Swedbank A - Interim / Quarterly Report 2020

Q4 2020

Year-end report 2020, 1 February 2021

Interim report for the fourth quarter 2020

Fourth quarter 2020 compared with third quarter 2020

Stable underlying net interest income
Improved asset management result positively affected net commission income

“A stable quarter in difficult times”

Jens Henriksson, President and CEO

Expenses for the full year according to plan
Low credit impairments and strong capitalisation
Dividend of SEK 4.35 per share proposed for 2019 and SEK 2.90 per share for 2020

Financial information	Q4	Q3		Full-year	Full-year
SEKm	2020	2020	%	2020	2019	%
Total income	11 764	11 604	1	45 676	45 960	-1
Net interest income	6 567	6 714	-2	26 853	25 989	3
Net commission income	3 376	3 246	4	12 770	12 984	-2
Net gains and losses on financial items	910	669	36	2 655	3 629	-27
Other income1)	911	975	-7	3 398	3 358	1
Total expenses	5 586	4 761	17	24 560	19 984	23
of which adminstrative fine	0	0		4 000	0
Profit before impairment	6 178	6 843	-10	21 116	25 976	-19
Impairment of intangible and tangible assets	1	1	0	2	87	-98
Credit impairment	523	425	23	4 334	1 469
Tax expense	1 144	1 155	-1	3 851	4 711	-18
Profit for theperiod attributable to the shareholders of Swedbank AB	4 510	5 261	-14	12 929	19 697	-34

Earnings per share, SEK, after dilution	4.01	4.68		11.51	17.56
Return on equity, %	11.8	14.3		8.9	14.7
Return on equity excl. administrative fine, %	11.8	14.3		11.4	14.7
C/I ratio	0.47	0.41		0.54	0.43
C/I ratio excl. administrative fine	0.47	0.41		0.45	0.43
Common Equity Tier 1 capital ratio, %	17.5	16.8		17.5	17.0
Credit impairment ratio, %	0.12	0.10		0.26	0.09

1) Other income includes the items Net insurance, Share of profit or loss of associates and joint ventures and Other income from the Group income statement.

Swedbank – Year-end report 2020

CEO Comment

Anti-money laundering measures

A stable quarter in difficult times

Global economic development was again overshadowed by the pandemic which worsened in the fourth quarter. Stricter restrictions in our home markets affected both companies and individuals. Now that vaccinations have begun, we can see the light at the end of the tunnel. It could take time, however, before the effects of the pandemic become manifest. Government support for companies and individuals is critical to future economic development.

Advice and transition

We continued to support our customers during the second wave of the pandemic. Covid-19 is following a different pattern than other crises, including as regards bankruptcies, as new research from the IMF shows. Monetary and fiscal support has helped many companies to withstand and the need for amortisation exemptions among corporate customers has levelled off. However, the corporate market is still characterised by low demand for bank loans, increased competition and attractive opportunities for companies to find funding directly in the capital market.

Our private customers have reacted to the crisis by changing their spending pattern and saving more. Last spring, there was great interest in amortisation exemptions for mortgage customers, but new applications are now largely non-existent.

During the pandemic, a higher percentage of customers are contacting us digitally and by phone, while the branches are seeing fewer visits than before. We offer qualified advice by video chat.

During the year, we worked intensely to remedy our shortcomings in internal governance and control in order to manage the risks associated with money laundering, terrorist financing and sanctions. An expansive investment plan is underway where we more than doubled the number of employees who directly work in this area during the year. During 2021 we will be nearly 1 500 employees exclusively working to combat financial crime.

We are continually taking new steps to rectify the historical shortcomings. On 19 November, Swedbank’s Estonian subsidiary submitted a final report to the Estonia FSA describing how the shortcomings were addressed.

Swedbank shall be at the forefront of the fight against financial crime. Especially important is to have a thorough understanding of our risk exposure and customers, and to work relentlessly to detect and prevent illicit transactions. Therefore, Swedbank is committed to implement effective and efficient processes and shall strive for international best practices. As we stated in 2020, further investigations are underway in the US. We are in discussions with the relevant authorities through our US legal representative.

Dividend

Swedbank’s financial position is strong and we would like to pay shareholders a dividend. After consultation with the Swedish FSA, the Board is proposing a dividend corresponding to 25 per cent of net profit for the financial year 2019. The Board is also proposing a dividend corresponding to 25 per cent of net profit for the financial year 2020.

Result and capital

Swedbank delivered a stable quarter in difficult times. The housing market is strong and competition for mortgage customers is on the rise. We want to grow in line with the market, but not at the expense of lower profitability or higher risk. Our strategy is therefore to offer a competitive price and a comprehensive solution to our customers.

In the fourth quarter, we increased provisions for credit impairments by SEK 523m.

The return on equity in the fourth quarter was 11.8 per cent. The quarter was impacted by the pandemic and higher expenses due to investments in anti-money laundering work, as well as seasonal effects. Our capital position is strong with a comfortable margin regarding the Swedish Financial Supervisory Authority’s minimum requirement. Our expenses are now levelling off in 2021 and 2022.

Sustainability

Swedbank is the only Nordic bank to have qualified for the Dow Jones Sustainability Index (DJSI). This is a mark of quality for our sustainability work, and for some investors is critical in determining where they place their money. Swedbank was one of the three main Nordic issuers of ESG bonds in 2020 and we were the first bank in the world to develop a green equity framework, a new sustainability tool for publicly listed companies that brings transparency to their revenues and investments.

Strategic direction

During the year, we updated our strategic direction as well as our vision and our purpose. We have defined the customer promise and the foundation that our operations are built on. The values - simple, open and caring - remain unchanged. We now have a strategic direction with a clear connection to our roots in the savings bank movement and that contributes to clearer governance in the Group.

Our newly formulated vision of a financially healthy and sustainable society is based on our strong commitment to sustainability. We shall guide customers with advice and products that keep them financially healthy. As a consequence of the updated business strategy, the bank has decided not to grant new financing for the prospecting of new oil and gas fields or for unconventional extraction of fossil fuels.

The fourth quarter concluded a year like no other. The bank remains strong in its 200-year tradition and is well prepared for 2021. Swedbank will continue to empower the many people and businesses to create a better future.

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Jens Henriksson President and CEO

Swedbank – Year-end report 2020

Table of contents
	Page
Overview	5
Market	5
Important to note	5
Group development	6
Result fourth quarter 2020 compared with third quarter 2020	6
Result full-year 2020 compared with full-year 2019	6
Volume trend by product area	7
Credit and asset quality	9
Operational risks	9
Funding and liquidity	9
Ratings	9
Capital and capital adequacy	10
Other events	11
Swedbank’s anti-money laundering work	11
Events after 31 December 2020	12
Business segments
Swedish Banking	13
Baltic Banking	15
Large Corporates & Institutions	17
Group Functions & Other	19
Eliminations	20
Group
Income statement, condensed	22
Statement of comprehensive income, condensed	23
Balance sheet, condensed	24
Statement of changes in equity, condensed	25
Cash flow statement, condensed	26
Notes	27
Parent company	58
Alternative performance measures	63
Signatures of the Board of Directors and the President	65
Review report	65
Contact information	66

More detailed information can be found in Swedbank’s Fact book, www.swedbank.com/ir, under Financial information and publications.

Swedbank – Year-end report 2020

Financial overview

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Income statement Q4 Q3 Q4 Full-year Full-year
SEKm 2020 2020 % 2019 % 2020 2019 %
Net interest income 6 567 6 714 -2 6 408 2 26 853 25 989 3
Net commission income 3 376 3 246 4 3 415 -1 12 770 12 984 -2
Net gains and losses on financial items 910 669 36 1 218 -25 2 655 3 629 -27
Other income [1)] 911 975 -7 915 0 3 398 3 358 1
Total income 11 764 11 604 1 11 956 -2 45 676 45 960 -1
Staff costs 3 205 2 930 9 2 815 14 11 873 11 119 7
Other expenses 2 381 1 831 30 2 734 -13 8 687 8 865 -2
Administrative fine 0 0 0 4 000 0
Total expenses 5 586 4 761 17 5 549 1 24 560 19 984 23
Profit before im pairment 6 178 6 843 -10 6 407 -4 21 116 25 976 -19
Impairment of intangible assets 0 0 13 0 79
Impairment of tangible assets 1 1 0 5 -80 2 8 -75
Credit impairment 523 425 23 988 -47 4 334 1 469
Operating profit 5 654 6 417 -12 5 401 5 16 780 24 420 -31
Tax expense 1 144 1 155 -1 973 18 3 851 4 711 -18
Profit for the period 4 510 5 262 -14 4 428 2 12 929 19 709 -34
Profit for the period attributable to the
shareholders of Swedbank AB 4 510 5 261 -14 4 428 2 12 929 19 697 -34
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1) Other income includes the items Net insurance, Share of profit or loss of associates and joint ventures and Other income from the Group income statement.

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Q4 Q3 Q4 Full-year Full-year
Key ratios and data per share 2020 2020 2019 2020 2019
Return on equity, % 11.8 14.3 13.0 8.9 14.7
Earnings per share before dilution, SEK [1)] 4.03 4.70 3.96 11.55 17.62
Earnings per share after dilution, SEK [1)] 4.01 4.68 3.95 11.51 17.56
C/I ratio 0.47 0.41 0.46 0.54 0.43
Equity per share, SEK 1) 138.5 134.4 123.9 138.5 123.9
Loan/deposit ratio, % 143 143 168 143 168
Common Equity Tier 1 capital ratio, % 17.5 16.8 17.0 17.5 17.0
Tier 1 capital ratio, % 18.7 18.2 19.4 18.7 19.4
Total capital ratio, % 21.0 20.6 21.8 21.0 21.8
Credit impairment ratio, % 0.12 0.10 0.23 0.26 0.09
Share of Stage 3 loans, gross, % 6.39 0.75 0.82 6.39 0.82
Total credit impairment provision ratio, % 0.48 0.53 0.40 0.48 0.40
Liquidity coverage ratio (LCR), % 174 153 182 174 182
Net stable funding ratio (NSFR), % [2)] 125 124 120 125 120
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1) The number of shares and calculation of earnings per share are specified on page 56.

2) NSFR calculated in accordance with Regulation (EU) 2019/876. Past NSFR numbers for 2019, that were based on the Basel III version, have been recalculated.

Balance sheet data	31 Dec	31 Dec
SEKbn	2020	2019	%
Loans to the public, excl. the Sw edish National Debt Office and repurchase agreements	1 616	1 606	1
Deposits from the public, excl. the Sw edish National Debt Office and repurchase agreements	1 131	954	19
Equity attributable to shareholders of the parent company	155	139	12
Total assets	2 595	2 408	8
Risk exposure amount	690	649	6

Definitions of all key ratios can be found in Swedbank’s Fact book on page 78.

Swedbank – Year-end report 2020

Overview

Market

The fourth quarter was dominated by the second wave of the pandemic and the bifurcation of the economy that is becoming increasingly apparent as industry recovers while consumer services struggle. The growing contagion and increased number of cases led to new restrictions around the world. Initially, the restrictions were more targeted than last spring, when entire economies were shut down. In Sweden, however, stricter restrictions were introduced than in the spring, primarily focused on the already hard-hit, labourintensive service sector. Activity in the Swedish industrial sector and demand from our most important trading partners remained fairly good, however.

Global stock markets generally performed well in the quarter. Uncertainty surrounding the US presidential election temporarily caused stocks to fall, but the first really positive vaccine news that came in November sparked hope of a rapid economic recovery and return to something closer to normal. November 2020 was thus the single strongest November in several decades. Expectations of a rapid recovery also coincided with rising oil prices in the fourth quarter. More than four years after the Brexit referendum the last stumbling blocks were resolved, and the UK finally exited the EU.

To ensure well-functioning financial systems and support the recovery, central banks maintained the support they had introduced in the first quarter. This included asset purchases and other measures to maintain liquidity in the markets. During the quarter, the euro continued to appreciate against the dollar and the Swedish krona in turn strengthened against both of these currencies.

Swedbank expects economic recovery in Sweden to tail off in the fourth quarter 2020 and early 2021 due to the stricter restrictions. However, industrial activity should help avoid a more significant slowdown than the one in the second quarter. The recovery in the second half of the year also helped to reduce the economic downturn for the full-year 2020 to around 2.8 per cent. As Covid19 vaccinations increase, economic recovery should accelerate in the second quarter. Growth in 2021 is estimated at around 3.0 per cent.

The pandemic is leading to uneven economic development, and consumer-oriented service sectors are the ones mainly seeing a large drop in demand. Lower revenue at the same time that government support payments are delayed are causing problems for many companies in these industries. Data on daily card transactions via Swedbank Pay show a clear slowdown in household consumption after the tighter restrictions were introduced last autumn. Other activity data at the same time show that the industrial sector continues to recover and B2B service sectors are much more optimistic than B2C services. Recent economic data show however that business bankruptcies increased year-over-year in November and December. The labour market is expected to further decline with unemployment rising to just over 9 per cent. There is also a risk that it will linger at these high levels.

The housing market continued to perform strongly last autumn with robust activity. The low supply of single-

family and holiday homes pushed up the prices of these properties more than for apartments. In December, prices rose slightly from November, up 11.5 per cent year-over-year. Household mortgage volumes increased by 5.9 per cent in December. Inflation remains low and monetary policy is expected to remain expansionary.

The Baltic countries recovered in the third quarter after having been hit hard in the first half of the year. After a relatively mild first wave of the virus last spring, the contagion spread quickly in the region in the fourth quarter, most severely in Lithuania. The tight restrictions introduced in the last quarter of 2020 are expected to stay in place in early 2021. We estimate the economic downturn in 2020 to be 1.7 per cent in Lithuania, 2.7 per cent in Estonia and 4.5 per cent in Latvia and that their economies will grow by around 3 per cent in 2021. The CPI inflation rate fell in Estonia and Latvia by 0.8 and 05 per cent respectively in December compared with December 2019, at the same time that inflation in Lithuania rose by 0.2 per cent.

Important to note

In light of the Swedish FSA’s recommendation that banks be restrictive with dividends and share buybacks until 30 September 2021, the Board of Directors, after consultation with the Swedish FSA, has resolved to propose a dividend for the financial year 2019 of SEK 4.35 per share. This corresponds to approximately 25 per cent of net profit for the financial year 2019.

Swedbank will hold an Extraordinary General Meeting on Monday, 15 February 2021, to decide on the dividend payment based on the 2019 profit. Due to the ongoing pandemic, the Board has decided that the meeting will be held without shareholders, proxies or outsiders physically present and that votes can be cast only by post prior to the meeting.

The proposed record date for the dividend is 17 February 2021, which means that payment is expected to be paid out through Euroclear on 22 February 2021. The last day to trade Swedbank’s shares with the right to the dividend is 15 February 2021.

Furthermore, the Board of Directors proposes a dividend of SEK 2.90 per share for the financial year 2020. The proposal corresponds to a payout ratio of 25 per cent of net profit for the financial year 2020.

Swedbank’s Annual General Meeting will be held on Thursday, 25 March 2021. More information on Swedbank’s general meetings will be available on the website www.swedbank.com under the heading: About Swedbank/Corporate governance.

The proposed record date for the dividend is 29 March 2021. The last day to trade Swedbank’s shares with the right to the dividend is 25 March 2021. If the general meeting approves the Board’s proposal, the dividend is expected to be paid out through Euroclear on 1 April 2021.

When the consequences of the Covid-19 pandemic are better understood, and if conditions are right, the Board of Directors intends to propose additional dividends based on the profits for 2019 and 2020. Swedbank’s policy is to pay a dividend corresponding to 50 per cent of annual profit.

Swedbank – Year-end report 2020

The interim report contains alternative performance measures that Swedbank considers valuable information for the reader, since they are used by the executive management for internal governance and performance measurement as well as for comparisons between reporting periods. Further information on the alternative performance measures used in the interim report can be found on page 61.

Group development

Result fourth quarter 2020 compared with third quarter 2020

Swedbank’s profit decreased in the fourth quarter to SEK 4 510m (5 261), mainly due to seasonally higher expenses. Foreign exchange effects negatively affected profit before impairment by SEK 5m.

The return on equity was 11.8 per cent (14.3) and the cost/income ratio was 0.47 (0.41).

Income increased to SEK 11 764m (11 604). The main reason was higher net gains and losses on financial items, though higher net commission income also contributed. Net interest income and other income decreased. Foreign exchange effects reduced income by SEK 25m.

Net interest income decreased by 2 per cent to SEK 6 567m (6 714), mainly due to a higher deposit guarantee fee and lower deposit margins caused by lower market interest rates as well as a negative impact from foreign exchange effects. The deposit guarantee fee rose by SEK 93m in the quarter after the Swedish National Debt Office announced the final fee level for the current year, therefore the fourth quarter was retroactively adjusted for the previous quarters in 2020.

Net commission income increased by 4 per cent to SEK 3 376m (3 246), mainly due to higher income from asset management and within Large Corporates & Institutions. Asset management income was positively affected mainly by performance-based fees and a higher volume of assets under management. Income within Large Corporates & Institutions benefited from participation in more IPOs and share issues, as well as higher fees for Swedbank serving as covered bond market makers. Card income decreased due to lower transaction volumes and because Swedbank paid a one-off compensation of SEK 130m to the savings banks to terminate a card acquiring agreement in advance.

Net gains and losses on financial items increased to SEK 910m (669) and client activity within Large Corporates & Institutions remained good. Favourable derivative valuation adjustments (CVA/DVA) due to lower credit spreads positively affected the result. Revaluations of fixed income instruments within Group Treasury also contributed, while the revaluation of shareholdings was slightly negative in the quarter.

Other income decreased to SEK 911m (975). The decrease was primarily affected by a lower result within Entercard and slightly lower net insurance.

Expenses were seasonally higher in the fourth quarter and increased by 17 per cent to SEK 5 586m (4 761). Higher staff costs, higher marketing expenses and oneoff expenses contributed to the increase. An increase in

the number of employees in the third and fourth quarters, lower activity during the holiday months in the third quarter, and variable remuneration were the main reasons for increased staff costs. Consulting expenses to manage money laundering related investigations increased to SEK 170m in the quarter. Foreign exchange effects reduced expenses by SEK 20m.

Credit impairments amounted to SEK 523m (425) in the fourth quarter, corresponding to a credit impairment ratio of 0.12 per cent (0.10). The impairments are mainly due to additional provisions for a few oil-related commitments within Large Corporates & Institutions. Reversals due to updated macro scenarios were largely offset by further experienced credit judgments that were made because of the continuing significant uncertainty surrounding the pandemic and economic impact on vulnerable industries.

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Credit impairments
by business segment Q4 Q3 Q4 Full-year Full-year
SEKm 2020 2020 2019 2020 2019
Sw edish Banking -1 -140 10 664 154
Baltic Banking -8 43 -3 237 3
Estonia -10 35 16 135 20
Latvia 5 10 -13 53 -4
Lithuania -3 -2 -6 49 -13
Large Corporates & Institutions 537 521 982 3 425 1 312
Group Functions & Other -5 1 -1 8 0
Total 523 425 988 4334 1469
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The tax expense amounted to SEK 1 144m (1 155), corresponding to an effective tax rate of 20.2 per cent (18.0). The comparatively high tax rate in the fourth quarter is due to the tax expense in the third quarter, which was positively affected by deferred taxes of SEK 130m attributable to previous years.

Result full-year 2020 compared with full-year 2019

Swedbank’s profit decreased to SEK 12 929m (19 709) due to higher expenses including the Swedish FSA’s administrative fine, higher credit impairments and lower net gains and losses on financial items. The table below shows a simplified income statement adjusted for the Swedish FSA’s administrative fine.

Income statement,	Full-year	Full-year	Full-year
SEKm	2020	2020	2019
		Excl
		administrative
		fine
Total income	45 676	45 676	45 960
Total expenses	24 560	20 560	19 984
of which administrative fine	4 000	0	0
Credit impairment and impairment	4 336	4 336	1 556
Operating profit	16 780	20 780	24 420
Tax expense	3 851	3 851	4 711
Profit for the period attributable to
the shareholders of Swedbank AB	12 929	16 929	19 697
Non-controlling interests	0	0	12
Return on equity, %	8.9	11.4	14.7
Cost/Income ratio	0.54	0.45	0.43

Foreign exchange effects negatively affected profit before impairment by SEK 66m.

The return on equity was 8.9 per cent (14.7) and the cost/income ratio was 0.54 (0.43). Adjusted for the Swedish FSA’s administrative fine, the return on equity was 11.4 per cent and the cost/income ratio was 0.45.

Swedbank – Year-end report 2020

Income decreased to SEK 45 676m (45 960) and was negatively impacted by lower net gains and losses on financial items and net commission income, but this was offset mainly by higher net interest income. Foreign exchange effects reduced income by SEK 163m.

Net interest income increased by 3 per cent to SEK 26 853m (25 989). The increase was mainly due to a lower resolution fund fee, higher lending and deposit volumes, higher mortgage margins and lower funding costs.

Net commission income decreased by 2 per cent to SEK 12 770m (12 984). Income primarily from cards decreased due to Covid-19, while asset management income increased due to a higher average volume of assets under management.

Net gains and losses on financial items decreased to SEK 2 655m (3 629). The main reason was a lower appreciation of the shareholdings in Visa and Enento this year. The Visa holding was hedged in the second quarter and the Enento holding was divested in the third quarter. The result within Large Corporates & Institutions, which was largely affected by derivative value adjustments (CVA/DVA), also contributed to a lower result.

Other income amounted to SEK 3 398m (3 358) and was stable.

Expenses increased to SEK 24 560m (19 984), mainly due to the Swedish FSA’s administrative fine of SEK 4 000m. Adjusted for the administrative fine, expenses rose by 3 per cent and were mainly affected by higher staff costs and IT expenses. Staff costs increased due to a higher number of employees, annual wage increases and higher pension expenses. The increase in the number of employees was mainly in the AML area and in IT. Consulting expenses to manage money laundering related investigations decreased by SEK 252m to SEK 852m, while other consulting expenses increased by SEK 160m. Foreign exchange effects reduced expenses by SEK 97m.

Credit impairments for the year amounted to SEK 4 334m (1 469), corresponding to a credit impairment ratio of 0.26 per cent (0.09). The increase is a result of increased provisions for a few large oilrelated counterparties, negative risk class changes in pandemic affected industries, and experienced credit adjustments due to the uncertainty surrounding future economic impacts of Covid-19. A large part of the credit impairments was in Large Corporates & Institutions. The tax expense amounted to SEK 3 851m (4 711), corresponding to an effective tax rate of 22.9 per cent (19.3). The effective tax rate for 2020 was negatively affected by the Swedish FSA’s administrative fine, which is not tax-deductible, and positively by a deferred tax asset from previous years. Excluding the administrative fine and deferred tax asset, the adjusted effective tax rate was 20.0 per cent. The Group’s effective tax rate is estimated at 19-21 per cent in the medium term.

Volume trend by product area

Swedbank’s main business is organised in three product areas: lending, payments and savings.

Lending

Total lending to the public, excluding repos and lending to the Swedish National Debt Office, decreased by SEK 6bn to SEK 1 616bn (1 622) compared with the end of the third quarter 2020. Compared with the end of the fourth quarter 2019 the increase was SEK 10bn, corresponding to growth of 1 per cent. Foreign exchange effects negatively affected lending volumes by SEK 12bn compared with the end of the third quarter 2020 and negatively by SEK 12bn compared with the end of the fourth quarter 2019.

Loans to the public excl. the
Swedish National Debt Office and	31 Dec	30 Sep	31 Dec
repurchase agreements, SEKbn	2020	2020	2019
Loans, private mortgage	939	933	905
of w hich Sw edish Banking	849	841	818
of w hich Baltic Banking	90	92	87
Loans, private other incl tenant-
ow ner associations	141	146	148
of w hich Sw edish Banking	123	127	130
of w hich Baltic Banking	16	18	17
of w hich Large Corporates & Inst.	2	1	1
Loans, corporate	536	543	553
of w hich Sw edish Banking	239	243	248
of w hich Baltic Banking	76	80	82
of w hich Large Corporates & Inst.	221	220	222
Total	1 616	1 622	1 606

Lending to mortgage customers within Swedish Banking increased by SEK 8bn to SEK 849bn compared with the end of the third quarter 2020. The market share in mortgages was 23 per cent (24). Other private lending, including lending to tenant-owner associations, decreased by SEK 4bn in the quarter.

Swedish consumer credit volume amounted to SEK 32bn (32), corresponding to a market share of about 8 per cent. Consumer credit includes unsecured loans as well as loans secured by a car or a boat.

Baltic Banking’s mortgage volume increased by 2 per cent in local currency to the equivalent of SEK 94bn at the end of the quarter.

The Baltic consumer credit portfolio decreased by 4 per cent in local currency to the equivalent of SEK 8bn at the end of the quarter.

Corporate lending in all business segments decreased by SEK 7bn in the quarter to SEK 536bn (543), largely due to foreign exchange effects. In Sweden the market share was 17 per cent (17).

For more information on lending, see page 36 of the Fact book.

