Banks

www.fitchratings.com 23 October 2014

Sweden

Skandinaviska Enskilda Banken AB Full Rating Report

Key Rating Drivers

Strong Standalone Strength: The ratings of Skandinaviska Enskilda Banken AB (SEB) reflect

its strong domestic franchise, particularly in corporate banking, solid capitalisation, sound asset

quality and robust revenue generation. They also consider the bank's high dependence on

merchant banking and a structural reliance on wholesale funding. The Positive Outlook reflects

a more conservative risk profile in recent years as well as improving profitability.

Merchant Bank Business Model: SEB's business model is more geared towards corporate

and merchant banking than its Nordic peers. However, the bank is managing the risk well.

Revenue is well diversified and is increasingly focused on long-term relationship banking, with

reduced reliance on market-driven income. Its loan book is weighted towards large export-

orientated corporations with geographical diversification.

Good Revenue Generation, Stable Costs: Fitch Ratings expects SEB to maintain revenue

growth and contain costs, strengthening pre-impairment operating profitability. Its strategy to

expand retail banking enhances the bank's sources of recurring income.

Sound Asset Quality: Asset quality should stay sound, driven by conservative underwriting,

robust portfolio diversification and a growing retail book. The corporate loan book is of sound

quality, and loan concentration is at acceptable levels.

Solid Capitalisation: SEB's risk-weighted capital ratios, as well as its leverage, compare well

with regional and international peers.

Wholesale Funding Reliance: SEB is reliant on wholesale funding although to a lesser extent

than its Nordic peers. Fitch expects continued good access to debt capital markets, driven by

strong liquidity and a domestic captive investor base for covered bonds. Fitch also expects

SEB to continue to lengthen its maturity profile. The group funds its corporate lending through

corporate deposits, which it monitors closely.

Extremely High Support Probability: Fitch believes there is an extremely high probability that

support would come from the Swedish authorities if required, given SEB‟s importance within

the Swedish financial sector. Fitch expects to revise SEB‟s Support Rating Floor to „BBB-‟ by

mid-2015, reflecting a decreasing likelihood of sovereign support for financial institutions in the

European Union.

Rating Sensitivities

One Notch Upgrade Possible: Fitch could upgrade SEB by one notch over the next one to

two years if the trends of de-risking and improving profitability continue. An upgrade is also

contingent on the bank maintaining strong capital and leverage ratios, sound asset quality and

a healthy funding and liquidity profile.

Investor Sentiment Key Risk: Although not expected, pressure on the ratings could come

from an adverse change in investor sentiment materially affecting SEB's access to debt capital

markets, a shortened funding profile or reduced emphasis on liquidity. Larger-than-expected

losses or revenue volatility in corporate banking would also put pressure on the ratings

Ratings

Skandinaviska Enskilda Banken AB

Foreign Currency

Long-Term IDR A+ Short-Term IDR F1 Viability Rating a+ Support Rating 1 Support Rating Floor A−

SEB AG

Long-Term IDR A+ Short-Term IDR F1

Support Rating 1

Sovereign Risk

Foreign-Currency Long-Term IDR AAA Local-Currency Long-Term IDR AAA

Outlooks

Skandinaviska Enskilda Banken AB

Foreign-Currency Long-Term IDR Positive

SEB AG

Foreign-Currency Long-Term IDR Positive

Sovereign Risk

Sovereign Foreign-Currency Long-Term IDR

Stable

Sovereign Local-Currency Long-Term IDR

Stable

Financial Data

Skandinaviska Enskilda Banken AB

30 June 14

31 Dec 13

Total assets (USDm) 394,991 386,817 Total assets (SEKm) 2,653,784 2,484,834 Total equity (SEKm) 123,224 122,814 Operating profit (SEKm)

10,122 18,111

Published net income (SEKm)

8,058 14,778

Comprehensive income (SEKm)

