Interim report Q2 2008

17 July 2008
Jan Lidén
President and CEO
Continued solid results
• Continued solid results in all
business areas
– Net profit for the period Jan-Jun
increased by 8 percent to
SEK 6 504m (6 022)
• Conversion to covered bonds on
21 April – decreased spreads,
increased liquidity and facilitated
funding
• New capital adequacy objective
for full Basel 2 – Tier 1 capital
ratio is to be 8.5-9.0 percent
• Credit quality remains good and in
line with expectations
• The macro environment in the
Baltic states has deteriorated
compared with expectations in
Q1, affected by a weaker
European economy
• Net gains and losses on financial
items were positively affected by
unrealized valuation effects –
valuation volatility expected to
decrease as from Q3 2008.
(2)
 H1 2008 – best half-year so far

Swedish Banking Baltic Banking International Banking Swedbank Markets

SEKm SEKm
SEKm SEKm

1 300 450
150
2,000 400
1 250
125 350
1 200
300
1,500 1 150
100 250
1 100
200
1 050 75
1,000 150
1 000 100
50
950 50
500 900 0
25
Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
07 07 07 07 08 08 Q1 Q2 Q3 Q4 Q1 Q2
07 07 07 07 08 08 06 06 06 07 07 07 07 08 08
07 07 07 07 08 08

Profit for the period Profit for the period of which First Securities
Profit for the period
Profit for the period

(3)
Initiatives in line with our strategy
Sweden
• Structural initiatives –
operation and branches
• Channel management
• Corporate market and
metropolitan areas
• Private banking, life and
pension, environmentally
friendly products and services
Stable base
Share of lending: 80 %
Baltics
• Productivity improvement
• Cross-border capabilities
• IT management and
development
• Corporate sector – leverage on
pan-Baltic position
• Broaden customer offerings
• Re-branding starting in autumn
Growth and
experience
Share of lending: 16 %
Ukraine and Russia
• Build-up of critical functions
and growth management
• Grow distribution network -
ATMs, branches and agency
network
• Broaden product range
• Re-branding completed
• Capture future growth
Future growth and
profitability
Share of lending: 2 %
(4)
 A slowing Swedish economy
• The Swedish economy has performed better than the EU average. However, GDP growth,
CPI and other indicators show that the Swedish economy will grow more slowly in the next few
quarters
• Higher inflation, rising interest rates and weaker disposable income for households are
expected to lead to weakening household consumption and credit growth.

Real GDP growth CPI growth

3.0% 4.0%

2.5% 3.0%
2.0%
2.0%
1.5%
1.0%
1.0%
2007 2008F 2009F 0.0%
2007 2008F 2009F
Sweden Euro-zone Sweden Euro-zone
(5)

Source: Swedbank, Economic Secretariat

 Baltic macro development weaker than expected
• Economic slowdown in Estonia continues: GDP growth will slow to about 2% in 2008 and
recover to 4% in 2009 if global economic developments improve and price growth slows
• In Latvia growth will slow to about 1.3% in 2008 and 2009, the bottom of the cycle is expected
to be in winter 2008/2009
• The slowdown in Lithuania is expected to be modest: growth of about 6.5% is expected in
2008 and about 5.5% in 2009
• Export growth remains relatively strong, while weak domestic demand dampens imports.
Trade and current account deficits are falling. The CPI has started to show signs of a
slowdown, but external risks are high (oil, food).
Real GDP growth CPI growth
14% 16%
12% 14%
10% 12%
8% 10%
6% 8%
4% 6%
2% 4%
0% 2%
2005 2006 2007 2008F 2009F 2005 2006 2007 2008F 2009F
Est Lat Lit Est Lat Lit
(6)

Source: Hansabank Markets

Credit quality, Group
SEKm %
600 0.60
500 0.50 Loan losses, net
400 0.40
300 0.30 Loan loss ratio
200 0.20
*Loan losses, net = write-offs +
100 0.10 provisions - recoveries + change in
0 0.00 property taken over
-100 -0.10