Payments

The total number of Swedbank cards in issue at the end of the quarter was 8.1 million, in line with the end of the third quarter. In Sweden 4.3 million cards were in issue and in the Baltic countries 3.8 million. During the quarter, corporate card issuance in Sweden grew by 2 per cent and private card issuance by 1 per cent compared with the same quarter in 2019.

Swedbank – Year-end report 2020

Number of cards	31 Dec 2020	30 Sep 2020	31 Dec 2019
Issued cards, millon	8.1	8.1	8.1
of w hich Sw eden	4.3	4.3	4.3
of w hich Baltic countries	3.8	3.8	3.8

The number of purchases with Swedbank cards in Sweden was affected by Covid-19 and decreased compared with the previous year. In the fourth quarter, there were 308 million card purchases, or 10 per cent lower than the same quarter in 2019. In the Baltic countries there were 166 million card purchases, which was 1 per cent below the level in the fourth quarter of 2019.

The number of card transactions acquired by Swedbank decreased by 5 per cent compared with the year-earlier period. In Sweden, Norway, Finland and Denmark 672 million card transactions were acquired in the quarter, a decrease of 6 per cent year-over-year. Transaction volumes decreased by 2 per cent in the quarter compared with the same period in 2019. In the Baltic countries the corresponding figure was 118 million transactions, down 1 per cent from the previous year.

Sectors such as home electronics significantly increased in the fourth quarter thanks to strong Christmas sales, including in connection with Black Friday. Others that have been more affected by the crisis such as hotels, travel and transport again declined in the fourth quarter after a clear recovery in the previous quarter. Sectors little or even positively affected by Covid-19 such as food and other consumer staples continued to see good activity.

In Sweden there were 222 million domestic payments in the fourth quarter, a year-over-year increase of 4 per cent. In the Baltic countries 89 million domestic payments were processed, up 11 per cent compared with the same period in 2019. Swedbank’s market share of payments through the Bankgiro system was 34 per cent. The number of international payments in Sweden increased by 8 per cent to 1.5 million compared with the same quarter in 2019. The Baltic countries saw an increase in international payments of 18 per cent compared with the fourth quarter 2019 to 4.1 million.

Savings

Total deposits within the business segments rose to SEK 1 130bn (1 075). Compared with the end of fourth quarter 2019 the increase was SEK 176bn, corresponding to growth of 18 per cent. All business segments contributed to the year-over-year increase. Exchange rates negatively affected deposits by SEK 17.4bn compared with the end of third quarter 2020 and negatively by SEK 15.3bn compared with the end of fourth quarter 2019. Total deposits from the public, including volumes attributable to Group Treasury, amounted to SEK 1 131bn (1 132).

Deposits from the public excl.
the Swedish National Debt Office	31 Dec	30 Sep	31 Dec
and repurchase agreements,	2020	2020	2019
Deposits, private	588	577	531
of w hich Sw edish Banking	424	419	388
of w hich Baltic Banking	164	158	143
Deposits, corporate	543	555	423
of w hich Sw edish Banking	222	208	183
of w hich Baltic Banking	120	114	99
of w hich Large Corporates & Inst.	200	176	141
of w hich Group Functions & Other	1	57	0
Total	1 131	1 132	954

Swedbank’s deposits from private customers increased by SEK 11bn in the quarter to SEK 588bn (577).

Corporate deposits in the business segments increased in total by SEK 44bn in the quarter.

Swedbank’s market share for household deposits in Sweden was unchanged in the quarter at 19 per cent (19). The market share for corporate deposits increased to 17 per cent (16). For more information on deposits, see page 37 of the Fact book.

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Asset management, 31 Dec 30 Sep 31 Dec
SEKbn 2020 2020 2019
Total asset management 1 686 1 609 1 538
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Total asset management	1 686 1 609 1 538
Assets under management Assets under management, Robur of which Sweden of which Baltic countries of which eliminations Assets under management, Other, Baltic countries Discretionary asset management	1 227 1 155 1 090
	1 220 1 153 1 083
	1 163 1 095 1 025
	64 63 59
	-7 -5 -1
	7 2 7
	459 454 448

Assets under management in Swedbank Robur rose in the fourth quarter to SEK 1 220bn (1 153) at 31 December, of which SEK 1 163bn (1 096) related to the Swedish business and SEK 64bn (63) to the Baltic business. The increases in both Sweden and the Baltic countries were partly due to value appreciation and partly to net fund inflows.

Net flows in the Swedish fund market amounted to SEK 84bn in the quarter (38), of which SEK 38bn relates to annual PPM contributions. All fund categories had net inflows with the largest flow, SEK 44bn, to actively managed equity funds. Swedbank’s share of inflows to the Swedish fund market was 14 per cent in the quarter.

Including annual PPM contributions of SEK 5bn, Swedbank Robur’s Swedish fund business had a net inflow of SEK 14bn (8). Flows within Swedbank and the savings banks remained positive, as they did in third party distribution, where sales nearly doubled in the quarter. At the same time, the institutional management business also had net inflows.

The net inflow in the Baltic countries remained stable at SEK 1bn (1).

By assets under management Swedbank Robur is the largest player in the Swedish and Baltic fund markets. As of 31 December, the market share in Sweden was 21 per cent. The market share in Estonia and Latvia was 41 per cent respectively and in Lithuania 37 per cent.

Assets under management, life insurance SEKbn	31 Dec 2020	30 Sep 2020	31 Dec 2019
Sw eden	247	235	220
of w hich collective occupational
pensions	125	119	109
of w hich endow ment insurance	80	76	72
of w hich occupational pensions	32	30	29
of w hich other	10	10	10
Baltic countries	7	7	7

Swedbank – Year-end report 2020

Life insurance assets under management in the Swedish operations rose by 12 per cent in the fourth quarter to SEK 247bn on 31 December. Premium income, consisting of premium payments and capital transfers, amounted to SEK 5bn (4) in the fourth quarter.

For premium income excluding capital transfers Swedbank’s market share in the third quarter was 6 per cent (6). In the transfer market Swedbank’s market share in the third quarter was 8 per cent (9).

In Estonia and Lithuania Swedbank is the largest life insurance company and in Latvia it is the fourth largest. The market share for premium payments in the first 11 months of the year was 46 per cent in Estonia, 26 per cent in Lithuania and 21 per cent in Latvia.

Credit and asset quality

Swedbank’s credit quality remained good in the fourth quarter. The visible economic impact from Covid-19 on the majority of Swedbank’s lending remained small, and the credit quality of the large mortgage portfolio remained very high and stable. The segments that were hardest hit by the pandemic, such as hotels, restaurants, some retail, passenger transport and oilrelated, account for a small share of Swedbank’s lending.

The total share of loans in stage 2, gross, in the fourth quarter was 6.4 per cent (7.2), of which 3.9 per cent (4.3) was for personal loans and 12.2 per cent (13.5) for corporate loans. During the year, sectors hard hit by Covid-19, such as hotels and restaurants, saw the largest increase in the share of loans in stage 2.

The share of loans in stage 3, gross, in the fourth quarter was 0.6 per cent (0.8). The decrease in loans in stage 3 in the quarter was mainly attributable to the shipping and offshore industries as well as property management. The provision ratio for loans in stage 3 increased to 47 per cent (46). Increased individual provisions for certain oil-related commitments and the lower volume of loans in stage 3 within property management explain this. Swedbank’s oil-related portfolio is small and is being reduced and restructured. Market conditions remain challenging.

The quality of Swedbank’s mortgage portfolio, which accounts for just over half of total lending, is high and historical credit impairments are very low. Customers’ long-term repayment capacity is a critical factor and ensures high quality and low risks for both the customer and the bank. The average loan-to-value ratios for the mortgage portfolio are 53 per cent in Sweden, 48 per cent in Estonia, 76 per cent in Latvia and 57 per cent in Lithuania.

Swedbank’s lending in property management accounts for approximately 15 per cent of the total loan portfolio and is mainly to real estate companies with strong finances and good collateral with low loan-to-value ratios. Segments with low risk and low cyclical sensitivity such as residential and public properties as well as logistics properties in prime locations account for about

40 per cent of the real estate portfolio. Swedbank’s lending to retail and hotel properties represents a smaller share of the total loan volume in property management. Swedbank focuses its lending to

commercial properties with stable cash flows and the customer’s long-term ability to repay interest and amortisation. Loan-to-value ratios in lending to property management companies are generally low and average 57 per cent (57) in Sweden.

For more information on credit exposures and credit quality, see notes 10-12 and pages 39-50 of the fact book.

Operational risks

Covid-19 is considered a critical risk for the bank, its employees and customers. Despite a widespread second wave of the pandemic, the bank has been able to fully maintain its operations. To protect customers and employees and to ensure that customer service is maintained, the bank has taken a number of measures to reduce the risk of the virus’s spread. In response to the pandemic, the bank has improved its preparedness e.g. by updating continuity plans. The bank also expanded opportunities for remote work and digital customer meetings, allocated resources to ensure operational continuity and activated a crisis management function. Plans for various Covid-19 scenarios have been prepared to manage operational risks and reduce the risk of disruptions.

A number of IT incidents occurred in the fourth quarter that caused serious disruptions. Disruptions at external providers affected the availability of critical channels and payment services. Swedbank is working continuously to ensure a high level of availability for its customers.

Funding and liquidity

Funding activity was lower in 2020 than in the previous year due to large deposit inflows. Covered bond issues in particular were down, while the focus was on issuing unsecured bonds to meet the regulatory requirements adopted by the authorities. For the full-year 2020, Swedbank issued SEK 78bn in long-term debt, of which SEK 3bn in the fourth quarter.

The total issuance need for the full-year 2021 is expected to be in line with issuance volume in 2020. The issuance need is affected by the current liquidity situation, future maturities and changes in deposit and lending volumes and is therefore adjusted over the course of the year. Maturities in 2021 amount to SEK 151bn.

As of 31 December, short-term funding and commercial paper included in debt securities in issue amounted to SEK 127bn (SEK 158bn as of 30 September). Available cash and balances with central banks and reserves with the Swedish National Debt Office amounted to SEK 315bn (389) and the liquidity reserve amounted to SEK 485bn (563). The Group’s liquidity coverage ratio (LCR) was 174 per cent (153) and for USD, EUR and SEK was 145, 263 and 134 per cent respectively. The net stable funding ratio (NSFR) was 125 per cent (124). For more information on funding and liquidity, see notes 14-16 and pages 55–68 of the fact book.

Ratings

There were no changes in Swedbank’s ratings in the fourth quarter. For more information on the ratings, see page 68 of the fact book.

Swedbank – Year-end report 2020

Capital and capital adequacy

Capital ratio and capital requirement

The Common Equity Tier 1 capital ratio was 17.5 per cent (16.8) at the end of the quarter. The total Common Equity Tier 1 capital requirement was 12.4 per cent (13.0) of the risk exposure amount (REA). Common Equity Tier 1 capital increased to SEK 120.5bn (116.4), mainly due to the quarterly profit after the estimated dividend of SEK 2.9bn.

Change in Common Equity Tier 1 capital, Swedbank consolidated situation

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Total REA decreased to SEK 689.6bn (691.5) in the fourth quarter.

REA for credit risk decreased in the quarter by SEK 0.9bn to SEK 574.6bn. The decrease was mainly due to foreign exchange effects, which reduced REA by SEK 6.2bn. Improved ratings of corporate and household exposures reduced REA by SEK 2.0bn and decreased exposures within counterparty credit risk reduced REA by SEK 2.3bn. The decreases were partly offset by higher other assets as well as increased lending volumes. In total, increased exposures raised REA by SEK 7.0bn. REA attributable to exposures in default of SEK 2.6bn, mainly to corporate customers, also offset the decrease in REA for credit risk.

REA for market risk decreased in the quarter by SEK 3.0bn to SEK 17.3bn (20.3). REA for credit value adjustments decreased by SEK 1.1bn to SEK 4.4bn (5.5), mainly due to decreased exposures compared with the third quarter. The annual update of the REA calculation for operational risk increased REA by SEK 2.1bn to SEK 73.5bn. This is due to increased income.

The quarterly review of additional REA for article 3 of the Capital Requirements Regulation (CRR) resulted in an increase in REA of SEK 1.0bn attributable to probability of default in the model for large corporates.

Change in REA, Swedbank consolidated situation

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----- Start of picture text -----

SEKbn
730
720
710
700690 691.5 5.3 6.2 2.1 1.0 689.6
680 4.1
670
660
650
640
630
Q3 2020 Credit risk excl. FX credit risk Market risk and Operational Article 3 and Q4 2020
FX CVA risk model update
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The leverage ratio was 5.1 per cent (4.8). The ratio increased due to slightly higher Tier 1 capital and lower

total assets at the end of fourth quarter 2020 compared with the third quarter.

Future capital regulations

In September 2020, the Swedish FSA proposed amended rules and a change in the application of banks’ capital requirements. The change is based on the proposed amendments to the capital adequacy rules resulting from the implementation of the EU’s banking package.

In the fourth quarter 2020, Swedbank’s capital requirement changed due to regulatory changes. The 2 per cent add-on for systemic risk in Pillar 2 was removed and an O-SII buffer corresponding to 1 per cent increased the requirement. In addition, an add-on corresponding to 0.5 per cent was introduced in Common Equity Tier 1 capital for exposures to commercial properties.

The new application will also result in changes in how the Pillar 2 requirement is determined. According to the proposal, the Swedish FSA will set a Pillar 2 requirement and announce guidance on the additional capital that banks should hold to cover risks and manage future financial stresses. The pillar 2 requirement is expected to remain unchanged and guidance is expected to be 1 per cent.

In the proposal the Swedish FSA gives its view of how a leverage ratio requirement should be introduced. The minimum leverage ratio requirement is 3 per cent of the leverage exposure amount. In addition, the Swedish FSA will announce another leverage ratio requirement in the form of guidance. The leverage ratio requirement will be met in parallel with the risk-based requirements, and for Swedbank the Swedish FSA estimates that the total leverage ratio requirement will be lower than the risk-based capital requirements. All in all, the Swedish FSA expects the amended requirement to essentially leave the capital requirements’ nominal level unchanged.

A decision on Pillar 2 requirements and information on Pillar 2 guidance will be announced after the first evaluation and review, which will be conducted once the amended supervisory act has entered into force, i.e. the end of the third quarter 2021. According to the Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms, the minimum leverage ratio requirement will be applied as of 28 June 2021.

In December 2019, the committee of inquiry appointed by the Swedish Ministry for Finance presented a proposal on the implementation of among other things BRRD2.When the final amended law takes effect, Swedbank’s issuance of eligible liabilities (e.g. senior non-preferred debt) may be affected. The amended law was scheduled to take effect by 28 December 2020 but has been delayed. The changes relating to the requirements on own funds and eligible liabilities will be phased in. The phase-in will be completed by 1 January 2024.

In November 2018, the Swedish FSA published a memorandum explaining its view of the European Banking Authority’s (EBA) updated guidelines on banks’ internal risk rating based models. In the memorandum the Swedish FSA states that Swedish banks must analyse their internal rating based models to ensure that

Swedbank – Year-end report 2020

they continue to live up to the updated requirements. Implementation of the new guidelines must be completed by the end of 2021 and is expected to raise REA.

Other events

On 5 October, it was announced that Swedbank’s Annual General Meeting will be held on Thursday, 25 March 2021. The Nomination Committee consists of the following persons:

Lennart Haglund, appointed by Sparbankernas Ägareförening and Chair of the Nomination Committee
Ylva Wessén, appointed by Folksam
Hans Sterte, appointed by Alecta
Anders Oscarsson, appointed by AMF
Peter Karlström, appointed by the owner-group Sparbanksstiftelserna
Göran Persson, Chair of the Board of Directors of Swedbank AB (publ).

In November, Swedbank announced that it had qualified for the Dow Jones Sustainability Index 2020, one of the world’s most influential sustainability indices. Each year the index ranks the world’s most sustainable companies and being selected is proof of Swedbank’s consistent and effective work in terms of environmental, economic and social criteria.

In December, Swedbank’s Board of Directors approved a new risk policy and new risk appetite policy that are better adapted to Swedbank’s specific needs, and which clarify the connection between the risk strategy and the bank’s overarching targets and strategy. Risk management and the desired risk culture have been clarified as well. A new risk taxonomy and low risk appetite have been established, which means among other things that risk-taking will be related to customers in Swedbank’s four home markets, including the other Nordic countries where the bank has branches.

In December Swedbank’s Board of Directors approved a revised strategic direction for the Bank.

==> picture [205 x 155] intentionally omitted <==

Swedbank’s anti-money laundering work Swedbank worked intensely in 2020 to remedy the historical shortcomings in governance and control of money laundering risks, terrorist financing and financial sanctions that were pointed out by the Swedish and Estonian FSAs and in the report from Clifford Chance’s investigation in March 2020.

As a bank, Swedbank is exposed to risks of being exploited for money laundering and terrorist financing and has therefore established Group-wide processes to identify and manage these risks in all the jurisdictions where the bank operates. Fighting financial crime is fundamental to a safe society, and these functions support Swedbank’s goal of an “economically sound and sustainable society”.

Swedbank’s Board of Directors and senior executives fully comprehend the seriousness and complexity of the bank’s historical shortcomings and the need for improvements in the governance and control of risks of money laundering, terrorist financing and financial sanctions. During the year, Swedbank was open in its communication with external stakeholders and the public on its AML work, and in the quarter the bank reported the important steps that have been taken to remedy the historical shortcomings.

Actions to remedy historical shortcomings in Estonia

On 19 November, Swedbank AS, Swedbank’s Estonian subsidiary, submitted a final report to the Estonian FSA. The report described all the actions that have been taken to remedy the historical shortcomings presented in the precept from March 2020. The actions are described in detail and Swedbank AS is confident that the shortcomings identified by the Estonian FSA have been addressed. In the area of governance and control of money laundering risks, terrorist financing and financial sanctions, the following actions have been taken:

Swedbank AS has strengthened the Board of Directors’ competence and strengthened awareness among employees of the importance of an improved culture in both AML work and the AML framework.
The organisational structure has been changed to clarify responsibilities.
The compliance function has been strengthened and has established a new unit to oversee the work.
Swedbank AS has significantly strengthened resources in the AML/CTF area.

After the end of the quarter, the Estonian FSA announced its assessment of the final report, which is described in the section Events after 31 December 2020, on page 12.

Action plan

Significant progress was made in the fourth quarter in the comprehensive Group-wide action plan that was implemented and reported during the year. More than 90 per cent of the points in the plan were completed on time. The remaining measures are being transferred to the bank’s change programme.

The action plan addresses a large share of the known shortcomings pointed out by the Swedish and Estonian FSAs and in the Clifford Chance investigative report.

Review of corporate governance

Changes in corporate governance are underway with several subprojects and workflows, which will be fully implemented in 2021. Important aspects include a comprehensive review of the corporate governance framework within the Group and ensuring that governance and control in the business area Baltic

Swedbank – Year-end report 2020

Banking are strengthened both within the subsidiary banks and from the parent company. Furthermore, Swedbank will implement a mandatory training programme on corporate governance for among others senior executives, board members in major subsidiaries and employees who are involved in the corporate governance process.

Investigations

In September 2020, Swedbank was notified by the Swedish FSA that it was investigating the bank for suspected breaches of the regulation on market abuse (MAR). The investigation encompasses 20 September 2018 to 20 February 2019 and is focused on disclosures of insider information and the obligation to establish an insider list (articles 17 and 18) in connection with the disclosure of suspected money laundering within the bank.

The US authorities continue to investigate Swedbank’s historical AML/CTF work and information disclosure. The investigations are progressing and Swedbank is holding discussions with relevant authorities through our US legal advisors. We cannot at this point predict when the investigations will be finalised or the results.

Part of the Estonian FSA’s investigation was handed over to the Estonian Prosecutor’s Office, which is investigating whether money laundering or other criminal activities have taken place in Swedbank AS.

The Swedish Economic Crime Authority (EBM) is investigating whether historical information disclosures were criminal. The bank has no information when the EBM’s investigation will be completed.

Work going forward

Events after 31 December 2020

In 2020, Swedbank updated its strategic direction and placed sustainability at the core of its business strategy. Consequently, the bank has decided to prohibit all new financing for unconventional fossil fuels: shale oil and gas, Arctic oil and gas, and oil sands.

Nor will we grant new financing for the prospecting of new oil and gas fields, unless the company can supply and demonstrate a transition plan for its entire value chain that aligns with the Paris Agreement.

On 15 January, it was announced that Björn Meltzer was appointed acting head of the business area Large Corporates & Institutions. Björn Meltzer had until then been CFO of Large Corporates & Institutions. The recruitment of a permanent head has begun.

On 18 January, it was announced that Swedbank will hold an Extraordinary General Meeting on 15 February 2021 to decide on the dividend payment based on the 2019 profit; see section Important to note.

On 1 February 2021, it was announced that Swedbank’s Board of Directors had decided to establish a Baltic subsidiary in the form of a holding company headquartered in Riga, where ownership of the current subsidiary banks in Estonia, Latvia and Lithuania will be placed. The measures, which are a result of the corporate governance evaluation, strengthen both Swedbank’s internal governance and the Baltic subsidiary banks. The decision will not result in any changes for the bank’s customers in its home markets of Estonia, Latvia, Lithuania and Sweden.

On 28 January, the Estonian FSA announced that it had assessed the final report on measures regarding AML/CTF that Swedbank AS submitted on 19 November 2020. The Estonian FSA considers the measures taken to be sufficient and that they have no further remarks. In its assessment, the Estonian FSA has also taken into account the action plan for development presented by Swedbank. The supervision of Swedbank's continued work in the AML / CTF area will thus take place within the framework of regular supervisory work.

Swedbank – Year-end report 2020

Swedish Banking

Good volume growth in mortgages, but decreased net interest income mainly due to lower deposit margins
Stronger net commission income mainly due to higher income from asset management and securities trading
Apple Pay and Samsung Pay were launched for younger customers

Income statement

Income statement	Income statement	Income statement
Q4 Q3 Q4 Full-year Full-year SEKm 2020 2020 % 2019 % 2020 2019 %
Net interest income 3 851 Net commission income 2 100 Net gains and losses on financial items 91 Other income 1) 423	4 063 -5 4 093 -6 16 276	16 254 0
	2 015 4 2 017 4 7 922	7 854 1
	104 -13 105 -13 351	433 -19
	525 -19 555 -24 1 596	1 816 -12
Total income 6 465	6 707 -4 6 770 -5 26 145	26 357 -1
Staff costs 789 Variable staff costs 17 Other expenses 2 003 Depreciation/amortisation 12	768 3 736 7 3 079	2 950 4
	17 0 6 48	48 0
	1 674 20 1 685 19 6 855	6 001 14
	13 -8 19 -37 53	237 -78
Total expenses 2821	2 472 14 2 446 15 10 035	9 236 9
Profit before impairment 3 644	4 235 -14 4324 -16 16 110	17 121 -6
Credit impairment -1	-140 -99 10 664	154
Operating profit 3 645	4375 -17 4314 -16 15 446	16 967 -9
Tax expense 663 Profit for the period 2982	855 -22 790 -16 3 007 3 520 -15 3 524 -15 12 439	3 270 -8 13 697 -9
Profit for the period attributable to the shareholders of Swedbank AB 2982	3 519 -15 3 524 -15 12 439	13 685 -9
Non-controlling interests 0 Return on allocated equity, % 17.7 Loan/deposit ratio, % 187 Credit impairment ratio, % 0.00 Cost/income ratio 0.44 Loans, SEKbn 2) 1 211 Deposits, SEKbn 2) 646 Full-time employees 3 991	1 0 0	12
	20.6 21.8 18.5 193 209 187	21.2 209
	-0.05 0.00 0.06	0.01
	0.37 0.36 0.38 1 211 0 1 196 1 1 211 627 3 571 13 646 3 936 1 3 644 10 3 991	0.35 1 196 1 571 13 3 644 10

1) Other income includes the items Net insurance, Share of profit or loss of associates and joint ventures and Other income from the Group income statement.

2) Excluding the Swedish National Debt Office and repurchase agreements.

Result

Fourth quarter 2020 compared with third quarter 2020

Swedish Banking’s profit decreased to SEK 2 982m (3 519), mainly due to lower interest income and higher expenses.

Net interest income decreased by 5 per cent to SEK 3 851m (4 063). Lower market interest rates had a negative effect on deposit margins and the deposit guarantee fee increased when the Swedish National Debt Office announced the final fee level for the current year. This was partly offset by higher margins on lending.

Household mortgage volume increased by SEK 8bn to SEK 849bn in the quarter. Lending to tenant-owner associations decreased by SEK 3bn to SEK 92bn. Corporate lending decreased by SEK 4bn to SEK 239bn, of which SEK 2bn was from the transfer of customers with more complex needs to the business area Large Corporates & Institutions. Volumes otherwise decreased mainly in the forestry, agriculture and fishing, professional services and manufacturing sectors.

Deposit volume increased to SEK 646bn (627), of which household deposits increased by SEK 6bn and corporate deposits by SEK 14bn.

Net commission income increased by 4 per cent to SEK 2 100m (2 015), mainly due to higher income from asset management, securities trading and payment processing. This was partly offset by lower card commissions.

Other income decreased, mainly due to lower income from Entercard.

Expenses increased by 14 per cent to SEK 2 821m (2 472), largely due to higher consulting expenses and other expenses, mainly related to compliance.