8,823 20,464

Operating ROAA (%) 0.8 0.7 Operating ROAE (%) 16.8 16.1 Fitch core capital/ weighted risks (%)

16.5 17.3

a

Tier 1 ratio (%)

17.9 16.5 a

a Excluding transitional floors

Related Research

Peer Review: Large Swedish and Finnish Banks (June 2014)

SEB – Ratings Navigator (June 2014)

Analysts

Olivia Perney Guillot + 33 1 44 29 91 74 olivia.perney@fitchratings.com Bjorn Norrman +44 20 3530 1330 bjorn.norrman@fitchratings.com

Banks

Skandinaviska Enskilda Banken AB

October 2014 2

Operating Environment

„AAA‟ Sovereign; Stable Political and Economic Environment

The four major Swedish banks (SEB, Nordea Bank AB (AA-/Stable/aa-), Svenska

Handelsbanken AB (AA-/Stable/aa-), and Swedbank AB (A+/Positive/a+) dominate the banking

system with a combined market share of 75%. These banks‟ performances are closely linked to

the performance of the Swedish and also other Nordic economies.

Sweden has maintained its „AAA‟/Stable rating through the global financial crisis, and its low

net sovereign debt allows for some flexibility to support the economy. Sweden's gross general

government debt is lower than the 'AAA' median. Sweden has high governance and human

development indicators, high income per capita, and a track record of sound macroeconomic

policy implementation, which contribute to a stable political and economic environment.

Strong Regulator; Well-Functioning Markets

The Swedish regulatory environment is highly developed and transparent. The banking

authorities have been vocal advocates of tougher requirements for banks, including capital and

liquidity buffers, and also for more frequent and transparent reporting. Higher capital

requirements and liquidity buffers are being introduced than in most other European countries.

The depth and sophistication of the domestic debt capital markets is an important mitigating

factor to this wholesale funded banking system.

Company Profile

Strong Swedish Franchise; Nordic Corporate Bank

SEB offers a full range of financial services including retail, corporate and investment banking,

wealth management and life insurance. It has a strong market share in Sweden and in the

Baltics where it operates a universal bank. In Germany and in the other Nordic countries it

focuses on corporate and investment banking activities. Sweden, its home market, represents

around 55% of group operating profit.

SEB has offices in a number of cities around the world, including London, New York, Shanghai,

Singapore and Hong Kong. Their role is to provide global services to selected Nordic and

German corporates and to help global financial institutions access Nordic investment

opportunities. Overall SEB is present in around 20 countries.

Its German operations are conducted via SEB AG, its wholly owned subsidiary. SEB AG‟s IDRs

are aligned with those of SEB. The close integration of SEB AG into the SEB group means that

Fitch does not assign the subsidiary a Viability Rating.

Merchant Banking Driven Business Model

SEB's business model is more geared towards corporate and merchant banking than its Nordic

peers, reflecting its traditionally very strong merchant bank franchise, particularly in Sweden.

Merchant banking revenue is potentially volatile, but the bank benefits from diversification and

good risk management. Like its Nordic peers, its business model is based on building close

customer relationships and promoting cross selling.

Management

Strong Management

SEB has an experienced management team. Corporate governance and internal controls are

efficient, and there is a high degree of transparency. The bank is listed on the Stockholm Stock

Exchange. The AGM elects 12 members to the board of directors annually, for a one-year term.

All are independent of the bank except SEB‟s president and CEO, Annika Falkengren. Two

more board members are elected as staff representatives.

Figure 1

SEB

Source: SEB

Universal Banking

Merchant Banking and Wealth

Management

Related Criteria

Global Financial Institutions Rating Criteria (January 2014)

Banks

Skandinaviska Enskilda Banken AB

October 2014 3

Good Execution of Strategy in Recent Years

Since the CEO took charge in 2005, management has taken significant steps towards

improving the bank‟s competitiveness by strengthening revenue generation in core businesses,

selling non-core operations (e.g. German retail) and reducing operational complexities. It has

also improved the bank‟s risk profile through portfolio de-risking and the strengthening of its

liquidity. Management‟s ability to continue to execute its strategy is an important rating driver.

