Swedbank A

Investor Presentation • Dec 6, 2022

Swedbank's Investor Day: The Road to 15 per cent Return on Equity

Swedbank's Investor Day: The Road to 15 per cent Return on Equity

Today, Swedbank will present the business priorities and financial plan for

reaching 15 per cent return on equity in 2025 at a digital Investor Day. The

live webcast starts at 10.00 CET.

"A sustainable bank is a profitable bank. Our target is therefore to reach a 15

per cent return on equity. We will reach that target by growing income faster

than costs, maintaining a low-risk profile and reaching a CET1 capital buffer of

200 basis points in 2025 and onwards. With strong fundamentals and clear

business priorities, we make Swedbank 15/25 a reality", says President and CEO

Jens Henriksson.

Business priorities

Swedbank strives to have the best full-service offering. To enhance the customer

experience, we will improve our availability, increase the frequency and quality

of advice, and make it easier to do business with us via faster processes. We

have four priorities for the private and corporate segments in Sweden, Estonia,

Latvia, and Lithuania, in line with our core business.

Leverage proven business model and pricing strategy

We serve more than 7.5 million customers across our home markets. Thanks to a

high degree of digital activation, we can give individual offers and price

volumes in an automated and efficient way, while striking a long-term balance

between pricing, competition, and profitability. In the Baltic countries, where

mortgage penetration is relatively low, we are supporting the need for property

modernisation.

Grow share of wallet for existing customers

We will help our customers find the proper offering in our wide range of

products and services. To enhance the customer experience and support financial

health, we will become more proactive towards our customers and improve our

advisory capabilities. In the Baltic region, we also continue to contribute to

building a long-term savings culture by making non-deposit savings affordable

and available to retail customers.

Grow business in prioritised segments

Through improved service and advice across the bank, we will increase business

volumes in the segments where we have identified possibilities to grow market

share. Large Corporates and Institutions and Swedish Banking will jointly

prioritise midsized corporates by aligning corporate business capabilities in

Sweden. We will also grow corporate lending in Latvia and Lithuania and support

the green transition in all three Baltic countries.

Improve availability and operational excellence

We will continue to invest in the quality, frequency, and speed of customer

service and advice by introducing a new communication platform, and a new

advisory platform, as well as further automating onboarding and lending

processes. Shorter lead times, less time spent on administration and more time

spent on service and advice will improve customer satisfaction, drive business

growth, and reduce costs.

Focus on core business

During 2022, we have made a strategic review of our international presence to

make it sharper and more focused, in line with how we work with the savings

banks in Sweden. The review has resulted in a new partnership with Sparebank1 SR

-Bank in Norway, as communicated in Q2. In Denmark, we will close our business

and work with Sydbank as a partner for corporate customers. The Finnish business

has been deemed the right size. Our offices in Shanghai, China, and New York

City, US, will remain, while the South African rep office will close.

We have concluded the strategic review of our merchant payment business. The

market is characterised by increased competition, disruption, and fast-moving

technological development. We will continue to develop the profitable Baltic

merchant payment business. For the Nordic business, we have improved our

customer offerings and now our focus is on making the business profitable.

Financial plan

The KPIs and assumptions supporting a return on equity of 15 per cent in 2025

include:

Supporting KPIs

· Cost/Income ratio of 0.40, supported by strict cost control. Inflationary

headwinds shall be mitigated by efficiency gains from automating internal

processes and structural cost reductions.

· CET1 capital management buffer to regulatory requirement of 100-300 basis

points, aiming to reach a buffer of 200 basis points in 2025 and onwards.

Additional assumptions

· Average annual income growth of 3 percentage points higher than annual

average cost growth, driven by our pricing strategy and gearing towards a

normalised rate environment, growing lending volumes, commissions, and other

income as outlined by the business priorities.

· Credit impairment ratio of 7 basis points in 2025, derived from the ten-year

historical average, which includes impairments in the shipping and offshore

portfolio. Excluding those impairments, the ten-year average is 3 basis points.

Dividend policy

· Annual dividend policy of 50 per cent payout ratio maintained.

· In addition to ordinary dividends, by 2025, we expect to have generated

around 300 basis points of capital in excess of our target management buffer of

200 basis points.

· Any excess capital will be distributed to shareholders.

· The timing and size of capital distributions and a potential reassessment of

dividend policy over the course of the plan are subject to further clarity on

capital needs.

"In times like these, it is of uttermost importance that we have sustainable and

thus profitable banks. By being profitable we contribute to a financially sound

and sustainable society. By being profitable we can support our customers,

distribute dividends to our shareholders, continue to develop the bank, and

contribute to financial stability. For our customers, our employees and for

society at large", says Jens Henriksson.

Webcast and presentation

The live webcast starts at 10.00 CET and can be accessed here (http://creo

-live.creomediamanager.com/09cfd163-38c7-4d31-95e2-da03a6598ee7). Presentations

will be given by Jens Henriksson (President and CEO), Anders Karlsson (CFO),

Mikael Björknert (Head of Swedish Banking), Pål Bergström (Head of Large

Corporates and Institutions), Jon Lidefelt (Head of Baltic Banking) and Kerstin

Winlöf (Head of Group Products and Advice). The presentations will be followed

by a Q&A session where Rolf Marquardt (CRO) also will participate.

The presentation material will be available on

swedbank.com/ir (https://www.swedbank.com/investor-relations.html) at around

9.30 CET. A webcast recording will be published on the same website after the

event.

Contact:

Annie Ho

Unni Jerndal

Head of Investor Relations

Senior Advisor

annie.ho@swedbank.com

unni.jerndal@swedbank.com

+46 70 343 7815

+46 73 092 1180

Disclaimer

Certain statements made in this press release are forward looking statements.

Such statements are based on current expectations and are subject to several

risks and uncertainties that could cause actual results and performance to

differ materially from any expected future results or performance, express or

implied, by the forward-looking statements.

Factors that might cause forward looking statements to differ materially from

actual results include, among other things, regulatory and economic factors.

Swedbank AB assumes no responsibility to update any of the forward-looking

statements contained herein.

No representation or warranty, express or implied, is made or given by or on

behalf of Swedbank AB or its directors, officers or employees or any other

person as to the accuracy, completeness or fairness of the information or

opinions contained in this press release.

None of Swedbank AB or any of its directors, officers or employees nor any other

person accepts any liability whatsoever for any loss howsoever arising from any

use of this press release or its contents or otherwise arising in connection

therewith.

This press release does not constitute or form part of any offer or invitation

to sell or issue, or any solicitation of any offer to purchase or subscribe for,

any securities of Swedbank AB, nor shall it or any part of it nor the fact of

its distribution form the basis of, or be relied on in connection with, any

contract or investment decision.

Swedbank empowers the many people and businesses to create a better future. Our

vision is a financially sound and sustainable society. Swedbank is the leading

bank with over 7 million retail customers and 600 000 corporate customers in our

four home markets Sweden, Estonia, Latvia and Lithuania. Swedbank is also

present in other Nordic countries, the U.S. and China. Together we make your

financial life easier. Find out more: www.swedbank.com