Q2-07
Q1-05
Q2-05
Q3-05
Q4-05
Q1-06
Q2-06
Q3-06
Q4-06
Q1-07

Q3-07
Q4-07
Q1-08
Q2-08
Q4-03
Q1-04
Q2-04
Q3-04
Q4-04
Q1-03
Q2-03
Q3-03

-200 -0.20

SEKm %
6,000 0.50
0.45
5,000 0.40 Impaired loans
4,000 0.35
0.30
3,000 0.25 Share of impaired loans
0.20
2,000 0.15
1,000 0.10
0.05
0 Q4-07 0.00
Q1-08
Q2-08
Q3-07
Q3-05
Q4-05
Q1-06
Q2-06
Q3-06
Q4-06
Q1-07
Q2-07
Q3-03
Q4-03
Q1-04
Q2-04
Q3-04
Q4-04
Q1-05
Q2-05

(7)
 Baltic banking overdues vs market
Estonia - overdue over 30 days / current Estonia - overdue over 60 days / current
portfolio portfolio

3.0% 2.0%
2.5%
2.0% 1.5%
1.5% 1.0%
1.0%
0.5% 0.5%
0.0% 0.0%
31.12.05

30.06.06

31.12.06

30.06.07

31.12.07

30.04.08

31.12.05

30.06.06

31.12.06

30.06.07

31.12.07

30.04.08
Rest of the market HB Bank Rest of the market HB Bank

Latvia - overdue over 30 days / current portfolio

Latvia - overdue over 90 days / current portfolio
5%
3,0%
4%
2,5%
3% 2,0%
2% 1,5%
1% 1,0%
0% 0,5%
0,0%
31.12.04

30.06.05

31.12.05

30.06.06

31.12.06

30.06.07

31.12.07

31.12.04

30.06.05

31.12.05

30.06.06

31.12.06

30.06.07

31.12.07
Rest of the market HBA Bank
Rest of the market HBA Bank (8)

Source: Swedbank, Bank of Estonia, and Financial and Capital Market Commission (Latvia)
Credit quality, Baltic Banking
Loan loss ratio, net*

Q4 07 Q1 08 Q2 08 H1 08
Estonia 0.58% 0.38% 0.55% 0.48%
Latvia 0.63% 0.53% 0.73% 0.64%
Lithuania 0.10% 0.25% 0.30% 0.28%

Group level provision adjustment -0.18%

Baltic Banking 0.28% 0.39% 0.54% 0.47%
*Loan loss ratio, net = (changes in provisions + net write-offs) /
credit portfolio at the beginning of the period

Overdue ratio (more than 60 days)*

Q4 07 Q1 08 Q2 08
Corporate 0.65% 0.79% 1.24%
Private 0.75% 0.92% 1.11%
Baltic Banking 0.71% 0.86% 1.20%
*Overdue ratio (more than 60 days) = volume of loans more
than 60 days overdue /12 month-old credit portfolio
(9)
Accounting and valuation effects

Q2 Q1 Q4
Accounting and valuation effects, SEKm 2008 2008 2007

Swedbank Markets 0 – 187 – 40

Group Treasury, intra-group lending 419 – 253 20

Swedbank Mortgage 29 – 22 66

Group Treasury, liquidity portfolio –4 53 –5

(10)
 Swedish Banking
SEKm C/I-ratio
• Continued strong corporate lending
growth
5,000 0.7 • Mortgage lending growth has started
to decline
4,500
0.6 • Overall stable lending margins
4,000
– Back book mortgage margin stabilizing.
3,500 0.5 New lending shows increasing margin
3,000 – Corporate margins are increasing
0.4 slowly
2,500
0.3 • Deposit margins decreased as a result
2,000
of mix effects
1,500 0.2 • Continued increase in card volumes
1,000 • Capital gain of SEK 101m from sale of
0.1
500 MasterCard shares
0 0.0 • Continued strong credit quality
Q1 Q2 Q3 Q4 Q1 Q2 – Stable low LTV ratio at 43% in
07 07 07 07 08 08 Swedbank Mortgage
– Only 1.5% of the lending in Swedbank
Mortgage has a LTV ratio over 75%.
Income Costs C/I-ratio