This includes expanding SEB‟s merchant banking position among Nordic corporates and

financial institutions, and among selected medium-sized companies in Germany. In Sweden it

is focused on strengthening its retail franchise, including with small and medium–sized

enterprises (SMEs). The retail franchise is important for SEB as it creates a more balanced

business mix for the group. Fitch does not expect SEB to expand into other geographical

areas.

Risk Appetite

Good Risk Framework; Active De-Risking in Recent Years

SEB has a sound risk appetite, in Fitch‟s opinion, and has strengthened its risk management

framework in recent years. Lending has shifted towards relatively low-risk Swedish households

and large Nordic corporates, with reduced exposure to German real estate and the Baltics.

Merchant banking revenue has increasingly been geared towards relationship lending and

transaction services, with less reliance on more volatile market driven products such as

customer-driven trading and brokerage services. Credit risk is the most significant risk for SEB,

and represented 81% of total group risk exposure amount at end-June 2014.

Controlled Growth in Strategic Areas

SEB is strategically growing in its target markets including Swedish retail (households and

SMEs) as well as large Nordic corporates. Fitch expects modest loan growth, on average

around 4% in keeping with recent years, with continued strong internal capital generation.

Following the Baltic crisis 2008 and 2009, the group has put a cap on Baltic credit exposure (on

and off balance sheet). It also has a cap on commercial real estate lending.

Low Market Risk; Mostly Customer Driven Trading

Capital markets activities are essentially customer driven, with FX forwards and interest rate

swaps being the two main products demanded by the corporate customers. Market making is

focused on Nordic bonds, equities and currencies. The bank has only recorded 50 trading loss

days since 1 January 2007, with an average loss of SEK12m.

Monitoring is done through value-at-risk (VaR) calculations, stop-loss limits and sensitivity

analysis. The maximum VaR in 2013, based on a 10-day holding period, a 99% confidence

interval and a one-year observation period, was SEK199m and SEK356m in the trading book

and banking book, respectively, or 0.2% and 0.4% of Fitch core capital (FCC). The maximum

stressed VaR for the trading book was SEK777m in 2013.

SEB‟s structural interest rate sensitivity is somewhat more material. The banking book‟s value

sensitivity to a one percentage point parallel yield curve shift was an acceptable SEK1.5bn at

end-2013, or 1.6% of FCC.

Insurance – Limited Risk to the Group

Insurance represents only a moderate share of group assets (10-12%) and is not a material

risk to SEB. The operations are well capitalised and new sales are focused on unit-linked

products. Assets relating to traditional policies with guaranteed returns amounted to SEK255bn

at end-June 2014. SEB is technically not liable for 70% of this book, which was previously sold

through its Swedish mutual insurance company and is not consolidated, but for reputational

purposes it may have to cover any potential shortfall. The Danish operation, which makes up

the remaining 30% of the traditional book, is the only one that still writes new traditional

policies, although it is mainly a unit-linked underwriter.

Banks

Skandinaviska Enskilda Banken AB

October 2014 4

Financial Profile

Asset Quality Strong Asset Quality

SEB has strong asset quality, in line with its peer group, with an impaired loans ratio (impaired

loans / gross loans) of 66bp at end-June 2014 (impaired loans include portfolio assessed loans

that are more than 60 days overdue as well as restructured loans). The impaired loans ratio

has fallen in recent years as the bank has been working out its Baltic book, although this

continues to carry the largest stock of impaired loans. Sweden represents around 70% of the

total loan portfolio, and around 45% of total loans are linked to Swedish real estate, although

most of it relates to low-risk mortgage loans and lending to housing associations. SEB‟s

German and Baltic exposures are subject to the ECB‟s asset quality review, but Fitch does not

expect any material negative findings.