During the quarter, credit impairments were positive at SEK -1m (-140), mainly due to exposure changes where lending with higher provisions decreased at the same time that lending with lower provisions increased.

Full-year 2020 compared with full-year 2019 Profit decreased to SEK 12 439m (13 685), mainly due to higher expenses and credit impairments.

Net interest income was stable at SEK 16 276m (16 254). Higher average market interest rates positively affected deposit margins, but were offset by lower lending margins.

Swedbank – Year-end report 2020

Net commission income increased to SEK 7 922m (7 854). Higher income from asset management and securities trading was offset by lower card commissions.

Other income decreased mainly due to a one-off effect in the fourth quarter 2019 when Entercard divested a credit portfolio.

Expenses increased by 9 per cent to SEK 10 035m (9 236), mainly due to increased expenses related to compliance.

Credit impairments for the full-year amounted to SEK 664m (154) and were a result of negative risk class changes in pandemic-affected industries as well as experienced credit judgments due to the uncertainty surrounding future economic impacts of Covid-19.

Business development

The pandemic again worsened in the fourth quarter, and to assist our customers we continued with and added measures. We informed customers how we can best help them and how they can bank digitally. To make it easier to receive advice remotely, we added virtual meetings with advisors in branches and customer centres. During the quarter, we also arranged digital presentations on secure online shopping for customers who are not used to shopping that way.

Amortisation exemptions for private customers were granted for mortgages until 31 August 2021 and up to six months for other consumer loans. Companies have been able to apply for exemptions of up to six months with the option of an additional extension for another three months. The number of companies that applied for exemptions increased compared with the third quarter, but the levels are still lower than in the second quarter.

We continued in the quarter to improve our services and products for both private and corporate customers. In the payments area we launched Apple Pay and Samsung Pay for younger customer groups. To facilitate

access for new customers, we made it easier for them to contact us using the channels they prefer. We have also seen increased usage of our spending tracker, which gives private customers a clearer overview of what they are spending their money on by categorising purchases. For our corporate customers we improved functionality in the internet bank. We also launched a new tool called Företagskollen for small businesses to easily forecast cash flows.

We continue to work with sustainable advice and support customers in the transition away from fossil fuels. In addition to offering products such as green funding and sustainable investments, we are also helping them to identify risks and determine which measures they can take themselves.

The magazine Lyckoslanten , one of Sweden’s largest magazines for children, which covers money, savings and engagement with tips and advice, is now also available digitally in the app for young people.

AML work is continuing within the framework of the action plan that was previously presented and is continuing according to plan. The unit leading the AML work continued to grow during the quarter. Quality improvements are underway to increase efficiency and prepare for the implementation of the new system support. In the quarter, a new support unit was organised as well to provide additional support to branches and customer centres on matters involving money laundering.

==> picture [213 x 48] intentionally omitted <==

Mikael Björknert Head of Swedish Banking

Sweden is Swedbank’s largest market , with around 4 million private customers and over 250 000 corporate customers. This makes Swedbank Sweden’s largest bank by number of customers. Through digital channels, the Telephone Bank and our branches, and through the cooperation with the savings banks and franchisees, we are always available. Swedbank is part of the local community. Branch managers have a strong mandate to act in their local communities. The bank’s presence and engagement are expressed in various ways. A project called “Young Jobs”, which has created thousands of trainee positions for young people, has played an important part in recent years. Swedbank has 159 branches in Sweden.

Swedbank – Year-end report 2020

Baltic Banking

Increased lending and deposits in local currency in the quarter
Sustainability remained a priority with new climate-smart customer offerings
Swedbank named the “Most loved brand” in the Baltic countries

Income statement

Income statement
	Q4	Q3		Q4		Full-year	Full-year
SEKm	2020	2020	%	2019	%	2020	2019	%
Net interest income	1 266	1 309	-3	1 358	-7	5 354	5 232	2
Net commission income	606	620	-2	671	-10	2 430	2 627	-7
Net gains and losses on financial items	100	91	10	93	8	337	396	-15
Other income1)	228	210	9	253	-10	876	899	-3
Total income	2 200	2 230	-1	2 375	-7	8 997	9 154	-2
Staff costs	312	305	2	290	8	1 194	1 104	8
Variable staff costs	19	9		10	90	45	57	-21
Other expenses	623	544	15	607	3	2 153	2 075	4
Depreciation/amortisation	42	42	0	44	-5	171	175	-2
Total expenses	996	900	11	951	5	3 563	3 411	4
Profit before impairment	1 204	1 330	-9	1 424	-15	5 434	5 743	-5
Impairment of tangible assets	1	1	0	5	-80	2	8	-75
Credit impairment	-8	43		-3		237	3
Operating profit	1 211	1 286	-6	1 422	-15	5 195	5 732	-9
Tax expense	200	212	-6	200	0	869	816	6
Profit for theperiod	1 011	1 074	-6	1 222	-17	4 326	4 916	-12
Profit for the period attributable to the
shareholders of Swedbank AB	1 011	1 074	-6	1 222	-17	4 326	4 916	-12
Return on allocated equity, %	16.4	16.6		19.3		17.5	19.6
Loan/deposit ratio, %	64	70		77		64	77
Credit impairment ratio, %	-0.02	0.09		-0.01		0.12	0.00
Cost/income ratio	0.45	0.40		0.40		0.40	0.37
Loans, SEKbn2)	182	190	-4	186	-2	182	186	-2
Deposits, SEKbn2)	284	272	4	241	18	284	241	18
Full-time employees	3 769	3 752	0	3 689	2	3 769	3 689	2

1) Other income includes the items Net insurance, Share of profit or loss of associates and joint ventures and Other income from the Group income statement.

2) Excluding the Swedish National Debt Office and repurchase agreements.

Result

Fourth quarter 2020 compared with third quarter 2020

Profit in the fourth quarter amounted to SEK 1 011m (1 074). Profit in local currency decreased due to lower income and higher expenses, partly offset by lower credit impairments. Foreign exchange effects reduced profit by SEK 7m.

Net interest income decreased by 2 per cent in local currency. Mortgage margins were unchanged in the quarter at the same time that margins on corporate lending decreased. Deposit margins also decreased in the quarter. Foreign exchange effects negatively affected net interest income by SEK 10m.

Lending slightly increased in the quarter in local currency. Household lending increased by 2 per cent at the same time that corporate lending fell by 1 per cent. Foreign exchange effects negatively contributed SEK 8.8bn.

Deposits increased by 10 per cent in local currency due to growth in both corporate and private deposits in the quarter. Foreign exchange effects negatively contributed SEK 13.8bn.

Net commission income decreased by 1 per cent in local currency in the quarter, mainly related to lower payment income. Card usage decreased in the quarter, but to a lower degree than during the spring’s first wave of Covid-19.

Net gains and losses on financial items increased by 11 per cent in local currency, mainly thanks to higher income from FX trading and unrealised gains in asset management and insurance in the quarter.

Other income rose by 10 per cent in local currency, mainly due to lower insurance claims in the quarter.

Expenses increased by 12 per cent in local currency, largely due to seasonally higher staff costs as well as expenses for marketing and premises. The work to strengthen AML functions as well as the work to improve KYC processes continued in the quarter.

Credit impairments were positive in the quarter at SEK - 8m (43).

Full-year 2020 compared with full-year 2019

Profit decreased to SEK 4 326m (4 916), mainly due to increased expenses, lower income and higher credit impairments. Foreign exchange effects reduced profit by SEK 35m.

Net interest income increased by 3 per cent in local currency, mainly due to increased lending volumes. Foreign exchange effects reduced net interest income by SEK 40m.

Lending increased by 2 per cent in local currency. Household lending increased by 6 per cent at the same time that corporate lending decreased by 4 per cent.

Swedbank – Year-end report 2020

Foreign exchange effects reduced lending growth by SEK 6.8bn.

Deposits increased by 22 per cent in local currency. Deposits increased in all markets. Foreign exchange effects reduced deposits by SEK 10.6bn.

Net commission income decreased by 7 per cent in local currency, mainly due to lower income from cards and asset management. Changing consumption patterns and lower management fees explain the decrease.

Net gains and losses on financial items decreased by 14 per cent in local currency, largely due to higher unrealised losses in the asset management and insurance businesses.

Other income decreased by 2 per cent in local currency due to positive valuation effects in 2019 which were not repeated in 2020. At the same time, the insurance operations reported an improved result.

Expenses increased by 5 per cent in local currency, mainly due to higher staff costs and expenses related to AML work as well as increased expenses for risk management and compliance. Expenses and investments in digital solutions increased as well.

Credit impairments for the full-year amounted to SEK 237m (3) and were mainly explained by experienced credit judgments due to the uncertainty surrounding future economic impacts of Covid-19.

Business development

Due to the increased spread of Covid-19 in the Baltic countries during the quarter, we continued to support our customers and offered individualised restructuring solutions among other things. Demand for amortisation exemptions was low. Since the end of the previous quarter, more than half of the customers who had been granted exemptions began to amortise according to their previous amortisation schedule.

In the fourth quarter, Swedbank continued to improve the customer experience in its digital channels. Biometric authentication was introduced in the internet bank, thanks to which customers can log in and approve payments either by fingerprint or facial recognition. This enables approximately 673 000 customers who already use biometric recognition in the mobile app to log in to the internet bank in the same way. Biometrics is currently one of the safest ways to identify people, and

Swedbank is the only bank in the Baltic region to provide such an authentication method to its customers.

Google Pay was also launched in the quarter. This allows our customers in the Baltic countries to make contactless payments with an Android unit. The service was launched on the same day that Google opened the service for the Baltic markets and by the of the quarter it was activated on nearly 8 500 units.

In addition, the My Budget tool is now available for our mobile app customers. This function makes it possible for customers to track their monthly spending. The app had a very positive response and the number of customers who use My Budget neared 400 000 at the end of the quarter.

We further improved our sustainable lending offerings in the quarter with the launch of a sustainable mortgage for energy improvements and a new business loan for renewable energy investments. Small businesses can now borrow at a lower fixed rate for investments that reduce their CO2 emissions e.g. solar panels, wind power or heat pumps.

During the Baltic Brand Awards, Swedbank was named a winner in five different categories. At the national level, Swedbank was named “Most loved brand” in all three Baltic countries. Swedbank also received an award as the most loved and humane brand in the region. This shows that the people in the Baltic countries see Swedbank as a socially responsible company locally and regionally.

On 19 November, a final report was submitted by Swedbank AS to the Estonian FSA on all the actions taken to address the shortcomings that were presented in the precept from March 2020. Additional measures to improve the quality and efficiency of our work to prevent money laundering and economic crime remain a high priority.

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Jon Lidefelt Head of Baltic Banking

Swedbank is the largest bank by number of customers in Estonia, Latvia and Lithuania, with around 3.2 million private customers and around 300 000 corporate customers. According to surveys, Swedbank is also the most loved brand in the Baltic countries. Through digital channels (Telephone Bank, Internet Bank and Mobile Bank) and branches, the bank is always available. Swedbank is part of the local community. Its local social engagement is expressed in many ways, with initiatives to promote education, entrepreneurship and social welfare. Swedbank has 18 branches in Estonia, 22 in Latvia and 42 in Lithuania.

Swedbank – Year-end report 2020

Large Corporates & Institutions

Stable net interest income and net commission income strengthened by asset management and advisory income
Higher net gains and losses on financial items due to favourable FX trading and derivative value adjustments (CVA/DVA)
Continued high activity in the primary market for stocks and bonds

Income statement

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Q4 Q3 Q4 Full-year Full-year
SEKm 2020 2020 % 2019 % 2020 2019 %
Net interest income 942 925 2 931 1 3 834 3 769 2
Net commission income 649 610 6 718 -10 2 436 2 411 1
Net gains and losses on financial items 677 503 35 551 23 1 897 2 085 -9
Other income [1)] 25 29 -14 1 116 111 5
Total income 2 293 2 067 11 2 201 4 8 283 8 376 -1
Staff costs 653 534 22 600 9 2 332 2 196 6
Variable staff costs 54 14 10 94 176 -47
Other expenses 339 360 -6 360 -6 1 429 1 447 -1
Depreciation/amortisation 65 61 7 61 7 248 233 6
Total expenses 1 111 969 15 1 031 8 4 103 4 052 1
Profit before im pairment 1 182 1 098 8 1 170 1 4 180 4 324 -3
Impairment of intangible assets 0 0 13 0 79
Credit impairment 537 521 3 982 -45 3 425 1 312
Operating profit 645 577 12 175 755 2 933 -74
Tax expense 147 -41 46 -271 682
Profit for the period 498 618 -19 129 1 026 2 251 -54
Profit for the period attributable to the
shareholders of Swedbank AB 498 618 -19 129 1 026 2 251 -54
Return on allocated equity, % 6.0 7.3 1.9 3.2 8.3
Loan/deposit ratio, % 111 126 159 111 159
Credit impairment ratio, % 0.68 0.57 1.32 1.16 0.47
Cost/income ratio 0.48 0.47 0.47 0.50 0.48
Loans, SEKbn [2)] 223 221 1 223 0 223 223 0
Deposits, SEKbn [2)] 200 176 14 142 41 200 142 41
Full-time employees 2 385 2 351 1 2 273 5 2 385 2 273 5
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1) Other income includes the items Net insurance, Share of profit or loss of associates and joint ventures and Other income from the Group income statement.

2) Excluding the Swedish National Debt Office and repurchase agreements.

Result

Fourth quarter 2020 compared with third quarter 2020

Despite increased income in the quarter, profit decreased to SEK 498m (618) as the previous quarter was positively affected by tax reversals.

Net interest income increased by 2 per cent to SEK 942m (925), mainly due to the transfer of customers from the business area Swedish Banking, but was offset by the deposit fee, which increased when the Swedish National Debt Office announced the final fee level for the year.

Net commission income increased by 6 per cent to SEK 649m (610) and was positively affected by increased asset management income. The main reason for the increase was performance-based fees, but a higher volume of assets under management contributed as well. Higher advisory commissions from M&A and share issues, as well as fees Swedbank earned as a liquidity guarantor in the covered bond market, also had a positive effect. Card commissions decreased due to lower transaction volumes and because Swedbank paid one-off compensation of SEK 130m to the savings banks to terminate in advance a card acquiring agreement.

Net gains and losses on financial items increased to SEK 677m (503) and customer activity remained good. The result was positively affected primarily by favourable FX trading. Derivative value adjustments (CVA/DVA) due to lower credit spreads also contributed.

Expenses increased by 15 per cent to SEK 1 111m (969), mainly due to higher staff costs due to more employees in the fourth quarter as well as lower activity during the holiday months in the third quarter. IT expenses and consulting expenses also contributed to the increase.

Credit impairments amounted to SEK 537m (521). Market conditions for the bank’s counterparties within oil-related industries remain difficult and reassessments of individual cases resulted in additional provisions, which were partly offset by positive risk class changes in other industries.

Full-year 2020 compared with full-year 2019

Profit decreased to SEK 1 026m (2 251) due to higher credit impairments.

Swedbank – Year-end report 2020

Net interest income increased by 2 per cent to SEK 3 834m (3 769), mainly due to a lower resolution fee and higher deposit volumes.

Net commission income increased by 1 per cent to SEK 2 436m (2 411). Higher advisory commissions from stock market related deals and higher lending commissions contributed to the increase. Income from card acquiring decreased due to lower transaction volumes in the wake of Covid-19.

Net gains and losses on financial items decreased to SEK 1 897m (2 085). Increased income from strong underlying client-driven trading and risk management was offset by revaluations of bond holdings in the trading book as well as derivative valuation adjustments (CVA/DVA) due to the market concerns that have arisen in connection with the pandemic.

Total expenses increased by 1 per cent to SEK 4 103m (4 052), partly due to an increased number of employees.

Credit impairments for the full-year amounted to SEK 3 425m (1 312), driven by increased individual provisions for a few oil-related counterparties, negative risk class changes in pandemic-affected industries, and experienced credit adjustments due to the uncertainty surrounding the future economic impacts of Covid-19.

Business development

The pandemic continued to affect the way the bank meets customers during the quarter. We are working continuously to find safe, personalised solutions, where the digital channels that were set up last spring for virtual meetings and digital events are now a natural part of our daily interactions with customers.

M&A related funding remained good in the quarter. For example, Swedbank provided a bridge loan in connection with MTG’s acquisition of Hutch Games and participated as funding coordinator for the leading solar energy producer Scatec’s acquisition of a large portfolio of hydropower plants. The latter funding was structured as green and sustainable loans.

Swedbank has assisted a broad base of customers with advisory services in connection with bond issues, including Nordic Investment Bank, which issued a blue

bond to support water resource management and protection projects in the Baltic region. The Finnish real estate company Citycon also tapped Swedbank when it issued a green bond. Kommuninvest attracted a broad base of investors when it issued its first green bond, with a volume of SEK 7bn.

In its equity business Swedbank led the IPO of the Baltic company Ignitis Grupe, which issued shares valued at EUR 450m, making it the largest IPO ever in the Baltic region. Swedbank also participated in the IPOs of the Swedish real estate companies Wästbygg and Offentliga Hus, as well as in a new share issue in Norway for Scatec. Moreover, the bank advised Platzer Fastigheter when it established a green equity framework, making it the second company in Sweden to have its shares classified as green in an independent evaluation.

In the quarter, the bank continued to focus on implementing its long-term strategic plan to combat money laundering and increase KYC. The aim is to further improve operating procedures and strengthen the organisation through new recruits. System-related improvements to increase automation and the quality of processes and data have been made as well.

The research firm Prospera’s annual surveys show increased satisfaction among corporate and institutional clients. In the survey for Corporate Banking 2020 Real Estate Sweden, Swedbank shared first place. Swedbank is also the bank that issued the largest SEK volume in the year, as well as the second largest volume among Nordic issuers of ESG bonds, according to data from Bloomberg.

Swedbank established a strategic partnership in the quarter with Pepins, which helps privately held growth companies to raise capital. Swedbank has a large client base of fast-growing small businesses, which will be able to use Pepins’ services through the collaboration.

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Björn Meltzer Acting Head of Large Corporates & Institutions

Large Corporates & Institutions is responsible for Swedbank’s offering to clients with revenues above SEK 2 billion and those whose needs are considered complex due to multinational operations or a need for advanced financing solutions. They are also responsible for developing corporate and capital market products for other parts of the bank and the Swedish savings banks. Large Corporates & Institutions works closely with clients, who receive advice on decisions that create long-term profitability and sustainable growth. Large Corporates & Institutions is represented in Sweden, Norway, Estonia, Latvia, Lithuania, Finland, Denmark, China, the US and South Africa

Swedbank – Year-end report 2020

Group Functions & Other

Income statement

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Q4 Q3 Q4 Full-year Full-year
SEKm 2020 2020 % 2019 % 2020 2019 %
Net interest income 517 422 23 27 1 417 735 93
Net commission income -43 -15 -13 -137 -13
Net gains and losses on financial items 43 -29 469 -91 71 716 -90
Other income [1)] 336 261 29 199 69 1 070 790 35
Total income 853 639 33 682 25 2 421 2 228 9
Staff costs 1 281 1 252 2 1 139 12 4 920 4 430 11
Variable staff costs 84 34 25 175 159 10
Other expenses -948 -1 107 -14 -239 -3 174 -2 055 54
Depreciation/amortisation 288 280 3 268 7 1 108 906 22
Administrative fine 0 0 0 4 000 0
Total expenses 705 459 54 1 193 -41 7 029 3 440
Profit before im pairment 148 180 -18 -511 -4 608 -1 212
Credit impairment -5 1 -1 8 0
Operating profit 153 179 -15 -510 -4 616 -1 212
Tax expense 134 129 4 -63 246 -57
Profit for the period 19 50 -62 -447 -4 862 -1 155
Profit for the period attributable to the
shareholders of Swedbank AB 19 50 -62 -447 -4 862 -1 155
Full-time employees 6 068 5 968 2 5 612 8 6 068 5 612 8
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1) Other income includes the items Net insurance, Share of profit or loss of associates and joint ventures and Other income from the Group income statement.

Net interest income and net gains and losses on financial items mainly stem from Group Treasury. Other income mainly refers to income from the savings banks. Expenses mainly relate to Group Financial Products & Advice and Group Staffs and are allocated to a large extent.

Result

Fourth quarter 2020 compared with third quarter 2020

Profit decreased to SEK 19m (50) and was mainly affected by lower other income and higher expenses, offset by higher net gains and losses on financial items.

Net interest income increased to SEK 517m (422). Net interest income within Group Treasury increased to SEK 551m (465). The change primarily related to effects of the lower market interest rates and the bank’s internal pricing model.

Net gains and losses on financial items increased to SEK 43m (-29). Net gains and losses on financial items within Group Treasury increased to SEK 17m (-44). Revaluations of fixed income instruments within Group Treasury due to lower market interest rates contributed to the increase, while the revaluation of shareholdings was slightly negative in the quarter.

Expenses increased to SEK 705m (459), mainly due to higher staff costs as well as higher consulting costs to manage money laundering related investigations.

Full-year 2020 compared with full-year 2019 Profit decreased to SEK -4 862m (-1 155), largely due to the Swedish FSA’s administrative fine.

Net interest income increased to SEK 1 417m (735). Group Treasury’s net interest income increased to SEK 1 573m (875), mainly due to lower funding costs, effects from the bank’s internal pricing model, and a one-off effect that raised net interest income by SEK 103m in the second quarter 2020.

Net gains and losses on financial items decreased to SEK 71m (716). Net gains and losses on financial items within Group Treasury decreased to SEK 3m (695), mainly due to lower appreciation of the shareholdings in Visa and Enento in the year. The holding in Visa was hedged in the second quarter and the holding in Enento was divested in the third quarter.

Expenses increased to SEK 7 029m (3 440), mainly due to the Swedish FSA’s administrative fine and higher staff costs. The increase was largely offset by one-off expenses for retroactive VAT and fraud in 2019. Consulting expenses to manage money laundering related investigations totalled SEK 852m (1 104). Staff costs increased due to annual salary increases and a higher number of employees.

Group Functions & Other consists of central business support units and the client advisory unit Group Financial Products & Advice. The central units serve as strategic and administrative support and comprise Accounting & Finance, Communication, Risk, Digital banking & IT, Compliance, Public Affairs, HR and Legal. Group Treasury is responsible for the bank’s funding, liquidity and capital planning. Group Treasury sets the prices on all internal deposit and loan flows in the Group through internal interest rates, where the most important parameters are maturity, interest fixing period, currency, and need for liquidity reserves.

Swedbank – Year-end report 2020

Eliminations

Income statement

Income statement	Income statement	Income statement
Q4 Q3 Q4 Full-year Full-year SEKm 2020 2020 % 2019 % 2020 2019 %
Net interest income -9 -5 80 -1 -28 -1 Net commission income 64 16 22 119 105 13 Net gains and losses on financial items -1 0 0 -1 -1 0 Other income1) -101 -50 -93 9 -260 -258 1
Total income -47 -39 21 -72 -35 -170 -155 10
Staff costs -4 -3 33 -1 -14 -1 Other expenses -43 -36 19 -71 -39 -156 -154 1
Total expenses -47	-39 21 -72 -35 -170 -155 10

1) Other income includes the items Net insurance, Share of profit or loss of associates and joint ventures and Other income from the Group income statement.

Group eliminations mainly consist of eliminations of internal transactions between Group Functions and the other business segments.

Swedbank – Year-end report 2020

Group
	Page
Income statement, condensed	22
Statement of comprehensive income, condensed	23
Balance sheet, condensed	24
Statement of changes in equity, condensed	25
Cash flow statement, condensed	26
Notes
Note 1 Accounting policies	27
Note 2 Critical accounting estimates	27
Note 3 Changes in the Group structure	27
Note 4 Operating segments (business areas)	28
Note 5 Net interest income	30
Note 6 Net commission income	31
Note 7 Net gains and losses on financial items	32
Note 8 Other general administrative expenses	32
Note 9 Credit impairment	33
Note 10 Loans	39
Note 11 Credit impairment provisions	41
Note 12 Credit risk exposures	44
Note 13 Intangible assets	45
Note 14 Amounts owed to credit institutions	45
Note 15 Deposits and borrowings from the public	45
Note 16 Debt securities in issue, senior non-preferred liabilities and subordinated
liabilities	46
Note 17 Derivatives	46
Note 18 Fair value of financial instruments	47
Note 19 Assets pledged, contingent liabilities and commitments	49
Note 20 Offsetting financial assets and liabilities	50
Note 21 Capital adequacy, consolidated situation	51
Note 22 Internal capital requirement	55
Note 23 Risks and uncertainties	55
Note 24 Related-party transactions	56
Note 25 Swedbank’s share	56
Note 26 Changed presentation, cash-flow statement	57
Parent company
Income statement, condensed	58
Statement of comprehensive income, condensed	58
Balance sheet, condensed	59
Statement of changes in equity, condensed	60
Cash flow statement, condensed	60
Capital adequacy	61

More detailed information including definitions can be found in Swedbank’s Fact book, www.swedbank.com/ir, under Financial information and publications.

