate diffe-
Assets		statement 1) 2)	income		Sales	ments	Level 3	Level 3	fication	rences	Total
Equity instruments atfair value
through profit and loss	298	96			–148					10	256
Derivatives – Interestrelated	903	–72			–23	15				9	832
Derivatives – Equity related	15	–9									6
Equity instruments available-for-sale	507	–1	3	29	–71		–52			17	432
Investmentin associates	712	114		122	–185					–10	753
TOTAL	2,435	128	3	151	–427	15	–52			26	2,279
Liabilities
Equity instruments atfair value through profit and loss Derivatives – Interestrelated	445 813	90 87		–267 –8		41				3 8	271 941
TOTAL	1,258	177		–275		41				11	1,212

1) Fair value gains and losses recognised in the income statement are included in Netfinancial income and Net otherincome.

2)Gains/losses recognised in the income statementrelating to instruments held as of 31December are SEK 139m(–322).

Sensitivity of Level 3 financial instruments to unobservable inputs

The table below illustrates the potential profit orloss impact ofthe relative uncertainty in the fair value of assets and liabilities thatfortheir valuation are dependent on unobservable inputs. The sensitivity to unobservable inputs is assessed by altering the assumptions to the valuation techniques, illustrated below by changes in index-linked swap spreads, implied volatilities, credit

spreads or comparator multiples. Itis unlikely that all unobservable inputs would be simultaneously atthe extremes oftheirranges ofreasonably possi ble alternatives. There have been no significant changes during 2017. The largest open marketrisk within Level 3 financial instruments is found within the insurance business.

		2017			2016
Group	Assets	Liabilities	Net	Sensitivity	Assets	Liabilities	Net	Sensitivity
Derivative instrumentsAFV1) 2) 4)	688	–798	–110	38	780	–940	–160	49
Equity instrumentsAFV 3)	180	–244	–64		256	–271	–15
Equity instrumentsAFS 3) 6)	336		336	63	432		432	78
Investments in associates 3)	729		729	146	753		753	151
Insurance holdings – Financial instruments 5) 7)	2,380		2,380	331	18,477	–2,695	15,782	1,807
Non-current assets and disposal groups
classified as held for sale 4 ) 5) 6 ) 7)	16,070	–2,395	13,675	1,657	18,477	–2,695	15,782	1,807
Insurance holdings – Investment properties 6) 7)					7,401		7,401	740

1) Sensitivity froma shift ofinflation linked swap spreads by 16 basis points (16) and implied volatilities by 5 percentage points (5).

2) Sensitivity froma shift of swap spreads by 5 basis points (5).

3)Valuation is estimated in a range ofreasonable outcomes. Sensitivity analysis is based on 20 per cent (20) shiftin market values.

4) Shiftin implied volatility down by 10 percentage points (10).

5) Sensitivity analysis is based on a shiftin private equity of 20 per cent (20), structured credits 10 per cent (10) and derivative market values of 10 per cent (10).

6) Sensitivity from a shift ofinvestment properties/real estate funds market values of 10 per cent (10).

7) The sensitivity shows changes in the value ofthe insurance holdings which do not at alltimes affectthe P/L oftheGroup since any surplus in the traditional life portfolios are consumed first.

22 Financial assets at fair value through profit or loss

	Group		Parent company
	2017	2016	2017	2016
Securities held fortrading Derivatives held fortrading	157,885 98,281	162,516 198,271	157,628 97,640	162,335 147,124
Held fortrading	256,165	360,787	255,268	309,459
Financial assets – policyholders bearing the risk Financial assets underinsurance contracts Otherfinancial assets atfair value	283,420 21,797 7,985	295,908 107,667 6,580	9	87
Designated atfair value through profit orloss	313,203	410,155	9	87
Derivatives held for hedging	6,587	14,084	6,580	12,649
TOTAL	575,955	785,026	261,857	322,195

The category Financial assets atfair value through profit and loss comprises financial instruments either classified as held fortrading orfinancial assets designated to this category upon initialrecognition. These financial assets are recognised atfair value and the value change is recognised through profit and loss.

Securities held fortrading

Equity instruments	48,371	40,324	48,370	40,323
Eligible debt securities1)	46,274	33,991	46,045	33,811
Other debt securities1)	62,820	87,653	62,793	87,653
Accrued interest	420	548	419	548
TOTAL	157,885	162,516	157,628	162,335

1) See note 41 forissuers.

Derivatives held fortrading

Other derivatives	3,708	8,531	3,621	6,723
TOTAL	98,281	198,271	97,640	147,124
Currency-related derivatives	37,904	65,056	38,494	63,144
Equity-related derivatives	3,349	4,990	3,355	3,734
Interest-related derivatives	53,320	119,694	52,170	73,523

Insurance assets atfair value

Equity instruments	8,871	30,712
Eligible debt securities1)	8,485	43,805
Other debt securities1)	4,379	32,587
Accrued interest	61	563
TOTAL	21,797	107,667

1) See note 41 forissuers.

Otherfinancial assets atfair value

Equity instruments	9	88	9	87
Eligible debt securities1)	7,135	6,169
Other debt securities1)	813	301
Accrued interest	29	22
TOTAL	7,985	6,580	9	87

1) See note 41 forissuers.

Derivatives held for hedging

Fair value hedges	5,294	8,777	5,287	8,763
Cash flow hedges	1,273	3,884	1,273	3,884
Portfolio hedges forinterestrate risk	21	1,423	21	2
TOTAL	6,587	14,084	6,580	12,649

To eliminate to the extent possible inconsistency in measurement and accounting the Group has chosen to designate financial assets and financial liabilities, which the unitlinked insurance business give rise to, atfair value through profit orloss. This implies that changes in fair value on those investment assets (preferably funds), where the policy-holders bearthe risk and the corresponding liabilities, are recognised in profit orloss. Fair value on those assets and liabilities are set by quoted market price in an active market.

23 Available-for-sale financial assets

	Group		Parent company
	2017	2016	2017	2016
Equity instruments at cost	134	496	126	487
Equity instruments atfair value	1,777	2,507	1,581	2,256
Eligible debt securities1)	25,386	31,426	6,087	6,588
Other debt securities1)	270	1,021	2,604	2,608
Seized shares	42	46	11	11
Accrued interest	167	251	111	113
TOTAL	27,776	35,747	10,521	12,063

1) See note 41 forissuers.

Equity instruments measured at cost do not have a quoted market price in an active market. Further, it has not been possible to reliably measure the fair values of those equity instruments. Most of these investments are held for

strategic reasons and are not intended to be sold in the near future.

24 Investments in associates

	Group		Parent company
	2017	2016	2017	2016
Strategic investments Venture capital holdings	334 842	229 970	190 842	90 935
TOTAL	1,176	1,199	1,032	1,025

Strategic investments	Assets1)	Liabilities 1)	Revenues 1)	Profit orloss1)	Book value	Ownership, %
BankomatAB, Stockholm	5,337	4,987	789	20	66	20
BankomatcentralenAB, Stockholm	1	0	0	0	0	28
BGCHoldingAB, Stockholm	473	148	793	9	103	33
GetswishAB, Stockholm	88	43	32	–20	19	20
UCAB, Stockholm	277	140	677	57	1	28
Parent company holdings					190
Holdings of subsidiaries					16
Group adjustments					129
GROUPHOLDINGS					334

1) Retrieved fromrespectiveAnnualreport 2016.

		2017	2016
Venture capital holdings		Ownership, %	Book value	Ownership, %
Actiwave, Linköping	0	42	4	42
AirsonettAB,Ängelholm	100	33	95	34
ApicaAB, Stockholm	60	25	41	20
Avaj InternationalHoldingAB, Stockholm	149	18	60	18
AvidicareHoldingAB,Ängelholm	17	38	17	38
CapresA/S, Copenhagen	39	45	15	40
CoinifyApS,Herlev	15	16	7	9
Donya LabsAB, Linköping	0	0	118	22
Fält CommunicationsAB,Umeå	0	0	64	46
InDex PharmaceuticalsHoldingAB, Stockholm	67	23	90	23
LeasifyAB, Stockholm	10	17	10	17
NomadHoldings Ltd, Newcastle	0	0	45	22
Now Interact NordicAB, Stockholm	15	10	15	10
NuEvolutionAB, Stockholm	167	24	146	24
OssDsignAB,Uppsala	25	22	25	20
ProdacapoAB,Örnsköldsvik	0	0	4	22
Scandinova SystemsAB,Uppsala	63	30	48	29
ScibaseHoldingAB, Stockholm	16	13	36	23
SenionAB, Linköping	19	34	15	27
TSSHoldingAB, Stockholm	80	43	80	43
Parent company holdings	842		935
Holdings of subsidiaries			35
GROUPHOLDINGS	842		970

Information aboutthe corporate registration numbers and numbers of shares ofthe associates is available upon request.

Strategic investments in associates in the Group are accounted for using the equity method.

Investments in associates held by the venture capital organisation of the Group have, in accordance with IAS 28, been designated as atfair value through profit and loss. Therefore,these holdings are accounted forin accordance with IAS 39.

Some entities, in which the bank has an ownership ofless than 20 per cent, has been classified as investments in associates. The reason is thatthe bank is represented in the board of directors and participates in the policy making processes ofthose entities.

Allfinancial assets within the Group's venture capital business are managed and its performance is evaluated on a fair value basis in accordance with documented risk management and investment strategies.

Fair values forinvestments listed in an active market are based on quoted market prices. Ifthe marketfor a financial instrumentis not active,fair value is established by using valuation techniques based on discounted cash flow analysis, valuation with reference to financial instruments thatis substan tially the same, and valuation with reference to observable markettransac tions in the same financial instrument.

25 Shares in subsidiaries

	Group		Parent company
	2017	2016	2017	2016
Swedish subsidiaries Foreign subsidiaries 1)	137	39	14,228 36,339	14,128 36,483
TOTAL of which holdings in creditinstitutions	137	39	50,567 33,264	50,611 33,384

			2017			2016
Swedish subsidiaries	Country			Book value Dividend Ownership, %			Book value Dividend Ownership, %
Aktiv PlaceringAB, Stockholm	Sweden	38		100	38		100
Enskilda Kapitalförvaltning SEBAB, Stockholm	Sweden	0		100	0		100
Försäkringsaktiebolaget Skandinaviska Enskilda Captive,
Stockholm	Sweden	100		100	100		100
Parkeringshuset LasarettetHGB KB, Stockholm	Sweden	0		99	0		99
ReponoHoldingAB, Stockholm	Sweden	3,227		100	3,227		100
SEB FörvaltningsAB, Stockholm	Sweden	5		100	5		100
SEB Internal SupplierAB, Stockholm	Sweden	12		100	12		100
SEB Investment ManagementAB, Stockholm	Sweden	523	430	100	523		100
SEB Kort BankAB, Stockholm	Sweden	2,360	1,096	100	2,260	769	100
SEB Life and PensionHoldingAB, Stockholm	Sweden	6,424	2,500	100	6,424	2,800	100
SEB PortföljförvaltningAB, Stockholm	Sweden	1,115		100	1,115		100
SEB Strategic InvestmentsAB, Stockholm	Sweden	424		100	424		100
Skandinaviska Kreditaktiebolaget, Stockholm	Sweden	0		100	0		100
TOTAL		14,228	4,026		14,128	3,569

Foreign subsidiaries
Baltectus B.V.,Amsterdam	Netherlands	167		100	252		100
Domena Property Sp. Z o.o., Warsaw	Poland	130		100	120		100
Möller BilfinansAS,Oslo	Norway	0		0	0	4	0
Postep Property Sp. Z o.o., Warsaw	Poland	55		100	51		100
SEBAG, Frankfurt am Main	Germany	18,521		100	19,313	832	100
SEBAsset Management S.A., Luxembourg	Luxembourg	0		0	0	74	0
SEB Bank JSC, St Petersburg	Russia	458		100	458		100
SEB Banka,AS, Riga	Latvia	1,682	701	100	1,586	604	100
SEB bankas,AB,Vilnius	Lithuania	6,423	1,175	100	6,239	819	100
SEB Corporate Bank, PJSC, Kiev	Ukraine	138		100	138		100
SEB do Brasil Representacões LTDA, Sao Paulo	Brazil	0		100	0		100
SEB Fondbolag FinlandAb,Helsinki	Finland	19		100	18		100
SEB Fund Services S.A., Luxembourg	Luxembourg	100		100	97		100
SEBHong Kong Trade Services Ltd,Hong Kong	China	0		100	0		100
SEB Kapitalförvaltning FinlandAb,Helsinki	Finland	255		100	248		100
SEB LeasingOy,Helsinki	Finland	4,273	82	100	4,124	177	100
SEB NjordAS,Oslo	Norway	0		100	0		100
SEB Pank,AS, Tallinn	Estonia	2,260	286	100	2,014	186	100
SEB Securities Inc, New York	USA	40		100	48		100
Skandinaviska Enskilda Banken S.A., Luxembourg	Luxembourg	1,422	145	100	1,376	195	100
Skandinaviska Enskilda Ltd, London	Great Britain	395		100	401		100
TOTAL		36,339	2,389		36,483	2,891

Information aboutthe corporate registration numbers and numbers of shares ofthe subsidiaries is available upon request.

1) Some dormant subsidiaries in theGroup are consolidated using the equity method.

Significant restrictions on the ability to use assets and settle liabilities of the Group

Skandinaviska Enskilda Banken AB (Publ) can obtain distributions of capital, use assets and settle liabilities of members ofthe Group within the limitation of some regulatory, statutory and contractualrestrictions. These restrictions are:

Regulatory requirements

Regulated subsidiaries are subjectto prudentialregulatory capitalrequire ments in the countries in which they are regulated. These subsidiaries are required to maintain a certain level of own funds in relation to their exposures, restricting their ability to distribute cash or other assets to the parent company. To meetthese requirements the subsidiaries hold capital instruments and other forms of subordinated liabilities.

Statutory requirements

Subsidiaries are required to have a certain level of solvency and are restricted to make distributions of capital and profits leading to a solvency below that level.

Contractual requirements

The Group pledges some ofits financial assets as collateralforfinancing and liquidity purposes. Encumbered assets can't be transferred within the Group. Such assets are described furtherin the note Pledged assets, contingentlia bilities and commitments.

26 Interest in unconsolidated structured entities

		Group		Parent company
Assets , 2017	Special purpose entities	Asset management1)	Total	Special purpose entities	Asset management1)	Total
Loans to the public	8,434	343	8,777	7,244	343	7,587
Financial assets atfair value through profit and loss	2	276,559	276,561	7 2	6	7 7
of which: derivatives	2	5		2	5
Available-for-sale financial assets		1,047	1,047		1,006	1,006
TOTAL	8,435	277,949	286,384	7,246	1,355	8,600
Liabilities
Deposits and borrowings from the public	216	77	292	–87	–77	–164
Financial liabilities atfair value through profit orloss	1	52	53 53	–1	–52	53 –53 –
of which: derivatives	1	52		–1	–52
TOTAL	217	129	346	–88	–129	–217
Obligations	577		577	577		577
TheGroup's maximum exposure to loss	9,012	20,638	29,650	7,823	1,355	9,177
1) Investments in SEB- and non-SEBmanaged funds
Assets, 2016
Loans to the public	8,939	12	8,951	7,440	12	7,452
Financial assets atfair value through profit and loss	1,950	263,815	2 034 265,765	1,950	94	2 034 2,044
of which: securities held fortrading	1,946	88	11 ,	1,946	88	11 ,
of which: derivatives	4	7		4	7
Available-for-sale financial assets	127	1,292	1,419	127	1,226	1,353
TOTAL	11,016	265,119	276,135	9,517	1,333	10,850
Liabilities
Deposits and borrowings from the public	218	887	1,105	93	887	980
Financial liabilities atfair value through profit orloss	1	63	64 64	1	63	64 64
of which: derivatives	1	63		1	63
TOTAL	219	950	1,169	94	950	1,044
Obligations	312		312	193		193
TheGroup's maximum exposure to loss	11,328	24,113	35,441	9,710	1,333	11,043

1) Investments in SEB- and non-SEBmanaged funds

Interests in unconsolidated structured entities refers to cases when the Group has interests in structured entities which it does not control. A struc tured entity is an entity thatis designed so that voting or similarrights are notthe dominantfactorin deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements.