(11)
 Baltic Banking Operations

SEKm C/I-ratio • Strong and stable income

2,400 0.5 • Lending margins decreased as a
2,200
2,000
result of higher funding costs
0.4
1,800 • Deposit margins affected
1,600
1,400 0.3 negatively by decreasing local
1,200 interest rates and increased
1,000 0.2 competition
800
600 • Capital gain of SEK 66m from the
0.1
400 sale of PKK
200
0 0.0 • Profit based staff costs have been
Q1 Q2 Q3 Q4 Q1 Q2 reduced by SEK 185m owing to
07 07 07 07 08 08
lower provision requirements.
Income Costs C/I-ratio

C/I-ratio excluding one-offs (12)

 International Banking
• Annika Wijkström new head of
SEKm
International Banking
• Strong net interest income development
100
• Continued strong economic growth in
Ukraine and Russia but with high inflation
75 • Ukrainian Banking operations
– Continued high lending growth
– Higher costs due to operational excellence
50 projects and profit-based staff costs
• Russian Banking
– Ownership transferred from Hansabank to
25
Swedbank
– Raimo Valo new CEO
0 – Recovered tax on lease assets of SEK 19m
Q1 Q2 Q3 Q4 Q1 Q2 • Strong lending growth in the Nordic
07 07 07 07 08 08 branches.

International Banking, profit for the period

of which Russian Banking
of which Ukrainian Banking Operations
(13)
 Swedbank Markets
SEKm
450 • Magnus Geeber new head of
400 Swedbank Markets
350 • Good development in fixed
300 income and FX trading despite
250 difficult conditions at times
200
• Stable market share in equity
150
trading and structured products
100
but lower market activity
50
0 • Increased activity in Project and
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Corporate Finance compared with
06 06 06 07 07 07 07 08 08
Q1
of which First Securities • Good performance in First
Profit for the period attributable to shareholders of Swedbank
Securities after a slow start to the
year.
(14)
Swedbank lending and funding
Lending to the public, SEK 1,169bn
Russia Ukraine
1% 1%
Nordic; 3%
Lithuania
5%
Latvia
Swedbank 5% Swedbank
Group, excl. Estonia
7%
Mortgage
Swedbank Swedbank
SEK 573bn
Mortgage Mortgage
49%
- Exclusively Swedish
SEK 596bn mortgage lending
Sweden
30%

Distribution of Net Funding Need

Swedbank Treasury (excluding Mortgage) Swedbank Mortgage
Funding Equity
12% 5%

Commercial
• Large deposits Papers
Swedbank Mortgage
Equity
• Liquidity reserves 8% 22% constitutes a larger part of
Swedbank Group’s balance
• Net lender in the interbank market sheet than other financial
• Liquidity limits – conservative view institutions

Covered Bonds (15)

Deposits 73%
80%
New capital adequacy target – mid-term
• New target:
The capital ratios will at least meet the level that at any given time is
considered appropriate to maintain sustainable financial stability and
develop operations. Considering full effect of Basel 2, the Tier 1 capital ratio
is to be 8.5-9.0%.
• Swedbank is currently well capitalized given the current risk profile and the
risk development under an adverse scenario
• Swedbank is currently capitalized in line with European peers in full Basel 2
• In relative terms Swedbank has a low risk business model with a
predominance of Swedish mortgage business and low counterparty risks,
which indicates a lower than average Tier 1 capital ratio. Growing presence
in Eastern Europe indicates higher Tier 1 capital ratio

(16)
 Group results
Mikael Inglander
CFO

(17)
 Prof it for the period, SEKm Earnings per share, SEK Return on equity, % Tier 1 capital rat io, %

4 000 8.0 25.0 10.0

3 500 7.0 9.0
20.0 8.0
3 000 6.0
7.0
2 500 5.0 15.0 6.0
2 000 4.0 5.0
1500 3.0 10.0 4.0
3.0
1000 2.0
5.0 2.0
500 1.0 1.0
0 0.0 0.0 0.0
Q2- Q3- Q4- Q1- Q2- Q2- Q3- Q4- Q1- Q2- Q2- Q3- Q4- Q1- Q2- Q2- Q3- Q4- Q1- Q2-
2007 2007 2007 2008 2008 2007 2007 2007 2008 2008 2007 2007 2007 2008 2008 2007 2007 2007 2008 2008