Swedbank – Year-end report 2020

Income statement, condensed

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Group Q4 Q3 Q4 Full-year Full-year
SEKm 2020 2020 % 2019 % 2020 2019 %
Interest income on financial assets at amortised cost 7 300 8 027 -9 7 430 -2 32 020 32 810 -2
Other interest income 804 187 1 294 -38 1 771 2 560 -31
Interest income 8 104 8 214 -1 8 724 -7 33 791 35 370 -4
Interest expense -1 537 -1 500 2 -2 316 -34 -6 938 -9 381 -26
Net interest income (note 5) 6 567 6 714 -2 6 408 2 26 853 25 989 3
Commission income 5 185 4 899 6 5 242 -1 19 476 19 472 0
Commission expense -1 809 -1 653 9 -1 827 -1 -6 706 -6 488 3
Net commission income (note 6) 3 376 3 246 4 3 415 -1 12 770 12 984 -2
Net gains and losses on financial items (note 7) 910 669 36 1 218 -25 2 655 3 629 -27
Net insurance 408 424 -4 399 2 1 518 1 465 4
Share of profit or loss of associates and joint ventures 122 231 -47 252 -52 582 822 -29
Other income 381 320 19 264 44 1 298 1 071 21
Total income 11 764 11 604 1 11 956 -2 45 676 45 960 -1
Staff costs 3 205 2 930 9 2 815 14 11 873 11 119 7
Other general administrative expenses (note 8) 1 974 1 435 38 2 342 -16 7 107 7 314 -3
Depreciation/amortisation 407 396 3 392 4 1 580 1 551 2
Administrative fine 0 0 0 4 000 0 0
Total expenses 5 586 4 761 17 5 549 1 24 560 19 984 23
Profit before impairment 6 178 6 843 -10 6 407 -4 21 116 25 976 -19
Impairment of intangible assets 0 0 13 0 79
Impairment of tangible assets 1 1 0 5 -80 2 8 -75
Credit impairment (note 9) 523 425 23 988 -47 4 334 1 469
Operating profit 5 654 6 417 -12 5 401 5 16 780 24 420 -31
Tax expense 1 144 1 155 -1 973 18 3 851 4 711 -18
Profit for the period 4 510 5 262 -14 4 428 2 12 929 19 709 -34
Profit for the period attributable to the
shareholders of Swedbank AB 4 510 5 261 -14 4 428 2 12 929 19 697 -34
Non-controlling interests 0 1 0 0 12
SEK
Earnings per share, SEK 4.03 4.70 3.96 11.55 17.62
after dilution, SEK 4.01 4.68 3.95 11.51 17.56
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Swedbank – Year-end report 2020

Statement of comprehensive income, condensed

Statement of comprehensive income, condensed
Group	Q4	Q3		Q4		Full-year	Full-year
SEKm	2020	2020	%	2019	%	2020	2019	%
Profit for theperiod reported via income statement	4 510	5 262	-14	4 428	2	12 929	19 709	-34
Items that will not be reclassified to the income statement
Remeasurements of defined benefit pension plans	1 148	949	21	1 091	5	5 166	-3 866
Share related to associates and joint ventures:
Remeasurements of defined benefit pension plans	20	-20		32	-38	96	-127
Change in fair value attributable to changes in ow n credit risk on financial liabilities designated at fair value	2	1	100	4	-50	6	17	-65
through profit and loss
Income tax	-236	-196	20	-225	5	-1 065	793
Total	934	734	27	902	4	4 203	-3 183
Items that may be reclassified to the income statement
Exchange rate differences, foreign operations: Gains/losses arising during the period Reclassification adjustments to income statement, Net gains and losses on financial items Hedging of net investments in foreign operations: Gains/losses arising during the period Reclassification adjustments to income statement, Net gains and losses on financial items Cash flow hedges:	-2 337 -2 1 808 9	371 0 -291 0	0	-1 232 0 976 0	90 85 0	-1 838 -2 1 523 9	739 0 -600 0
Gains/losses arising during the period	-412	34		-250	65	-358	159
Reclassification adjustments to the income statement,Net gains and losses on financial items	403	-33		244	65	349	-154
Foreign currency basis risk:
Gains/losses arising during the period	-24	-14	71	-6		-42	-18
Share of other comprehensive income of associates and joint ventures	6	-4		-40		-84	32
Income tax	-372	67		-184		-306	167
Total	-921	130		-492	87	-749	325
Other comprehensive income for the period, net of tax	13	864	-98	410	-97	3 454	-2 858
Total comprehensive income for theperiod	4 523	6 126	-26	4 838	-7	16 383	16 851	-3
Total comprehensive income attributable to the
shareholders of Swedbank AB	4 523	6 125	-26	4 838	-7	16 383	16 839	-3
Non-controlling interests	0	1		0		0	12

For 2020 a gain of SEK 5 166m (-3 866) was recognised in other comprehensive income, regarding remeasurements of defined benefit pension plans. As per 31 December the discount rate, which is used to calculate the closing pension obligation, was 1.41 per cent, compared with 1.46 per cent at year end 2019. More high quality bonds have been included in the determination of the discount rate from the first quarter 2020. The inflation assumption was 1.48 per cent compared with 1.98 per cent at year end 2019. The changed assumptions together with gains and losses based on experience represented SEK 2 792 million of the positive result in other comprehensive income. The fair value of plan assets increased during 2020 by SEK 2 374m. In total, the obligation for defined benefit pension plans exceeded the fair value of plan assets by SEK 3 665m compared with SEK 8 798m at year end 2019.

For January-December 2020 an exchange rate difference of SEK -1 840m (739) was recognised for the Group's foreign net investments in subsidiaries. The loss related to subsidiaries mainly arose because the Swedish krona strengthened against the euro during the year. In addition, an exchange rate difference of SEK -84m (32) for the Group's foreign net investments in associates and joint ventures is included in Share of other comprehensive income of associates and joint ventures. The total loss of SEK 1 924m is not taxable. Since the large part of the Group's foreign net investments is hedged against currency risk, a profit of SEK 1 532m (-600) arose for the hedging instruments.

The revaluation of defined benefit pension plans and translation of net investments in foreign operations can be volatile in certain periods due to movements in the discount rate, inflation and exchange rates.

Swedbank – Year-end report 2020

Balance sheet, condensed

Balance sheet, condensed
Group SEKm	31 Dec 2020	31 Dec 2019	∆ SEKm	%
Assets
Cash and balances with central banks	293 811	195 286	98 525	50
Treasury bills and other bills eligible for refinancing with central banks, etc.	137 191	137 094	97	0
Loans to credit institutions (note 10)	47 954	45 452	2 502	6
Loans to the public (note 10)	1 680 987	1 652 296	28 691	2
Value change of interest hedged item in portfolio hedge	1 774	271	1 503
Bonds and other interest-bearing securities	59 975	57 367	2 608	5
Financial assets for which customers bear the investment risk	252 411	224 893	27 518	12
Shares and participating interests	17 215	6 568	10 647
Investments in associates and joint ventures	7 287	6 679	608	9
Derivatives (note 17)	52 177	44 424	7 753	17
Intangible assets (note 13)	18 361	17 864	497	3
Tangible assets	5 421	5 572	-151	-3
Current tax assets	1 554	2 408	-854	-35
Deferred tax assets	124	170	-46	-27
Other assets Prepaid expenses and accrued income	16 483 1 917	8 859 3 025	7 624 -1 108	86 -37
Total assets	2594 642	2 408 228	186 414	8
Liabilities and equity Amounts owed to credit institutions (note 14)	150 313	69 686	80 627
Deposits and borrowings from the public (note 15)	1 148 240	954 013	194 227	20
Financial liabilities for which customers bear the investment risk	253 229	225 792	27 437	12
Debt securities in issue (note 16)	732 814	855 754	-122 940	-14
Short positions, securities	23 300	34 345	-11 045	-32
Derivatives (note 17)	54 380	40 977	13 403	33
Current tax liabilities	424	836	-412	-49
Deferred tax liabilities	2 784	1 571	1 213	77
Pension provisions	3 665	8 798	-5 133	-58
Insurance provisions	1 859	1 894	-35	-2
Other liabilities and provisions	30 610	28 807	1 803	6
Accrued expenses and prepaid income	4 038	4 383	-345	-8
Senior non-preferred liabilities (note 16)	10 359	10 805	-446	-4
Subordinated liabilities (note 16)	23 434	31 934	-8 500	-27
Total liabilities	2 439 449	2 269 595	169 854	7
Equity
Non-controlling interests	25	25	0	0
Equity attributable to shareholders of the parent company	155 168	138 608	16 560	12
Total equity	155 193	138 633	16 560	12
Total liabilities and equity	2594 642	2 408 228	186 414	8

Swedbank – Year-end report 2020

Statement of changes in equity, condensed

Group				Equity attributable to	Equity attributable to
SEKm				shareholders	of theparent company
		Other		Exchange	Hedging of net		Foreign
		contri-		differences,	investments in	Cash flow	currency	Own			Non-
	Share	buted		subsidiaries	foreign	hedge	basis	credit risk	Retained		controlling
	capital	equity	1)	and associates	operations	reserve	reserve	reserve	earnings	Total	interests	Total equity
January-December 2020
Opening balance 1 January 2020	24 904	17 275		6 279	-3 880	8	-33	-5	94 060	138 608	25	138 633
Share based payments to employees	0		0	0	0	0	0	0	178	178	0	178
Deferred tax related to share based payments to employees	0		0	0	0	0	0	0	7	7	0	7
Current tax related to share based payments to employees	0		0	0	0	0	0	0	-8	-8	0	-8
Total comprehensive income for the period	0		0	-1 924	1 211	-7	-29	5	17 127	16 383	0	16 383
of which reported through profit or loss	0		0	0	0	0	0	0	12 929	12 929	0	12 929
of which reported through other comprehensive
income	0		0	-1 924	1 211	-7	-29	5	4 198	3 454	0	3 454
Closing balance 31 December 2020	24 904	17 275		4 355	-2 669	1	-62	0	111 364	155 168	25	155 193
January-December 2019
Opening balance 1 January 2019	24 904	17 275		5 508	-3 444	4	-19	-18	93 186	137 396	213	137 609
Dividends	0		0	0	0	0	0	0	-15 878	-15 878	-15	-15 893
Share based payments to employees	0		0	0	0	0	0	0	272	272	0	272
Deferred tax related to share based payments to employees	0		0	0	0	0	0	0	-34	-34	0	-34
Current tax related to share based payments to employees	0		0	0	0	0	0	0	13	13	0	13
Business disposal	0		0	0	0	0	0	0	0	0	-185	-185
Total comprehensive income for the period	0		0	771	-436	4	-14	13	16 501	16 839	12	16 851
of which reported through profit or loss	0		0	0	0	0	0	0	19 697	19 697	12	19 709
of which reported through other comprehensive
income	0		0	771	-436	4	-14	13	-3 196	-2 858	0	-2 858
Closing balance 31 December 2019	24 904	17 275		6 279	-3 880	8	-33	-5	94 060	138 608	25	138 633

1) Other contributed equity consists mainly of share premiums.

Swedbank – Year-end report 2020

Cash flow statement, condensed

Cash flow statement, condensed
Group	Full-year	Full-year
SEKm	2020	20191
Operating activities
Operating profit	16 780	24 420
Adjustments for non-cash items in operating activities	447	4 952
Income taxes paid	-4 331	-5 981
Increase (-) / decrease (+) in loans to credit institution	-2 937	-9 130
Increase (-) / decrease (+) in loans to the public	-39 022	-27 282
Increase (-) / decrease (+) in holdings of securities for trading	-15 081	-43 187
Increase (-) / decrease (+) in other assets	-18 908	-678
Increase (+) / decrease (-) in amounts ow ed to credit institutions	82 997	12 249
Increase (+) / decrease (-) in deposits and borrow ings from the public	203 526	33 488
Increase (+) / decrease (-) in debt securities in issue	-104 629	40 561
Increase(+)/ decrease(-)in other liabilities	-9 605	8 556
Cash flow from operating activities	109 237	37 968
Investing activities
Business disposal		52
Acquisitions of and contributions to joint ventures	-54	-81
Disposal of shares in associates	76	184
Dividend from associates and joint ventures	2	529
Acquisitions of other fixed assets and strategic financial assets	-364	-224
Disposals of/maturityof other fixed assets and strategic financial assets 1 723		535
Cash flow from investing activities	1 383	995
Financing activities
Amortisation of lease liabilities	-723	-718
Issuance of senior non-preferred liablities		11 266
Redemption of senior non-preferred liablities	-95	0
Issuance of subordinated liabilities		4 909
Redemption of subordinated liabilities	-7 880	-7 711
Dividendspaid		-15 893
Cash flow from financing activities	-8 698	-8 147
Cash flow for theperiod	101 922	30 816
Cash and cash equivalents at the beginning of the period	195 286	163 161
Cash flow for the period	101 922	30 816
Exchange rate differences on cash and cash equivalents	-3 397	1 309
Cash and cash equivalents at end of theperiod	293 811	195 286

1) Changed presentation, see note 26

2020

During the year contributions were provided to joint ventures Invidem AB of SEK 23m and P27 Nordic Payments Platform AB of SEK 31m.

During the second quarter the associated company Svensk Mäklarstatistik was sold. Swedbank received a cash payment of SEK 5m and the capital gain was SEK 3m. During the first quarter of 2017, the associated company Hemnet AB was sold. Swedbank received parts of the cash payment, SEK 71m, in the first quarter of 2020 as well as in the first quarter of 2019.

During the fourth quarter, the Visa Inc. A shares were sold and Swedbank received a cash payment of SEK 794m. During the third quarter, the shares in the Finnish credit information company Enento Group was sold. Swedbank received a cash payment of SEK 570m.

2019

During the third quarter, 11 per cent of the subsidiary Ölands Bank AB was sold. Swedbank AB´s ownership subsequently amounts to 49 per cent, and as a result the company is accounted for as an associated company according to the equity method from the date of disposal. Swedbank received a cash payment of SEK 52m. The capital gain was SEK 40m.

During the year contributions were provided to the joint ventures Invidem AB of SEK 57m and P27 Nordic Payments Platform AB of SEK 24m.

During the fourth quarter, the associated company Babs Paylink AB was sold. Swedbank received a cash payment of SEK 113m. The capital gain was SEK 25m.

Swedbank – Year-end report 2020

Note 1 Accounting policies

The interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. The condensed consolidated financial statements have also been prepared in accordance with the recommendations and statements of the Swedish Financial Reporting Board, the Annual Accounts Act for Credit Institutions and Securities Companies and the directives of the SFSA.

Other changes in accounting regulations

Other amended regulations that have been adopted from 1 January 2020 did not have a significant impact on the Group’s financial position, results, cash flows or disclosures.

Standards issued but not yet adopted

The Parent Company report has been prepared in accordance with the Annual Accounts Act for Credit Institutions and Securities Companies, the directives of the SFSA and recommendation RFR 2 of the Swedish Financial Reporting Board.

The accounting policies applied in the interim report conform to those applied in the Annual and Sustainability Report for 2019, which was prepared in accordance with International Financial Reporting Standards as adopted by the European Union and interpretations thereof. There have been no significant changes to the Group’s accounting policies set out in the 2019 Annual and Sustainability Report.

Changed presentation of cash flow statement

From the Interim report for the fourth quarter of 2020 the cash flows from issued interest-bearing securities and commercial papers, excluding senior non-preferred liabilities and subordinated liabilities, have been transferred from financing activities to operating activities. Cash flows within the financing activities will going forward be split into senior non-preferred liabilities, subordinated liabilities, leasing liabilities and dividend. The changes are made to the cash flow statement to be more representative of our business model and to align it with our balance sheet. Comparative figures have been restated, see note 26.

The International Accounting Standards Board (IASB) has issued amendments to IFRS 17 Insurance contracts which are not yet applicable to Swedbank.

IFRS 17 was issued in May 2017 and amended in June 2020. The standard is applicable from 1 January 2023 and has not yet been approved by the EU. The new standard establishes principles for recognition, presentation, measurement and disclosure of insurance contracts issued. Insurance contracts in scope will be measured at current value, based on the current estimates of amounts expected to be collected from premiums and paid out for claims, benefits and expenses plus expected profit for providing insurance coverage. The impacts on the Group’s financial reports are still being assessed by the Group.

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2 were issued in August 2020. The amendments were approved by the EU in January 2021 and are applicable from 1 January 2021, with early application permitted. The amendments address the accounting issues that arise when financial instruments that reference an IBOR interest rate transition to an alternative benchmark rate. The amendments include a practical expedient for modifications required by the Interest Rate Benchmark, Reform (the Reform), to be treated as changes to a floating interest rate. They also permit changes required by the Reform to be implemented in hedge designations and hedge documentation without the hedging relationship being discontinued. The adoption will not have any impact on the Group’s financial position, results, cash flows or disclosures.

Note 2 Critical accounting estimates

Presentation of consolidated financial statements in conformity with IFRS requires the executive management to make judgments and estimates that affect the recognised amounts for assets, liabilities and disclosures of contingent assets and liabilities as of the reporting date as well as the recognised income and expenses during the report period. The executive management continuously evaluates these judgments and estimates, including assessing control over investment funds, the fair value of financial instruments, provisions for credit impairment, impairment testing of goodwill, deferred taxes and defined benefit pension

provisions. Significant changes to the basis upon which the critical accounting judgments and estimates have been determined compared with 31 December 2019 related to provisions for credit impairments. The changes are described in Note 9. From the first quarter 2020 more high quality bonds have been included in the determination of the discount rate, which are used in the provision for the defined benefit pension plan. Beyond the above there have been no significant changes to the basis upon which the critical accounting judgments and estimates have been determined compared with 31 December 2019.

Note 3 Changes in the Group structure

No significant changes to the Group structure occurred during 2020.

Swedbank – Year-end report 2020

Note 4 Operating segments (business areas)

SEKm Full-year 2020	Large Group Swedish Baltic Corporates & Functions Banking Banking Institutions & Other Eliminations Group
Income statement Net interest income Net commission income Net gains and losses on financial items Other income 1)
	16 276 5 354 3 834 1 417 -28 26 853 7 922 2 430 2 436 -137 119 12 770 351 337 1 897 71 -1 2 655 1 596 876 116 1 070 -260 3 398
Total income	26 145 8 997 8 283 2 421 -170 45 676
of which internal income Staff costs Variable staff costs Other expenses Depreciation/amortisation Administrative fine	55 3 17 -75 0 0 3 079 1 194 2 332 4 920 -14 11 511 48 45 94 175 0 362 6 855 2 153 1 429 -3 174 -156 7 107 53 171 248 1 108 0 1 580 0 0 0 4 000 0 4 000
Total expenses	10 035 3 563 4 103 7 029 -170 24 560
Profit before impairment	16 110 5 434 4 180 -4 608 0 21 116
Impairment of tangible assets Credit impairment	0 2 0 0 0 2 664 237 3 425 8 0 4 334
Operating profit	15 446 5 195 755 -4 616 0 16 780
Tax expense Profit for theperiod	3 007 869 -271 246 0 3 851 12 439 4 326 1 026 -4 862 0 12 929
Profit for the period attributable to the shareholders of Swedbank AB	12 439 4 326 1 026 -4 862 0 12 929
Non-controlling interests Net commission income Commission income Payment processing Cards Asset management and custody Lending Other commission income 2)	0 0 0 0 0 0 719 647 585 61 7 2 019 2 168 1 543 1 969 -6 -423 5 251 5 943 341 1 473 -13 -260 7 484 219 167 666 13 -8 1 057 2 136 503 991 42 -7 3 665
Total Commission income	11 185 3 201 5 684 97 -691 19 476
Commission expense	3 263 771 3 248 234 -810 6 706
Net commission income	7 922 2 430 2 436 -137 119 12 770
Balance sheet, SEKbn Cash and balances with central banks Loans to credit institutions Loans to the public	1 3 131 160 -1 294 7 0 109 264 -332 48 1 211 182 263 25 0 1 681
Interest-bearing securities	0 1 52 147 -3 197 246 6 0 0 0 252 5 0 0 2 0 7 0 0 65 33 -46 52 2 12 2 8 0 24 4 110 25 354 -453 40
Financial liabilities for which customers bears the investment risk Investments in associates and joint ventures Derivatives Tangible and intangible assets Other assets
Total assets	1 476 314 647 993 -835 2 595
Amounts owed to credit institutions Deposits and borrowings from the public Debt securities in issue Financial liabilities for which customers bears the investment risk Derivatives Other liabilities Senior non-preferred liabilities Subordinated liabilities	27 0 263 179 -319 150 646 284 226 2 -10 1 148 0 0 7 730 -4 733 247 6 0 0 0 253 0 0 67 33 -46 54 489 0 51 -15 -456 69 0 0 0 10 0 10
	0 0 0 23 0 23
Total liabilities	1 409 290 614 962 -835 2 440
Allocated equity	67 24 33 31 0 155
Total liabilities and equity	1 476 314 647 993 -835 2 595
Key figures
Return on allocated equity, % Cost/income ratio Credit impairment ratio, % Loan/deposit ratio, % Loans to the public, stage 3, SEKbn3)(gross) Loans to the public, total, SEKbn 3) Provisions for loans to the public, total, SEKbn 3) Deposits from the public, SEKbn 3) Risk exposure amount, SEKbn	18.5 17.5 3.2 -21.8 0.0 8.9 0.38 0.40 0.50 2.90 0.00 0.54 0.06 0.12 1.16 0.04 0.00 0.26 187 64 111 46 0 143 2 2 7 0 0 11 1 211 182 223 0 0 1 616 2 1 5 0 0 8 646 284 200 1 0 1 131 391 92 168 39 0 690
Full-time employees Allocated equity, average, SEKbn	3 991 3 769 2 385 6 068 0 16 213 67 25 32 22 0 146

1) Other income includes the items Net insurance, Share of profit or loss of associates and joint ventures and Other income from the Group income statement.
2) Other commission income includes Service concepts, Insurance, Securities and corporate finance and Other, see note 6.
3) Excluding the Swedish National Debt Office and repurchase agreements.

Swedbank – Year-end report 2020

Full-year 2019			Large	Group
	Swedish	Baltic	Corporates &	Functions
SEKm	Banking	Banking	Institutions	& Other	Eliminations	Group
Income statement
Net interest income	16 254	5 232	3 769	735	-1	25 989
Net commission income	7 854	2 627	2 411	-13	105	12 984
Net gains and losses on financial items	433	396	2 085	716	-1	3 629
Other income 1)	1 816	899	111	790	-258	3 358
Total income	26 357	9 154	8 376	2 228	-155	45 960
of which internal income	63	0	15	-78	0	0
Staff costs	2 950	1 104	2 196	4 430	-1	10 679
Variable staff costs	48	57	176	159	0	440
Other expenses	6 001	2 075	1 447	-2 055	-154	7 314
Depreciation/amortisation	237	175	233	906	0	1 551
Total expenses	9 236	3 411	4 052	3 440	-155	19 984
Profit before impairment	17 121	5 743	4 324	-1 212	0	25 976
Impairment of intangible assets	0	0	79	0	0	79
Impairment of tangible assets	0	8	0	0	0	8
Credit impairment	154	3	1 312	0	0	1 469
Operating profit	16 967	5 732	2 933	-1 212	0	24 420
Tax expense	3 270	816	682	-57	0	4 711
Profit for the period	13 697	4 916	2 251	-1 155	0	19 709
Profit for the period attributable to the	0	0	0	0	0	0
shareholders of Swedbank AB	13 685	4 916	2 251	-1 155	0	19 697
Non-controlling interests	12	0	0	0	0	12
Net commission income
Commission income
Payment processing	723	703	562	135	-33	2 090
Cards	2 562	1 719	2 057	0	-390	5 948
Asset management and custody	5 331	374	1 263	31	-36	6 963
Lending	239	171	559	8	0	977
Other commission income2)	2 099	483	863	59	-10	3 494
Total Commission income	10 954	3 450	5 304	233	-469	19 472
Commission expense	3 100	823	2 893	246	-574	6 488
Net commission income	7 854	2 627	2 411	-13	105	12 984
Balance sheet, SEKbn
Cash and balances with central banks	1	3	42	150	-1	195
Loans to credit institutions	6	0	81	176	-218	45
Loans to the public	1 196	186	270	2	-2	1 652
Interest-bearing securities	0	1	45	151	-3	194
Financial liabilities for which customers bears the investment risk	219	6	0	0	0	225
Investments in associates	5	0	0	2	0	7
Derivatives	0	0	53	29	-38	44
Tangible and intangible assets	2	12	2	7	0	23
Other assets	4	65	10	489	-545	23
Total assets	1 433	273	503	1 006	-807	2 408
Amounts owed to credit institutions	26	0	177	72	-205	70
Deposits and borrowings from the public	571	241	149	2	-9	954
Debt securities in issue	0	1	10	848	-3	856
Financial liabilities for which customers bears the investment risk	220	6	0	0	0	226
Derivatives	0	0	55	24	-38	41
Other liabilities	551	0	83	-4	-551	79
Senior non-preferred liabilities	0	0	1	11	-1	11
Subordinated liabilities	0	0	0	32	0	32
Total liabilities	1 368	248	475	985	-807	2 269
Allocated equity	65	25	28	21	0	139
Total liabilities and equity	1 433 ~~0~~	273 ~~0~~	503 ~~0~~	1 006 ~~0~~	-807 ~~0~~	2 408 ~~0~~
Key figures	0	0	0	0	0	0
Return on allocated equity, %	21.2	19.6	8.3	-6.7	0.0	14.7
Cost/income ratio	0.35	0.37	0.48	1.54	0.0	0.43
Credit impairment ratio, %	0.01	0.00	0.47	0.00	0.0	0.09
Loan/deposit ratio, %	209	77	159	233	0.0	168
Loans to the public, stage 3, SEKbn3)(gross)	3	2	9	0	0.0	14
Loans to the public, total, SEKbn3)	1 196	186	223	1	0.0	1 606
Provisions for loans to the public, total, SEKbn3)	1	1	5	0	0.0	7
Deposits, SEKbn3)	571	241	142	0	0.0	954
Risk exposure amount, SEKbn	391	94	144	20	0	649
Full-time employees	3 644	3 689	2 273	5 612	0.0	15 218
Allocated equity, average, SEKbn	64	25	27	17	0.0	134

1) Other income includes the items Net insurance, Share of profit or loss of associates and joint ventures and Other income from the Group income statement.