The Group enters into transactions with structured entities in the normal cause of business for various reasons. Depending on the type of structured entity the purpose is to support customertransactions,to engage in specific investment opportunities and to facilitate the start-up of certain entities.

The Group has interests in the following types of structured entities:

Interests in funds

The Group establishes and manages funds to provide customers with investment opportunities, SEB is considered to be the sponsor ofthose funds. Total assets under managementrepresentthe size of a fund. Total assets under management offunds managed by SEB are SEK 569bn (531). The total assets of Non-SEB managed funds are not publically available and not considered meaningfulfor understanding related risks, and have therefore not been pre sented. In some cases the Group facilitates the start-up offunds by holding units and it may hold units in funds managed by the Group or by a third party forinvestment purposes within the life business. The funds managed by the Group generate income in the form of managementfees and performance fees based on the assets under management. The income from asset managementis presented in note 5. The maximum exposure to loss is limited to the carrying amount of units held by the Group. This amount does notreflect the probable loss.

Interests in other structured entities

The Group has had a role in establishing structured entities to support cus tomertransactions. The purpose ofthese entities is to provide alternative funding and liquidity improvementto the sellers and investment opportunities to investors by purchasing assets and obtain funding forthe purchases with the assets as collateral. The Group provides seniorrevolving creditfacilities and administrative services to the entities and earn fee and interest income on market based conditions.

The Group holds the most seniorinvestments in debtinstruments issued by banks,through securitisation vehicles (SPV) whose purpose is to provide alternative funding to the issuers and investment opportunities to investors. The SPVs purchase pools of assetfrom the originating banks balance sheet, e.g. credit card loans,residential mortgage loans, loans to small and medium sized enterprises and fund these purchases by issuing debt securities with the assets as collateral. The securities have multiple tranches of subordina tion.

The maximum exposure to loss regarding investments in other structured entities is limited to the carrying amount ofthe investments and may occur only afterlosses by creditors with junior exposures. The maximum exposure to loss does notreflectthe probability ofloss and hedging or collateral arrangements are not considered. The total assets forthese entities are not considered meaningful information forthe purpose of understanding the related risks and therefore have not been presented.

27 Related parties

	Group
	Associated companies		Key management		Otherrelated parties
2017	Assets/ Liabilities	Interest	Assets/ Liabilities	Interest	Assets/ Liabilities	Interest
Loans to the public Notional amount of derivatives	960	13	227	3	30 1,575
Deposits and borrowings from the public	105		38		260

2016

Loans to the public	101	219	62
Notional amount of derivatives	12		911
Deposits and borrowings from the public	226	131	1,251
Obligations	1

	Parent company
	Associated companies		Group companies
2017	Assets/ Liabilities	Interest	Assets/ Liabilities	Interest
Loans to creditinstitutions Loans to the public Interest-bearing securities Positive replacement values of derivatives Other assets	875	9	138,931 11,887 2,605 3,862 24,092	126 68 53
TOTAL	875	9	181,377	247
Deposits from creditinstitutions Deposits and borrowings from the public Negative replacement values of derivatives Otherliabilities	4		46,490 10,359 6,228 240	–415 –52
TOTAL	4		63,317	-467
2016
Loans to creditinstitutions Loans to the public Interest-bearing securities Positive replacement values of derivatives Other assets	1	7	173,291 15,281 2,616 10,984 16,853	412 62 53
TOTAL	1	7	219,025	527
Deposits from creditinstitutions Deposits and borrowings from the public Issued securities Negative replacement values of derivatives Otherliabilities	4		66,849 11,040 21 12,393 165	–433 –18
TOTAL	4		90,468	–451

Key management above refers to the Board of Directors and the Group Execu tive Committee. Entities with significantinfluence or significantly influenced by key managementin the Group, and post-employment benefit plans are presented as otherrelated parties. Investor AB and the pension foundation SEB-stiftelsen are within this category as well as close family members to key management. In addition the Group has insurance administration and asset management agreements with Gamla Livförsäkringsbolaget SEB Trygg Liv

based on conditions on the market. SEB has received SEK 120m (129) under the insurance administration agreement and SEK 381m (361) underthe asset management agreement. For more information on Gamla Livförsäkringsbolaget SEB Trygg Liv, see note 46.

The parent company is a related party to its subsidiaries and associates. See note 24 Investments in associates and note 25 Shares in subsidiaries for disclosures ofinvestments.

28 Tangible and intangible assets

	Group		Parent company
	2017	2016	2017	2016
Goodwill	4,727	4,760
Deferred acquisition costs	3,968	4,044
Internally developed IT-systems	1,611	1,925	1,403	1,755
Otherintangible assets	413	676	195	268
Intangible assets 1)	10,718	11,405	1,597	2,023
Equipment	1,111	853	842	492
Equipmentleased to clients 2)			33,643	34,669
Properties for own operations	19	55	2	2
Property and equipment	1,130	908	34,487	35,163
Investment properties recognised at cost	20	31
Investment properties recognised atfair value		7,401
Properties taken overfor protection of claims	183	413
Investment properties	203	7,845
TOTAL	12,052	20,158	36,084	37,186

1)Goodwill has an indefinite useful life.All otherintangible assets have a definite useful life.Amortisation methods are described in note 1.

2) Equipmentleased to clients are recognised as financial leases and presented as loans in theGroup. See note 44.

Intangible assets

			Group			Parent company
2017	Goodwill	Deferred acquisition costs	Internally developed IT-systems	Other intangible assets	Total	Goodwill	Internally developed IT-systems	Other intangible assets	Total
Opening balance Additions from acquisitions and capitalisations Reclassifications	4,760	12,695 882	3,911 908 3	3,845 215 –549	25,211 2,004 –546	1,377	3,668 804	749 205	5,794 1,009
Retirements and disposals1) Exchange rate differences	–33	50	–202 4	–87 52	–290 72		–151 –2	–71 –1	–222 –3
Acquisition value	4,727	13,627	4,623	3,475	26,451	1,377	4,320	882	6,579
Opening balance Current year's amortisations Current year's impairments1) Reclassifications		–8,651 –957	–1,986 –438 –661	–3,169 –169 –312 547	–13,806 –1,564 –973 547	–1,377	–1,913 –408 –661	–481 –52 –210	–3,771 –460 –872
Retirements and disposals1) Exchange rate differences		–51	75 –2	77 –37	153 –90		65	55 1	120 1
Accumulated depreciations		–9,659	–3,012	–3,062	–15,733	–1,377	–2,917	–687	–4,982
TOTAL	4,727	3,968	1,611	413	10,718		1,403	195	1,597

2016

Opening balance Additions from acquisitions and capitalisations Reclassifications	10,003	12,163 859 –394	3,700 567	3,839 86 –5	29,705 1,512 –399	1,444	3,478 507	820 55	5,742 562
Retirements and disposals1) Exchange rate differences	–5,334 91	–6 73	–363 7	–170 95	–5,873 266	–67	–320 3	–127 1	–514 4
Acquisition value	4,760	12,695	3,911	3,845	25,211	1,377	3,668	749	5,794
Opening balance Current year's amortisations Current year's impairments Reclassifications		–7,914 –943 234	–1,705 –354 2	–3,017 –135 –3	–12,636 –1,432 233	–1,201 –43 –200	–1,644 –340	–473 –27	–3,318 –410 –200
Retirements and disposals1) Exchange rate differences		6 –34	70 1	65 –79	141 –112	67	71	20 –1	158 –1
Accumulated depreciations		–8,651	–1,986	–3,169	–13,806	–1,377	–1,913	–481	–3,771
TOTAL	4,760	4,044	1,925	676	11,405		1,755	268	2,023

1) Including Items affecting comparability, see note 49.

Note 28 continued Tangible and intangible assets

Principle for allocation of goodwill

In conjunction with SEB's reorganisation as of 1 January 2016 goodwill was reallocated to appropriate Cash Generating Units (CGUs). The CGU structure is aligned with the business unit (BU) combined with geography to reflectthe importance of steering and measuring the new customer-oriented organisa tion. The CGU structure before the reorganisation was to a large extent aligned with operating segments, exceptfor Card and Life.

2017
CGUs	Acquisition year	Opening balance	Exchange rate differences	Closing balance
Card, Norway & Denmark1)	2002/2004	913	–33	880
Life Sweden	1996/1997	2,343		2,343
Investment Management Sweden	1997/1998	1,504		1,504
TOTAL		4,760	–33	4,727

2016
CGUs	Acquisition year	New allocation 2016	Exchange rate differences	Impairment 2016	Closing balance 2016	Remaining book value 2)
Equities & Corp, Sweden & Norway1)	2000	879		–879		645
Transaction Services Poland	2008	141		–141		373
Internet/Telephone Sweden	1997	929		–929
Retail Norway	2005	406		–406
Card, Norway & Denmark1)	2002/2004	826	87		913
Life Sweden	1996/1997	2,334	9		2,343
Life Denmark	2004	299	–5	–294		3,056
Investment Management Sweden	1997/1998	3,117		–1,613	1,504	1,919
Investment Management, Finland & Denmark1)	1997/2002	340		–340		9
Investment Management, UK & BVI 1)	2008	732		–732
TOTAL		10,003	91	–5,334	4,760

1) Some CGU:s are presented together due to thatthe acquisitions are related. Card in Norway andDenmark is related to the Eurocard business. The Equities and Corporate business in Sweden and Norway were acquired in a linked transaction and the Investment Management activities inUK and BVI as well. Investment Managementin Finland andDenmark represents the same type of business and the amounts are minor.

2) Internally assessed remaining book value of CGU's only when impairment has occurred.

Impairment test 2017

Result of impairment test

The yearly impairmenttestfor 2017 was performed in the fourth quarter covering the fourremaining CGUs with allocated goodwill. The impairment test did notresultin any indication ofimpairment.

Estimates and assumptions used: future cash flows

The impairmenttest on goodwill is based on value in use and builds on the business plan for 2018-2020 and projected cash flows for 2021–2022. The long-term growth is based on expectations on inflation 1.5 per cent. The allo cated capital is derived from the Group's internal capital allocation modelthat has been aligned with the regulatory capitalrequirements including the man agement buffer. The cash flows in the business plan starts with the assumptions from the mostrecent Nordic outlook published atthe commencement ofthis business plan process. The main assumptions are; GDP growth in Swe den from 2.6 per centto 2.2 per cent overthree years and other Nordic countries excluding Sweden from 2.3 per centto 1.8 per cent; inflation in Sweden from 1.8 per centto 2.2 per cent and in Other Nordic countries from 1.1 per centto 1.7 per cent. The repo rate in Sweden is assumed to be 0.50 per cent end of 2019.

Estimates and assumptions used: Cost of Equity (CoE) – discount rate The discountrate used is 9.0 per cent post-tax for SEB Group and is deter mined based on information from external sources and applied on all CGUs exceptInvestment Management. The higher discountrate forInvestment Management, 11.0 per cent, is applied due to uncertainty related to limitations to retrocessions, possible further margin squeeze and the current negative interest environmentthat can create squeezed asset prices and volatility.

Sensitivities

An increase of one percentage ofthe discountrate (CoE), a decrease ofthe average growth rates by one percentage pointfor earnings before amortisations during the projection period and a decrease of one percentage point of the long term growth was applied in the sensitivity analysis. The sensitivity analysis carried out did notresultin any indication ofimpairment.

Impairment tests 2016

Two impairmenttests were performed in 2016. In the first quarter a test was triggered by the new principle for allocating goodwill as described above. The yearly impairmenttest was performed in the fourth quarter.

Impairment test first quarter 2016

Goodwill was reallocated to 14 CGU:s. The impairmenttest did resultin ten units were the goodwill were fully impaired and one unit where it was par tially impaired. The total impairmentreported as Depreciation, amortisation and impairment oftangible and intangible assets was SEK 5.3bn within Other in the income statement. This test was based on the business plan for 2016– 2018 and projected cash flows for 2019–2020. The long term growth was based on expectations on inflation 1.5 per cent. The discountrate used was 9.5 per cent post-tax for SEB Group exceptforInvestment Management where 11.5 per cent were used due to uncertainty as described in the test for 2017.

Yearly impairment test fourth quarter 2016

The yearly impairmenttest covering the fourremaining CGUs with allocated goodwill did notresultin any indication ofimpairment. This test was based on the business plan for 2017–2019 and projected cash flows for 2020–2021. The long term growth was based on expectations on inflation of 1.5 per cent. The discountrate used was 9.0 per cent post-tax for SEB Group exceptfor Investment Management where 11.0 per cent were used due to uncertainty as described in the testfor 2017.

Note 28 continued Tangible and intangible assets

Property and equipment

		Group		Parent company
2017	Equipment	Properties for own operations	Total	Equipment	Equipment leased to clients ) 1	Properties for own operations	Total
Opening balance Additions from acquisitions and capitalisations Reclassifications	3,248 562 –63	106 –76	3,354 563 –138	2,074 473	48,704 5,158	2	50,780 5,631
Retirements and disposals Exchange rate differences	–1,281 33	–1 –1	–1,282 32	–1,142 6	–4,959		–6,101 6
Acquisition value	2,500	28	2,528	1,410	48,903	2	50,316
Opening balance Current year's depreciations Current year's impairments Reclassifications	–2,395 –216 –4 –32	–51 –5 48	–2,446 –220 –4 16	–1,582 –127	–14,035 –4,817		–15,617 –4,944
Retirements and disposals Exchange rate differences	1,261 –3	1 –3	1,262 –6	1,127 14	3,836 –246		4,964 –232
Accumulated depreciations	–1,389	–9	–1,398	–568	–15,260		–15,829
TOTAL	1,111	19	1,130	842	33,643	2	34,487
2016
Opening balance Additions from acquisitions and capitalisations Reclassifications	3,105 297 –52	97 8 1	3,202 305 –51	1,888 190	50,388 5,437	2	52,278 5,627
Retirements and disposals Exchange rate differences	–189 87	–8 8	–197 95	–28 24	–7,121		–7,149 24
Acquisition value	3,248	106	3,354	2,074	48,704	2	50,780
Opening balance Current year's depreciations Current year's impairments Reclassifications	–2,334 –261 –1 91	–43 –5 –2	–2,377 –266 –3 91	–1,480 –106	–12,645 –4,704		–14,125 –4,810
Retirements and disposals Exchange rate differences	180 –70	8 –9	188 –79	26 –22	2,822 492		2,848 470
Accumulated depreciations	–2,395	–51	–2,446	–1,582	–14,035		–15,617
TOTAL	853	55	908	492	34,669	2	35,163

1) Equipmentleased to clients are recognised as financial leases and presented as loans in theGroup. See note 44.