Figure 3 Figure 4

Household Mortgage and Housing Associations Lending is Low Risk

Sweden makes up the bulk of these portfolios, which together represented 34% of group loans

at end-June 2014. They are of very high quality with a combined impaired loans ratio of 8bp at

end-June 2014. The bank maintains a strict focus on loan serviceability (including stressing

interest rates up to 7% for household mortgage loans) and has recently introduced amortisation

requirements on all new mortgage loans. Average loan-to-value ratios are good. Loans to

housing cooperative associations share similar risk characteristics to mortgage loans. They are

often tenant owned and are sensitive to the financial health of its residents.

Although property prices are high by an international standard and have continued to rise in

2014, Fitch believes that debt serviceability among households remains strong. In the event of

a fall in employment and rising interest rate costs, the agency expects households to prioritise

their debt obligations and instead reduce consumption. As a result of very strict and efficient

bankruptcy laws combined with a shortage of rental accommodation, households have strong

incentives not to default on their mortgage loans. The agency‟s base case for house prices

remains one of a stabilisation to a moderate fall, although a larger correction is not ruled out.

Resilient Nordic Corporate Portfolio

SEB‟s non-Baltic corporate loan book has good industry diversification, and around three-

quarters represent large companies with often sound geographical revenue distribution. The

bank benefits from strong client relationships, and the portfolio proved resilient through the

financial crisis. The targeted growth in SME lending could potentially weaken asset quality

somewhat but it is of limited size and therefore manageable. Loan concentration is acceptable,

and the bank‟s largest counterparts have good creditworthiness. The impaired loans ratio was

32bp at end-June 2014.

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

End-2011 End-2012 End-2013 End-June2014

(%) SEB Peer average

Source: Banks' data, adjusted by FitchPeers = SEB, Nordea Bank AB, Svenska Handelsbanken AB, Swedbank AB

Impaired LoansAs % of gross loans

0123456789

10

End-2011 End-2012 End-2013 End-June2014

Net Impaired Loans/Equity

SEB Peer average

Source: Banks' data, adjusted by Fitch

(%)

Figure 2

Figure 5

Source: SEB, Fitch

Property Management

16%

Corporates31%

Householdmortgage

loans30%

Banks &

public9%

Baltics 8%

Housingassociations

3%

Householdother3%

Group Loan SplitEnd-June 2014

Source: SEB, Fitch

Manufacturing24%

Businessand

household services

20%Finance and

insurance11%

Wholesaleand retail

10%

Shipping9%

Utilities7%

Transport7%

Other12%

Non-Baltic Corporate Loan Split (Excl. CRE)End-June 2014

Banks

Skandinaviska Enskilda Banken AB

October 2014 5

Exposure to riskier industries is managed conservatively. The shipping book has good sub-

industry diversification, and lending targets industrial companies with strong cash flows rather

than project finance. Impaired loans in the shipping book are low.

Non-Baltic Property Management; Large Sophisticated Clients

SEB‟s non-baltic property management lending comprises both commercial and residential real

estate management, with the latter representing just less than 40% of this portfolio. Three

quarters of the portfolio is in Sweden, and the remaining exposure is in Germany. Residential

real estate management is subject to rent control in Sweden which reduces the speculative

nature often present in this industry, increases affordability and has partly contributed to a

shortage of rental properties which in turn creates stable demand. The Swedish commercial

real estate (CRE) market is characterised by large strong clients with good cash flows that

often have access to both debt and equity markets, and SEB takes a corporate rather than

asset based approach when lending to these companies. Fitch expects a continued strong

performance. The impaired loans ratio of this book was 41bp at end-June 2014, most of which

related to the German exposure.