(18)
Income statement, Group
Q2 Q1 Q2
SEKm 2008 2008 % 2007 %
Net interest income 5,295 5,241 1 4,591 15
Net commission income 2,374 2,180 9 2,552 –7
Net gains/losses on financial items at fair value 1,141 75 579 97
Other income 623 950 – 34 504 24
Total income 9,433 8,446 12 8,226 15
Staff costs 2,268 2,311 –2 2,016 13
Profit-based staff costs 185 268 – 31 409 – 55
Other expenses 1,977 1,861 6 1,699 16
Total expenses 4,430 4,440 –0 4,124 7
Profit before loan losses 5,003 4,006 25 4,102 22
Loan losses, net 423 288 47 102
Operating profit 4,580 3,718 23 4,000 15
Tax 935 805 16 856 9
Profit for the period 3,645 2,913 25 3,144 16
Attributable to shareholders of Swedbank 3,604 2,900 24 3,112 16

(19)
 4,600
4,800
5,000
5,200
5,400
5,600
Net interest income SEKm
Q1-08

5,241
Swedish Banking

11
Baltic Banking Operations
44

Baltic Banking
1

Investment

International
72

Banking

Swedbank
187

Markets

Asset management and

2
Net interest income Q2-08 (Q1-08)

Insurance

Shared Services and other

151

Net interest income

Q2-08
5,295

(20)
Swedish Banking, change in net interest income

Q2 2008 Q2 2008
SEKm vs Q1 2008 vs Q2 2007
Net interest income Q1 2008 2,982
Net interest income Q2 2007 2,905
Changes:
Higher lending volumes 54 227
Unchanged lending margins 0.0
Decreased lending margins – 244
Higher deposit volumes 34 140
Decreased deposit margins – 44
Higher deposit margins 79
Other changes – 55 – 136
Total change – 11 66
Net interest income Q2 2008 2,971 2,971

(21)
Baltic Banking, change in net interest income
Q2 2008 Q2 2008
SEKm vs Q1 2008 vs Q2 2007
Net interest income Q1 2008 1,575
Net interest income Q2 2007 1,377
Changes:
Higher lending volumes 33 214
Decreased lending margins -92 -108
FX-effects, lending -5 11
Higher deposit volumes 14 78
Decreased deposit margins -76 -127
FX-effects, deposits -3 8
Other changes 85 78
Total change – 44 154
Net interest income Q2 2008 1,531 1,531

(22)
Net commission income, Group
Q2 Q1 Q2
SEKm 2008 2008 % 2007 %
Payments 839 793 6 743 13
Lending 199 136 46 178 12
Brokerage 188 213 – 12 242 – 22
Asset management 945 950 –1 1,126 – 16
Insurance 71 68 5 80 – 11
Corporate finance 177 19 172 3
Other – 45 1 11
Total net commissions 2,374 2,180 9 2,552 –7

(23)
 Expenses
Q2 Q1 Q2
SEKm 2008 2008 % 2007 %
Swedish Banking 2,239 2,255 – 1 2,330 –4
Baltic Banking 795 899 – 12 851 –7
International Banking 349 309 13 113
of which Ukrainian Banking 197 150 31
Swedbank Markets 585 456 28 499 17
Asset Management & Insurance 206 253 – 19 239 – 14
Other 256 268 – 4 92
Total expenses 4,430 4,440 – 0 4,124 7
of which staff costs in:
Swedish Banking 1,017 1,099 – 7 1,084 –6
Baltic Banking 343* 522 – 34 495 – 31
International Banking 177 157 13 64
Swedbank Markets 390 258 51 318 23
Asset Management & Insurance 98 110 – 11 102 –4

(24)
* Baltic Banking profit based staff costs have been reduced
by SEK 185m owing to lower provision requirements.
Business areas
Swedish Baltic International Swedbank Asset
Q2 08 vs Q2 07 Banking Banking Banking Markets Mgmt
SEKm Q2 08 % Q2 08 % Q2 08 % Q2 08 % Q2 08 %
Net interest income 2,971 2 1,531 11 441 476 61 27 13
Net commission income 1,057 -5 478 0 55 38 352 –8 432 – 15
Other income 425 12 405 18 132 138 – 29 68 33
Total income 4,453 1 2,414 10 628 966 11 527 – 10
Staff costs 1,017 – 6 343 – 31 177 390 23 98 – 4
Other expenses 1,222 – 2 452 27 172 198 8 108 – 21
Total expenses 2,239 – 4 795 – 7 349 585 17 206 – 14
Profit before loan losses 2,214 7 1,619 20 279 381 2 321 –7
Loan losses 85 245 93 0 0
Operating profit 2,129 4 1,374 8 186 381 3 321 -7
Net shareholders' profit 1,601 8 1,272 10 147 235 0 244 –6
Return on allocated
equity, % 22.1 34.8 7.8 23.3 44.7