Investment properties,Group

	2017				2016
	Investment properties at cost	Investment properties atfair value	Properties taken overfor protection of claims	Total	Investment properties at cost	Investment properties atfair value	Properties taken overfor protection of claims	Total
Opening balance	37	7,401	499	7,937	43	7,169	1,248	8,460
Additions from acquisitions and capitalisations Reclassifications	6	768 –7,097	3 –278	777 –7,375	5	73	52 –494	130 –494
Retirements and disposals	–17	–1,374	–57	–1,449	–13	–236	–343	–592
Exchange rate differences		53	16	69	2	312	36	350
Acquisition value	26	–250	183	–41	37	7,318	499	7,854
Opening balance	–6		–86	–92	–5		–146	–151
Current year's depreciations	–1		–1	–2	–1		–4	–5
Current year's impairments			–57	–57			–127	–127
Reclassifications			128	128			174	174
Retirements and disposals	1		17	18			23	23
Exchange rate differences				–1			–6	–6
Accumulated depreciations	–6			–5	–6		–86	–92
Fair value changes		250		250		83		83
TOTAL	20		183	203	31	7,401	413	7,845

Note 28 continued Tangible and intangible assets

Net operating earnings from investment properties

	Group
	2017	2016
External income Operating costs 1)	563 –189	556 –170
TOTAL	375	386

1)Direct operating expenses arising frominvestment property that did not generate rental income amounts to SEK 0m (12).

Net operating earnings from properties taken overfor protection of claims

External income	19	54
Operating costs	–41	–88
TOTAL	–22	–34

SEB may in specific cases acquire assets used as collateral when the loan is in default and the customer can no longer meetits obligations towards SEB. Properties are held and managed during a period with the intention to divestthe assets when deemed appropriate.

29 Other assets

	Group		Parent company
	2017	2016	2017	2016
Trade and clientreceivables Margin collateral paid Other assets	13,040 18,994 11,328	7,635 29,177 12,306	12,871 22,282 7,761	7,234 29,177 7,538
TOTAL	43,362	49,118	42,914	43,949

Trade and clientreceivables

	Group		Parent company
	2017	2016	2017	2016
Trade receivables Clientreceivables	1,223 11,817	1,773 5,862	1,251 11,620	1,678 5,556
TOTAL	13,040	7,635	12,871	7,234
Other assets
Pension plan assets, net Reinsurers share ofinsurance provisions Other accrued income Prepaid expenses Other	5,280 185 720 1,272 3,870	3,914 539 1,654 635 5,564	2,481 5,281	1,448 6,090
TOTAL	11,328	12,306	7,761	7,538

30 Liabilities to policyholders

	Group
	2017	2016
Liabilities to policyholders – investment contracts Liabilities to policyholders – insurance contracts	284,291 18,911	296,618 107,213
TOTAL	303,202	403,831
Liabilities to policyholders - investment contracts 1)
Opening balance Reclassification from insurance contracts	296,618	271,995 1,316
Reclassification to liabilities of disposal groups classified as held for sale	–37,323
Change in investment contract provisions 2)	24,445	14,987
Exchange rate differences	551	8,320
TOTAL	284,291	296,618

1) Insurance provisions where the policyholders are carrying the risk. The liabilities and the underlying assets are designated atfair value through profit orloss (fair value option). 2) The net of premiums received during the year,return on investmentfunds less payments to the policyholders and deduction offees and policyholders'tax.

Liabilities to policyholders – insurance contracts

Opening balance 107,213 Transfer of portfolios through divestments –792 Reclassification to investment contracts Reclassification to liabilities of disposal groups classified as held for sale –93,910 Change in otherinsurance contract provisions 1) 5,696 Exchange rate differences 705	107,213
	3,838
	5,622

	–1,316
	355
	98,714

1) The net of premiums received during the year, allocated return on investmentfunds less payments to the policyholders and deduction offees and policyholders'tax.

31 Financial liabilities at fair value through profit or loss

	Group		Parent company
	2017	2016	2017	2016
Liabilities held fortrading Derivatives held fortrading	28,879 84,571	38,845 173,348	28,879 86,127	38,845 132,861
Held fortrading	113,450	212,193	115,006	171,706
Derivatives held for hedging	863	1,303	863	972
TOTAL	114,313	213,496	115,869	172,678
Liabilities held fortrading
Short positions in equity instruments	14,228	10,072	14,228	10,072
Short positions in debt securities	10,757	9,527	10,757	9,527
Otherfinancial liabilities Accrued interest	3,842 53	19,224 22	3,842 53	19,224 22
TOTAL	28,879	38,845	28,879	38,845
Derivatives held fortrading
Interest-related derivatives	38,509	96,955	39,360	61,795
Currency-related derivatives	40,669	64,420	41,438	61,415
Equity-related derivatives	1,928	2,010	1,950	1,855
Other derivatives	3,465	9,963	3,379	7,796
TOTAL	84,571	173,348	86,127	132,861
Derivatives held for hedging
Fair value hedges	122	12	122	12
Cash flow hedges	741	957	741	957
Portfolio hedges forinterestrate risk		334		3
TOTAL	863	1,303	863	972
32 Other liabilities
	Group		Parent company
	2017	2016	2017	2016
Trade and client payables	13,142	8,926	11,782	7,945
Margin collateralreceived	33,740	29,922	34,350	29,922
Otherliabilities	18,746	17,576	10,466	8,211
TOTAL	65,629	56,424	56,598	46,078
Trade and client payables
Trade payables	2,248	1,882	1,939	1,703
Client payables	10,894	7,044	9,843	6,242
TOTAL	13,142	8,926	11,782	7,945
Otherliabilities
Other accrued expense	3,917	3,986	2,781	2,623
Prepaid income	1,373	1,477
Other	13,456	12,113	7,685	5,588
TOTAL	18,746	17,576	10,466	8,211

33 Provisions

	Group		Parent company
	2017	2016	2017	2016
Otherrestructuring and redundancy reserves Reserve for obligations Pensions (note 9b) 1) Other provisions	810 75 1,325 799	642 44 718 829	28 47 38	35 45
TOTAL	3,009	2,233	113	80

1) Part ofthe net (asset) amountrecognised in balance sheet amounting to SEK 3,955m (3,196) in note 9b.

Otherrestructuring and redundancy reserves

Opening balance	642	515	35	42
Additions	429	308
Amounts used	–278	–186	–7	–9
Unused amounts reversed	–3	–19
Other movements		3
Exchange differences	20	21		2
TOTAL	810	642	28	35

The main part ofthe reserve will coverredundancy costs to be used within five years.

Reserve for obligations

Opening balance	44	81		22
Additions	49	24	47	19
Amounts used		–34		–34
Unused amounts reversed	–22	–33		–7
Other movements	2	4
Exchange differences	2	2
TOTAL	75	44	47

Other provisions

Opening balance	829	893	45	80
Additions	93	53
Amounts used	–20	–91	–7	–35
Unused amounts reversed	–30	–33
Other movements	–80
Exchange differences	7	7
TOTAL	799	829	38	45

Other provisions mainly consist of costs forre-organisation within theGroup to be used within six years and unsettled claims covering all operating segments; among others in the divestedGerman retail business to be settled within two years and tax returns within LifeU.K. branch under decommission.

34 Subordinated liabilities

	Group		Parent company
	2017	2016	2017	2016
Debenture loans Debenture loans, perpetual Change in the value due to hedge accounting atfair value Accrued interest	18,171 13,922 25 272	24,851 14,738 625 505	18,171 13,922 25 272	24,851 14,738 625 505
TOTAL	32,390	40,719	32,390	40,719

Debenture loans

		Original nom.
	Currency	amount	Book value	interest, %
2014/2026	EUR	1,000	9,822	2.500
2016/2028	EUR	850	8,349	1.380
TOTAL			18,171

Debenture loans, perpetual

	Currency	Original nom. amount	Book value	Rate of interest, %
2017	EUR	500	4,914	5.625
2014	USD	1,100	9,008	5.750
TOTAL			13,922

35 Untaxed reserves 1)

	Parent company
	2017	2016
Depreciation in excess of plan on office equipment/leased assets Other untaxed reserves	21,423 6	21,755 6
TOTAL	21,429	21,761

1) In the balance sheet oftheGroup untaxed reserves are reclassified partly as deferred tax liability and partly as restricted equity.

Parent company

	Excess depreciation	Other untaxed reserves	Total
Opening balance Reversals	23,460 –1,705	6	23,466 –1,705
Closing balance 2016	21,755	6	21,761
Reversals	–332		–332
CLOSINGBALANCE 2017	21,423	6	21,429

36 Pledged assets

					Group				Parent company
					2017		2016		2017 2016
Pledged assets and comparable securities for own liabilities Pledged assets for own liabilities to insurance policyholders					477,220 436,890	478,998 403,831		447,925	392,227
Other pledged assets and comparable securities					136,998	154,518		114,494	152,317
TOTAL					1,051,109	1,037,347		562,419	544,544
Pledged assets and comparable securities for own liabilities*
Repos					77,646		3,901	77,426	3,783
Assets collateralised forissued mortgage covered bonds					346,057	335,094		331,073	318,412
Assets collateralised forissued public covered bonds					9,530		11,491
Other collateral					43,986	128,512		39,425	70,032
of which group internal									23 18,723
TOTAL					477,220	478,998		447,925	392,227
* Transfers that do not qualify for derecognition.
Pledged assets for own liabilities to insurance policyholders
Assets pledged forinsurance contracts					114,578	107,213
Assets pledged forinvestment contracts1)					322,312	296,618
TOTAL					436,890	403,831
1) Shares in funds.
Other pledged assets and comparable collateral
Bonds1)					57,390		80,718	57,390	80,718
Securities lending				59,443		61,498	36,939	59,297
Other					20,166		12,302	20,166	12,302
TOTAL				136,998	154,518		114,494	152,317
1) Pledged but unencumbered bonds.
Transferred financial assets entirely recognized		1)
		Transferred assets				Associated liabilities			Associated collateralreceived 2)
	Securities lending	Repurchase	3)		Securities	Repurchase	3)
Group, 2017		agreements	Other	Total	lending	agreements	Other	Total	Securities lending
Equity instruments	16,564		617	17,181	1,073		150	1,223	14,005
Debt securities	13,276	5,743	200	19,220	149	5,736	2	5,886	12,748
Financial assets held fortrading	29,841	5,743	817	36,401	1,222	5,736	152	7,109	26,753
2016
Equity instruments	9,029		4,495	13,524	864		4,050	4,914	7,668
Debt securities	6,769	1,283	1,258	9,310	410	1,101	806	2,317	5,986
Financial assets held fortrading	15,798	1,283	5,753	22,834	1,274	1,101	4,856	7,231	13,654
Debt securities		118		118		118		118

fair value through profit orloss 118 118 118 118

Financial assets designated at

Note 36 continued Pledged assets

	Transferred assets			Associated liabilities				Associated collateralreceived 2)
Parent company, 2017	Securities lending	Repurchase agreements	Other 3)	Total	Securities lending	Repurchase agreements	Other 3)	Total	Securities lending
Equity instruments Debt securities	16,492 13,276	5,743	617 200	17,109 19,220	1,041 134	5,736		1,041 5,869	13,916 11,976
Financial assets held fortrading	29,768	5,743	817	36,329	1,174	5,736		6,910	25,892
2016
Equity instruments Debt securities	9,258 6,734	1,283	4,451 1,217	13,709 9,234	1,078 316	1,101	3,992 810	5,070 2,227	7,400 5,849
Financial assets held fortrading	15,992	1,283	5,668	22,943	1,394	1,101	4,802	7,297	13,249

1) Carrying amount and fair value are the same.

2)Otherthan cash collateral.

3)Assets provided as collateralfor derivatives trading, clearing etc. and other collateralized deposits.

Pledged assets

Assets are transferred forrepurchase agreements and securities lending agreements. The counterpart has the rightto sell orrepledge the assets.Other transferred assets referto assets provided as collateralfor derivatives trading, clearing etc., where the title to the instrument has been transferred to the counterparty. The assets continue to be recognised on SEB's balance sheet since SEB is still exposed to changes in the fair value ofthe assets. The carrying value and fair value ofthe assets transferred as collateralforliabilities or con tingentliabilities are shown in the table above.

SEB issues covered bonds secured by mortgage loans pledged as security according to the local legislation. The pledged securities are mainly residen tial mortgages in single family homes,tenant owned homes or otherresidential apartment buildings. The loan-to-value ratio does not exceed 75 per cent. In the event of SEB's insolvency,the holders ofthe covered bonds have priority to the assets registered as collateral.

Obtained collateral

SEB obtains collateral underreverse repurchase agreements and securities borrowing agreements. Underthe terms of standard financial market agree ments SEB has the rightto sell orrepledge the collateral, subjectto returning equivalent securities on settlement ofthe transactions.

More information aboutthe accounting ofrepurchase agreements and securities lending can be found in the accounting principles.

37 Obligations

	Group		Parent company
	2017	2016	2017	2016
Contingentliabilities Commitments	122,896 563,181	120,231 655,350	103,059 435,488	97,642 468,953
TOTAL	686,077	775,581	538,547	566,595
Contingentliabilities1)
Own acceptances	2,122	1,318	2,096	1,274
Financial guarantees given 2) of which group internal	22,145	25,203	30,742 11,402	26,035 8,831
Other guarantees given of which group internal	98,629	93,710	70,221 7,760	70,333 2,220
Guarantees given	120,774	118,913	100,962	96,368
TOTAL	122,896	120,231	103,059	97,642

1) Pledged assets for own orthird party obligations

2) SEB does notregularly securitise its assets and has no outstanding own issues. Forliquidity facilities and otherfacilities to conduits see note 27.

Other contingent liabilities

The parent company has undertaken to the Monetary Authority of Singapore to ensure thatits subsidiary in Luxembourg's branch in Singapore is able to fulfil its commitments.

The parent company has issued a deposit guarantee for SEB AG in Germany to the Bundesverband deutscher Banken e.V.

Legal proceedings

Within the ordinary course of business SEB is engaged in various legal pro ceedings, both in Sweden and in otherjurisdictions. SEB does not expect these currentlegal proceedings to have a significant adverse effect on the financial position ofthe Group.

	Group		Parent company
Commitments1)	2017	2016	2017	2016
Granted undrawn creditfacilities of which group internal	333,917	347,273	266,966 339	275,157 250
Unutilised part of overdraftfacilities of which group internal	132,161	143,041	75,802 7,333	78,077 8,495
Repledged collaterals of which group internal	90,160	120,486	90,237 286	102,933 20,473
Other commitments given	6,944	44,550	2,484	12,786
Other commitments	563,181	655,350	435,488	468,953
TOTAL	563,181	655,350	435,488	468,953

1) Pledged assets for own orthird party obligations

Discretionary managed assets

Discretionary managed assets in the parent company amounted to SEK 498bn (528).