2) Other commission income includes Service concepts, Insurance, Securities and corporate finance and Other, see note 6.
3) Excluding the Swedish National Debt Office and repurchase agreements.

Swedbank – Year-end report 2020

Operating segments accounting policies

The operating segment report is based on Swedbank’s accounting policies, organisation and management accounts. Market-based transfer prices are applied between operating segments, while all expenses for Group functions and Group staffs are transfer priced at cost to the operating segments. Cross-border transfer pricing is applied according to OECD transfer pricing guidelines.

The Group’s equity attributable to shareholders is allocated to each operating segment based on capital adequacy rules and estimated capital

requirements based on the bank’s Internal Capital Adequacy Assessment Process (ICAAP).

The return on allocated equity for the operating segments is calculated based on profit for the period for the operating segment (operating profit less estimated tax and non-controlling interests), in relation to average monthly allocated equity for the operating segment. For periods shorter than one year the key ratio is annualised.

During the first quarter 2020 Swedbank’s operating segments were changed slightly to coincide with the organisational changes made. Comparative figures have been restated.

Note 5 Net interest income

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Group Q4 Q3 Q4 Full-year Full-year
SEKm 2020 2020 % 2019 % 2020 2019 %
Interest income
Cash and balances with central banks -165 -211 -22 35 -547 439
Treasury bills and other bills eligible for refinancing with central banks, etc. 15 15 0 45 -67 76 172 -56
Loans to credit institutions 46 56 -18 130 -65 314 539 -42
Loans to the public 7 892 8 101 -3 8 201 -4 32 645 32 947 -1
Bonds and other interest-bearing securities 57 176 -68 57 0 378 118
Derivatives [1)] 56 78 -28 320 -83 637 1 473 -57
Other assets 46 42 10 51 -10 190 216 -12
Total 7 947 8 257 -4 8 839 -10 33 693 35 904 -6
Deduction of trading-related interests reported in Net gains and losses on
financial items -157 43 115 -98 534
Total interest income 8 104 8 214 -1 8 724 -7 33 791 35 370 -4
Interest expense
Amounts owed to credit institutions 10 -1 -130 -204 -1 005 -80
Deposits and borrowings from the public -224 -148 51 -261 -14 -847 -1 663 -49
of which deposit guarantee fees -212 -119 78 -116 83 -566 -457 24
Debt securities in issue -1 422 -1 594 -11 -2 417 -41 -7 282 -11 464 -36
Senior non-preferred liabilities 10 -57 -15 -102 -15
Subordinated liabilities -170 -183 -7 -290 -41 -821 -993 -17
Derivatives [1)] 561 781 -28 1 131 -50 3 450 6 945 -50
Other liabilities -233 -247 -6 -311 -25 -962 -1 246 -23
of which resolution fund fee -220 -218 1 -278 -21 -863 -1 117 -23
Total -1 468 -1 449 1 -2 293 -36 -6 768 -9 441 -28
Deduction of trading-related interests reported in Net gains and losses on
financial items 69 51 35 23 170 -60
Total interest expense -1 537 -1 500 2 -2 316 -34 -6 938 -9 381 -26
Net interest income 6 567 6 714 -2 6 408 2 26 853 25 989 3
Net investment margin before trading-related interests are deducted 0.97 1.00 -3 1.05 -7 1.01 1.06 -5
Average total assets 2 673 367 2 728 877 -2 2 503 821 7 2 670 861 2 504 946 7
Interest expense on financial liabilities at amortised cost 1 839 1 954 -6 2 869 -36 9 237 15 672 -41
Negative yield on financial assets 329 355 -7 392 -16 1 554 2 031 -23
Negative yield on financial liabilities 164 106 55 166 -1 497 592 -16
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1) Derivatives include net interest income related to hedged assets and liabilities. These may have both a positive and negative impact on interest income and interest expense.

Swedbank – Year-end report 2020

Note 6 Net commission income

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Group Q4 Q3 Q4 Full-year Full-year
SEKm 2020 2020 % 2019 % 2020 2019 %
Commission income
Payment processing 526 499 5 531 -1 2 019 2 090 -3
Cards 1 309 1 380 -5 1 511 -13 5 251 5 948 -12
Service concepts 310 306 1 316 -2 1 240 1 248 -1
Asset management and custody 2 075 1 895 9 2 013 3 7 484 6 963 7
Insurance 164 168 -2 168 -2 690 677 2
Securities and corporate finance 299 140 245 22 810 562 44
Lending 280 271 3 231 21 1 057 977 8
Other 222 240 -8 227 -2 925 1 007 -8
Total commission income 5 185 4 899 6 5 242 -1 19 476 19 472 0
Commission expense
Payment processing -285 -277 3 -291 -2 -1 128 -1 167 -3
Cards -783 -667 17 -672 17 -2 719 -2 654 2
Service concepts -44 -39 13 -47 -6 -156 -172 -9
Asset management and custody -471 -431 9 -570 -17 -1 763 -1 629 8
Insurance -74 -70 6 -78 -5 -280 -255 10
Securities and corporate finance -73 -77 -5 -80 -9 -328 -304 8
Lending -36 -32 13 -22 64 -119 -79 51
Other -43 -60 -28 -67 -36 -213 -228 -7
Total commission expense -1 809 -1 653 9 -1 827 -1 -6 706 -6 488 3
Net commission income
Payment processing 241 222 9 240 0 891 923 -3
Cards 526 713 -26 839 -37 2 532 3 294 -23
Service concepts 266 267 0 269 -1 1 084 1 076 1
Asset management and custody 1 604 1 464 10 1 443 11 5 721 5 334 7
Insurance 90 98 -8 90 0 410 422 -3
Securities and corporate finance 226 63 165 37 482 258 87
Lending 244 239 2 209 17 938 898 4
Other 179 180 -1 160 12 712 779 -9
Total Net commission income 3 376 3 246 4 3 415 -1 12 770 12 984 -2
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Swedbank – Year-end report 2020

Note 7 Net gains and losses on financial items

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Group Q4 Q3 Q4 Full-year Full-year
SEKm 2020 2020 % 2019 % 2020 2019 %
Fair value through profit or loss
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Fair value through profit or loss
Shares and share related derivatives	128	-59		420	-70	369	1 004	-63
of which dividend	18	13	38	22	-18	47	152	-69
Interest-bearing securities and interest related derivatives	434	430	1	145		928	663	40
Financial liabilities	6	8	-25	22	-73	36	85	-58
Other financial instruments	3	-5		29	-90	-15	-10	50
Total fair value through profit or loss	571	374	53	616	-7	1 318	1 742	-24
Hedge accounting
Ineffective part in fair value hedges	58	76	-24	123	-53	3	11	-73
of which hedging instruments	-1 185	-394		-6 644	-82	3 314	3 368	-2
of which hedged items	1 243	470		6 767	-82	-3 311	-3 357	-1
Ineffective part in portfolio fair value hedges	-40	-72	-44	-42	-5	-27	43
of which hedging instruments	594	-166		2 595	-77	-1 531	541
of which hedged items	-634	94		-2 637	-76	1 504	-498
Ineffectivepart in cash flow hedges	0	0		4		-2	7
Total hedge accounting	18	4		85	-79	-26	61
Amortised cost
Derecognition gain or loss for financial assets	63	79	-20	55	15	214	212	1
Derecognitiongain or loss for financial liabilities	1	-23		-57		-112	-153	-27
Total amortised cost	64	56	14	-2		102	59	73
Trading related interest
Interest income	-157	43		115		-98	534
Interest expense	69	51	35	23		170	-60
Total trading related interest	-88	94		138		72	474	-85
Change in exchange rates	345	141		381	-9	1 189	1 293	-8
Total netgains and losses on financial items	910	669	36	1 218	-25	2 655	3 629	-27

Note 8 Other general administrative expenses

Group Q4 Q3 Q4 Full-year Full-year SEKm 2020 2020 % 2019 % 2020 2019	%
Premises 163 112 46 125 30 459 536 IT expenses 587 566 4 627 -6 2 318 2 170 Telecommunications and postage 54 31 74 30 80 162 122 Consultants 271 215 26 776 -65 1 545 1 637 Compensation to savings banks 57 58 -2 59 -3 231 228 Other purchased services 372 218 71 287 30 1 054 953 Travel 5 3 67 71 -93 62 230 Entertainment 9 4 14 -36 26 40 Supplies 33 17 94 28 18 95 82 Advertising, PR and marketing 198 62 138 43 420 338 Security transport and alarm systems 16 16 0 19 -16 68 69 Repair/maintenance of inventories 19 21 -10 26 -27 94 77 Other administrative expenses 131 103 27 119 10 468 627	-14 7 33 -6 1 11 -73 -35 16 24 -1 22 -25
Other operatingexpenses 59 9 23 105 205	-49
Othergeneral administrative expenses 1 974 1 435 38 2 342 -16 7 107 7 314	-3

Swedbank – Year-end report 2020

Note 9 Credit impairment

Note 9 Credit impairment
Group	Q4	Q3	Q4	Full-year	Full-year
SEKm	2020	2020	2019	2020	2019
Loans at amortised cost Credit impairment provisions - Stage 1	-13	-140	-35	403	-12
Credit impairment provisions - Stage 2	62	16	-6	1 094	-418
Credit impairment provisions - Stage 3	-412	-167	594	561	844
Credit impairmentprovisions - Credit-impairedpurchased or originated1)	-2	-1	0	-4	-4
Total	-365	-292	553	2 054	410
Write-offs	1149	773	492	2 166	1098
Recoveries	-43	-54	-46	-174	-202
Total	1 106	719	446	1 992	896
Total loans at amortised cost	741	427	999	4 046	1 306

Other assets at amortised cost	0	0	0	6	0
Loan commitments and financial guarantees
Credit impairment provisions - Stage 1	5	-19	-3	149	16
Credit impairment provisions - Stage 2	-61	27	2	269	-71
Credit impairmentprovisions - Stage 3	-162	-10	-10	-136	217
Total	-218	-2	-11	282	162
Write-offs	0	0	0	0	1
Total Loan commitments and financialguarantees	-218	-2	-11	282	163
Total credit impairment	523	425	988	4 334	1 469
Credit impairment ratio, %	0.12	0.10	0.23	0.26	0.09

1) Of which SEK -1m (-1m) is a year to date change in the gross carrying amount of purchased or originated credit-impaired assets due to remeasurement of expected credit losses recognized as part of the gross carrying amount on initial recognition.

Credit impairment provisions are estimated using quantitative models, which incorporate inputs, assumptions and methodologies that involve a high degree of management judgement. They reflect the effect of a range of possible probability-weighted economic outcomes. In particular, the following can have a significant impact on the level of impairment provisions:

measurement of both 12-month and lifetime expected credit losses;
determination of a significant increase in credit risk; and
incorporation of forward-looking macroeconomic scenarios.

Further details on the key inputs and assumptions used as at 31 December 2020 are provided below.

Measurement of 12-month and lifetime expected credit losses

The measurement of expected credit losses is described in Note G3.1 Credit risks on pages 67-70 of the Annual and Sustainability Report 2019. There have been no significant changes during the year to the methodology. However, key portfolio risks have changed as a consequence of Covid-19. The deterioration of macroeconomic indicators that contribute to credit risk and losses – inter alia GDP growth, housing and property prices, unemployment, oil prices and interest rates – have not yet resulted in a similar increase in credit losses or default rates, that historically have been observed in similar economic shocks. Government and regulator support measures and guidance on the treatment of customer impacts (for example, forbearance and payment moratoria) have

significantly suppressed the impacts of Covid-19 in the short term and there is a risk that credit quality may start to deteriorate as such measures end. The onset of the Covid-19 second wave during Q4 led to some additional support measures to mitigate the further effects, which potentially also leads to further delays in credit risk impacts. The models do not capture these complexities, nor do they capture the continued uncertainty around further Covid-19 outbreaks, which could event further delay the recovery. Consequently, as the quantitative risk models may not appropriately incorporate these dynamics, post-model adjustments to the credit impairment provisions were deemed necessary.

The post-model expert credit adjustment that was recognised in Q3 was reviewed and retained but reallocated to more significantly affected or vulnerable industry segments. An increased post-model expert credit adjustment of SEK 672m was recognised, resulting in a total adjustment to increase credit impairment provisions by SEK 1.533m at 31 December 2020 to account for the potential economic impacts of the Covid-19 pandemic that have not yet been realised. The post-model expert credit adjustment is allocated as SEK 518m in Stage 1, SEK 1 001m in Stage 2 and SEK 13m in Stage 3. As at 31 December 2020, the most significant impacts of the post-model expert credit adjustments are reflected in the hotels and restaurants, manufacturing, transportation, retail and property management segments.

Swedbank – Year-end report 2020

Determination of a significant increase in credit risk

The Group uses both quantitative and qualitative indicators for assessing a significant increase in credit risk. The criteria are disclosed in the Annual and Sustainability Report of 2019 on page 62 and 68 - 69. There have been no significant changes during the year to the methodology. As a way of supporting both private and corporate customers with Covid-19 related liquidity constraints, Swedbank introduced standardised and collective methods for payment respites and grace periods for principal amounts due. Generally, these measures have not automatically or individually been treated as a Stage 2 trigger or forbearance measures, in accordance with the EBA Guidelines on legislative and non-legislative moratoria on loan repayments applied in light of the Covid-19 crisis. These guidelines were issued in April 2020 and expired on 30 September 2020 but were subsequently reinstated in December 2020 and valid for legislative and non-legislative moratoria applied until 31 March 2021. New measures granted or extended from 30 September 2020 that are not compliant with these guidelines are assessed for both Stage 2 and forbearance according to Swedbank’s ordinary rules and practice. The fact that certain borrowers need extensions of their payment moratoria also indicates further financial difficulties for these customers.

The tables below show the quantitative thresholds, namely:

changes in the 12-month PD and internal risk rating grades, which have been applied for the portfolio of loans originated before 1 January 2018. For instance, for exposures originated with a risk grade between 0 and 5, a downgrade by 1 to 2 grades from initial

recognition is assessed as a significant change in credit risk. Alternatively, for exposures originated with a risk grade between 13 and 21, a downgrade by 3 to 8 grades from initial recognition is considered significant. Internal risk ratings are assigned according to the risk management framework outlined in Note G3 Risks in the 2019 Annual and Sustainability Report.

changes in the lifetime PD, which have been applied for the portfolio of loans originated on or after 1 January 2018. For instance, for exposures originated with a risk grade between 0 and 5, a 50 per cent increase in the lifetime PD from initial recognition is assessed as a significant change in credit risk. Alternatively, for exposures originated with a risk grade between 13 and 21, an increase of 150-300 per cent from initial recognition is considered significant.

These limits reflect a lower sensitivity to change in the low risk end of the risk scale and a higher sensitivity to change in the high-risk end of the scale.

The Group has performed a sensitivity analysis on how credit impairment provisions would change if thresholds applied were increased or decreased. A lower threshold would increase the number of loans that have migrated from Stage 1 to Stage 2 and, also increase the estimated credit impairment provisions. A higher threshold would have the opposite effect. The tables below disclose the impacts of this sensitivity analysis on the 31 December 2020 credit impairment provisions. Positive amounts represent higher credit impairment provisions that would be recognised.

Significant increase in credit risk, financial instruments with initial recognition before 1 January 2018

Impairment provision impact of

					Recognised	Recognised	Share of total
					credit		portfolio (%) in
Internal risk rating	12-month PD		Increase in	Decrease in	impairment		terms of gross
grade at initial	band at initial	Threshold, rating	threshold by 1	threshold by 1	provisions		carrying amount
recognition	recognition	downgrade1) 2) 3)	grade	grade	31 Dec 2020		31 Dec 2020
13-21	< 0.5%	3 - 8 grades	-7.7%	7.0%		514	35%
9-12	0.5-2.0%	1 - 5 grades	-13.5%	13.0%		330	7%
6-8	2.0-5.7%	1 - 3 grades	-11.5%	4.0%		84	3%
0-5	>5.7% and <100%	1 - 2grades	-0.9%	0.0%		141	1%
			-9.0%	7.7%	1	069	46%
		Financial instruments subject to the low credit risk exemption				17	8%
			Stage 3 financial instruments		2	207	0%
			Post model expert credit adjustment4)			673	0%
				Total provisions5)	3	966	54%

1) Downgrade by 2 grades corresponds to approximately 100 per cent increase in 12-month PD.
2) Thresholds vary within given ranges depending on the borrower's geography, segment and internal risk rating.
3) The threshold used in the sensitivity analyses is floored to 1 grade.
4) Represents post-model expert credit adjustments for stages 1 and 2. The sensitivity analysis is reflected on the model output prior to the post-model expert credit adjustment.
5) Of which provisions for off-balance exposures are SEK 499m.

Swedbank – Year-end report 2020

Significant increase in credit risk, financial instruments with initial recognition on or after 1 January 2018

Impairment provision impact of

						Share of total portfolio
Internal risk rating	Threshold,				Recognised credit	(%) in terms of gross
grade at initial	increase in		Increase in threshold by	Decrease in threshold by	impairment provisions	carrying amount
recognition	lifetime PD	6)	100%	50%	31 Dec 2020	31 Dec 2020
13-21	100-300%		-3.1%	5.8%	340	31%
9-12	100-200%		-4.8%	2.2%	413	8%
6-8	50-150%		-0.7%	0.9%	143	3%
0-5	50%		0.0%	0.1%	299	1%
			-2.6%	2.5%	1 195	43%
			Financial instruments subject to	the low credit risk exemption	15	3%
				Stage 3 financial instruments	2 952	0%
			Post model expert credit adjustment7)		847	0%
				Total provisions 8)	5 009	46%

6) Thresholds vary within given ranges depending on the borrower's geography, segment and internal risk rating.

7) Represents post-model expert credit adjustments for stages 1 and 2. The sensitivity analysis is reflected on the model output prior to the post-model expert credit adjustment.

8) Of which provisions for off-balance exposures are SEK 307m.

Incorporation of forward-looking macroeconomic scenarios

Forward-looking information is incorporated into both the assessment of significant increase in credit risk and calculation of expected credit losses. The formulation and incorporation of multiple forward-looking scenarios are described in Note G3.1 Credit risks page 67 - 70 in the 2019 Annual and Sustainability Report. There have been no significant changes during the year to the methodology.

The macroeconomic scenarios are provided by Swedbank Macro Research on a quarterly basis and are aligned with the Swedbank Economic Outlook. The economic scenarios are developed to reflect assumptions about future economic conditions given the current state of the local and global economies. A new

Swedbank Economic Outlook was published on 5 November which serves as the base scenario, with an assigned probability weight of 66.6 per cent. Aligned with the updated base scenario, new alternative scenarios were developed, with assigned probability weights of 16.7 per cent on both the upside and downside scenario. These new macroeconomic scenarios were included in the expected credit losses calculations according to the Group’s usual monthly process.

The decrease in credit impairment provisions due to changes in macroeconomic scenarios was SEK 123m. See the reconciliation of credit impairment provisions for loans in Note 11.

Swedbank – Year-end report 2020

IFRS 9 scenarios

Compared with the Swedbank Economic Outlook, the GDP and unemployment rates used in the expected credit losses calculations are seasonally adjusted.

31 Dec 2020	20201) 2021 2022 2023 Positive scenario	20201) 2021 2022 20232) 20201) 2021 2022 2023 Baseline scenario Negative scenario
Sweden GDP (% annual) Unemployment (% annual)3) House prices (% annual change) Stibor 3m (%) Estonia GDP (% annual) Unemployment (% annual) House prices (% annual change) Latvia GDP (% annual) Unemployment (% annual) House prices (% annual change) Lithuania GDP (% annual) Unemployment (% annual) House prices (% annual change) Global indicators US GDP (% annual) EU GDP (% annual) Brent Crude Oil (USD/Barrel) Euribor 6m (%)	-3.5 3.0 2.7 2.3 8.5 8.3 7.6 7.2 6.9 6.9 5.5 6.1 0.09 0.10 0.29 0.56 -3.1 3.7 4.2 2.5 6.8 6.7 5.8 5.5 6.5 9.1 9.8 5.3 -4.8 3.6 4.3 3.4 8.1 6.9 5.9 5.4 2.1 8.2 8.2 6.4 -1.8 4.6 4.8 3.2 7.8 6.4 5.6 5.4 12.8 7.1 8.3 5.6 -3.9 3.6 4.3 2.8 -6.4 6.2 2.0 1.4 39.4 54.0 59.1 61.9 -0.36 -0.14 0.53 1.37	-3.7 2.0 3.1 2.3 -4.2 -5.6 2.0 4.6 8.4 9.1 8.8 8.1 8.6 11.1 12.0 10.9 6.7 5.6 4.1 5.0 5.8 -1.5 -0.4 2.0 0.08 -0.02 0.07 0.27 0.08 -0.39 -0.59 -0.55 -3.2 3.1 4.1 1.9 -3.5 -4.2 3.1 2.4 6.8 7.5 6.9 6.4 7.0 12.9 11.5 10.2 6.4 6.1 8.5 5.0 6.1 -13.2 4.9 4.3 -5.0 3.1 4.1 3.0 -5.3 -3.8 4.6 3.0 8.3 8.1 6.5 6.0 8.4 13.4 12.3 10.8 2.0 3.3 6.3 5.4 1.7 -10.7 4.9 4.7 -1.9 4.0 4.7 2.5 -2.2 -4.0 4.5 2.4 7.9 7.2 6.3 6.0 8.0 12.4 11.4 10.2 12.6 4.6 6.0 4.9 12.4 -12.5 5.4 5.3 3.9 3.0 3.3 1.9 -4.0 -0.2 1.1 1.5 7.3 3.7 3.3 1.6 -8.6 0.5 4.5 2.8 37.7 43.3 45.4 46.8 34.0 28.6 34.6 39.5 -0.39 -0.50 -0.44 -0.21 -0.46 -0.80 -0.69 -0.59

1) Forecasted 2020 values, as the actual offical numbers were not published when the scenarios were set.
2) The baseline scenario for 2020, 2021 and 2022 are based on the published Swedbank Economic Outlook. The baseline scenario variables for 2023 are model-based extrapolations.
3) Unemployment rate, 16-64 years

Swedbank – Year-end report 2020

30 Sep 2020	2019 2020 2021 2022 Positive scenario	2019 2020 2021 2022 2019 2020 2021 2022 Baseline scenario Negative scenario
Sweden GDP (% annual) Unemployment (% annual) 1) House prices (% annual change) Stibor 3m (%) Estonia GDP (% annual) Unemployment (% annual) House prices (% annual change) Latvia GDP (% annual) Unemployment (% annual) House prices (% annual change) Lithuania GDP (% annual) Unemployment (% annual) House prices (% annual change) Global indicators US GDP (% annual) EU GDP (% annual) Brent Crude Oil (USD/Barrel) Euribor 6m (%)	1,3 -4,4 4,2 2,7 6,8 8,4 8,4 7,5 2,3 5,8 4,5 4,5 -0,03 0,12 0,19 0,42 4,9 -2,5 5,9 3,4 4,5 7,6 6,5 5,8 7,3 6,0 10,1 7,9 2,2 -3,6 5,8 3,6 6,3 7,9 6,9 5,9 7,3 3,5 11,2 8,2 3,9 -1,2 6,2 4,0 6,3 7,3 6,2 5,6 6,0 12,5 8,5 7,8 2,2 -4,5 5,4 3,4 1,3 -7,6 6,4 2,3 64,1 36,2 31,4 37,8 -0,30 -0,30 -0,01 0,73	1,3 -5,2 3,0 3,5 1,3 -8,3 -5,0 5,8 6,8 8,6 9,4 8,9 6,8 8,9 12,4 11,8 2,3 5,5 3,5 3,7 2,3 4,3 -5,5 -1,1 -0,03 0,12 0,07 0,14 -0,03 0,09 -0,50 -0,58 4,9 -4,3 4,5 3,0 4,9 -7,8 -2,3 3,4 4,5 8,1 7,4 6,9 4,5 9,0 13,9 12,4 7,3 4,4 2,7 5,0 7,3 2,0 -17,5 8,2 2,2 -5,0 4,2 3,3 2,2 -8,9 -1,8 3,7 6,3 8,3 7,8 6,5 6,3 9,4 14,9 13,9 7,3 1,4 4,4 5,9 7,3 -1,2 -16,7 6,7 3,9 -2,0 4,8 3,4 3,9 -5,8 -2,2 3,8 6,3 7,5 6,6 6,3 6,3 9,1 14,4 13,4 6,0 9,1 1,6 5,5 6,0 7,3 -20,7 9,2 2,2 -5,1 3,7 2,9 2,2 -6,9 -1,2 5,8 1,3 -8,3 5,8 2,8 1,3 -11,6 0,1 6,3 64,1 43,8 47,8 49,4 64,1 47,6 59,7 64,4 -0,30 -0,36 -0,45 -0,34 -0,30 -0,56 -0,77 -0,66

1) Unemployment rate, 16-64 years

31 Dec 2019	20191) 2020 2021 Positive scenario	20191) 2020 2021 20191) 2020 2021 Baseline scenario Negative scenario
Sweden GDP (% annual) Unemployment (% annual) 2) House prices (% annual change) Stibor 3m (%) Estonia GDP (% annual) Unemployment (% annual) House prices (% annual change) Latvia GDP (% annual) Unemployment (% annual) House prices (% annual change) Lithuania GDP (% annual) Unemployment (% annual) House prices (% annual change) Global indicators US GDP (% annual) EU GDP (% annual) Brent Crude Oil (USD/Barrel) Euribor 6m (%)	1,7 2,2 2,1 6,8 6,3 5,7 2,5 7,2 5,8 -0,01 0,35 0,75 3,2 4,2 3,2 4,9 4,7 4,6 6,4 9,5 7,0 2,3 4,1 3,4 6,5 6,4 6,4 8,4 10,9 9,3 3,8 4,2 3,0 6,2 5,9 5,6 4,8 8,3 7,2 2,3 2,7 2,8 1,2 2,0 2,2 64,8 61,0 70,8 -0,30 -0,10 0,61	1,3 1,0 1,4 0,3 -6,3 -1,5 6,9 7,1 7,2 6,9 8,9 11,8 2,2 5,0 5,0 0,0 -14,9 -7,7 -0,03 0,15 0,15 -0,09 -0,53 -0,35 3,2 2,1 2,5 3,1 -6,1 -4,7 4,9 5,1 5,4 5,0 9,1 13,7 6,3 4,5 4,2 6,2 -15,2 -18,6 2,3 2,0 2,4 2,2 -5,8 -4,2 6,5 6,6 6,6 6,6 10,7 15,1 8,2 4,9 4,8 8,2 -11,2 -14,0 3,8 2,0 2,5 3,7 -5,2 -3,3 6,2 6,2 6,0 6,2 9,8 14,3 4,7 4,8 4,8 4,6 -14,7 -16,0 2,3 1,5 2,0 2,2 -1,1 0,3 1,1 1,1 1,5 1,1 -2,1 0,5 62,8 50,8 55,3 58,7 32,7 39,3 -0,30 -0,35 0,00 -0,37 -0,71 -0,61

1) Forecasted 2019 values, as the actual offical numbers were not published when the scenarios were set.