(25)
Key figures
Jan-Jun Jan-Jun
2008 2007
Return on equity, % 18.7 19.5
Earnings per share, SEK 12.62 11.68
Equity per share, SEK 135.81 120.23
C/I ratio before loan losses 0.50 0.50
Loan loss ratio, net, % 0.12 0.03
Share of impaired loans, % 0.20 0.08
Tier 1 capital ratio, new rules, % 8.8 9.0
Tier 1 capital ratio, transition rules, % 6.7 6.7
Capital adequacy ratio, new rules, % 12.6 13.4

(26)
Continued solid results
• Continued solid results in all
business areas
– Net profit for the period Jan-Jun
increased by 8 percent to
SEK 6 504m (6 022)
• Conversion to covered bonds on
21 April – decreased spreads,
increased liquidity and facilitated
funding
• New capital adequacy objective
for full Basel 2 – Tier 1 capital
ratio is to be 8.5-9.0 percent
• Credit quality remains good and in
line with expectations
• The macro environment in the
Baltic states has deteriorated
compared with expectations in
Q1, affected by a weaker
European economy
• Net gains and losses on financial
items were positively affected by
unrealized valuation effects –
valuation volatility expected to
decrease as from Q3 2008.
(27)
Appendix

(28)
Exposure FAQ
• No direct US Sub-Prime exposure
– Minimal indirect exposure through investments of EUR 23.4m in bonds issued by US mortgage
institutions who, in their turn, have exposures towards US sub-prime
• Total exposure to structured credits is minimal
– Total commitments towards conduits or SIVs is EUR 127m
• The exposure has originated when reshaping an existing loan in order to gain better collateral,
lower risk and higher margin
– Negligible exposure to CDOs
• Swedbank holds a very small CDO trading stock for client trades in CDOs which we have issued
ourselves with mainly large Caps as underlying risk
• Total holdings were EUR 21m at end Q2
– Exposure to Mortgage Backed Securities is about EUR 648m
• European Aaa and mainly residential (RMBS)
• Held for EUR liquidity purposes and client trading
• Hedge fund exposure is about EUR 150m, all collateralized
• Exposure towards private equity firms and their target companies is about
EUR 1 375m in total
– Nordic related LBOs
• In total, the above mentioned exposures represent less than 1.5% of total
assets
(29)
 Main Baltic macro indicators

Real GDP growth CPI growth

15%
20%

10% 15%

10%
5%
5%

0% 0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
05 05 05 05 06 06 06 06 07 07 07 07 08 05 05 05 05 06 06 06 06 07 07 07 07 08 08
Est Lat Lit
Est Lat Lit

Consumer confidence Number of real-estate transactions and average

20 3 000 sales price 2 000
10 2 400 1 600
0 # of transactions
1 800 1 200
-10

EUR/m2
1 200 800
-20 jan- maj- sep- jan- maj- sep- jan- maj- sep- jan- maj- 600 400
05 05 05 06 06 06 07 07 07 08 08
-30 0 0
Estonia Latvia Lithuania jan- maj- sep- jan- maj- sep- jan- maj- sep- jan- maj-
05 05 05 06 06 06 07 07 07 08 08
(30)
Tallinn, # of transactions Riga, # of transactions Vilnius, # of transactions
Tallinn, avg sales price Riga, avg sales price Vilnius, avg sales price
 GDP growth components
24% Components of GDP growth - Estonia 24% Components of GDP growth - Latvia
20% 20%
16% 16%
12% 12%
8% 8%
4% 4%
0% 0%
-4% 2004 2005 2006 2007 Q108 -4% 2004 2005 2006 2007 Q108

-8% -8%
-12% -12%
households government investments households government investments
net exports errors net exports errors