38 Current and non-current assets and liabilities

Group		2017			2016
Assets	Current assets	Non-current assets	Total	Current assets	Non-current assets	Total
Cash and cash balances with central banks	177,222		177,222	151,078		151,078
Otherlending to central banks	12,778		12,778	66,730		66,730
Loans to creditinstitutions	26,987	7,728	34,715	42,080	8,447	50,527
Loans to the public	616,969	867,834	885 157 1,484,803	598,919	854,100	162 516 1,453,019
Securities held fortrading	157,885		98 281 ,	162,516		198 271 ,
Derivatives held fortrading	98,281		587 6 ,	198,271		084 14 ,
Derivatives held for hedging	6,587		203 313 ,	14,084		410 155 ,
Financial assets – designated atfair value through profit orloss	313,203		,	410,155		,
Financial assets atfair value through profit and loss	575,955		575,955	785,026		785,026
Fair value changes of hedged items in a portfolio hedge	93		93	111		111
Available-for-sale financial assets	27,776		472 27,776	35,747		268 35,747
Investment accounted for using the equity method		472	842		268	970
Otherinvestments in associates		842			970
Investments in subsidiaries and associates		1,314	10 718 1,314		1,238	405 11 1,238
Intangible assets	1,564	9,154	130 1 ,	1,432	9,973	908 ,
Property and equipment	222	908	,	271	637
Investment properties	203		203	7,845		7,845
Tangible and intangible assets	1,989	10,062	12,052	9,548	10,610	20,158
Current tax assets	5,255		255 5 260 ,	5,978		978 5 329 1 ,
Deferred tax assets		260			1,329	,
Tax assets	5,255	260	040 13 5,515	5,978	1,329	7 635 7,307
Trade and clientreceivables	13,040		,	7,635		,
Otherfinancial assets	19,007		19 007 11 316 ,	29,239		29 239 12 244 ,
Other non-financial assets	11,316			12,244
Other assets	43,362		, 43,362	49,118		, 49,118
Non-current assets and disposal groups classified as held for sale	184,011		184,011	587		587
TOTAL	1,672,398	887,198	2,559,596	1,744,922	875,724	2,620,646

		2017			2016
Liabilities	Current liabilities	Non-current liabilities	Total	Current liabilities	Non-current liabilities	Total
Deposits from central banks and creditinstitutions	85,148	3,928	89,076	106,600	13,264	119,864
Deposits and borrowing from the public	966,294	38,427	284 291 1,004,721	916,562	45,466	296 618 962,028
Liabilities to policyholders – investment contracts	10,902	273,389	18 911 ,	16,719	279,899	107 213 ,
Liabilities to policyholders – insurance contracts	8,176	10,735	,	8,403	98,810	,
Pooled schemes and liabilities to policyholders	19,078	284,124	303,202	25,122	378,709	403,831
Debt securities issued	184,333	429,699	28 879 614,033	198,709	470,171	38 845 668,880
Liabilities held fortrading	28,879		84 571 ,	38,845		348 173 ,
Derivatives held fortrading	84,571		863 ,	173,348		303 1 ,
Derivatives held for hedging	863			1,303		,
Financial liabilities atfair value through profit and loss	114,313		114,313	213,496		213,496
Fair value changes of hedged items in portfolio hedge	1,046		1 463 1,046	1,537		2 184 1,537
Currenttax liabilities	1,463		8 079 ,	2,184		8 474 ,
Deferred tax liabilities		8,079	,		8,474	,
Tax liabilities	1,463	8,079	142 13 9,542	2,184	8,474	8 926 10,658
Trade and client payables	13,142		33 766 ,	8,926		30 609 ,
Otherfinancial liabilities	33,766		18 720 ,	30,609		889 16 ,
Other non-financial liabilities	18,720		,	16,889		,
Otherliabilities	65,629		65,629	56,424		56,424
Provisions		3,009	3,009		2,233	2,233
Subordinated liabilities	272	32,118	32,390	505	40,214	40,719
Liabilities of disposal groups classified as held for sale	178,710		178,710
TOTAL	1,616,286	799,385	2,415,671	1,521,139	958,531	2,479,670

Assets and liabilities are classified as current assets and currentliabilities when they are cash or cash equivalents, are hold fortrading purposes, are expected to be sold, settled or consumed in normal business, and are

expected to be realised within twelve months. All other assets and liabilities are classified as non-current.

39 Financial assets and liabilities by class

Group	Book value					Fair value
Assets, 2017	Held for trading	Designated atfair value through p/l / Hedge instruments	Available for-sale	Loans and receivables	Total	Quoted prices in active markets (Level 1)	Valuation technique using observable inputs (Level 2)	Valuation technique using non- observable inputs (Level 3)	Total
Loans				1,694,524	1,694,524	46,835	6,614	1,645,286	1,698,735
Equity instruments	48,371	8,880	1,952		59,203	52,082	4,573	2,548	59,203
Debt securities	109,512	20,902	25,824	13,030	169,268	71,626	97,171	571	169,368
Derivative instruments	98,281	6,587			104,868	1,250	102,930	688	104,868
Financial assets
– policyholders bearing the risk		283,420			283,420	275,737	7,053	630	283,420
Other		93		34,007	34,100	1,960		32,140	34,100
Financial assets	256,164	319,882	27,776	1,741,561	2,345,383	449,490	218,341	1,681,863	2,349,694
Other assets (non-financial)					214,213
TOTAL	256,164	319,882	27,776	1,741,561	2,559,596

2016

Loans				1,704,291	1,704,291	49,975	533	1,665,293	1,715,801
Equity instruments	40,324	30,800	3,049		74,173	50,254	13,215	10,704	74,173
Debt securities	122,192	83,447	32,698	15,106	253,443	102,894	147,427	3,332	253,653
Derivative instruments	198,271	14,084			212,355	2,593	201,621	8,141	212,355
Financial assets
– policyholders bearing the risk		295,908			295,908	275,894	15,589	4,425	295,908
Other		111		38,831	38,942	1,957		36,985	38,942
Financial assets	360,787	424,350	35,747	1,758,228	2,579,112	483,567	378,385	1,728,880	2,590,832
Other assets (non-financial)					41,534
TOTAL	360,787	424,350	35,747	1,758,228	2,620,646

			Book value				Fair value
Liabilities, 2017	Held for trading	Designated atfair value through p/l / Hedge instruments	Other financial liabilities	Total	Quoted prices in active markets (Level 1)	Valuation technique using observable inputs (Level 2)	Valuation technique using non- observable inputs (Level 3)	Total
Deposits			1,093,798	1,093,798	30,286	4,277	1,063,928	1,098,491
Equity instruments	14,228			14,228	13,984		244	14,228
Debt securities	10,809	24,388	622,035	657,232	6,254	653,229	2,677	662,160
Derivative instruments	84,569	863		85,432	910	83,723	799	85,432
Liabilities to policyholders
– investment contracts		284,291		284,291	276,482	7,185	624	284,291
Other	3,842	1,046	46,912	51,800	21	3,897	47,882	51,800
Financial liabilities	113,448	310,588	1,762,745	2,186,781	327,937	752,311	1,116,154	2,196,402
Otherliabilities (non-financial) Total equity				228,890 143,925
TOTAL	113,448	310,588	1,762,745	2,559,596

2016

Deposits Equity instruments	10,071		1,045,056	1,045,056 10,071	30,491 9,798	325 2	1,016,048 271	1,046,864 10,071
Debt securities	9,549	30,992	715,443	755,984	7,074	727,440	34,099	768,613
Derivative instruments	173,348	1,303		174,651	2,808	168,207	3,636	174,651
Liabilities to policyholders
– investment contracts		296,618		296,618	276,666	15,542	4,410	296,618
Other	19,225	1,537	39,535	60,297	10	19,244	41,043	60,297
Financial liabilities	212,193	330,450	1,800,034	2,342,677	326,847	930,760	1,099,507	2,357,114
Otherliabilities (non-financial) Total equity				136,993 140,976
TOTAL	212,193	330,450	1,800,034	2,620,646

Note 39 continued Financial assets and liabilities by class

Parent company			Book value
Assets, 2017	Held for trading	Designated atfair value through p/l / Hedge instruments	Available- for-sale	Loans and receivables	Total
Loans Equity instruments Debt securities Derivative instruments Other	48,370 109,258 97,640	9 6,580	52,286 8,802	1,480,014 7,010 36,349	1,480,014 100,665 125,070 104,220 36,349
Financial assets Other assets (non-financial)	255,268	6,589	61,088	1,523,373	1,846,318 45,845
TOTAL	255,268	6,589	61,088	1,523,373	1,892,163

2016
Loans				1,520,966	1,520,966
Equity instruments	40,323	87	53,365		93,775
Debt securities	122,012		9,309	8,703	140,024
Derivative instruments	147,124	12,649			159,773
Other				37,592	37,592
Financial assets	309,459	12,736	62,674	1,567,261	1,952,130
Other assets (non-financial)					47,714
TOTAL	309,459	12,736	62,674	1,567,261	1,999,844

			Book value
Liabilities, 2017	Held for trading	Designated atfair value through p/l / Hedge instruments	Other financial liabilities	Total
Deposits			949,690	949,690
Equity instruments	14,228			14,228
Debt securities	14,651		642,682	657,333
Derivative instruments	86,127	863		86,990
Other			46,132	46,132
Financial liabilities	115,006	863	1,638,504	1,754,373
Otherliabilities (non-financial)				11,599
Total equity				126,191
TOTAL	115,006	863	1,638,504	1,892,163

2016

Deposits			951,436	951,436
Equity instruments	10,072			10,072
Debt securities	28,773		704,905	733,678
Derivative instruments	132,861	972		133,833
Other			37,867	37,867
Financial liabilities	171,706	972	1,694,208	1,866,886

Otherliabilities (non-financial)				9,823
Total equity				123,135
TOTAL	171,706	972	1,694,208	1,999,844

SEB has grouped its financial instruments by class taking into account the cha racteristics of the instruments:

Loans and deposits includes financial assets and liabilities with fixed or determinable payments that are not quoted in an active market. Loans are further specified in note 17a and 19.

Equity instruments includes shares, rights issues and similar contractual rights of other entities.

Debt instruments includes contractual rights to receive or obligations to deliver cash on a predetermined date. These are further specified in note 17f and 41.

Derivative instruments includes options, futures, swaps and other derived products held for trading and hedging purposes. These are further specified in notes 22, 31 and 42.

Investment contracts include those assets and liabilities in the Life insurance operations where the policyholder is carrying the risk of the contractual agre ement (is not qualified as an insurance contract under IFRS 4). The Life insu rance operations are further specified in note 46.

Insurance contracts includes those assets and liabilities in the Life insurance operations where SEB is carrying the insurance risk of a contractual agre ement (is qualified as an insurance contract under IFRS 4). The Life insurance operations are further specified in note 46.

Other includes other financial assets and liabilities recognised in accordan ce with IAS 39, i.e. Trade and client receivables/payables and Withheld/paid margins of safety.

40 Financial assets and liabilities subject to offsetting or netting arrangements

		Financial assets and liabilities subjectto offsetting or netting arrangements
				Related arrangements			Otherinstruments
Group, 2017	Gross amounts	Offset	Net amounts in balance sheet	Master netting arrangements	Collaterals received/ pledged	Net amounts	in balance sheet not subjectto net- ting arrangements	Total in balance sheet
Derivatives Reversed repo receivables Securities borrowing	111,634 104,354 3,782	–7,826 –61,735	103,808 42,620 3,782	–58,922 –6,613 –3,165	–29,374 –36,007 –512	15,512 105	1,060 12,955	104,868 42,620 16,736
Clientreceivables							11,817	11,817
ASSETS	219,770	–69,560	150,210	–68,701	–65,892	15,617	25,832	176,042
Derivatives Repo payables	92,496 68,348	–7,826 –61,735	84,670 6,613	–58,922 –6,613	–18,293	7,455	763	85,434 6,613
Securities lending Client payables	9,604		9,604	–3,165	–6,152	287	911 10,894	10,515 10,894
LIABILITIES	170,448	–69,560	100,888	–68,701	–24,445	7,742	12,569	113,456

2016
Derivatives	215,367	–4,447	210,920	–123,698	–34,841	52,381	1,435	212,355
Reversed repo receivables	99,828	–35,332	64,496	–682	–63,612	202	1	64,497
Securities borrowing	25,265		25,265	–7,616	–17,649		5,525	30,790
Clientreceivables	43	–42	1			1	5,861	5,862
ASSETS	340,503	–39,821	300,682	–131,996	–116,102	52,584	12,822	313,504
Derivatives	176,773	–4,447	172,326	–123,698	–31,547	17,081	2,325	174,651
Repo payables	36,926	–35,332	1,594	–682	–795	117		1,594
Securities lending	25,155		25,155	–7,616	–8,765	8,774	6	25,161
Client payables	42	–42					7,044	7,044
LIABILITIES	238,896	–39,821	199,075	–131,996	–41,107	25,972	9,375	208,450

	Financial assets and liabilities subjectto offsetting or netting arrangements
				Related arrangements			Otherinstruments
Parent company, 2017	Gross amounts	Offset	Net amounts in balance sheet	Master netting arrangements	Collaterals received/ pledged	Net amounts	in balance sheet not subjectto net- ting arrangements	Total in balance sheet
Derivatives Reversed repo receivables Securities borrowing Clientreceivables	104,220 104,354 3,468	–61,735	104,220 42,620 3,468	–57,904 –6,613 –3,165	–29,155 –36,007 –303	17,161	35,153 11,620	104,220 42,620 38,621 11,620
ASSETS	212,043	–61,735	150,308	–67,682	–65,465	17,161	46,773	197,081
Derivatives Repo payables Securities lending Client payables	86,990 68,349 8,505	–61,735	86,990 6,614 8,505	–57,904 –6,614 –3,165	–18,293 –5,340	10,793	35,254 9,843	86,990 6,614 43,759 9,843
LIABILITIES	163,844	–61,735	102,110	–67,683	–23,633	10,793	45,097	147,207
2016
Derivatives Reversed repo receivables Securities borrowing Clientreceivables	159,773 100,150 24,396 42	–35,332 –42	159,773 64,818 24,396	–80,887 –682 –7,616	–19,811 –63,612 –11,642	59,075 524 5,138	5,423 5,556	159,773 64,818 29,819 5,556
ASSETS	284,361	–35,374	248,987	–89,185	–95,065	64,737	10,979	259,966
Derivatives Repo payables Securities lending Client payables	133,833 36,808 14,431 42	–35,332 –42	133,833 1,476 14,431	–80,887 –682 –7,616	–43,422 –4,128 –9,051	9,524 –3,334 –2,236	6,242	133,833 1,476 14,431 6,242
LIABILITIES	185,114	–35,374	149,740	–89,185	–56,601	3,954	6,242	155,982

The table shows financial assets and liabilities that are presented netin the balance sheet or with potentialrights to off-set associated with enforceable master netting arrangements or similar arrangements,together with related collateral.

Financial assets and liabilities subjectto enforceable master netting arrange ments or similar arrangements that are not presented netin the balance sheet are arrangements that are usually enforceable in the case of bankruptcy or default but notin the ordinary course of business or arrangements where SEB does not have the intention to settle the instruments simultaneously.