2) Unemployment rate, 16-64 years

Swedbank – Year-end report 2020

The world economy is experiencing an unprecedented rollercoaster due to Covid-19. After the dramatic decline in the spring, an impressive recovery began in several countries during the summer. Now the spread of the infection is increasing again, and economic activity is slowing down. We still believe that the lowest point is behind us, but it will not be until the latter part of 2021 when the economy recovers more clearly and steadily.

The forecast is based on some important assumptions: The increased spread of infection leads to further measures promoting physical distancing in many countries. However, the measures are assumed to be more targeted and regional as compared to the spring. In the latter part of 2021, restrictions are gradually being eased as the spread of the virus decreases. By the end of 2021, or early 2022, the impact of the virus will weaken further, allowing virtually all restrictions to be lifted.

Sweden

The recovery in the Swedish economy was stronger than expected during the summer and the GDP drop this year is expected to be -3.7 per cent. However, with the onset of the second wave of the virus, there are signs that the recovery has weakened stricter containment measures are being imposed as a result. The outlook for 2021 has therefore been revised negatively. In the latter part of 2021 and in 2022, growth is expected to pick up again as the pandemic subsides and with continued support from fiscal and monetary policy. GDP is expected to grow by 2 per cent in 2021 and 3 per cent in 2022.

In the labour market, the turnaround will be sluggish and unemployment remains stubbornly high. The slowdown in the economy, evidenced by, inter alia, gloomy warnings about increases in the number of redundancy notices, means that the risk of slightly higher unemployment this winter prevails. We estimate that

around 135,000 more people will be unemployed this winter than before the pandemic, with the youth having been hit the hardest. During 2022, unemployment is slowly turning downwards.

The Riksbank's repo rate is expected to remain at zero per cent while asset purchases continue. Fiscal policy is expected to stimulate the economy throughout the forecast period.

The housing market has been resilient during the pandemic. Low interest rates, together with the various government measures to keep household incomes up, have also supported the rise in house prices. As Covid19 stabilises and household consumption patterns normalise in the coming years, price increases are expected to gradually slow.

Baltics

During the first wave of the virus, the Baltic economies, especially Lithuania, suffered less than the euro area as whole. Household consumption is doing relatively better, while manufacturing and exports are recovering more slowly. In terms of the number of infected, the second wave of the virus is more severe and may dampen and postpone the recovery.

We expect the economic shock from the second wave of the virus to be less severe than the first. Furthermore, businesses are better prepared and the governments still have plenty of room to support in the most affected sectors.

Unemployment rates have risen by 2-3 percentage points across the Baltics but are likely to be close to their peaks, as most of the job losses were concentrated in tourism-dependent sectors; meanwhile, government support measures were largely efficient and should soften job losses going forward.

Sensitivity

Set out below are the credit impairment provisions as at 31 December 2020 that would result from the negative and positive scenarios, which are considered reasonably possible, being assigned probabilities of 100 per cent. Postmodel expert credit adjustments are assumed to be constant in the results.

Business area Credit impairment provisions (probability weighted) Of which: post-model expert credit adjustment	Credit impairmentprovisions
	Negative scenario Positive scenario
Swedish Banking 1 788 424	1 969 1 690
Baltic Banking 754 242	872 669
LC&I 6 423 867	7 471 5 640
Group1) 8 975 1 533	10 323 8 010

1) Including Group Functions & Other.

Swedbank – Year-end report 2020

Note 10 Loans

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Non credit-impaired Credit impaired
Stage 1 Stage 2 Stage 3
31 Dec 2020 12 month ECL2) Lifetime ECL2) Lifetime ECL2)
Credit Credit Credit
Group Gross carrying impairment Gross carrying impairment Gross carrying impairment
SEKm amount provision Net amount provision Net amount provision Net Total
Loans to the public at amortised cost
Private customers 1 036 489 118 1 036 371 42 251 291 41 960 2 152 505 1 647 1 079 978
Private mortgage 902 233 51 902 182 35 323 171 35 152 1 531 290 1 241 938 575
Tenant owner associations 91 286 4 91 282 1 582 5 1 577 109 2 107 92 966
Private other 42 970 63 42 907 5 346 115 5 231 512 213 299 48 437
Corporate customers 468 798 709 468 089 66 009 2 025 63 984 8 378 4 493 3 885 535 958
Agriculture, forestry, fishing 57 258 11 57 247 7 283 57 7 226 204 33 171 64 644
Manufacturing 32 876 133 32 743 5 910 141 5 769 298 97 201 38 713
Public sector and utilities 24 821 13 24 808 990 16 974 53 12 41 25 823
Construction 14 952 32 14 920 4 643 122 4 521 159 40 119 19 560
Retail 23 019 67 22 952 5 955 244 5 711 531 216 315 28 978
Transportation 11 480 8 11 472 1 483 28 1 455 19 4 15 12 942
Shipping and offshore 6 634 32 6 602 4 251 560 3 691 6 235 3 917 2 318 12 611
Hotels and restaurants 4 339 49 4 290 4 655 313 4 342 323 27 296 8 928
Information and communication 11 041 10 11 031 2 569 35 2 534 13 3 10 13 575
Finance and insurance 20 083 29 20 054 744 12 732 22 10 12 20 798
Property management, including 224 852 272 224 580 22 533 376 22 157 244 62 182 246 919
Residential properties 65 530 74 65 456 8 517 99 8 418 22 11 11 73 885
Commercial 92 881 125 92 756 7 123 118 7 005 162 40 122 99 883
Industrial and Warehouse 42 009 47 41 962 2 721 18 2 703 33 7 26 44 691
Other 24 432 26 24 406 4 172 141 4 031 27 4 23 28 460
Professional services 17 896 35 17 861 3 283 76 3 207 169 44 125 21 193
Other corporate lending 19 547 18 19 529 1 710 45 1 665 108 28 80 21 274
Loans to the public at fair value through profit or
loss 0 0 0 0 0 0 0 0 0 101
Loans to the public excluding the Swedish National 1 505 287 827 1 504 460 108 260 2 316 105 944 10 530 4 998 5 532 1 616 037
Debt Office and repurchase agreements
Swedish National Debt Office 25 003 0 25 003 0 0 0 0 0 0 25 003
Repurchase agreements 1) 0 0 0 0 0 0 0 0 0 39 947
Loans to the public 1 530 290 827 1 529 463 108 260 2 316 105 944 10 530 4 998 5 532 1 680 987
Banks and other credit institutions 46 367 28 46 339 33 0 33 0 0 0 46 372
1)
Repurchase agreements 0 0 0 0 0 0 0 0 0 1 582
Loans to credit institutions 46 367 28 46 339 33 0 33 0 0 0 47 954
Loans to the public and credit institutions 1 576 657 855 1 575 802 108 293 2 316 105 977 10 530 4 998 5 532 1 728 941
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1) At fair value through profit or loss

2) ECL - Expected credit losses

Swedbank – Year-end report 2020

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Non credit-impaired Credit impaired
Stage 1 Stage 2 Stage 3
31 Dec 2019 12 month ECL2) Lifetime ECL2) Lifetime ECL2)
Credit Credit Credit
Group Gross carrying impairment Gross carrying impairment Gross carrying impairment
SEKm amount provision Net amount provision Net amount provision Net Total
Loans to the public at amortised cost
Private customers 1 002 000 72 1 001 928 49 132 255 48 877 2 196 479 1 717 1 052 522
Private mortgage 864 774 26 864 748 38 657 159 38 498 1 661 301 1 360 904 606
Tenant owner associations 95 372 6 95 366 4 131 12 4 119 126 4 122 99 607
Private other 41 854 40 41 814 6 344 84 6 260 409 174 235 48 309
Corporate customers 490 368 407 489 961 57 057 1 092 55 965 11 397 4 374 7 023 552 949
Agriculture, forestry, fishing 56 898 14 56 884 8 304 89 8 215 199 38 161 65 260
Manufacturing 38 438 91 38 347 3 794 63 3 731 1 186 808 378 42 456
Public sector and utilities 21 901 17 21 884 850 11 839 64 14 50 22 773
Construction 15 089 13 15 076 3 929 55 3 874 511 186 325 19 275
Retail 26 241 28 26 213 5 714 236 5 478 460 225 235 31 926
Transportation 13 022 8 13 014 2 174 17 2 157 32 6 26 15 197
Shipping and offshore 10 483 28 10 455 3 982 203 3 779 6 837 2 596 4 241 18 475
Hotels and restaurants 8 208 6 8 202 1 315 27 1 288 103 21 82 9 572
Information and communication 11 002 18 10 984 1 583 61 1 522 9 2 7 12 513
Finance and insurance 16 300 10 16 290 643 2 641 12 8 4 16 935
Property management, including 233 217 144 233 073 20 515 244 20 271 1 454 239 1 215 254 559
Residential properties 71 810 35 71 775 7 706 100 7 606 145 49 96 79 477
Commercial 93 108 61 93 047 5 401 64 5 337 1 137 147 990 99 374
Industrial and Warehouse 43 708 35 43 673 3 367 28 3 339 96 9 87 47 099
Other 24 591 13 24 578 4 041 52 3 989 76 34 42 28 609
Professional services 21 621 20 21 601 2 895 55 2 840 325 172 153 24 594
Other corporate lending 17 948 10 17 938 1 359 29 1 330 205 59 146 19 414
Loans to the public at fair value through profit or
loss 0 0 0 0 0 0 0 0 0 154
Loans to the public excluding the Swedish National 1 492 368 479 1 491 889 106 189 1 347 104 842 13 593 4 853 8 740 1 605 625
Debt Office and repurchase agreements
Swedish National Debt Office 4 0 4 0 0 0 0 0 0 4
Repurchase agreements 1) 0 0 0 0 0 0 0 0 0 46 667
Loans to the public 1 492 372 479 1 491 893 106 189 1 347 104 842 13 593 4 853 8 740 1 652 296
Banks and other credit institutions 45 373 4 45 369 75 1 74 0 0 0 45 443
1)
Repurchase agreements 0 0 0 0 0 0 0 0 0 9
Loans to credit institutions 45 373 4 45 369 75 1 74 0 0 0 45 452
Loans to the public and credit institutions 1 537 745 483 1 537 262 106 264 1 348 104 916 13 593 4 853 8 740 1 697 748
1) At fair value through profit or loss
2) ECL - Expected credit losses
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	31 Dec	31 Dec
Ratios	2020	2019
Share of Stage 2 loans, gross, %	6.39	6.41
Share of Stage 3 loans, gross, %	0.62	0.82
Credit impairment provision ratio Stage 1 loans	0.05	0.03
Credit impairment provision ratio Stage 2 loans	2.14	1.27
Credit impairment provision ratio Stage 3 loans	47.46	35.70
Total credit impairmentprovision ratio	0.48	0.40

Swedbank – Year-end report 2020

Note 11 Credit impairment provisions

Reconciliation of credit impairment provisions for loans

The tables below provides a reconciliation of credit impairment provisions for loans to the public and credit institutions at amortised cost. Stage transfers are reflected as taking place at the end of the reporting period.

Loans to the public and credit institutions	Non Credit-Impaired	Credit-Impaired
Group SEKm	Stage 1 Stage 2	Stage 31) Total
Carrying amount before provisions
Opening balance as of 1 January 2020	1 537 745 106 264	13 593 1 657 602
Closing balance as of 31 December 2020	1 576 657 108 293	10 530 1 695 480
Credit impairmentprovisions
Opening balance as of 1 January 2020	483 1 348	4 853 6 684

*Movements affecting Credit impairment line*	93 89	-1 906 -1 724
New and derecognised financial assets, net
Changes in risk factors (EAD, PD, LGD) Changes in macroeconomic scenarios Post-model expert credit adjustments Individual assessments Stage transfers from 1 to 2 from 1 to 3 from 2 to 1 from 2 to 3 from 3 to 2 from 3 to 1 Other Total movements affecting Credit impairment line *Movements recognised outside Credit impairment line* Interest Change in exchange rates	139 -117 -21 -90 387 823 0 0 -195 389 -206 496 -2 0 12 -75 0 -37 0 5 1 0 0 0 403 1 094 0 0 -31 -126	7 29 -5 -116 13 1 223 2 388 2 388 227 421 0 290 89 87 0 -63 201 164 -30 -25 -33 -32 -166 -166 558 2 055 166 166 -579 -736
Closing balance as of 31 December 2020	855 2 316	4 998 8 169
Carrying amount Opening balance as of 1 January 2020	1 537 262 104 916	8 740 1 650 918
Closing balance as of 31 December 2020	1 575 802 105 977	5 532 1 687 311

1) Including purchased or originated credit-impaired

Swedbank – Year-end report 2020

Loans to the public and credit institutions	Non Credit-Impaired	Credit-Impaired
Group SEKm	Stage 1 Stage 2	Stage 31) Total
Carrying amount before provisions Opening balance as of 1 January 2019	1 510 787 107 664	11 239 1 629 690
Closing balance as of 31 December 2019	1 537 745 106 264	13 593 1 657 602
Credit impairmentprovisions
Opening balance as of 1 January 2019	492 1 737	3 797 6 026
*Movements affecting Credit impairment line* New and derecognised financial assets, net Changes in risk factors (EAD, PD, LGD) Changes in macroeconomic scenarios Post-model expert credit adjustments Individual assessments Stage transfers from 1 to 2 from 1 to 3 from 2 to 1 from 2 to 3 from 3 to 2 from 3 to 1 Other Total movements affecting Credit impairment line *Movements recognised outside Credit impairment line* Disposal of subsidiary Interest Change in exchange rates	42 -218 5 -321 6 63 0 0 0 0 -65 58 -86 367 -11 0 32 -109 0 -218 0 18 0 0 0 0 -12 -418 -2 -5 0 0 5 34	-813 -989 60 -256 -3 66 0 0 196 196 1 550 1 543 0 281 197 186 0 -77 1 429 1 211 -68 -50 -8 -8 -149 -149 841 411 -3 -10 149 149 69 108
Closing balance as of 31 December 2019	483 1 348	4 853 6 684
Carrying amount Opening balance as of 1 January 2019	1 510 295 105 927	7 442 1 623 664
Closing balance as of 31 December 2019	1 537 262 104 916	8 740 1 650 918

1) Including purchased or originated credit-impaired

Swedbank – Year-end report 2020

Loan commitments and financial guarantees

The tables below provides a reconciliation of credit impairment provisions for loan commitments and financial guarantees. Stage transfers are reflected as taking place at the end of the reporting period.

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Non Credit-Impaired Credit-Impaired
SEKm Stage 1 Stage 2 Stage 3 [1)] Total
Nominal amount
Opening balance as of 1 January 2020 322 384 11 325 1 248 334 957
Closing balance as of 31 December 2020 358 988 17 341 542 376 871
Credit impairment provisions
Opening balance as of 1 January 2020 113 144 326 583
Movements affecting Credit impairment line
New and derecognosed financial assets, net 25 5 -198 -168
Changes in risk factors (EAD, PD, LGD) 21 32 -10 43
Changes in macroeconomic scenarios -3 -4 0 -7
Post-model expert credit adjustments 132 178 0 310
Individual assessments 0 0 2 2
Stage transfers -26 58 70 102
from 1 to 2 -28 77 0 49
from 1 to 3 -1 0 12 11
from 2 to 1 3 -10 0 -7
from 2 to 3 0 -9 59 50
from 3 to 2 0 0 -1 -1
from 3 to 1 0 0 0 0
Other 0 0 0 0
Total movements affecting Credit impairment line 149 269 -136 282
Movements recognised outside Credit impairment line
Change in exchange rates -13 -17 -29 -59
Closing balance as of 31 December 2020 249 396 161 806
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1) Including purchased or originated

Swedbank – Year-end report 2020

	Non Credit-Impaired	Credit-Impaired
SEKm	Stage 1 Stage 2	Stage 31) Total
Nominal amount Opening balance as of 1January 2019	312311 9 969	804 323 084
Closing balance as of 31 December 2019	322 384 11 325	1 248 334 957
Credit impairment provisions
Opening balance as of 1 January 2019	94 208	105 407

*Movements affecting Credit impairment line*
New and derecognosed financial assets, net	20 -21	5 4
Changes in risk factors (EAD, PD, LGD) Changes in macroeconomic scenarios Post-model expert credit adjustments Individual assessments Stage transfers from 1 to 2 from 1 to 3 from 2 to 1 from 2 to 3 from 3 to 2 from 3 to 1 Other Total movements affecting Credit impairment line *Movements recognised outside Credit impairment line* Change in exchange rates	-9 -76 12 20 0 0 0 0 -7 6 -9 30 0 0 2 -11 0 -14 0 1 0 0 0 0 16 -71 3 7	-16 -101 0 32 0 0 122 122 106 105 0 21 27 27 0 -9 81 67 -2 -1 0 0 0 0 217 162 4 14
Closing balance as of 31 December 2019	113 144	326 583
1)Including purchased or originated

Note 12 Credit risk exposures

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Group 31 Dec 31 Dec
SEKm 2020 2019 %
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Assets
Cash and balances with central banks	293 811	195 286	50
Interest-bearing securities	197 166	194 461	1
Loans to credit institutions	47 954	45 452	6
Loans to the public	1 680 987	1 652 296	2
Derivatives	52 177	44 424	17
Other financial assets	16 451	8 804	87
Total	2 288 546	2 140 723	7
Contingent liabilities and commitments
Guarantees	50 696	52 008	-3
Loan commitments	326 175	287 413	13
Total	376 871	339 421	11
Total credit risk exposures	2 665 417	2 480 144	7

Swedbank – Year-end report 2020

Note 13 Intangible assets

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Group 31 Dec 31 Dec
SEKm 2020 2019 %
With indefinite useful life
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With indefinite useful life
Goodw ill	13 327	13 709	-3
Brand name	92	94	-2
Total	13 419	13 803	-3
With finite useful life
Customer base	293	336	-13
Internally developed softw are	4 319	3 350	29
Other	330	375	-12
Total	4 942	4 061	22
Total intangible assets	18 361	17 864	3

At 31 December 2020 there was no indication of an impairment of intangible assets. The carrying amount for goodwill has been tested for impairment. No impairment existed at year end.

Note 14 Amounts owed to credit institutions

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Group 31 Dec 31 Dec
SEKm 2020 2019 %
Amounts owed to credit institutions
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Amounts owed to credit institutions
Central banks	79 715	6 306
Banks	60 110	57 878	4
Other credit institutions	7 195	5 498	31
Repurchase agreements - banks	1 877	4
Repurchase agreements - other credit institutions	1 416	0
Amounts owed to credit institutions	150 313	69 686

Note 15 Deposits and borrowings from the public

Group SEKm	31 Dec 2020	31 Dec 2019	%
Deposits from the public
Private customers	588 487	531 139	11
Corporate customers	542 860	422 527	28
Deposits from the public excluding the Swedish National Debt Office
and repurchase agreements	1 131 347	953 666	19
Swedish National Debt Office	69	328	-79
Repurchase agreements - Swedish National Debt Office	0	1
Repurchase agreements -public	16 824	18
Deposits and borrowings from thepublic	1 148 240	954 013	20

Swedbank – Year-end report 2020

Note 16 Debt securities in issue, senior non-preferred liabilities and subordinated liabilities

subordinated liabilities
Group	31 Dec	31 Dec
SEKm	2020	2019	%
Commercial papers	127 209	128 772	-1
Covered bonds	471 491	589 627	-20
Senior unsecured bonds	128 437	128 445	0
Structured retail bonds	5 677	8 910	-36
Total debt securities in issue	732 814	855 754	-14
Senior non-preferred liabilities	10 359	10 805	-4
Subordinated liabilities	23 434	31 934	-27
Total debt securities in issue, senior non-preferred liabilities and	766 607	898 493	-15
subordinated liabilities

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Turnover 2020 2019 %
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Turnover	2020	2019	%
Opening balance 1 January	898 493	838 544	7
Issued	498 084	631 819	-21
Repurchased	-54 877	-21 017
Repaid	-555 811	-561 777	-1
Interest, change in market values or in hedged item in hedge accounting at fair	9 187	462
value
Changes in exchange rates	-28 469	10 462
Closing balance 31 December	766 607	898 493	-15

Note 17 Derivatives

Note 17 Derivatives
	Nominal amount Remaining contractual maturity	Nominal amount	Positive fair value	Negative fair value
Group		31 Dec 31 Dec	31 Dec 31 Dec	31 Dec 31 Dec
SEKm	< 1yr. 1-5yrs. > 5yrs.	2020 2019	2020 2019	2020 2019
Derivatives in hedge accounting	208 571 715 665 56 760	980 996 1 011 702	15 109 13 905	2 705 1 898
Fair value hedges, interest rate swaps Portfolio fair value hedges, interest rate swaps Cash flow hedges, foreign currencybasis swaps	96 636 377 161 41 052	514 849 608 694	14 953 13 013	37 534
	111 530 335 627 10 490	457 647 393 728	137 702	2 412 1 331
	405 2 877 5 218	8 500 9 280	19 190	256 33
Non-hedge accounting derivatives	6 002 457 7 849 903 5 449 621	19 301 981 16 051 211	126 813 102 833	143 547 113 311
Total,gross amount	6 211 028 8 565 568 5 506 381	20 282 977 17 062 913	141 922 116 738	146 252 115 209
Offset amount	-4 494 381 -6 901 472 -5 375 952	-16 771 805 -12 057 460	-89 745 -72 314	-91 872 -74 232
Total	1 716 647 1 664 096 130 429	3 511 172 5 005 453	52 177 44 424	54 380 40 977

The Group trades derivatives in the normal course of business and to hedge certain positions with regards to the value of equities, interest rates and currencies.