24% Components of GDP growth - Lithuania

20%
16%
12%
8%
4%
0%
-4% 2004 2005 2006 2007 Q108

-8%
-12%
households government investments
net exports errors
(31)
* Please note that Q1 08 data for GDP growth components are initial figures that can change as new information
becomes available
 Baltic current account deficit
Current account (% of GDP) Estonia
5% 40%
35%
0%
Q104

Q204

Q304

Q404

Q105

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

Q307

Q407

Q108
30%
-5% 25%
-10% 20%
15%
-15%
10%
-20% 5%

-25% 0%

Q105

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

Q307

Q407

Q108
-5%
-30%
Est Lat Lit Exports YoY growth Imports YoY growth

40%
Latvia Lithuania
45%
35% 40%
30% 35%
25% 30%
25%
20%
20%
15%
15%
10% 10%
5% 5%
0% 0%
Q105

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

Q307

Q407

Q108

Q105

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

Q307

Q407

Q108
(32)
Exports YoY growth Imports YoY growth Exports YoY growth Imports YoY growth
 Baltic consumer price index
Latvia
35
Estonia 35

30
30
25
25
20
20
15
15
10
10
5
5
0
0 2005 2006 2007 2008
2005 2006 2007 2008 -5
-5
HICP, % HICP, %
Energy, % Energy, %
Food including alcohol and tobacco, % Food including alcohol and tobacco, %
Core inflation, % Core inflation, %

35
Lithuania

30

25

20

15

10

0
2005 2006 2007 2008
-5

HICP, % (33)
Energy, %
Food including alcohol and tobacco, %
Core inflation, %
Talibor, Rigibor, Vilibor, Euribor

14

12

10

8
%

0
jan-07 feb-07 mar-07 apr-07 maj-07 jun-07 jul-07 aug-07 okt-07 nov-07 dec-07 jan-08 feb-08 mar-08 apr-08 jun-08

3m Talibor 3m Rigibor 3m Vilibor 3m Euribor

(34)
 Asset quality and provisioning costs
Net loan losses Net loan losses by country
250% 30
25
Q2 08 Q1 08 2007
200%
20
Estonia 0.58% 0.38% 0.39%

EURm
150%
15 Latvia 0.75% 0.54% 0.56%
100%
10 Lithuania 0.31% 0.25% 0.23%
50% 5 Group 0.55% 0.39% 0.40%
0% 0
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08
Net loan losses NLL YoY % growth
Net loan losses = (changes in general and special provisions + net write offs) / credit portfolio at the beginning of the year

Net loan losses

2,5%
Net loan losses
2,0%
Q2 08 Q1 08 2007
1,5% Corporate 0.71% 0.43% 0.42%
1,0% incl real estate 0.98% 0.86% 0.57%
0,5% incl industry 0.83% 0.09% 0.31%
0,0% Private 0.32% 0.32% 0.33%
-0,5% 1999 2000 2001 2002 2003 2004 2005 2006 2007 Q1 Q2
08 08 incl home loans 0.06% 0.16% N/A
-1,0%
-1,5%
Group 0.55% 0.39% 0.40%
-2,0% (35)
Estonia Latvia Lithuania Group
Asset quality – overdue more than 60 days
Overdue more than 60-days/12m old Overdue over 60-days/12m old
2,0% 2,0%
portfolio portfolio
1,6% 1,6%
1,2% 1,2%
0,8% 0,8%
0,4% 0,4%
0,0% 0,0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
08 08 06 06 06 06 07 07 07 07 08 08

Group Est Lat Lit Group

Overdue over 60-days/12m old

Overdue over 60-days/12m old 2,5%
1,2% portfolio
portfolio
2,0%
0,8%
1,5%

1,0%
0,4%
0,5%
0,0% 0,0%
Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008
Private Corporate Real estate, rent Retail and wholesale
Construction Industry
Logistics and comm Other business services
(36)
 Baltic Banking lending by sectors
Portfolio (EURm), June 2008 Portfolio growth (EURm), Q2 08