Financial assets and liabilities are presented netin the balance sheet when SEB has legally enforceable rights to set-off, in the ordinary cause of business and in the case of bankruptcy, and intends to settle on a net basis orto realize the assets and settle the liabilities simultaneously. Repos with central counterparty clearing houses that SEB has agreements with and clientreceivables and client payables are examples ofinstruments that are presented netin the balance sheet.

Assets and liabilities that are not subjectto offsetting or netting arrange ments, i.e those that are only subjectto collateral agreements, are presented as Otherinstruments in balance sheet not subject to netting arrangements.

41 Debt securities by issuers

Eligible debt securities			1)
--------------------------	--	--	----

Group, 2017	Swedish government	Swedish municipalities	Other Swedish issuers – non financial companies	Other Swedish issuers – other financial companies	Foreign government	Other foreign issuers	Total
Loans to the public Securities held fortrading Insurance assets atfair value Otherfinancial assets atfair value	7,893 783	4,606 859	751	15,000 3,935	6,875 18,759 1,632	6,020 15 524	12,895 46,274 8,485
through profit orloss Available-for-sale financial assets	304				6,259 21,641	876 3,441	7,135 25,386
TOTAL	8,980	5,465	751	18,935	55,167	10,877	100,175
2016
Loans to creditinstitutions Loans to the public Securities held fortrading Insurance assets atfair value Otherfinancial assets atfair value through profit orloss Available-for-sale financial assets	10,088 1,437 299	4,528 453		3,285	6,690 19,374 7,635 5,340 27,437	382 6,006 1 30,995 829 3,690	382 12,696 33,991 43,805 6,169 31,426
TOTAL	11,824	4,981		3,285	66,476	41,903	128,469
Parent company, 2017 Loans to the public Securities held fortrading	7,893	4,606		15,000	6,875 18,546		6,875 46,045
Available-for-sale financial assets					6,087		6,087
TOTAL	7,893	4,606		15,000	31,508		59,007
2016 Loans to the public Securities held fortrading Available-for-sale financial assets	10,088	4,528			6,690 19,195 6,588		6,690 33,811 6,588
TOTAL	10,088	4,528			32,473		47,089

1)Accrued interest excluded.

Eligible papers are considered as such ifthey, according to national legislation, are accepted by the Central bank in the country in which SEB is located.

Other debt securities 1)

Group, 2017	Swedish government and municipalities	Swedish mortgage institutions	Other Swedish issuers – non financial companies	Other Swedish issuers – other financial companies	Foreign government	Other foreign issuers	Total
Securities held fortrading Insurance assets atfair value Otherfinancial assets atfair value	254	15,740 317	1,807 1,822	6,376 619	23 998	38,874 369	62,820 4,379
through profit orloss Available-for-sale financial assets					813 270		813 270
TOTAL	254	16,057	3,629	6,995	2,104	39,243	68,283
2016
Loans to the public Securities held fortrading Insurance assets atfair value Otherfinancial assets atfair value	306	26,683	1,368 1,094	5,525 1,132	7 2,168	1,896 54,070 27,887	1,896 87,653 32,587
through profit orloss Available-for-sale financial assets					301 1,021		301 1,021
TOTAL	306	26,683	2,462	6,657	3,497	83,853	123,458
Parent company, 2017
Securities held fortrading Available-for-sale financial assets		15,740	1,789	6,393 2,575		38,872 29	62,793 2,604
TOTAL		15,740	1,789	8,968		38,901	65,398
2016
Loans to the public Securities held fortrading Available-for-sale financial assets		26,683	1,293	5,600		1,881 54,077 2,608	1,881 87,653 2,608
TOTAL		26,683	1,293	5,600		58,566	92,142

1)Accrued interest excluded.

42 Derivative instruments

	Group		Parent company
	2017	2016	2017	2016
Interest-related	59,908	133,778	58,750	86,172
Currency-related	37,904	65,056	38,494	63,144
Equity-related	3,349	4,990	3,355	3,734
Other	3,708	8,531	3,621	6,723
Positive replacement values	104,868	212,355	104,220	159,773
Interest-related	39,372	98,258	40,223	62,767
Currency-related	40,669	64,420	41,438	61,415
Equity-related	1,928	2,010	1,950	1,855
Other	3,465	9,963	3,379	7,796
Negative replacement values	85,434	174,651	86,990	133,833

	Positive replacement values		Negative replacement values
Group, 2017	Nominal amount	Book value	Nominal amount	Book value
Options Futures Swaps	127,819 2,026,323 3,125,249	2,719 127 57,062	194,210 2,379,972 2,808,063	3,949 179 35,244
Interest-related	5,279,390	59,908	5,382,245	39,372
Options Futures Swaps	202,288 322,076 1,540,961	2,082 7,741 28,081	195,228 497,127 1,576,686	2,225 11,880 26,563
Currency-related of which exchange traded	2,065,326	37,904 3	2,269,041	40,669 42
Options Futures Swaps	20,630 120,991	2,226 62 1,060	15,835 168,563	576 29 1,322
Equity-related of which exchange traded	141,621	3,349 278	184,398	1,928 146
Options Futures Swaps	43,648 26,270 16,334	1,801 951 955	58,023 3,387 20,242	2,550 65 850
Other of which exchange traded	86,252 28,802	3,708 1,068	81,652 3,141	3,465 375
TOTAL of which exchange traded	7,572,590 28,802	104,868 1,349	7,917,336 3,141	85,434 563

2016

Options	574,200	32,326	1,004,430	25,284
Futures	2,648,672	1,211	2,466,844	2,170
Swaps	3,848,336	100,241	2,735,011	70,804
Interest-related	7,071,208	133,778	6,206,285	98,258
of which exchange traded	259,062	16	178,790	9
Options	163,012	4,461	140,597	4,534
Futures	459,163	15,694	388,388	10,389
Swaps	1,533,842	44,901	1,647,949	49,497
Currency-related of which exchange traded	2,156,017	65,056 2	2,176,934	64,420 34
Options	31,059	2,415	19,841	780
Futures	5	17	2	35
Swaps	691,265	2,558	40,115	1,195
Equity-related	722,329	4,990	59,958	2,010
of which exchange traded	5	203	95	123
Options	47,860	2,017	40,998	2,315
Futures	35,653	3,896	19,309	4,218
Swaps	6,139	2,618	33,719	3,430
Other	89,652	8,531	94,026	9,963
of which exchange traded	30,670	3,159	6,571	3,330
TOTAL	10,039,206	212,355	8,537,203	174,651
of which exchange traded	289,737	3,380	185,456	3,496

Note 42 continued Derivative instruments

	Positive replacement values		Negative replacement values
Parent company, 2017	Nominal amount	Book value	Nominal amount	Book value
Options	106,346	2,333	147,622	3,512
Futures	2,026,323	127	2,379,972	179
Swaps	3,135,062	56,290	2,825,626	36,531
Interest-related	5,267,731	58,750	5,353,220	40,223
Options	211,368	2,142	199,247	2,220
Futures	349,973	8,272	492,378	11,783
Swaps	1,553,851	28,080	1,640,304	27,434
Currency-related of which exchange traded	2,115,192	38,494 3	2,331,929	41,438 42
Options	20,665	2,232	15,803	599
Futures		62		29
Swaps	120,991	1,060	168,563	1,322
Equity-related of which exchange traded	141,656	3,355 278	184,366	1,950 146
Options	42,192	1,718	59,493	2,467
Futures	25,890	948	3,767	62
Swaps	16,334	955	20,242	850
Other	84,417	3,621	83,502	3,379
of which exchange traded	26,952	981	4,991	289
TOTAL	7,608,996	104,220	7,953,016	86,990
of which exchange traded	26,952	1,263	4,991	477
2016
Options	96,395	4,106	87,081	4,302
Futures	2,648,610	1,212	2,452,956	1,375
Swaps	3,251,815	80,854	2,718,139	57,090
Interest-related of which exchange traded	5,996,820 259,000	86,172	5,258,176 178,500	62,767
Options	147,641	2,991	123,246	2,977
Futures	336,700	13,097	261,143	9,901
Swaps	1,608,724	47,056	1,786,265	48,537
Currency-related	2,093,065	63,144	2,170,654	61,415
Options	31,059	2,378	19,808	756
Futures		17		35
Swaps	667,259	1,339	32,271	1,064
Equity-related of which exchange traded	698,318	3,734	52,079 15	1,855
Options	33,201	1,905	66,174	2,203
Futures	35,642	3,896	19,298	4,217
Swaps	13,395	922	117	1,376
Other	82,238	6,723	85,589	7,796
of which, cleared	29,209		5,111
TOTAL	8,870,441	159,773	7,566,498	133,833
of which exchange traded	288,209		183,626

43 Future minimum lease payments for operational leases*

	Group		Parent company
	2017	2016	2017	2016
Year 2017		1,274		885
Year 2018	1,042	1,048	791	721
Year 2019	836	791	606	549
Year 2020	694	683	486	465
Year 2021	584	549	439	382
Year 2022 and later	5,037	4,890	4,711	4,532
TOTAL	8,193	9,235	7,033	7,534

* Leases for premises and other operational leases where SEB is the lessee.

44 Finance leases*

	Group
	2017	2016
Book value	62,107	61,039
Gross investment	66,694	65,924
Present value of minimum lease paymentreceivables	61,904	60,074
Unearned finance income	4,391	4,668
The unguaranteed residual value	480	463
Reserve forimpaired uncollectable minimum lease payments	–176	–199

* Financial leases where SEB is the lessor.

	Group 2017			Group 2016
	Book value	Gross investment	Present value	Book value	Gross investment	Present value
Remaining maturity – maximum 1 year – more than 1 year but maximum 5 years – more than 5 years	8,097 28,663 25,347	8,377 30,073 28,244	8,113 28,817 24,974	6,240 27,666 27,133	6,983 28,830 30,111	6,740 27,151 26,183
TOTAL	62,107	66,694	61,904	61,039	65,924	60,074

The leased assets mainly comprise transport vehicles, machinery and facilities. The largestlease engagement amounts to SEK 6.6 billion (7.5).

45 Assets and liabilities distributed by main currencies

Group, 2017	SEK	EUR	USD	GBP	DKK	NOK	Other	Total
Cash and cash balances and loans to central banks	5,680	79,653	57,802	151	4,149	5,159	37,406	190,000
Loans to creditinstitutions	1,511	9,565	13,731	3,303	897	814	4,895	34,715
Loans to the public	893,926	326,215	118,961	19,254	48,947	58,279	19,221	1,484,803
Otherfinancial assets	392,271	114,510	73,548	7,749	17,516	23,474	6,802	635,871
Other assets	21,817	56,927	32,971	2,976	96,465	211	2,839	214,207
TOTALASSETS	1,315,204	586,870	297,012	33,434	167,974	87,937	71,164	2,559,596
Deposits from central banks	339	3,530	21,127	1,605	165	16,502	975	44,243
Deposits from creditinstitutions	14,996	8,793	12,116	1,153	2,367	1,839	3,571	44,833
Deposits and borrowing from the public	506,756	257,308	133,594	36,904	20,230	31,039	18,891	1,004,721
Otherfinancial liabilities	567,439	265,233	215,023	22,895	11,682	8,392	2,499	1,093,164
Otherliabilities	31,367	42,813	8,134	2,507	139,263	1,600	3,025	228,710
Total equity	143,925							143,925
TOTAL LIABILITIESANDEQUITY	1,264,822	577,677	389,994	65,064	173,707	59,372	28,961	2,559,596

2016
Cash and cash balances and loans to central banks	61,808	83,837	55,755	126	5,595	124	10,563	217,808
Loans to creditinstitutions	1,410	13,101	26,444	2,565	1,572	557	4,878	50,527
Loans to the public	842,883	318,592	134,739	18,311	54,365	62,143	21,986	1,453,019
Otherfinancial assets	396,970	210,719	101,198	10,483	105,136	23,214	10,038	857,758
Other assets	19,983	9,333	975	598	9,558	451	636	41,534
TOTALASSETS	1,323,054	635,582	319,111	32,083	176,226	86,489	48,101	2,620,646


Deposits from central banks	304	21,323	26,398	2,301			4,066	54,392
Deposits from creditinstitutions Deposits and borrowing from the public	18,265 483,722	23,594 249,599	6,969 143,092	134 26,381	10,313 15,839	2,663 27,388	3,534 16,007	65,472 962,028
Otherfinancial liabilities	563,111	355,529	259,103	23,351	46,240	9,030	4,421	1,260,785
Otherliabilities	27,976	8,863	2,411	1,058	93,783	1,680	1,222	136,993
Total equity	140,976							140,976

Parent company, 2017	SEK	EUR	USD	GBP	DKK	NOK	Other	Total
Cash and cash balances with central banks	161	18	57,670		1,566	4,793	33,532	97,741
Loans to creditinstitutions	15,826	134,821	18,003	5,627	6,415	5,703	6,197	192,591
Loans to the public	855,405	101,073	110,469	13,716	48,259	51,014	16,887	1,196,824
Otherfinancial assets	149,078	83,877	70,754	7,947	17,633	23,409	6,464	359,163
Other assets	17,597	21,235	1,560	1,601	946	2,540	365	45,845
TOTALASSETS	1,038,069	341,024	258,456	28,891	74,820	87,459	63,444	1,892,163
Deposits from central banks	339	3,529	21,127	1,605	165	16,502	975	44,242
Deposits from creditinstitutions	30,034	22,009	18,242	1,797	2,748	4,494	3,974	83,297
Deposits and borrowing from the public	498,066	103,265	122,977	35,298	20,718	28,018	13,811	822,151
Otherfinancial liabilities	326,773	219,083	214,254	22,281	11,712	8,330	2,251	804,683
Otherliabilities	3,381	964	3,554	319	304	966	2,111	11,599
Shareholders' equity and untaxed reserves	126,191							126,191
TOTAL LIABILITIESANDEQUITY	984,784	348,849	380,153	61,300	35,645	58,309	23,122	1,892,163

2016
Cash and cash balances with central banks	154	3,505	55,659		1,656	65	9,632	70,671
Loans to creditinstitutions	74,309	156,123	30,507	4,938	8,308	5,260	7,614	287,059
Loans to the public	802,335	103,325	126,832	13,018	53,500	54,893	18,192	1,172,095
Otherfinancial assets	175,607	112,558	66,908	8,326	27,588	23,073	8,245	422,305
Other assets	18,312	21,193	1,391	1,848	1,509	3,036	425	47,714
TOTALASSETS	1,070,717	396,704	281,297	28,130	92,561	86,327	44,108	1,999,844


Deposits from central banks	304	21,153	26,377	2,301			4,065	54,200
Deposits from creditinstitutions	33,038	47,667	14,693	1,041	10,297	4,453	3,463	114,652
Deposits and borrowing from the public	475,728	95,457	131,139	24,710	16,228	25,648	13,674	782,584
Otherfinancial liabilities	368,972	245,943	253,462	20,842	13,751	8,992	3,488	915,450
Otherliabilities	4,071	247	1,929	870	453	1,100	1,153	9,823
Shareholders' equity and untaxed reserves	123,135							123,135

46 Life insurance operations

	Group
INCOME STATEMENT	2017	2016
Premium income, net Income investment contracts	10,039	9,268
–Own fees including risk gain/loss – Commissions from fund companies	1,525 1,928	1,499 1,735
	3,453	3,234
Netinvestmentincome Other operating income	5,103 556	6,704 473
Total income, gross	19,151	19,679
Claims paid, net Change in insurance contract provisions	–8,174 –5,649	–8,949 –5,534
Total income, net	5,329	5,196
Of which from other units within the SEB group	1,595	1,521
Direct acquisition costs investment and insurance contracts Change in deferred acquisition costs	–1,042 –75	–1,013 –84
	–1,117	–1,097
Commissions received and profit share from ceded reinsurance Other expenses	115 –1,838	110 –1,819
Total expenses	–2,840	–2,806
OPERATINGPROFIT	2,489	2,390

CHANGE IN SURPLUSVALUES IN DIVISION LIFE

Present value of new sales 1) Return on existing policies Realised surplus value in existing policies Actual outcome compared to assumptions 2)	1,045 1,856 –2,999 –39	1,208 1,781 –2,915 371
Change in surplus values from ongoing business, gross	–136	445
Capitalisation of acquisition costs Amortisation of capitalised acquisition costs Change in deferred front end fees	–882 957 21	–859 943 –45
Change in surplus values from ongoing business, net 3)	–40	484
Financial effects due to short-term marketfluctuations 4) Change in assumptions 5)	769 134	531 202
TOTAL CHANGE IN SURPLUSVALUES 6)	862	1,217

Calculations of surplus value in the life insurance operations are based on assumptions ofthe future development of existing insurance contracts and a risk-adjusted discountrate. The mostimportant assumptions (Swedish unit-linked - which represent 63 per cent (65) ofthe total surplus value).