Swedbank – Year-end report 2020

Note 18 Fair value of financial instruments

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31 Dec 2020 31 Dec 2019
Group Fair Carrying Fair Carrying
SEKm value amount Difference value amount Difference
Assets
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Assets
Financial assets Cash and balances with central banks Treasury bills and other bills eligible for refinancing with central banks Loans to credit institutions Loans to the public Value change of interest hedged items in portfolio hedge Bonds and interest-bearing securities Financial assets for which the customers bear the investment risk Shares and participating interest Derivatives Other financial assets
	293 811 293 811 0 195 286 195 286 0
	137 206 137 191 15 137 119 137 094 25
	47 954 47 954 0 45 452 45 452 0
	1 684 884 1 680 987 3 897 1 660 659 1 652 296 8 363
	1 774 1 774 0 271 271 0
	59 976 59 975 1 57 369 57 367 2
	252 411 252 411 0 224 893 224 893 0
	17 215 17 215 0 6 568 6 568 0
	52 177 52 177 0 44 424 44 424 0
	16 451 16 451 0 8 804 8 804 0
Total	2 563 859 2 559 946 3 913 2 380 845 2 372 455 8 390
Investment in associates	7 287 6 679
Non-financial assets	27 409 29 094
Total	2 594 642 2 408 228
Liabilities Financial liabilities Amounts owed to credit institutions Deposits and borrowings from the public Debt securities in issue Financial liabilities for which the customers bear the investment risk Senior non-preferred liabilities Subordinated liabilities Derivatives Short positions securities Other financial liabilities	150 313 150 313 0 69 569 69 686 -117 1 148 231 1 148 240 -9 953 996 954 013 -17 738 196 732 814 5 382 861 883 855 754 6 129 253 229 253 229 0 225 792 225 792 0 10 545 10 359 186 10 805 10 805 0 23 688 23 434 254 31 730 31 934 -204 54 380 54 380 0 40 977 40 977 0 23 300 23 300 0 34 345 34 345 0 30 536 30 536 0 28 115 28 115 0
Total	2 432 418 2 426 605 5 813 2 257 212 2 251 421 5 791
Non-financial liabilities	12 844 18 174
Total	2 439 449 2 269 595

The following tables present fair values of financial instruments recognised at fair value split between the three valuation hierarchy levels.

The Group uses various methods to determine the fair value of financial instruments depending on the degree of observable market data in the valuation and activity in the market. An active market is considered a regulated or reliable marketplace where quoted prices are easily accessible, and which demonstrates regularity. Activity is continuously evaluated by analysing factors such as differences in bid and ask prices. The methods are divided into three different levels:

• Level 1: Unadjusted quoted price on an active market

• Level 2: Adjusted quoted price or valuation model with valuation parameters derived from an active market

• Level 3: Valuation model where significant valuation parameters are non-observable and based on internal assumptions.

When financial assets and financial liabilities in active markets have market risks that offset each other, an average of bid and ask prices is used as a basis to determine the fair value.

Where the fair value is derived from a modelling technique, the valuation is performed using mid prices. For any open net position, a bid/ask adjustment is applied to ensure that long positions are recognised at bid price and short positions at ask price.

The Group has a continuous process that identifies financial instruments which indicate a high level of internal assumptions or low level of observable market data. The process determines how to make the calculation based on how the internal assumptions are expected to affect the valuation. In cases where internal assumptions have a significant impact on fair value, the financial instrument is reported in level 3. The process also includes an analysis based on the quality of valuation data and whether any types of financial instruments will be transferred between the various levels.

Transfers between fair value hierarchy levels are reflected as taking place at the end of each quarter. There were no transfers of financial instruments between valuation levels 1 and 2 during the year.

Swedbank – Year-end report 2020

Financial instruments recognised at fair value

Group 31 Dec 2020 SEKm	Level 1 Level 2 Level 3 Total
Assets Treasury bills etc. Loans to credit institutions Loans to the public Bonds and other interest-bearing securities Financial assets for w hich the customers bear the investment risk Shares and participating interests Derivatives	18 968 3 300 0 22 268 0 1 582 0 1 582 0 40 049 0 40 049 22 676 37 264 0 59 940 252 411 0 0 252 411 16 088 0 1 127 17 215 85 52 092 0 52 177
Total	310 228 134 287 1 127 445 642
Liabilities Amounts ow ed to credit institutions Deposits and borrow ings from the public Debt securities in issue Financial liabilities for w hich the customers bear the investment risk Derivatives Shortpositions, securities	0 3 294 0 3 294 0 16 824 0 16 824 0 6 767 0 6 767 0 253 229 0 253 229 69 54 311 0 54 380 22 307 993 0 23 300
Total	22 376 335 418 0 357 794

Group 31 Dec 2019 SEKm	Level 1 Level 2 Level 3 Total
Assets Treasury bills etc. Loans to credit institutions Loans to the public Bonds and other interest-bearing securities Financial assets for which the customers bear the investment risk Shares and participating interests Derivatives	12 405 4 115 0 16 520 0 9 0 9 0 46 821 0 46 821 22 935 34 394 0 57 329 224 893 0 0 224 893 4 714 0 1 854 6 568 12 44 412 0 44 424
Total	264 959 129 751 1 854 396 564
Liabilities Amounts owed to credit institutions Deposits and borrowings from the public Debt securities in issue Financial liabilities for which the customers bear the investment risk Derivatives Shortpositions, securities	0 4 0 4 0 18 0 18 0 10 785 0 10 785 0 225 792 0 225 792 16 40 961 0 40 977 31 864 2 481 0 34 345
Total	31 880 280 041 0 311 921

Level 3 primarily contains unlisted equity instruments, where the price is unobservable and the sensitivity in the value to changes in the unobservable parameter is linear in the model applied. To estimate the unobservable price different methods are applied depending on the type of available data. The primary method is based on executed transactions or quoted share price of similar equities. Other inputs to these methods are primarily prices, proxy prices, market indicators and company information. The level 3 unlisted equity instruments include strategic investments. Swedbank’s holdings in VISA Inc. C

shares are subject to selling restrictions for a period of up to 9 years and under certain conditions may have to be returned. Liquid quotes are not available for these shares, therefore the fair value is established with significant elements of Swedbank’s own internal assumptions. During September Visa Inc. converted half of the outstanding in Visa Inc. C shares to Visa Inc. A shares. The fair value of the remaining Visa Inc. C holdings amounts to SEK 602m as per 31 December 2020.

Financial instruments are transferred to or from level 3 depending on whether the internal assumptions have changed in significance to the valuation. There were no transfers of financial instruments to or from level 3 during the year.

Swedbank – Year-end report 2020

Changes in level 3 Group SEKm	Assets
	Equity instruments Total
January-December 2020
Opening balance 1 January 2020	1 854 0 1 854
Purchases Sale of assets/ dividends received	9 0 9
	-2 0 -2
Conversion Visa Inc. shares	-819 0 -819
Gains and losses of which changes in unrealised gains or losses for items held at closing day	85 0 85
	95 0 95
Closing balance 31 December 2020	1 127 0 1 127
	Assets
Changes in level 3
Group SEKm	Equity instruments Derivatives Total
January-December 2019
Opening balance 1 January 2019	1 264 2 1 266
Purchases Sale of assets/ dividends received Maturities Gains and losses of which changes in unrealised gains or losses for items held at closing day	30 0 30 -14 0 -14 0 -1 -1 574 -1 573 567 0 567
Closing balance 31 December 2019	1 854 0 1 854

Note 19 Assets pledged, contingent liabilities and commitments

Group	31 Dec	31 Dec
SEKm	2020	2019	%
Loan receivables1)	561 209	578 758	-3
Financial assets pledged for insurance policy holders	247 632	220 589	12
Other assetspledged	117 257	52 720
Assets pledged	926 098	852 067	9
Nominal amounts
Guarantees	50 696	52 008	-3
Other	172	27
Contingent liabilities	50 868	52 035	-2
Nominal amounts
Loans granted not paid	259 683	223 108	16
Overdraft facilitiesgranted but not utilised	66 492	64 305	3
Commitments	326 175	287 413	13

1) The pledge is defined as the borrower’s nominal debt including accrued interest and refers to the loans of the total available collateral that are used as the pledge at each point in time.

Swedbank is cooperating with authorities in the United States who are conducting investigations into Swedbank’s historic AML compliance and the Group's response thereto, as well as related issues involving the Group's anti-money laundering controls and certain individuals and entities who may at some time have been customers of the Group. The timing of the completion of the investigations is still unknown and the outcome is still uncertain. At present, it is not possible to reliably estimate the amount of any potential settlement or fines, which could be material.

Swedbank – Year-end report 2020

Note 20 Offsetting financial assets and liabilities

The table below present recognised financial instruments that have been offset in the balance sheet under IAS 32 and those that are subject to legally enforceable master netting or similar agreements but do

not qualify for offset. Such financial instruments relate to derivatives, repurchase and reverse repurchase agreements, securities borrowing and lending transactions.

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Assets Liabilities
Group 31 Dec 31 Dec 31 Dec 31 Dec
SEKm 2020 2019 % 2020 2019 %
Financial assets and liabilities, which have been offset or are subject to netting
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Financial assets and liabilities, which have been offset or are subject to netting
Gross amount	224 363	212 597	6	207 455	163 345	27
Offset amount	-133 010	-123 222	8	-135 137	-125 140	8
Net amountspresented in the balance sheet	91 353	89 375	2	72 318	38 205	89
Related amounts not offset in the balance sheet
Financial instruments, netting arrangements	19 688	15 338	28	19 688	15 338	28
Financial Instruments, collateral	39 949	46 961	-15	24 313	3 264
Cash collateral	15 278	11 897	28	15 551	16 104	-3
Total amount not offset in the balance sheet	74 915	74 196	1	59 552	34 706	72
Net amount	16 438	15 179	8	12 766	3 499

The amount offset for derivative assets includes offset cash collateral of SEK 3 934m (2 783) derived from the balance sheet item Amounts owed to credit institutions. The amount offset for derivative liabilities includes offset cash collateral of SEK 6 061m (4 701), derived from the balance sheet item Loans to credit institutions.

Swedbank – Year-end report 2020

Note 21 Capital adequacy, consolidated situation

Capital adequacy	31 Dec	31 Dec
SEKm	2020	2019
Shareholders' equity according to the Group's balance sheet Anticipated dividend6) Deconsolidation of insurance companies7) Value changes in ow n financial liabilities Cash flow hedges Additional value adjustments1) Goodw ill Deferred tax assets Intangible assets Deductions of CET1 capital due to Article 3 CRR8) Shares deducted from CET1 capital	155 168 -16 320 0 -77 2 -478 -13 414 -78 -4 116 -158 -33	138 608 -9 856 -758 -90 -5 -454 -13 799 -108 -3 433 0 -32
Common Equity Tier 1 capital	120 496	110 073
Additional Tier 1 capital	8 352	16 153
Total Tier 1 capital	128 848	126 226
Tier 2 capital	15 889	15 328
Total own funds	144 737	141 554
Minimum capital requirement for credit risks, standardised approach Minimum capital requirement for credit risks, IRB Minimum capital requirement for credit risk, default fund contribution Minimum capital requirement for settlement risks Minimum capital requirement for market risks Trading book of w hich VaR and SVaR of w hich risks outside VaR and SVaR FX risk other operations Minimum capital requirement for credit value adjustment Minimum capital requirement for operational risks Additional minimum capital requirement, Article 3 CRR2) Additional minimum capital requirement, Article 458 CRR3)	3 865 23 972 44 0 1 385 1 373 1 119 254 12 352 5 882 1 584 18 084	3 614 21 559 47 0 1 308 1 292 1 021 271 16 378 5 481 2 451 17 101
Minimum capital requirement	55 168	51 939
Risk exposure amount credit risks, standardised approach	48 309	45 174
Risk exposure amount credit risks, IRB	299 652	269 485
Risk exposure amount default fund contribution	556	584
Risk exposure amount settlement risks	0	0
Risk exposure amount market risks	17 314	16 350
Risk exposure amount credit value adjustment	4 398	4 730
Risk exposure amount operational risks Additional risk exposure amount, Article 3 CRR2) Additional risk exposure amount, Article 458 CRR3)	73 521 19 800 226 044	68 514 30 635 213 765
Risk exposure amount	689 594	649 237

Common Equity Tier 1 capital ratio, %	17.5	17.0
Tier 1 capital ratio, %	18.7	19.4
Total capital ratio, %	21.0	21.8
Capital buffer requirement4) %	31 Dec 2020	31 Dec 2019
CET1 capital requirement including buffer requirements	11.0	12.0
of w hich minimum CET1 requirement	4.5	4.5
of w hich capital conservation buffer	2.5	2.5
of w hich countercyclical capital buffer	0.0	2.0
of w hich systemic risk buffer	3.0	3.0
of w hich buffer for other systemically important institutions	1.0	0.0
CET 1 capital available to meet buffer requirement5)	12.7	12.5
Leverage ratio	31 Dec	31 Dec
	2020	2019
Tier 1 Capital, SEKm	128 848	126 226
Leverage ratio exposure, SEKm	2 526 721	2 353 631
Leverage ratio, %	5.1	5.4

1) Adjustment due to the implementation of EBA’s technical standards on prudent valuation. The objective of these standards is to determine prudent values of fair valued positions.
2) To rectify for underestimation of default frequency in the model for corporate exposures, Swedbank has decided to hold more capital until the updated model has been approved by the Swedish FSA.The amount also includes planned implementation of Eba's Guideline on new default definition and increased safety margins.. Additional risk exposure amount according to article 3 CRR per 31 December 2019 includes the mortgage floor effect for reclassification of mortgage offers of SEK 4.2bn. As of 31 March 2020 these are directly included in additional risk exposure amount according to article 458 CRR. As of 30 September 2020 Swedbank has updated the LGD-model which decreases the additional risk exposure amount according to article 3 CRR by SEK 16.3bn.
3) Additional risk exposure amount and minimum capital requirement following the changed application of the risk weight floor for Swedish mortgages according to decision from the SFSA.
4) Buffer requirement according to Swedish implementation of CRD V. As of December 2020 buffer requirements also include a buffer for other systemically important institutions of 1 %.
5) CET1 capital ratio as reported, less minimum requirement of 4.5% (excluding buffer requirements) and less any CET1 items used to meet the Tier 1 and total capital requirements.
6) Expected dividend based on the annual profit for 2019 and 2020.
7) As of 31 December 2020 insurance companies are recognized in Swedbank consolidated situation according to the equity method. Hence, there are no longer any differences compared to the Swedbank Group's equity due to deconsolidation of the subsidiaries. Investments in insurance companies are deducted from own funds if they exceed 10 % of CET1 capital.
8) As of 31 December 2020 a deduction has been introduced for non performing exposures within the Baltic entities.

Swedbank – Year-end report 2020

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Capital requirements [1)] 31 Dec 31 Dec 31 Dec 31 Dec
SEKm / % 2020 2019 2020 2019
Capital requirement Pillar 1 99 991 100 766 14.5 15.5
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Capital requirements1) SEKm /% Capital requirement Pillar 1	31 Dec 31 Dec 31 Dec 31 Dec 2020 2019 2020 2019 99 991 100 766 14.5 15.5
of which Buffer requirements2) Total capital requirement Pillar 23)	44 824 48 827 6.5 7.5
	13 712 22 140 2.0 3.4
Total capital requirement Pillar 1 and 2	113 703 122 906 16.5 18.9
Own funds	144 737 141 554

1) Swedbank's calculation based on the SFSA's announced capital requirements, including Pillar 2 requirements.

2) Buffer requirements includes systemic risk buffer, capital conservation buffer, countercyclical capital buffer and buffer for other systemically important institutions. 3) Individual Pillar 2 requirement according to decision from SFSA SREP 2020.

In the consolidated situation the Group’s insurance companies are consolidated according to the equity method instead of full consolidation. The EnterCard Group is consolidated by proportional method instead of the equity method. Otherwise, same principles for consolidations are applied as for the Group.

The note contains the information made public according to the Swedish Financial Supervisory

Authority Regulation FFFS 2014:12, chap. 8. Additional periodic information according to Regulation (EU) No 575/2013 of the European Parliament and of the Council on supervisory requirements for credit institutions and Implementing Regulation (EU) No 1423/2013 of the European Commission can be found on Swedbank’s website: https://www.swedbank.com/investorrelations/financial-information-and-publications/riskreport/index.htm

	Exposure	Exposure	Average	Average	Minimum capital	Minimum capital
Swedbank consolidated situation Credit risk, IRB SEKm	31 Dec 31 Dec 2020 2019 value		31 Dec 31 Dec 2020 2019 risk weight, %		31 Dec 31 Dec 2020 2019 requirement
Central government or central banks exposures	475 296	362 380	1	1	539		402
Institutional exposures	57 900	53 466	20	18	919		788
Corporate exposures	535 990	544 080	36	31	15 452	13	546
Retail exposures	1 211 927	1 184 439	6	7	6 063	6	173
of which mortgage lending	1 119 419	1 070 279	4	5	3 941	3	928
of which other lending	92 508	114 160	29	25	2 122	2	245
Non credit obligation	16 217	12 581	77	65	999		650
Total credit risks, IRB	2 297 330	2 156 946	13	12	23 972	21	559

Swedbank – Year-end report 2020

31 Dec 2020 SEKm	Exposure amount Risk exposure amount Minimum capital requirement
Credit risks, STD Central government or central banks exposures Regional governments or local authorities exposures Public sector entities exposures Multilateral development banks exposures Institutional exposures Corporate exposures Retail exposures Exposures secured by mortgages on immovable property Exposures in default Exposures in the form of covered bonds Exposures in the form of collective investment undertakings (CIUs) Equity exposures Other items Credit risks, IRB Central government or central banks exposures Institutional exposures Corporate exposures of which specialized lending in category 1 of which specialized lending in category 2 of which specialized lending in category 3 of which specialized lending in category 4 Retail exposures of which mortgage lending of which other lending Non-credit obligation Credit risks, Default fund contribution Settlement risks Market risks Trading book of which VaR and SVaR of which risks outside VaR and SVaR FX risk other operations Credit value adjustment Operational risks of which Standardised approach Additional risk exposure amount, Article 3 CRR Additional risk exposure amount, Article 458 CRR	107 232 48 309 3 865 59 0 0 2 774 441 35 1 048 176 14 3 700 0 0 55 677 1 216 97 5 021 4 941 395 19 985 14 445 1 157 5 586 1 955 156 791 810 65 322 32 3 3 3 0 9 954 22 977 1 838 2 312 1 313 105 2 297 330 299 652 23 972 475 296 6 740 539 57 900 11 484 919 535 990 193 156 15 452 4 2 0 217 152 12 25 29 2
	90 226 18 1 211 927 75 784 6 063 1 119 419 49 260 3 941 92 508 26 524 2 122 16 217 12 488 999 0 556 44 0 0 0 0 17 314 1 385 0 17 160 1 373 0 13 988 1 119 0 3 172 254 0 154 12 22 419 4 398 352 0 73 521 5 882 0 73 521 5 882 0 19 800 1 584 0 226 044 18 084
Total	2 426 981 689 594 55 168

Swedbank – Year-end report 2020

31 Dec 2019		Risk exposure	Minimum capital
SEKm	Exposure amount	amount	requirement
Credit risks, STD	79 511	45 174	3 614
Central government or central banks exposures	64	0	0
Regional governments or local authorities exposures	2 583	371	30
Public sector entities exposures	1 399	161	13
Multilateral development banks exposures	2 061	3	0
Institutional exposures	28 091	659	53
Corporate exposures	5 357	5 095	408
Retail exposures	19 575	14 101	1 128
Exposures secured by mortgages on immovable property	6 608	2 312	185
Exposures in default	736	749	60
Exposures in the form of covered bonds	564	56	4
Exposures in the form of collective investment undertakings (CIUs)	6	6	0
Equity exposures	9 237	19 296	1 544
Other items	3 230	2 365	189
Credit risks, IRB	2 156 946	269 485	21 559
Central government or central banks exposures	362 380	5 021	402
Institutional exposures	53 466	9 855	788
Corporate exposures	544 080	169 325	13 546
of which specialized lending in category 1	50	29	2
of which specialized lending in category 2	284	240	19
of which specialized lending in category 3	141	162	13
of which specialized lending in category 4	116	289	23
of which specialized lending in category 5	18	0	0
Retail exposures	1 184 439	77 162	6 173
of which mortgage lending	1 070 279	49 094	3 928
of which other lending	114 160	28 068	2 245
Non-credit obligation	12 581	8 122	650
Credit risks, Default fund contribution	0	584	47
Settlement risks	0	0	0
Market risks	0	16 350	1 308
Trading book	0	16 150	1 292
of which VaR and SVaR	0	12 763	1 021
of which risks outside VaR and SVaR	0	3 387	271
FX risk other operations	0	200	16
Credit value adjustment	19 004	4 730	378
Operational risks	0	68 514	5 481
of which Standardised approach	0	68 514	5 481
Additional risk exposure amount, Article 3 CRR	0	30 635	2 451
Additional risk exposure amount, Article 458 CRR	0	213 765	17 101
Total	2 255 461	649 237	51 939

Credit risks

The Internal Ratings-Based Approach (IRB) is applied within the Swedish part of Swedbank’s consolidated situation, including the branches in New York and Oslo but excluding PayEx, EnterCard and several small subsidiaries. IRB is also applied for the majority of Swedbank’s exposure classes in the Baltic countries.

When Swedbank acts as a clearing member, the bank calculates an own funds requirement for its pre-funded, qualifying and non-qualifying central counterparty default fund contributions.

For exposures, excluding capital requirement for default fund contributions, where IRB-approach is not applied, the standardized approach is used.

Market risks

Under current regulations capital adequacy for market risks can be based on either the standardised approach or an internal Value at Risk model, which requires the approval of the SFSA. The parent company has received such approval and uses its internal VaR model

for general interest rate risks, general and specific share price risks and foreign exchange risks in the trading book. The approval also covers operations in the Baltic countries with respect to general interest rate risks and foreign exchange risks in the trading book. Foreign exchange risks outside the trading book, i.e. in other operations, are mainly of structural and strategic nature and are less suited to a VaR model.

These risks are instead estimated according to the standardised approach, as per the Group’s internal approach to managing these risks. Strategic foreign exchange risks mainly arise through risks associated with holdings in foreign operations.

Credit value adjustment

The risk of the credit value adjustment is estimated according to the standardised method.

Operational risk

Swedbank calculates operational risk using the standardised approach. The SFSA has stated that Swedbank meets the qualitative requirements to apply this method.

Swedbank – Year-end report 2020

Note 22 Internal capital requirement

This note provides information on the internal capital assessment according to chapter 8, section 5 of the SFSA’s regulation on prudential requirements and capital buffers (2014:12). The internal capital assessment is published in the interim report according to chapter 8, section 4 of the SFSA’s regulation and general advice on annual reports from credit institutions and investment firms (2008:25).

A bank must identify, measure and manage the risks with which its activities are associated and have sufficient capital to cover these risks. The purpose of the Internal Capital Adequacy Assessment Process (ICAAP) is to ensure that the bank is sufficiently capitalised to cover its risks and to conduct and develop its business activities. Swedbank applies its own models and processes to evaluate its capital requirements for all relevant risks. The models that serve as a basis for the internal capital assessment evaluate the need for economic capital over a one-year horizon at a 99.9% confidence level for each type of risk. Diversification effects between various types of risks are not taken into account in the calculation of economic capital.

As a complement to the economic capital calculation, scenario-based simulations and stress tests are conducted at least once a year. The analyses provide an overview of the most important risks Swedbank is exposed to by quantifying their

impact on the income statement and balance sheet as well as the capital base and risk-weighted assets. The purpose is to ensure efficient use of capital. The methodology serves as a basis of proactive risk and capital management.

As of 31 December 2020, the internal capital assessment for Swedbank’s consolidated situation amounted to SEK 37.0bn (SEK 34.7bn as of 31 December 2019). The capital to meet the internal capital assessment, i.e. the Common Equity Tier 1, amounted to SEK 120.5bn (SEK 110.1bn as of 31 December 2019) (see Note 21). Swedbank’s internal capital assessment using its own models is not comparable with the estimated capital requirement that the SFSA releases quarterly and does not consider the SFSA risk-weight floor for Swedish mortgages.

The internally estimated capital requirement for the parent company is SEK 25.7bn (SEK 27.3bn as of 31 December 2019) and the Common Equity Tier 1 capital amounted to SEK 93.9bn (SEK 90.3bn as of 31 December 2019) (see the parent company’s note on capital adequacy).

In addition to what is stated in this interim report, risk management and capital adequacy according to the Basel 3 framework are described in more detail in Swedbank’s annual report for 2019 as well as in Swedbank’s yearly Risk and Capital Adequacy Report, available on www.swedbank.com.

Note 23 Risks and uncertainties

Swedbank’s earnings are affected by changes in the global marketplace over which it has no control, including macroeconomic factors such as GDP, asset prices and unemployment as well as changes in interest rates, equity prices and exchange rates. The rapid spread of Covid-19 has had and is likely to continue to have further major consequences for the global economy and thus affect Swedbank in the future. The impact on society, private individuals, corporates and governments, could in some parts be long-lasting and severe.

For risks related to the ongoing investigations by the United States authorities related to the suspected money laundering issue arisen by media in 2019 it is referred to the Note 19 Assets pledged, contingent liabilities and commitments.

In addition to the observations reported on money laundering and terrorist financing, Swedbank has during the year identified areas that have led to unwanted compliance risks within the bank. These are related to internal governance as noted by

supervisory authorities in their investigations of money laundering, and to the customer protection area. In both areas, work is ongoing within the bank to ensure that deficiencies identified are addressed adequately. The bank’s Compliance function monitors the work.