Individuals 8 621 43% 249

Real-estate
3 110 15% 176*
mgmt *
Retail &
1 803 9% 2
Wholesale

Industry 1 801 9% 21

Transport 1 050 5% -26

Construction 580 3% -13

Other 3 181 16% 93

0 2 000 4 000 6 000 8 000 10 000 -75 0 75 150 225 300

xx% - share of portfolio

*Real estate management related portfolio growth includes refinancing of existing loan from
Sweden to Latvian business unit (Nordic real estate group with significant Latvian investments) (37)
 Estonian lending by sectors
Portfolio (EURm), June 2008 Portfolio growth (EURm), Q2 08

Individuals 3 685 45% 116

Real-estate
1 158 14% 28
mgmt
Retail &
694 9% -5
Wholesale

Industry 513 6% 18

Transport 308 4% -40

Construction 201 2% -4

Other 1 570 19% -17

0 1 000 2 000 3 000 4 000 -50 0 50 100 150

xx% - share of portfolio

(38)
 Latvian lending by sectors
Portfolio (EURm), June 2008 Portfolio growth (EURm), Q2 08

Individuals 2 739 43% 38

Real-estate
1 052 17% 114*
mgmt *
Retail &
536 8% 0
Wholesale

Industry 653 10% 28

Transport 287 5% 11

Construction 262 4% 6

Other 838 13% 13

0 1 000 2 000 3 000 4 000 -50 0 50 100 150

xx% - share of portfolio

*Real estate management related portfolio growth includes refinancing of existing loan from
Sweden to Latvian business unit (Nordic real estate group with significant Latvian investments)
(39)
 Lithuanian lending by sectors
Portfolio (EURm), June 2008 Portfolio growth (EURm), Q2 08

Individuals 2 197 38% 95

Real-estate
899 16% 34
mgmt
Retail &
573 10% 8
Wholesale

Industry 636 11% -25

Transport 455 8% 3

Construction 116 2% -16

Other * 867 15% 97 *

0 1 000 2 000 3 000 4 000 -50 0 50 100 150

xx% - share of portfolio

* Other - largest increase in Energy, gas and water supply sector

(40)
 Mortgages

• Standard mortgage product allows issue of 30 June 2008 Estonia Latvia Lithuania
new loans with maximum LTV of 85% and
loan-service ratio below 50%. Average portfolio LTV 59% 74% 61%

• Mortgage portfolio LTV ratios have remained Average maturity 21y 23y 22y
solid at 59% in Estonia, 74% in Latvia and
61% in Lithuania.

• Quality of existing portfolio and each new

customer/transaction are evaluated using
automated scoring tools.

• Decision making process, product conditions,

and pricing are adjusted based on
creditworthiness of the clients.

• Sub-prime mortgage lending is not practiced

in Baltics

(41)
Group lending by sectors – real estate
Estonia
6%
22%
15%

Portfolio, June 2008

5% 9% 6%
9% Latvia
2%
13%
25% 15%

43% 15%
26%
10%
3%

16%
22%

Construction Other
Lithuania
Individuals Transport 4%
4% 13%
Industry Retail & Wholesale
Real-estate mgmt
38%
5%
Office
Production&Warehouse
Residential
41% Retail
Land plots
34%
Other
(42)
Real estate portfolio

2,5% Real estate management overdues*

• As indicated by internal stress-tests 2,0%

and portfolio analyses, real estate and
1,5%
in particular residential real estate
development is the most sensitive 1,0%

sector in Baltic Banking portfolio. 0,5%

‘Sensitivity’ has started to appear in
0,0%
overdue and default figures of corporate Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008
portfolio. -0,5%
Estonia Latvia Lithuania
* Overdues over 60 days / 12 months old portfolio
• Around 2/3 from total Real Estate
portfolio are cash flow generating
properties with good tenant mix.
Properties under development process
(1/3 from portfolio) are currently affected
the most by decreasing prices and liquidity in the market. Hansabank has always strictly restrained
from financing speculative type of properties.