Discountrate	7.0%	7.0%
Surrender of endowmentinsurance contracts: contracts signed within 1 year/ 1–4 years / 5 years / 6 years /thereafter		2%/6%/ 19%/ 15%/9% 2%/6%/20%/ 15%/10%
Lapse rate ofregular premiums, unit-linked	8.3	8.1%
Growth in fund units, gross before fees and taxes	5.0%	5.0%
Inflation CPI / Inflation expenses	2% / 3%	2% / 3%
Expected return on solvency margin	3%	3%
Rightto transfer policy, unit-linked	3.1%	3.0%
Mortality	TheGroup's experience	TheGroup's experience

1) Sales defined as new contracts and extra premiums in existing contracts.

2) The actual outcome of previously signed contracts is compared with previous assumptions and deviations are calculated. Important components are the duration of contracts and cancellations.

3)Acquisition costs are capitalised and amortised according to plan. Certain front end fees are also recorded on the balance sheet and recognized as revenue in the income state ment during several years. The reported change in surplus values is adjusted by the net effect of changes in deferred acquisition costs and front end fees during the period.

4)Assumed investmentreturn (growth in fund values) is 5.0 per cent gross before fees and taxes.Actualreturns results in positive or negative financial effects.

5) Effect of changes in assumptions such as frequency of surrenders,transfers out and assumed expenses.

6) The calculated surplus value is notincluded in the SEBGroup's consolidated accounts. The surplus value is net of capitalised acquisition costs and deferred front end fees.

SUMMARISEDFINANCIAL INFORMATION FORGAMLALIVFÖRSÄKRINGSBOLAGET SEB TRYGGLIV*

Income statement, condensed	2017	2016
Life insurance technicalresult	8,142	8,384
Other costs and appropriations	60
Taxes	–194	–210
NETRESULT	8,008	8,174
Balance sheet, condensed
Total assets	181,308	179,769
TOTALASSETS	181,308	179,769
Total liabilities	87,359	87,666
Consolidation fund / equity	93,825	91,919
Untaxed reserves	124	184

TOTAL LIABILITIESANDEQUITY 181,308 179,769

* SEB owns all shares ofGamla Livförsäkringsbolaget SEB Trygg Liv exceptfor a golden share owned by Trygg-Stiftelsen.Gamla Livförsäkringsbolaget SEB Trygg Liv is not consoli dated as subsidiary oftheGroup, since the ownership of SEB in Gamla Livförsäkringsbolaget SEB Trygg Liv does notresultin control. Current yearfigures are unaudited.

47 Assets in unit-linked operations

Within the unit-linked business SEB holds,forits customers' account, a share

of more than ⁵⁰ per centin ²⁶ (23) funds, where SEB is the investment man- ager. The total value ofthose funds amounted to SEK 129,759m (104,003) of which SEB,forits customers' account, holds SEK 90,167m (74,944).

48 Non-current assets and disposal groups classified as held for sale

	Group
Non-current assets and disposal groups classified as held for sale	2017	2016
Financial assets atfair value through profit orloss Other assets	175,506 8,505	587
TOTAL	184,011	587

Liabilities of disposal groups classified as held for sale

TOTAL	178,710
Otherliabilities	10,553
Financial liabilities atfair value through profit orloss	34,469
Liabilities to policyholders	133,688

As announced on 14 December 2017, SEB has signed an agreementto sell all shares in SEB Pensionsforsikring A/S and SEB Administration A/S (SEB Pen sion) to Danica Pension Livsforsikringsaktieselskab (Danica, a subsidiary to Danske Bank). SEB Pension consists of a portfolio oflife and pension con tracts and approximately 275 employees. At year-end, assets under management by SEB Pension amounted to DKK 101bn, and the net profit contributed was DKK 490m forthe year. The completion ofthe sale is among otherthings conditional upon regulatory approvals and certain preparations for separation and is currently expected to occur around the summer of 2018. In the

consolidated balance sheet, assets and liabilities relating to SEB Pension are separated from other assets and liabilities. SEB Pension is reported in the Life & Investment Management division.

The Baltic division has a divestment plan forinvestment properties. Through the continuation ofthe plan, additional properties were reclassified as assets held for sale untilthe derecognition at concluded sales agreement. The impairmentloss recognised in association with the reclassifications amounted to SEK 205m (200).

49 Items affecting comparability

	Group
	2017	2016
Otherincome	494	520
Total operating income	494	520
Staff costs Other expenses Depreciation, amortisation and impairment oftangible and intangible assets	–1,320 –92 –978	–140 –84 –5,725
Total operating expenses	–2,390	–5,949
Items affecting comparability	–1,896	–5,429
Income tax on items affecting comparability	215	77
Items affecting comparability aftertax	–1,681	–5,352

Items affecting comparability 2017

The total expense in the income statementfrom Items affecting comparability was SEK 1,896m before tax and SEK 1,681m aftertax. In total,the items affecting comparability, including the effect on other comprehensive income of SEK 494m, decreased equity by SEK 2,175m.

Visa Sweden

The settlement ofthe acquisition of Visa Europe by Visa Inc. consisted of a combination of cash and shares to be paid to the different Visa Europe mem bers. In Sweden, SEB was an indirect member. A dividend of SEK 494m was received. There was no tax effect. The holdings in Visa have been classified as Available-for-sale asset where the change in value is recognised in Other comprehensive income. The dividend received has reduced the amountin Other comprehensive income by SEK 494m.

SEB's German business

In line with previous communication,the operations in Germany were trans formed and the core business was transferred from SEB AG to the German branch ofthe parent company, Skandinaviska Enskilda Banken AB, as per 2 January 2018. The purpose ofthe change is to simplify the reporting and administration ofthe German operations. The non-core business that was nottransferred to the branch from SEB AG will be dismantled overtime. The provisions related to redundancy and excess premises amounting to a total of SEK 521m were recognised in 2017. In addition, SEB entered into an agreementto transferthe pension obligations underthe defined benefit plan in SEB AG to Versicherungsverein des Bankgewerbes a.G (BVV) at a total cost of SEK 891m. The transfer willtake place in the second quarter 2018.

Impairment and derecognition of IT assets

An impairment and a derecognition ofintangible IT assets led to an expense in an amount of SEK 978m. The positive tax effect was SEK 215m.

Items affecting comparability 2016

The total effect ofItems affecting comparability in 2016 was a costin the amount of SEK 5,429m before tax and SEK 5,352m aftertax.

Visa Baltic

The settlement ofthe transaction of SEB's Baltic holdings in Visa Europe resulted in a gain of SEK 520m. The gain generated a tax expense of SEK 24m.

Reorganisation and restructuring

SEB implemented a new customer-oriented organisation which resulted in an impairment of goodwill in the amount of SEK 5,334m. This expense was not tax deductible. There were financial effects from restructuring activities in the Baltic and German businesses as well as an impairment and derecognition ofintangible IT assets no longerin use. The total amount was SEK 615m and there was a positive tax effect amounting to SEK 101m.

The SEB Group

Income Statement

SEKm	2017	20162)	20151) 2)	20141) 2)	20131)
Netinterestincome Netfee and commission income Netfinancial income Net otherincome	19,893 17,725 6,880 1,112	18,738 16,628 7,056 829	19,020 18,345 6,298 1,002	19,943 17,547 4,473 1,549	18,827 15,835 5,581 840
Total operating income	45,609	43,251	44,665	43,512	41,083
Staff costs Other expenses Depreciation, amortisation and impairment oftangible and intangible assets	–14,025 –6,947 –964	–14,422 –6,619 –771	–14,436 –6,355 –1,011	–13,760 –6,815 –1,129	–14,029 –6,720 –1,068
Total operating expenses	–21,936	–21,812	–21,802	–21,704	–21,817
Gains less losses on disposals oftangible and intangible assets Net creditlosses	–162 –808	–150 –993	–213 –883	–121 –1,324	16 –1,155
Operating profit before items affecting comparability	22,702	20,296	21,767	20,363	18,127
Items affecting comparability	–1,896	–5,429	–902	2,985
Operating profit	20,806	14,867	20,865	23,348	18,127
Income tax expense	–4,562	–4,249	–4,284	–4,129	–3,338
Net profitfrom continuing operations	16,244	10,618	16,581	19,219	14,789
Discontinued operations					–11
NET PROFIT	16,244	10,618	16,581	19,219	14,778
Attributable to minority interests Attributable to equity holders	16,244	10,618	16,581	1 19,218	7 14,771

1) Comparable figures for 2015 and 2014 restated and comparable figures for 2013 recalculated pro forma in line with changed reporting oflife insurance business. 2) Items affecting comparability restated, see note 49.

Balance sheet

SEKm	2017	2016	2015	2014	2013
Cash and cash balances and loans to central banks	190,000	217,808	133,651	119,915	183,611
Loans to creditinstitutions	34,715	50,527	58,542	90,945	102,623
Loans to the public	1,484,803	1,453,019	1,353,386	1,355,680	1,302,568
Otherfinancial assets	635,871	857,758	899,867	1,024,466	845,788
Other assets	214,208	41,534	50,518	50,240	50,244
TOTALASSETS	2,559,596	2,620,646	2,495,964	2,641,246	2,484,834
Deposits from central banks and creditinstitutions	89,076	119,864	118,506	115,186	176,191
Deposits and borrowing from the public	1,004,721	962,028	883,785	943,114	849,475
Otherfinancial liabilities	1,092,981	1,260,785	1,215,838	1,303,584	1,204,991
Otherliabilities	228,892	136,993	135,037	144,786	131,363
Total equity	143,925	140,976	142,798	134,576	122,814
TOTAL LIABILITIESANDEQUITY	2,559,596	2,620,646	2,495,964	2,641,246	2,484,834

Key figures

	2017	2016	2015	2014	2013
Return on equity, %	11.53	7.80	12.24	15.25	13.11
Return on equity excluding items affecting comparability, %	12.67	11.30	12.85	13.07	13.11
Basic earnings per share, SEK	7.49	4.88	7.57	8.79	6.74
Cost/Income ratio	0.48	0.50	0.49	0.50	0.53
Creditloss level, %	0.05	0.07	0.06	0.09	0.09
Totalreserve ratio forindividually impaired loans, %	55.1	68.8	68.3	62.2	86.9
Gross level ofimpaired loans, %	0.39	0.33	0.35	0.49	0.35
Common Equity Tier 1 capitalratio1), %	19.4	18.8	18.8	16.3	15.0
Tier 1 capitalratio1), %	21.6	21.2	21.3	19.5	17.1
Total capitalratio1), %	24.2	24.8	23.8	22.2	18.1

1) Basel III.

Skandinaviska Enskilda Banken

Income Statement

SEKm	2017	2016	2015	2014	2013
Netinterestincome Netfee and commission income Netfinancial income Otherincome	20,017 9,557 4,493 8,323	19,242 8,843 4,642 7,398	19,488 9,200 3,428 9,165	19,783 9,235 2,121 5,089	18,872 8,283 3,547 6,838
Total operating income	42,390	40,125	41,281	36,228	37,540
Administrative expenses Depreciation, amortisation and impairment	–14,252	–15,039	–13,458	–13,909	–14,062
oftangible and intangible assets	–6,377	–5,775	–5,447	–5,157	–5,024
Total operating costs	–20,629	–20,814	–18,905	–19,066	–19,086
Profit before creditlosses	21,761	19,311	22,376	17,162	18,454
Net creditlosses Impairment offinancial assets	–749 –1,497	–789 –3,841	–520 –775	–1,065 –2,721	–451 –1,691
Operating profit	19,515	14,681	21,081	13,376	16,312
Appropriations including pension compensation Taxes	1,885 –3,590	2,437 –2,740	781 –3,817	966 –2,053	3,432 –2,805
NET PROFIT	17,811	14,378	18,045	12,289	16,939

Balance sheet

SEKm	2017	2016	2015	2014	2013
Cash and cash balances with central banks	97,741	70,671	55,712	59,170	135,309
Loans to creditinstitutions	192,591	287,059	166,267	194,285	183,312
Loans to the public	1,196,824	1,172,095	1,080,438	1,056,807	1,013,188
Otherfinancial assets	359,162	422,305	516,708	623,920	523,970
Other assets	45,845	47,714	47,480	51,960	48,379
TOTALASSETS	1,892,163	1,999,844	1,866,605	1,986,142	1,904,158
Deposits from central banks and creditinstitutions	127,539	168,852	134,816	144,776	210,237
Deposits and borrowing from the public	822,151	782,584	690,301	706,452	611,234
Otherfinancial liabilities	804,683	915,450	905,621	1,002,762	958,231
Otherliabilities	11,599	9,823	14,621	17,587	17,006
Shareholders' equity and untaxed reserves	126,191	123,135	121,246	114,565	107,450
TOTAL LIABILITIES,UNTAXEDRESERVESANDSHAREHOLDERS' EQUITY	1,892,163	1,999,844	1,866,605	1,986,142	1,904,158

Key figures

	2017	2016	2015	2014	2013
Return on equity, %	16.3	12.6	16.5	11.8	17.7
Cost/Income ratio	0.49	0.52	0.46	0.53	0.51
Creditloss level, %	0.05	0.06	0.04	0.09	0.04
Gross level ofimpaired loans, %	0.33	0.22	0.17	0.31	0.08
Common Equity Tier 1 capitalratio1), %	19.8	18.8	19.2	16.2	16.3
Tier 1 capitalratio1), %	22.5	21.7	22.1	20.0	18.9
Total capitalratio1), %	25.5	26.1	25.0	23.1	20.0

1) Basel III.