The tax area is complex and leaves room for judgement. Practices and interpretations of applicable laws are often changed, sometimes retroactively. In the event that the tax authorities and, where appropriate, the tax courts decide on a different interpretation than what Swedbank initially made, then it could impact the Group’s operations, results and financial position.

In addition to what is stated in this interim report, detailed descriptions are provided in Swedbank’s 2019 Annual and sustainability report and in the annual disclosure in the Risk Management and Capital Adequacy report available at www.swedbank.com.

Swedbank – Year-end report 2020

Effect on value of assets and liabilities in SEK and foreign currency, including derivatives	Effect on value of assets and liabilities in SEK and foreign currency, including derivatives
if interest rates increase by 100bp, 31 Dec 2020
Group
SEKm	<5 years	5-10 years	>10 years	Total
Swedbank,
the Group	2 545	-1 215	571	1 901
of which SEK	1 190	-1 202	530	518
of which foreign currency	1 355	-13	41	1 383
Of which financial instruments at fair value
reported through profit or loss	762	-706	260	316
of which SEK	1 131	-1 047	484	568
of which foreign currency	-369	341	-224	-252

Note 24 Related-party transactions

During the period normal business transactions were executed between companies in the Group, including other related companies such as associates and joint ventures. The five partly owned savings banks are important associates

Note 25 Swedbank’s share

Note 25 Swedbank’s share
	31 Dec	31 Dec
Number of outstanding ordinary shares	2020	2019	%
Issued shares
SWED A	1 132 005 722	1 132 005 722
Repurchased shares
SWED A	-12 013 947	-13 701 333
Number of outstanding ordinary shares on the closing day	1 119 991 775	1 118 304 389	0
SWED A Lastprice,SEK	144.12	139.45	3
Market capitalisation, SEKm	161 413	155 948	4

Within Swedbank's share-based compensation programme, Swedbank AB has during 2020 transferred 1 687 386 shares at no cost to employees.

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Q4 Q3 Q4 Full-year Full-year
Earnings per share 2020 2020 2019 2020 2019
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Average number of shares Average number of shares before dilution Weighted average number of shares for potential ordinary shares that incur a dilutive effect due to share-based compensation programme Average number of shares after dilution Profit, SEKm Profit for the period attributable to shareholders of Swedbank Earnings for the purpose of calculating earnings per share Earnings per share, SEK Earnings per share before dilution Earnings per share after dilution
	1 119 991 775 1 119 991 714 1 118 304 389	1 119 720 567 1 118 055 542
	3 934 735 3 264 852 3 559 183	3 708 306 3 921 536
	1 123 926 510 1 123 256 566 1 121 863 572	1 123 428 873 1 121 977 078


	4 510 5 261 4 428	12 929 19 697
	4 510 5 261 4 428	12 929 19 697


	4.03 4.70 3.96 4.01 4.68 3.95	11.55 17.62 11.51 17.56

Swedbank – Year-end report 2020

Note 26 Changed presentation, cash-flow statement

Note 26 Changed presentation, cash-flow statement	Note 26 Changed presentation, cash-flow statement	Note 26 Changed presentation, cash-flow statement
2019 Previous reporting Change New reporting
Operating activities Operating profit 24 420 24 420 Adjustments for non-cash items in operating activities 4 952 4 952 Taxes paid -5 981 -5 981 Increase (-) /decrease (+) in loans to credit institution -9 130 -9 130 Increase (-) /decrease (+) in loans to the public -27 282 -27 282 Increase (-) /decrease (+) in holdings of securities for trading -43 187 -43 187 Increase (-) /decrease (+) in other assets -678 -678 Increase (+) /decrease (-) in amounts owed to credit institutions 12 249 12 249 Increase (+) /decrease (-) in deposits and borrowings from the public 33 488 33 488 Increase (+) /decrease (-) in debt securities in issue2) 40 561 40 561 Increase(+)/decrease(-)in other liabilities 8 556 8 556
Cash flow from operating activities -2 593 40 561 37 968
Investing activities Business disposal 52 52 Acquisitions of and contributions to joint ventures -81 -81 Disposals of shares in associates 184 184 Dividends from associates and joint ventures 529 529 Acquisition of other fixed assets and strategic financial assets -224 -224 Disposals of/maturityof other fixed assets and strategic financial assets 535 535
Cash flow from investing activities 995 995
Financing activities Amortisation of lease liabilities -718 -718 Issuance of interest-bearing securities1) 148 250 -148 250 Redemption of interest-bearing securities1) -94 929 94 929 Issuance of commercial papers 483 569 -483 569 Redemption of commercial papers -487 865 487 865 Issuance of senior non-preferred liablities1) 11 266 11 266 Issuance of subordinated liabilities1) 4 909 4 909 Redemption of subordinated liabilities1) -7 711 -7 711 Dividendspaid -15 893 -15 893
Cash flow from financing activities 32 414 -40 561 -8 147
Cash flow for the year 30 816 30 816
Cash and cash equivalents at the beginning of theyear 163 161 163 161
Cash flow for the year 30 816 30 816 Exchange rate differences on cash and cash equivalents 1 309 1 309
Cash and cash equivalents at end of the year 195 286 195 286
1) Issuance of interest-bearing securities
Covered bonds Structured retail bonds	131 039 1 036
Total	132 075
Senior non-preferred liablities Subordinated liabilities	11 266 4 909
Total	148 250
Redemption of interest-bearing securities
Covered bonds Other interest-bearing bonds Structured retail bonds	-41 435 -42 231 -3 552
Total	-87 218
Senior non-preferred liablities Subordinated liabilities	0 -7 711
Total	-94 929
2) Debt securities in issue
Covered bonds Other interest-bearing bonds Structured retail bonds Commercialpapers	89 604 -42 231 -2 516 -4 296
Total	40 561

1) Issuance of interest-bearing securities
Covered bonds	131 039
Structured retail bonds	1 036
Total	132 075
Senior non-preferred liablities Subordinated liabilities	11 266 4 909
Total	148 250
Redemption of interest-bearing securities
Covered bonds	-41 435
Other interest-bearing bonds	-42 231
Structured retail bonds	-3 552
Total	-87 218
Senior non-preferred liablities Subordinated liabilities	0 -7 711
Total	-94 929
2) Debt securities in issue
Covered bonds	89 604
Other interest-bearing bonds	-42 231
Structured retail bonds	-2 516
Commercialpapers	-4 296
Total	40 561

Swedbank – Year-end report 2020

Swedbank AB

Income statement, condensed

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Parent company Q4 Q3 Q4 Full-year Full-year
SEKm 2020 2020 % 2019 % 2020 2019 %
Interest income on financial assets at amortised cost 2 807 3 114 -10 3 093 -9 12 727 12 475 2
Other interest income 1 301 1 384 -6 1 660 -22 5 865 6 295 -7
Interest income 4 108 4 498 -9 4 753 -14 18 592 18 770 -1
Interest expense -702 -637 10 -1 347 -48 -3 529 -5 692 -38
Net interest income 3 406 3 861 -12 3 406 0 15 063 13 078 15
Dividends received 7 785 2 930 5 256 48 16 201 19 823 -18
Commission income 2 077 1 919 8 2 063 1 7 779 9 607 -19
Commission expense -620 -511 21 -494 26 -2 180 -3 382 -36
Net commission income 1 457 1 408 3 1 569 -7 5 599 6 225 -10
Net gains and losses on financial items 795 439 81 1 007 -21 2 243 2 202 2
Other income 680 487 40 675 1 1 923 1 679 15
Total income 14 123 9 125 55 11 913 19 41 029 43 007 -5
Staff costs 2 406 2 141 12 2 073 16 8 743 8 349 5
Other expenses 2 014 1 216 66 1 935 4 6 531 6 595 -1
Depreciation/amortisation and impairment of tangible
and intangible fixed assets 1 208 1 164 4 1 208 0 4 820 4 768 1
Administrative fine 0 0 0 4 000 0 0
Total expenses 5 628 4 521 24 5 216 8 24 094 19 712 22
Profit before impairment 8 495 4 604 85 6 697 27 16 935 23 295 -27
Impairment of financial assets -16 0 22 -16 22
Credit impairment 565 385 47 989 -43 4 068 1 514
Operating profit 7 946 4 219 88 5 686 40 12 883 21 759 -41
Appropriations -42 0 78 -42 78
Tax expense 1 337 817 64 1 229 9 3 089 3 685 -16
Profit for the period 6 651 3 402 96 4 379 52 9 836 17 996 -45
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Statement of comprehensive income, condensed

Parent company SEKm	Q4 2020	Q3 2020	%	Q4 2019	%	Full-year 2020	Full-year 2019	%
Profit for theperiod reported via income statement	6 651	3 402	96	4 379	52	9 836	17 996	-45
Total comprehensive income for theperiod	6 651	3 402	96	4 379	52	9 836	17 996	-45

Swedbank – Year-end report 2020

Balance sheet, condensed

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Parent company 31 Dec 31 Dec
SEKm 2020 2019 %
Assets
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Assets
Cash and balance with central banks	167 121	107 596	55
Loans to credit institutions	669 495	537 151	25
Loans to the public	428 997	422 794	1
Interest-bearing securities	192 488	191 084	1
Shares and participating interests	82 321	71 632	15
Derivatives	59 644	48 332	23
Other assets	48 538	43 321	12
Total assets	1 648 604	1 421 910	16
Liabilities and equity
Amounts owed to credit institutions	246 804	161 454	53
Deposits and borrowings from the public	869 222	719 211	21
Debt securities in issue	259 922	263 181	-1
Derivatives	74 236	69 908	6
Other liabilities and provisions	50 512	61 275	-18
Senior non-preferred liabilities	10 359	10 805	-4
Subordinated liabilities	23 434	31 934	-27
Untaxed reserves	10 682	10 724	0
Equity	103 433	93 418	11
Total liabilities and equity	1 648 604	1 421 910	16
Pledged collateral	110 092	48 725
Other assets pledged	7 149	3 987	79
Contingent liabilities	315 206	498 891	-37
Commitments	324 052	258 148	26

Swedbank – Year-end report 2020

Statement of changes in equity, condensed

Parent company SEKm

Parent company SEKm
		Share
	Share	premium	Statutory	Retained
	capital	reserve	reserve	earnings	Total
January-December 2020
Opening balance 1 January 2020	24 904	13 206	5 968	49 340	93 418
Share based payments to employees	0	0	0	178	178
Deferred tax related to share based payments to
employees	0	0	0	7	7
Current tax related to share based payments to
employees	0	0	0	-6	-6
Total comprehensive income for theperiod	0	0	0	9 836	9 836
Closing balance 31 December 2020	24 904	13 206	5 968	59 355	103 433
January-December 2019
Opening balance 1 January 2019	24 904	13 206	5 968	46 974	91 052
Dividend	0	0	0	-15 878	-15 878
Share based payments to employees	0	0	0	272	272
Deferred tax related to share based payments to
employees	0	0	0	-34	-34
Current tax related to share based payments to
employees	0	0	0	10	10
Total comprehensive income for theperiod	0	0	0	17 996	17 996
Closing balance 31 December 2019	24 904	13 206	5 968	49 340	93 418

Cash flow statement, condensed

Cash flow statement, condensed
Parent company	Full-year	Full-year
SEKm	2020	2019
Cash flow from operating activities	58 388	29 464
Cash flow from investing activities	9 112	4 644
Cash flow from financingactivities	-7 975	-7 415
Cash flow for theperiod	59 525	26 693
Cash and cash equivalents at beginning of period	107 596	80 903
Cash flow for theperiod	59 525	26 693
Cash and cash equivalents at end of period	167 121	107 596

The 2019 cash flow have been restated for changed presentation of statement of cash flow. Parent company cash flow from operating activities has decreased by SEK 49m and cash flow from financing activities has increased by SEK 49m. Refer to note 26 in Group for further information.

Swedbank – Year-end report 2020

Capital adequacy

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Capital adequacy, Parent company 31 Dec 31 Dec
SEKm 2020 2019
Common Equity Tier 1 capital 93 880 90 305
Additional Tier 1 capital 8 352 16 153
Tier 1 capital 102 232 106 458
Tier 2 capital 15 859 15 995
Total own funds 118 091 122 453
Minimum capital requirement 28 662 26 004
Risk exposure amount 358 278 325 056
Common Equity Tier 1 capital ratio, % 26.2 27.8
Tier 1 capital ratio, % 28.5 32.8
Total capital ratio, % 33.0 37.7
Capital buffer requirement [1)] 31 Dec 31 Dec
% 2020 2019
CET1 capital requirement including buffer requirements 7.1 8.9
of which minimum CET1 requirement 4.5 4.5
of which capital conservation buffer 2.5 2.5
of which countercyclical capital buffer 0.1 1.9
CET 1 capital available to meet buffer requirement [2)] 21.7 23.3
Leverage ratio 31 Dec 31 Dec
2020 2019
Tier 1 Capital, SEKm 102 232 106 458
Total exposure, SEKm 1 263 146 1 086 489
Leverage ratio, % 8.1 9.8
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1) Buffer requirement according to Swedish implementation of CRD V.

2) CET1 capital ratio as reported, less minimum requirement of 4.5% (excluding buffer requirements) and less any CET1 items used to meet the Tier 1 and total capital requirements.

Capital requirements1)	31 Dec	31 Dec	31 Dec	31 Dec
SEKm /%	2020	2019	2020	2019
Capital requirement Pillar 1	37 977	40 307	10.6	12.4
of which Buffer requirements2)	9 315	14 302	2.6	4.4
Total capital requirement Pillar 23)	8 035	5 265	2.2	1.6
Total capital requirement Pillar 1 and 2	46 012	45 572	12.8	14.0
Own funds	118 091	122 453

1) Swedbank's calculation based on the SFSA's announced capital requirements, including Pillar 2 requirements.

2) Buffer requirements includes capital conservation buffer and countercyclical capital buffer.

3) Individual Pillar 2 requirement according to decision from SFSA SREP 2020.

Swedbank – Year-end report 2020

Exposure amount, Risk exposure amount and Minimum capital requirement, parent company

Exposure amount, Risk exposure amount and Minimum capital requirement, parent company
31 Dec 2020 SEKm	Exposure amount Risk exposure amount Minimum capital requirement
Credit risks, STD Regional governments or local authorities exposures Public sector entities exposures Multilateral development banks exposures Institutional exposures Corporate exposures Retail exposures Exposures secured by mortgages on immovable property Equity exposures Other items Credit risks, IRB Central government or central banks exposures Institutional exposures Corporate exposures Retail exposures of which mortgage lending of which other lending Non-credit obligation Credit risks, Default fund contribution Settlement risks Market risks Trading book of which VaR and SVaR of which risks outside VaR and SVaR FX risk other operations Credit value adjustment Operational risks Standardised approach Additional risk exposure amount, Article 3 CRR Additional risk exposure amount, Article 458 CRR	1 014 105 85 062 6 805 63 13 1 781 150 12 3 660 0 0 936 638 6 894 551 3 301 3 178 254 211 157 13 2 956 1 035 83 66 472 73 635 5 891 23 0 0 934 464 189 909 15 193 338 782 4 619 370 60 331 12 420 994 435 697 147 231 11 778 92 273 18 455 1 476 27 809 2 291 183 64 464 16 164 1 293 7 381 7 184 575 0 556 44 0 0 0 0 17 004 1 360 0 16 868 1 349 0 13 722 1 097 0 3 146 252 0 136 11 21 014 4 362 349 0 39 068 3 125 0 39 068 3 125 0 17 658 1 413 0 4659 373
Total	1 969 583 358 278 28 662

Exposure amount, Risk exposure amount and Minimum capital requirement, parent company 31 Dec 2019 SEKm	Exposure amount Risk exposure amount Minimum capital requirement
Credit risks, STD Central government or central banks exposures Regional governments or local authorities exposures Public sector entities exposures Multilateral development banks exposures Institutional exposures Corporate exposures Retail exposures Exposures secured by mortgages on immovable property Exposures in default Equity exposures Other items Credit risks, IRB Central government or central banks exposures Institutional exposures Corporate exposures Retail exposures of which mortgage lending of which other lending Non-credit obligation Credit risks, Default fund contribution Settlement risks Market risks Trading book of which VaR and SVaR of which risks outside VaR and SVaR FX risk other operations Credit value adjustment Operational risks Standardised approach Additional risk exposure amount, Article 3 CRR	1 065 332 80 766 6 461 6 0 0 28 6 0 721 104 8 1 970 3 0 987 277 820 66 4 359 4 143 331 247 184 15 3 598 1 259 101 0 0 0 67 123 74 247 5 940 3 0 0 860 044 158 540 12 683 266 658 3 529 282 56 956 10 645 852 442 780 123 035 9 843 90 955 19 056 1 524 10 556 2 125 170 80 399 16 931 1 354 2 695 2 275 182 0 584 47 0 0 0 0 16 207 1 297 0 16 048 1 284 0 12 701 1 016 0 3 347 268 0 159 13 17 628 4 644 372 0 36 815 2 945 0 36 815 2 945 0 26 986 2 159
Additional risk exposure amount, Article 458 CRR	0 514 41
Total	1 943 004 325 056 26 004

Swedbank – Year-end report 2020

Alternative performance measures

Swedbank prepares its financial statements in accordance with IFRS as adopted by the EU, as set out in Note 1. The interim report includes a number of alternative performance measures, which exclude certain items that management believes are not representative of the underlying/ongoing performance of the business. Therefore the alternative performance measures provide more comparative information between periods. Management believes that inclusion of these measures provides information to the readers that enable comparability between periods.

Measure and definition	Purpose
Net investment margin before trading interest is deducted
Calculated as Net interest income before trading-related interest is deducted, in	Considers all interest income and
relation to average total assets. The average is calculated using month-end	interest expense, independent of
figures1),including the prior year end. The nearest IFRS measure is Net interest	how it has been presented in the
income and can be reconciled in Note 5.	income statement.
Allocated equity
Allocated equity is the operating segment’s equity measure and is not directly	Used by Group management for
required by IFRS. The Group’s equity attributable to shareholders is allocated	internal governance and operating
to each operating segment based on capital adequacy rules and estimated	segment performance management
capital requirements based on the bank’s internal Capital Adequacy	purposes.
Assessment Process (ICAAP). The allocated equity amounts per operating
segment are reconciled to the Group Total equity, the nearest IFRS measure,
in Note 4.
Return on allocated equity
Calculated based on profit for the period for the operating segment (operating	Used by Group management for
profit less estimated tax and non–controlling interests), in relation to average	internal governance and operating
allocated equity for the operating segment. The average is calculated using	segment performance management
month-end figures1),including the prior year end. The allocated equity amounts	purposes.
per operating segment are reconciled to the Group Total equity, the nearest
IFRS measure, in Note 4.
Income statement measures excluding expenses for the administrative fine
Amount related to expenses is presented excluding expenses for administrative	Provides comparability of figures
fine. The amounts are reconciled to the relevant IFRS income statement lines on	between reporting periods.

Amount related to expenses is presented excluding expenses for administrative fine. The amounts are reconciled to the relevant IFRS income statement lines on page 6.

Return on equity excluding expenses for administrative fine

Represents profit for the period allocated to shareholders excluding expenses for the administrative fine in relation to average Equity attributable to shareholders’ of the parent company. The average is calculated using month-end figures[1)] , including the prior year end. Profit for the period allocated to shareholders excluding expenses for administrative fine are reconciled to Profit for the period allocated to shareholders, the nearest IFRS measure, on page 6.

Provides comparability of figures between reporting periods.

Cost/Income ratio excluding expenses for administrative fine

Total expenses excluding expenses related to administrative fine in relation to total income. Total expenses excluding expense for administrative fine is reconciled to Total expenses, the nearest IFRS measure, on page 6.

Provides comparability of figures between reporting periods.

Adjusted effective tax rate

The adjusted effective tax rate is calculated as the Tax expense excluding tax income for previous years in relation to Operating profit excluding the administrative fine. For 2020, tax expense excluding tax income for previous years of SEK 4 149m reconciles to the nearest IFRS measure, Tax expense of SEK 3 851m, with the previous years’ tax income amount of SEK 298m. Operating profit excluding expense for administrative fine is reconciled on page 6.

Provides comparability and understanding of the Group’s effective tax rate on underlying operations between the reporting periods.

Swedbank – Year-end report 2020

Other alternative performance measures

These measures are defined in Fact book on page 78 and are calculated from the financial statements without adjustment.

Share of Stage 2 loans, gross

Used by Group management for internal governance and operating segment performance management purposes.

Share of Stage 3 loans, gross
Cost/Income ratio
Equity per share
Credit Impairment ratio
Credit impairment provision ratio Stage 1 loans
Credit impairment provision ratio Stage 2 loans
Credit impairment provision ratio Stage 3 loans
Return on equity[1)]
Total credit impairment provision ratio
Loan/Deposit ratio

1) The month-end figures used in the calculation of the average can be found on page 71 of the Fact book.

Swedbank – Year-end report 2020

Signatures of the Board of Directors and the President

The Board of Directors and the President hereby certify that the Interim report for January-December 2020 provides a fair and accurate overview of the operations, position and results of the parent company and the Group and describes the significant risks and uncertainties faced by the parent company and the companies in the Group.

Stockholm, 31 January 2021

Göran Persson Chair

Bo Bengtsson Göran Bengtsson Hans Eckerström Kerstin Hermansson Board Member Board Member Board Member Board Member

Bengt Erik Lindgren Josefin Lindstrand Bo Magnusson Anna Mossberg Board Member Board Member Board Member Board Member Biljana Pehrsson Board Member Roger Ljung Åke Skoglund Board Member Board Member Employee Representative Employee Representative

Jens Henriksson President and CEO

Review report

Introduction

We have reviewed the condensed interim financial information (interim report) of Swedbank AB as of 31 December 2020 and the twelve-month period then ended. The Board of Directors and the CEO are responsible for the preparation and presentation of the interim financial information in accordance with IAS 34 and the Annual accounts act for credit institutions and securities companies. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Annual accounts act for credit institutions and securities companies, regarding the Group, and with the Annual accounts act for credit institutions and securities companies, regarding the Parent Company.

Stockholm, 31 January 2020

PricewaterhouseCoopers AB

Anneli Granqvist Martin By Authorised Public Accountant Authorised Public Accountant Auditor in charge

Swedbank – Year-end report 2020

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Publication of financial information

The Group’s financial reports can be found on www.swedbank.com/ir

Financial calendar

Extraordinary General Meeting 15 February 2021 Annual report 2020 25 February 2021 Annual General Meeting 25 March 2021 Interim report for the first quarter 2021 22 April 2021 Interim report for the second quarter 2021 16 July 2021

For further information, please contact:

Jens Henriksson Anders Karlsson Annie Ho President and CEO CFO Head of Investor Relations Telephone +46 8 585 934 82 Telephone +46 8 585 938 75 Telephone +46 70 343 7815

Erik Ljungberg Unni Jerndal Head of Group Communications Press Officer and Sustainability Telephone +46 8 585 938 69 Telephone 08 +46 73-988 35 57 +46 73 092 11 80

Information on Swedbank’s strategy, values and share is also available on www.swedbank.com

Swedbank AB (publ)

Registration no. 502017-7753 Landsvägen 40 SE-105 34 Stockholm, Sweden Telephone +46 8 585 900 00 www.swedbank.com [email protected]

Swedbank – Year-end report 2020

AI assistant

Swedbank A — Interim / Quarterly Report 2020

2978_10-k_2021-02-01_0cf21052-fe34-45f9-83d0-cbd8b79f76eb.pdf

Q4 2020

Interim report for the fourth quarter 2020

“A stable quarter in difficult times”

CEO Comment

Anti-money laundering measures

A stable quarter in difficult times

Advice and transition

Dividend

Result and capital

Sustainability

Strategic direction

Table of contents

Financial overview

Overview

Market

Important to note

Group development

Result fourth quarter 2020 compared with third quarter 2020

Result full-year 2020 compared with full-year 2019

Volume trend by product area

Lending

Payments

Savings

Credit and asset quality

Operational risks

Funding and liquidity

Ratings

Capital and capital adequacy

Capital ratio and capital requirement

Change in Common Equity Tier 1 capital, Swedbank consolidated situation

Change in REA, Swedbank consolidated situation

Future capital regulations

Other events

Actions to remedy historical shortcomings in Estonia

Action plan

Review of corporate governance

Investigations

Work going forward

Events after 31 December 2020

Swedish Banking

Income statement

Result

Business development

Baltic Banking

Income statement

Result

Full-year 2020 compared with full-year 2019

Business development

Large Corporates & Institutions

Income statement

Result

Fourth quarter 2020 compared with third quarter 2020

Full-year 2020 compared with full-year 2019

Business development

Group Functions & Other

Income statement

Result

Fourth quarter 2020 compared with third quarter 2020

Eliminations

Income statement, condensed

Statement of comprehensive income, condensed

Balance sheet, condensed

Statement of changes in equity, condensed

Cash flow statement, condensed

2020

2019

Note 1 Accounting policies

Other changes in accounting regulations

Standards issued but not yet adopted

Changed presentation of cash flow statement

Note 2 Critical accounting estimates

Note 3 Changes in the Group structure

Note 4 Operating segments (business areas)

Operating segments accounting policies

Note 5 Net interest income

Note 6 Net commission income

Note 7 Net gains and losses on financial items

Swedbank A Interim / Quarterly Report 2020