• Additional defaults in the residential real estate development sector are expected in the second half
of 2008, but no major surprises are expected due to previously implemented portfolio limitations and
individual level monitoring. Restructuring capacity has been put in place.
(43)
Group lending by sectors – retail & wholesale
Estonia

32% 34%

Portfolio, June 2008

5%
9%
Latvia
43%
9%
26%
31%

35%
15%

3%
16%

Construction Other
Lithuania
Individuals Transport
12%
Industry Retail & Wholesale
Real-estate mgmt 43%

19%
Distributors

Specialty retail

Other
69%
(44)
 Group lending by sectors – transport
Estonia
24% 23%

Portfolio, June 2008

43%

Latvia

5%
25% 28%
35%
9%
16% 41%

3% 9%
15%

Construction Other
10% Lithuania
Individuals Transport
1%
Industry Retail & Wholesale 13%
4% 11%
Real-estate mgmt

Trucking
Marine
Terminals&Ports
Other

85% (45)
Sectors under close watch
2,0% Transportation overdues*
Transportation
1,5%
Trucking companies are facing problems due to increasing
fuel prices and lagging freight rates. This global problem has 1,0%
started to be reflected in Baltic Banking provisions
0,5%
(especially in SME segments) since the beginning of the
year. 0,0%
Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008
Estonia Latvia Lithuania
* Overdues over 60 days / 12 months old portfolio
Retail & wholesale
Trade volume growth rates slowed down and started to decrease in Estonia and Latvia in Q2 2008 (still
growing in Lithuania). There is no substantial impact on portfolio quality yet, but deterioration is expected
along with a decrease in consumption.

Wood processing
Raw material price increases coupled with downward pressure on sales prices are having a negative
impact on Baltic wood processing industry. Current portfolio quality is around average with only few
problem cases observed. Additional problems may occur after export duties are imposed on Russian
round wood as there is dependence on imported round wood in Estonia.

(46)
Collateral breakdown
Baltic Collateral (EUR m)
• Hansabank’s loan portfolio is adequately
secured.
Q2 08 % 2007 %
• Private mortgage portfolio is fully covered by State 270 1% 273 1%
family houses and apartments (as a rule
Private real-estate 7,172 35% 6,660 33%
owner occupied).
Corporate real-estate 7,927 38% 7,960 39%
• Full asset pledge, including tangible assets Guarantees 316 2% 668 3%
and current assets, is the most common
case for the Corporate portfolio. Collateral Other collateral* 3,810 18% 3,621 18%
position enhancement with owner Unsecured 1,172 6% 985 5%
guarantees and additional collateral is used
for more risky customers and SME Unsecured corporate 852 4% 706 4%
segments. Unsecured private 320 2% 279 1%
Total 20,667 100% 20,167 100%
• The share of unsecured loans is insignificant *Other collateral is deposits, customer payments, vehicles, etc
(used for top ratings in corporate segment
and consumer products in private segment).

(47)
Regular process of outstanding loan review
• Portfolio quality improvement measures were introduced at the end of 2006
• Real estate sector growth is under control, with regular scrutiny of existing portfolio
• Strengthened risk units
– Increased number of people dealing with problem loans
– Strengthened workout team
– Improved quality and increased frequency of portfolio quality reporting
• Targets set for new origination quality

• Regular loan review process includes

– Overall portfolio stress test once a year
– Portfolio review twice a year
– Quarterly “watch list” report
– IRB portfolio scoring once a month

• On the individual loan basis:

– Client rating review minimum once a year
• Rating classes 5 and higher are subject to more frequent assessment
– Quarterly financials/covenants assessment
– For SME/SSE and private portfolio weekly overdue report (with client names identified)
(48)
Credit quality management process

1. Proactive management of watch list clients

– Private clients - communication on step-by-step actions to take before falling into overdues.
Development of standard proactive solutions to ensure serviceability of the credit
– Corporate clients - proactive communication, frequent client meetings and positive attitude to find
solutions
2. Overdue management - concentrates on time horizon from occurrence of distress situation (either through
late payment or on the basis of client information) to moving credit over to restructuring or workout phase.
The primary focuses in overdue management are:
– Process design for fast and prudent management of overdues, clear process ownership
– Prudent tactics to handle overdue payments. Constant re-evaluation of the tactics on their
effectiveness and adequacy
– Clearly set timing and channels for client contacts
– Build capacity to work with distressed clients including adequate training of employees
– Internal target setting and incentives to reach targets
– Timely reporting and follow up on activities taken
3. Distressed debt restructuring
– Defined tactics of restructuring. Solutions to ensure client serviceability of the debt
– Extended capacity to work with distressed clients
– Effective solutions for collected collaterals handling
(49)