Proposalforthe distribution of profit

Standing atthe disposal oftheAnnual GeneralMeeting in accordance with the balance sheet of Skandinaviska Enskilda BankenAB:

The Board proposes that,following approval ofthe balance sheet of Skandinaviska Enskilda Banken AB forthe financial year 2017,the Annual General Meeting should distribute the earnings as follows:

1) Total	69,395,006,172	Total	69,395,006,172
Net profitforthe year	17,811,025,076	– retained earnings	56,778,518,310
Retained earnings	50,108,021,770	To be carried forward to:
Otherreserves	1,475,959,326	per Class C share	138,876,921
	SEK	– SEK 5.75
		per Class A share	12,477,610,941
		– SEK 5.75
		Dividend to shareholders:
			SEK

Itis the assessment ofthe Board of Directors thatthe proposed dividend is justifiable considering the demands which are imposed by the nature, scope, and risks associated with the business and the size ofthe Parent company's and theGroup's equity and need for consolida tion, liquidity and financial position in general.

1) The Parent Company's equity would have been SEK 10,385m lowerif assets and liabilities had not been measured atfair value in accordance with Chapter 4, Section 14 ofthe Swedish Annual Accounts Act.

Signatures ofthe Board of Directors and the President

The Board of Directors and the President declare thatthe consoli dated financial statements have been prepared in accordance with IFRS as adopted by the EU and give a relevant and faithful representation ofthe Group's financial position and results of operations.

The financial statements ofthe Parent Company have been prepared in accordance with generally accepted accounting principles in Sweden and give a true and fair view ofthe Parent Company's financial position and results of operations.

The Report ofthe Directors forthe Group and the Parent company provides a fairreview ofthe development ofthe Group's and the Parent company's operations,financial position and results of operations and describes materialrisks and uncertainties facing the Parent company and companies included in the Group.

Stockholm 20 February 2018

Marcus Wallenberg Chairman

Sven Nyman Vice Chairman

Samir Brikho Director Winnie Fok

SaraÖhrvall Director Anna-Karin Glimström

Jesper Ovesen Vice Chairman

JohanH.Andresen

Director Signhild Arnegård Hansen Director

Director Tomas Nicolin Director Helena Saxon Director

Håkan Westerberg Director Appointed by the employees

Appointed by the employees

Director

Johan Torgeby

President and Chief Executive Officer Director

Auditor's report

To the general meeting of the shareholders of Skandinaviska Enskilda BankenAB (publ), Corporate Identity Number 502032-9081

Report on the annual accounts and consolidated accounts

Opinions

We have audited the annual accounts and consolidated accounts of Skandinaviska Enskilda BankenAB (SEB) forthe year2017with the exception ofthe sustainability report on pages 67–71. The annual accounts and consolidated accounts ofthe company are included on pages32–166 in this document.

Inouropinion,theannualaccountshavebeenpreparedinaccordancewiththeAnnualAccountsActforCreditInstitutionsandSecuritiesCompaniesandpresentfairly, inallmaterialrespects,thefinan cialpositionofparent companyasof31December2017andits finan cialperformanceandcashflowfortheyearthenendedinaccordancewiththeAnnualAccountsActforCreditInstitutionsandSecuritiesCompanies.Theconsolidatedaccountshavebeenpreparedin accordancewiththeAnnualAccountsActforCreditInstitutionsand SecuritiesCompaniesandpresentfairly, inallmaterialrespects,the financialpositionofthegroupasof31December2017andtheir financialperformanceandcashflowfortheyearthenendedin accordancewithInternationalFinancialReportingStandards (IFRS), asadoptedbytheEU,andtheAnnualAccountsActforCreditInstitu tionsandSecuritiesCompanies.

Acorporate governance report has been prepared. The report ofthe directors and the corporate governance report are consist entwith the other parts ofthe annual accounts and consolidated accounts and the annual accounts actfor CreditInstitutions and Securities Companies.

We therefore recommend thatthe generalmeeting of share holders adopts the income statement and balance sheetforthe parent company and the group.

Our opinions in this report on the annual accounts and the con solidated accounts are consistentwith the content ofthe supple menting reportthat has been presented to the audit committee ofthe Board ofDirectors in accordancewith the auditregulation (537/2014) article 11.

Basis for Opinions

We conducted our auditin accordancewith International Standards onAuditing (ISA) and generally accepted auditing standards in Sweden.Ourresponsibilities underthose standards are further described in theAuditor'sResponsibilities section. We are independent ofthe parent company and the group in accordancewith professional ethics for accountants in Sweden and have otherwise fulfilled our ethicalresponsibilities in accordancewith these requirements.

This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the auditregulation (537/2014) Article 5.1 have been provided to the audited com pany or, where applicable, its parent company orits controlled companies within the EU.

We believe thatthe audit evidencewe have obtained is suffi cient and appropriate to provide a basis for our opinions.

Our audit approach

Audit scope

We designed our audit by determiningmateriality and assessing the risks ofmaterialmisstatementin the consolidated financial state ments. In particular,we consideredwhere theManagingDirector and theBoard ofDirectorsmade subjective judgements;for example, in respect of significant accounting estimates thatinvolved making assumptions and considering future events that are inher ently uncertain.As in all of our audits,we also addressed the risk of management override ofinternal controls, including among other

matters consideration ofwhethertherewas evidence of bias that represented a risk ofmaterialmisstatement due to fraud.

We tailored the scope of our auditin orderto perform sufficient work to enable us to provide an opinion on the consolidated finan cial statements as a whole,taking into accountthe structure of the Group,the accounting processes and controls, and the indus try in which the group operates.

TheSEBgrouphas centralizedservice centers, systemsandpro cesses andhas a centralizedfinancefunction foritsSwedishentities andbranches intheNordic countriesandtheUK.Wehaveorganized the auditworkbyhavingour central auditteamto carry outthe testing of all centralizedsystemsandprocessesandthe localaudit teams to carry outadditionaltestingbasedon ourinstructions.

Full scope audit and reporting is performed at entitieswith high significance and risk to the group. The auditis carried outin accordancewith International Standards onAudit and local auditrequire ments. The procedures applied generally include an assessment and testing of controls over key business processes, analytical pro cedures ofindividual account balances,tests of accounting records through inspection, observation or confirmation, and obtaining corroborating evidentialmatterin response to inquiries.

For someentities, even thoughnot consideredto have highsignifi cance orrisk, itis requiredfroma groupauditperspectivetoobtain assurance oncertain accountingareas.Inthese cases, localaudit teamsare instructedtoperformcertainproceduresandreportback tous.Theprocedures appliedgenerally include adetailedanalytical review,reconciliation to underlying sub-ledgers, substantivetesting for specificprocesses, areas andaccounts,discussionwithmanagementregardingaccounting,tax andinternal control aswell as follow-upson known issues frompreviousperiods.

As part of our auditwe place reliance on internal controls forthe applications/systems and related platforms that supports SEB's accounting and financialreporting. Therefore,we performaudit procedures to determine that systems and processes are designed, maintained, operated and kept secure in such away as to provide assurance thatthe risk of errorisminimized. The audit procedures includewalk-throughs of processes and evaluation of design and test of effectiveness of controls. Substantive testing has also been performed.Where possiblewe have relied onmanagement's own evaluation activities and audits performed by SEBInternalAudit.

Our auditis carried out continuously during the yearwith special attention at each quarter end. In connectionwith the SEB group's issuance ofinterimreports,we report our observations to the Audit Committee ofthe Board ofDirectors and issue interimreview reports.Atthe end ofthe year,we also report ourmain observa tions to the full Board ofDirectors.

Materiality

The scope of our auditwas influenced by our application ofmateriality.An auditis designed to obtain reasonable assurancewhether the financial statements are free frommaterialmisstatement. Misstatementsmay arise due to fraud or error. They are consideredmaterial ifindividually orin aggregate,they could reasonably be expected to influence the economic decisions of users taken on the basis ofthe financial statements.

Based on our professional judgement,we determined certain quantitative thresholds formateriality, including the overallmateriality forthe financial statements as awhole. These,togetherwith qualitative considerations, helped us to determine the scope of our audit and the nature,timing and extent of our audit procedures and to evaluate the effect ofmisstatements, both individually and in aggregate on the financial statements as awhole.

Key auditmatters

Key auditmatters ofthe audit are thosematters that, in our profes sional judgment,were ofmost significance in our audit ofthe annual accounts and consolidated accounts ofthe current period. These matterswereaddressedinthecontextofourauditof,andinforming ouropinionthereon,theannualaccountsandconsolidatedaccounts asawhole,butwedonotprovideaseparateopiniononthesematters.

Key audit matter

Impairment of loans to customers

Accounting forimpairment ofloans to customers requires subjec tive judgement over both timing ofrecognition ofimpairment and the size of any such impairment.

SEB makes provisions forincurred creditlosses on individually assessed loans and for portfolio assessed loans. Loans to corpo rate,real estate and institutional counterparties are primarily individually assessed and specific provisions are made foridentified impaired loans (individually assessed impaired loans). Loans that have not been deemed to be impaired on an individual basis and which have similar creditrisk characteristics are grouped together and assessed collectively forimpairment. Valuations ofloans to private individuals and small businesses are to a large extent made on a portfolio basis (portfolio assessed loans).

Referto the Annual ReportNote 17a – Creditrisk andNote 19 – Loans.

How our audit addressed the Key audit matter

Our audit included a combination of testing of internal controls over financialreporting and substantive testing. The testing of internal controls included procedures relating to the governance structure, segregation of duties and key controls in the lending processes. Substantive testing was made of a sample of provisioning models used, larger credits and higherrisk portfolios. In 2017, we had a special focus on loans to customers in the oil, gas and offshore industries. We also reviewed SEB's back testing of collective provisions.

Based on our work, we had no material observations for the overall audit on the level of loan loss provisions as at 31 December 2017.

Key audit matter

Valuation of financial instruments held at fair value

The valuation offinancial instruments held atfair value was an area of auditfocus due to their significance in presenting both financial position and performance.

Determining fair value offinancial instruments is inherently complex as many instruments are complex and as risks and mar ket prices are ever changing. For some instruments there is also limited availability of observable prices orrates. Because of these factors,the valuation of some instruments involves signifi cant managementjudgment.

The majority of SEB's assets and liabilities measured atfair value are held for clientfacilitation, liquidity or hedging purposes. Between 92-93% ofthe positions are fair valued based on observable prices orrates traded in active markets. The remaining 7-8% ofthe positions are valued based on models and are mainly venture capital holdings and certain derivatives held for hedging purposes.

Referto the Annual ReportNote 21 – Fair value measurement of assets and liabilities,Note 22 – Financial assets at fair value through profit orloss,Note 23 – Available-for-sale financial assets,Note 24 – Investments in associates,Note 31 – Financial Liabilities at fair value through profit orloss.

How our audit addressed the Key audit matter

In our audit, we assessed the design and tested the operating effec tiveness of key controls supporting the identification, measurement and oversight of valuation risk of financial instruments.

In addition to test appropriate segregation of duties, we exam ined SEB's independent price verification process, model validation and approval processes, controls over data feeds and valuation inputs as well as SEB's governance and reporting processes and

controls. We paid particular attention to controls relating to com plex instruments.

For valuations dependent on unobservable inputs or which involved a higher degree of judgement for otherreasons, we used our valuation specialists to evaluate the assumptions, methodolo gies and models used by SEB. We performed independent valua tions of a sample of positions.

Based on our work, we had no material observations forthe over all audit on the valuation of financial instruments held at market value as at 31 December 2017.

Key audit matter

IFRS 9 disclosures

IFRS 9,the new accounting standard forfinancial instruments came into effect on 1 January 2018. The standard replaces the currentIAS 39 standard. SEB presentthe financial effects ofthe new standard in Accordance with IAS 8.

The new standard has significant effects on SEB's opening balance for 2018, which is presented in disclosures to the annual reportfor 2017.

The two main areas affecting SEB are:

Classification and measurement: How differenttypes offinan cial instruments are to be classified and measured and accounted for. Valuation and accounting is determined based on the underlying business model.
Impairment: The methodology forloan loss provisioning. The new modelrequires companies to use forward looking information in an expected loss model instead ofthe currently used incurred loss model.
- Referto the Annual ReportNote 1 –Note about IFRS 9.

How our audit addressed the Key audit matter

We have audited the disclosures made related to the financial effects and the transition from IAS 39 to IFRS 9. We have also audited overall governing documents and the overall governance in SEB to ensure adherence to IFRS 9.

For Classification and measurement, we have examined SEB's business model assessments for a large number of contracts to validate the classifications made are in accordance with IFRS 9.

ForImpairment, we have reviewed definitions made, data sources used and the overall mechanics of the impairment models used and validated adherence to IFRS 9. We have also tested a sample of impairment models to ensure that the model calculator is working as described in the model documentation. The sample selected was risk based addressing either significant volumes or complex products.

Based on our work, we had no material observations forthe overall audit on the disclosures of the IFRS 9 implementation in accordance with IAS 8 as at 31 December 2017

Key audit matter

Provision for uncertain tax positions

SEB is subjectto taxation in many jurisdictions and, in many cases,the finaltax treatmentis uncertain and not determined untilresolved with the relevanttax authority. Consequently, SEB makes judgements aboutthe probability and amount oftax liabilities which are subjectto assessments by tax authorities and potentially associated with legal processes.

Additionally,tax legislation is under significant and rapid change which when becoming effective affect both current period tax costs and the valuation oftax assets.

Referto theAnnual ReportNote 15 – Taxes andNote 32 – Otherliabilities.

How our audit addressed the Key audit matter

In our audit of tax costs and valuation of tax assets and liabilities, we have tested internal controls and performed substantive testing. The testing of internal controls included procedures relating to the governance structure, segregation of duties and key controls in the tax process.

In the substantive testing we have used ourtax specialists to examine potential implications of ongoing tax audits and legal processes. We have followed correspondence with tax authorities and opinions SEB received from its external legal advisers. We have also independently examined the matters in dispute and the provi sions made by SEB.

Based on our work, we had no material observations forthe overall audit on the level of provisions for uncertain tax positions as at 31 December 2017.

Other Information than the annual accounts and consolidated accounts

This document also contains otherinformation than the annual accounts and consolidated accounts and is found on pages 1–31. The Board of Directors and the Managing Director are responsible forthis otherinformation.

Our opinion on the annual accounts and consolidated accounts does not coverthis otherinformation and we do not express any form of assurance conclusion regarding this otherinformation.

In connection with our audit of the annual accounts and con solidated accounts, our responsibility is to read the informa tion identified above and consider whether the information is materially inconsistent with the annual accounts and consoli dated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated.

If we, based on the work performed concerning this informa tion, conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible forthe preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act for Credit Institutions and Securities Companies and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU and the Annual Accounts Act for Credit Institutions and Securities Companies. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is neces sary to enable the preparation of annual accounts and consoli dated accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible forthe assessment ofthe company's and the group's ability to continue as a going concern. They disclose, as applicable, mat ters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied ifthe Board of Directors and the Managing Director intends to liquidate the company,to cease operations, or has no realistic alternative butto do so.

The Audit Committee shall, without prejudice to the Board of Director's responsibilities and tasks in general, among other things oversee the company's financialreporting process.

Auditor's responsibility

Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasona bly be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts.

A further description of ourresponsibility forthe audit of the annual accounts and consolidated accounts is available on Revisorsinspektionen's website: revisorsinspektionen.se/rn/ showdocument/documents/rev_dok/revisors_ansvar.pdf This description is part ofthe auditor's report.

Report on otherlegal and regulatory requirements Opinions

In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of Skandinaviska Enskilda Banken AB (publ) forthe year 2017 and the proposed appropriations of the company's profit orloss.

We recommend to the general 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 forthe financial year.

Basis for Opinions

We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our opinions.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors is responsible forthe proposal for appro priations of the company's profit orloss. At the proposal of a dividend, this includes an assessment of whetherthe dividend is justifiable considering the requirements which the company's and the group's type of operations, size and risks place on the size of the parent company's and the group's equity, consolida tion requirements, liquidity and position in general.

The Board of Directors is responsible for the company's organization and the administration of the company's affairs. This includes among other things continuous assessment of the company's and the group's financial situation and ensuring that the company's organization is designed so that the accounting, management of assets and the company's financial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Directors' guidelines and instructions and among other matters take measures that are necessary to fulfil the company's accounting in accordance with law and handle the management of assets in a reassuring manner.

Auditor's responsibility

Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors orthe Managing Directorin any materialrespect:

has undertaken any action or been guilty of any omission which can give rise to liability to the company, or
in any other way has acted in contravention of the Companies Act, the Banking and Financing Business Act, the Annual Accounts Act for Credit Institutions and Securities Companies orthe Articles of Association.

Our objective concerning the audit of the proposed appropria tions of the company's profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, orthat the proposed appropriations of the company's profit or loss are not in accordance with the Companies Act.

A further description of our responsibility for the audit of the administration is available on Revisorsinspektionen's website: revisorsinspektionen.se/rn/showdocument/documents/rev_dok/ revisors_ansvar.pdf

This description is part ofthe auditor's report.

Report on the statutory sustainability report

The Board of Directors is responsible forthe preparation ofthe sustainability reportincluded on pages 67–71 and thatit has been prepared in accordance with the Annual Accounts Act.

Our examination has been conducted in accordance with FAR's auditing standard RevR 12 The auditor's opinion regarding the statutory sustainability report. This means that our examination ofthe statutory sustainability reportis different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe thatthe examination has provided us with sufficient basis for our opinion.

A sustainability report has been prepared.

PricewaterhouseCoopers AB, was appointed as the auditor of SEB by the annual general meeting 2017, and has been SEB's auditor since 2000.

Stockholm 20 February 2018 PricewaterhouseCoopers AB

Peter Nyllinge Authorized Public Accountant Martin By Authorized Public Accountant

Auditors' limited assurance report on the statutory sustainability report

To the general meeting of the shareholders in Skandinaviska Enskilda Banken AB, corporate identity number 502032-9081

Introduction

We have been engaged by Skandinaviska Enskilda Banken AB (publ) (SEB) to undertake a limited assurance engagement ofthe statutory sustainability reportforthe year 2017 on pages 67-71.

Responsibilities of the Board

The Board of Directors is responsible forthe preparation of a sustainability reportin accordance with the Annual Accounts Act. This responsibility includes the internal controlrelevantto the preparation of a sustainability reportthatis free from material misstatements, whether due to fraud or error.

Responsibilities of the Auditor

Ourresponsibility is to express a conclusion on the sustainability report based on the procedures we have performed.

We have conducted ourlimited assurance engagementin accordance with ISAE 3000 Assurance Engagements Otherthan Audits or Reviews of Historical Financial Information issued by IAASB. A limited assurance engagement consists of making inquiries, primarily of persons responsible forthe preparation of the sustainability report, and applying analytical and otherlimited assurance procedures.

A limited assurance engagementis different and substantially less in scope than an audit conducted in accordance with IAASB's Standards on Auditing and other generally accepted auditing standards in Sweden. The procedures performed consequently

do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in a rea sonable assurance engagement. Accordingly, we do not express a reasonable assurance conclusion.

The auditfirm applies ISQC 1 International Standard on Quality Control and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethicalrequirements, professional standards and applicable legal and regulatory requirements.

Our procedures are based on the requirements on sustainability reporting in the Annual Accounts Act. We believe thatthe evi dence 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 reportis not prepared, in all materialrespects, in accordance with the criteria in the Annual Accounts Act.

Stockholm, 20 February 2018 PricewaterhouseCoopers AB

Peter Nyllinge Authorized Public Accountant Fredrik Ljungdahl

Expert Member of FAR

Definitions

Alternative Performance Measures 1)

Items affecting comparability

TofacilitatethecomparisonofSEB'soperatingprofitbetween currentandpreviousperiods, itemswithsignificantimpactthat management considersaffectthecomparabilityorarerelevantfor theunderstandingofthefinancialresult,areidentifiedandseparatelydescribed,e.g. impairmentofgoodwill,restructuring,netprofit fromdivestmentsandotherincomeor costs thatarenotrecurring.

Operating profit

Total profit before tax.

Operating profit before items affecting comparability

Total profit before items affecting comparability and tax.

Return on equity

Net profit attributable to shareholders in relation to average 2) shareholders' equity.

Return on equity excluding items affecting comparability

Net profit attributable to shareholders, excluding items effecting comparability and theirrelated tax effect, in relation to average 2) shareholders' equity.

Return on business equity

Operating profit by division,reduced by a standard tax rate, in relation to the divisions' average 2) business equity (allocated capital).

Return on total assets

Net profit attributable to shareholders, in relation to average 2) total assets.

Return on risk exposure amount

Net profit attributable to shareholders in relation to average 2) risk exposure amount.

Cost/income ratio

Total operating expenses in relation to total operating income.

Basic earnings per share

Net profit attributable to shareholders in relation to the weighted average3) number of shares outstanding before dilution.

Diluted earnings per share

Net profit attributable to shareholders in relation to the weighted average3) diluted number of shares. The calculated dilution is based on the estimated economic value ofthe long-term equity-based programmes.

Net worth per share

The sum of shareholders' equity and the equity portion of any surplus values in the holdings ofinterest-bearing securities and the surplus value in life insurance operations in relation to the total number of outstanding shares.

Equity per share

Shareholders' equity in relation to the number of shares outstanding.

Credit loss level

Net creditlosses in relation to the sum ofthe opening balances ofloans to the public, loans to creditinstitutions and loan guarantees less specific, collective and off balance sheetreserves.

Gross level of impaired loans

Individually assessed impaired loans, gross, in relation to the sum ofloans to the public and loans to creditinstitutions before reduction ofreserves.

Net level of impaired loans

Individually assessed impaired loans, net (less specific reserves), in relation to the sum of netloans to the public and loans to credit institutions less specific reserves and collective reserves.

Specific reserve ratio forindividually assessed impaired loans

Specific reserves in relation to individually assessed impaired loans.

Totalreserve ratio forindividually assessed impaired loans

Totalreserves (specific reserves and collective reserves for individually assessed impaired loans) in relation to individually assessed impaired loans.

Reserve ratio for portfolio assessed loans

Collective reserves for portfolio assessed loans in relation to portfolio assessed loans past due more than 60 days or restructured loans.

Non-performing loans (NPL)

SEB's term forloans that are eitherimpaired or not performing according to the loan contract. Includes individually assessed impaired loans, portfolio assessed loans, past due more than 60 days and restructured portfolio assessed loans .

NPL coverage ratio

Totalreserves (specific, collective and off balance sheet reserves) in relation to non-performing loans.

NPL per cent of lending

Non-performing loans in relation to the sum ofloans to the public and loans to creditinstitutions before reduction ofreserves.

See sebgroup.com/irforthe excel file entitled Alternative Performance Measures which includes information on the calculation of alternative performance measures.

1) Alternative Performance Measures, APMs, are financial measures of historical orfuture financial performance,financial position, or cash flows, otherthan those defined in the applicable financialreporting framework (IFRS) orin the EU Capital Requirements Regulation and Directive CRR/CRD IV. APMs are used by SEB when relevantto assess and describe SEB's financial situation and provide additionalrelevantinformation and tools to enable analysis of SEB's performance. APMs on basic earnings per share, diluted earnings per share, net worth per share, equity per share,return on equity,return on total assets and return on risk exposure amount provide relevantinformation on the performance in relation to differentinvestment measurements. The cost/income ratio provides information on SEB's cost efficiency. APMs related to lending provide information on provisions in relation to creditrisk. Allthese measures may not be comparable to similarly titled measures used by other companies.

2) Average year-to-date, calculated on month-end figures.

3) Average, calculated on a daily basis.

Definitions

According to the EU Capital Requirements Regulation no 575/2013 (CRR)

Risk exposure amount

Total assets and off balance sheetitems,risk-weighted in accordance with capital adequacy regulations for creditrisk and market risk. The operationalrisks are measured and added as risk exposure amount. Risk exposure amounts are only defined forthe consolidated situation, excluding insurance entities and items deducted from own funds.

Common Equity Tier 1 capital

Shareholders' equity excluding proposed dividend, deferred tax assets, intangible assets and certain otherregulatory adjustments defined in EU Regulation no 575/2013 (CRR).

Tier 1 capital

Common Equity Tier 1 capital plus qualifying forms of subordi nated loans.

Tier 2 capital

Mainly subordinated loans not qualifying as Tier 1 capital contribution.

Own funds

The sum of Tier 1 and Tier 2 capital.

Common Equity Tier 1 capitalratio

Common Equity Tier 1 capital as a percentage ofrisk exposure amount.

Tier 1 capitalratio

Tier 1 capital as a percentage ofrisk exposure amount.

Total capitalratio

Total own funds as a percentage ofrisk exposure amount.

Leverage ratio

Tier 1 capital as a percentage oftotal assets including off balance sheetitems with conversion factors according to the standardised approach.

Liquidity Coverage Ratio (LCR)

High-quality liquid assets as a percentage ofthe estimated net cash outflows overthe next 30 calendar days.

Calendar

2017 Annual Accounts 31 January 2018 Annual Report 5 March 2018 Annual General Meeting 26 March 2018 Interim report January–March 30 April 2018 Interim report January–June 17 July 2018 Interim report January–September 25 October 2018

Corporate website

Financial information, publications and other information regarding SEB is available at sebgroup.com

Financial information and publications

Annual Report Information on SEB's business, strategy, risk management and corporate governance. Detailed information on SEB's financial position and results. Includes SEB's Sustainability Report.

Annual Review An abbreviated version ofthe Annual Report.

Interim reports and fact books Quarterly reports on SEB's financial performance. Detailed information on SEB's financial position and results in fact books.

SEB Fact Book Annual Accounts 2017

Fact Book Annual Accounts 2017 STOCKHOLM 31 JANUARY 2018

Capital Adequacy and Risk Management Report (Pillar 3) Disclosure on capital adequacy and risk managementin accordance with regulatory requirements.

Sustainability Overview

Annual general infor mation on SEB's sustainability approach and performance.Includes highlights for 2017,the Global Reporting Initiative (GRI) Index and Fact Book.

New shareholders are automatically offered a subscription ofthe Annual Report orthe Annual Review. Order printed copies ofthe Annual Report and the Annual Review atsebgroup.com/ir Subscribe to a digital version ofthe interim reports and the fact book (pdf) atsebgroup.com/press

Annual General Meeting

The Annual General Meeting will be held on Monday 26 March 2018 at 1 pm (CET) at Stockholm Concert Hall, Hötorget, Stockholm, Sweden.

A notice convening the Annual General Meeting, including an agenda, is available on sebgroup.com

Shareholders who wish to attend the Annual General Meeting shall atthe latest on Tuesday20March 2018:

be registered in the shareholders'register kept by Euroclear SwedenAB, and
have notified the bank in either ofthe following ways:
by telephone 0771 23 18 18 (+46 771 23 18 18 from outside Sweden) between 9 am and 4.30 pm (CET) or
at sebgroup.com or
in writing to the following address: Skandinaviska Enskilda Banken c/o Euroclear Sweden, Box 191, 101 23 Stockholm, Sweden

Dividend

The Board proposes a dividend of SEK 5.75 per share for 2017.

Wednesday 28 March 2018, is proposed as record date forthe dividend payments. Ifthe Annual General Meeting resolves in accordance with the proposal,the share will be traded ex-dividend on Tuesday 27 March 2018 and dividend payments are expected to be distributed by Euroclear Sweden AB on Wednesday 4 April 2018.

Head office

Postal address SEB, SE-106 40 Stockholm, Sweden Visiting address Kungsträdgårdsgatan 8, Stockholm, Sweden Telephone +46 771 62 10 00

Contacts

Jan Erik Back 1) Chief Financial Officer Telephone: +46822 19 00 E-mail: [email protected]

Jonas Söderberg 2) Head ofInvestor Relations Telephone: +4687638319 E-mail: [email protected]

Viveka Hirdman-Ryrberg

Head of Group Communications and Group Marketing Telephone: +46 8 763 85 77 E-mail: [email protected]

Malin Schenkenberg Financial Information Officer Telephone: +46 8 763 95 31 E-mail: [email protected]

1) As of 1 May 2018, Masih Yazdi assumes the position of Finance Director (telephone +46 72 023 9458, e-mail: [email protected])

2) As of 1 April 2018 Christoffer Geijer assumes the position of Head ofInvestor Relations (telephone + 46 8 506 23198, e-mail: [email protected])

•

Skandinaviska Enskilda Banken AB's corporate registration number: 502032-9081

AI assistant

SEB — Annual Report 2017

2966_10-k_2018-03-05_33873a75-4266-4658-ba43-8b51c20b92bf.pdf

Annual Report

Contents 2017 in brief

Important events

Key figures

With our vision and strategy…

Our purpose

Our vision

Our strategic priorities

Our sustainability aim

…we serve our customers.

Large corporations

Financial institutions

Small and medium-sized companies

Private individuals

Creating value for our stakeholders

Who we are

What we do

Whom we serve

SEB's robustness important in a world of rapid change

Globaltrends drive change

Transformation on many fronts

The way forward – world-class service

Step by step we are delivering on ourlongterm strategy

More positive business sentiment

Delivering on the business plan

Macro environment

trong economic development but geopolitical uncertainty S

Digitalisation redrawing the map

Newrules for consumer protection and transparency

SEB creates value

Customer centricity, long-term perspectives and financial strength form

Customers

1.7 million corporate and private customers The customers' needs are atthe core ofthe bank's business. Customers' high expectations on service and quality advice as well as sustainable solutions drive the bank's business

Shareholders

269,000 shareholders

Employees

15,000 employees

Society

Society at large

Strategy

Long-term strategy

Service

Customer-oriented offering

IT

Secure and functional IT

Value creation based on trust

Resilience

Financial strength

Governance

Solid corporate governance

Risk

Sound risk culture

creates both social and financial value

For customers

For shareholders

For employees

For society at large

Total distribution offinancial value SEK58.2bn for 2017 Interest paid to customers SEK 16.6bn Dividends paid to shareholders SEK 12.5bn Salaries, pensions and benefits to employees SEK 11.5bn Payments to suppliers SEK 8.6bn Taxes and social fees SEK 7.0bn Regulatory fees

World-class service

Long-term strategic priorities

SEB's strategic priorities Select indicators

A strategy for all stakeholders

Current business plan

Since 1 January 2016:

Growth

Since 1 January 2016:

Sustainable financing

and increasingly use customer data to proactively offer

Transformation

Sustainable investments

Innovation and entrepreneurship

Since 1 January 2016:

25 million

Overalltargets and outcome

Customers

Shareholders

Financial targets

SEB Annual Report 2017

Common equity Tier ¹ capitalratio, Per cent