Baltics: Recovering

Fitch expects impaired loans in the Baltic portfolio to continue to decrease, driven by continued

economic recovery and strict underwriting standards. The impaired loans ratio fell to 4.3% at

end-June 2014 (end-June 2013: 7.7%). CRE lending in particular was the main driver of the

problems experienced by banks in the region, but SEB identified this at an early stage and took

appropriate action. The loan portfolio developed favourably compared to initial expectations,

resulting in reversals of loan impairment charges (LICs) between 3Q10 and 4Q11.

The Baltic countries could be negatively affected by the political and economic uncertainties

relating to Russia. However, Fitch believes SEB could withstand a deterioration in the Baltics

given the limited size of the book to the group (8% of total lending at end-June 2014) and the

relatively conservative reserving of the current stock of impaired loans (67%).

Germany: Legacy Portfolio of Impaired Loans Reducing

Impaired loans in the German portfolio remain relatively high, at 68bp of gross loans at end-

June 2014, which are almost fully reserved for (78%). This is a legacy from the past, and there

have been no material LICs in recent years. Fitch expects the volume of impaired loans to

continue to slowly decrease.

High Quality Securities Portfolio

The credit risk in the debt securities portfolio is low. At end-June 2014, it totalled SEK251bn

and mainly comprised „AAA‟ rated covered bonds and government and public sector securities.

The bank‟s exposure to eurozone peripherals (Greece, Ireland, Italy, Portugal and Spain)

amounted to SEK8bn and was mostly Spanish covered bonds.

Earnings and Profitability

Improving Performance

SEB‟s profitability has traditionally lagged somewhat behind its Swedish peers but it is

addressing this through good cost management and stronger revenue generation. Merchant

banking income is potentially volatile although it has been stable through the cycle. The

strategic growth in retail banking contributes to revenue stability, as does SEB‟s focus on

capturing a large share of its customers‟ wallet.

Fitch expects the net interest margin to be relatively stable. SEB, like its Swedish peers,

currently benefits from cheap market funding. This is partly offset by low deposit margins and

limited scope for loan re-pricing. The lowering of the central bank‟s policy rate by 50bp in July

will come at a cost to the bank, although Fitch expects most of this to be passed onto

customers over time.

Banks

Skandinaviska Enskilda Banken AB

October 2014 6

The cost to income ratio should continue to improve and is already more in line with peers. The

bank has reduced complexity in the group by, for example, centralising support functions. It has

a cost cap in place of SEK22.5bn for 2014 and 2015, and Fitch believes the bank has the

infrastructure to achieve continued revenue growth while keeping costs contained. LICs are

very low, reflecting strong asset quality and risk management.

Figure 6 Figure 7

Figure 8 Operating Profit by Division

1H14 2013

(SEKm) (%) (SEKm) (%)

Merchant banking 4,809 48 8,171 45 Retail banking 3,324 33 5,743 32 Wealth management 1,000 10 1,610 9 Life 1,046 10 1,892 10 Baltics 801 8 1,280 7 Eliminations and others -874 -9 -569 -3 Operating profit 10,106 100 18,127 100

Source: SEB, Fitch

Merchant Banking: Franchise Key to Revenue Generation

Revenue is dependent on customer flows, although income is well diversified by product

groups (see figure 9) and increasingly geared towards relationship banking. Capital markets-

driven revenue account for less than 10% of SEB‟s total revenue and has averaged around

SEK1.5bn per quarter in the last four years, with low volatility. There are signs that corporate

activity in SEB‟s operating environments is gaining momentum. Fitch expects improved

earnings in 2015.

Retail Banking: Volume Growth and Cost Focus

Fitch expects continued growth in revenue, driven by volume rather than margins. The bank

aims to increase cross selling among its existing customer base and to win new clients. Fitch

expects this to result in more robust income generation and a healthy mix of commission and

interest income. Cost management is a key management focus, and the reported cost to

income ratio for the Retail Banking segment improved to 44% in H114 (H113: 51%).

Wealth Management: Strong Inflow of Assets under Management

The Swedish savings business is a growth area for SEB. Assets under management increased

by 9% from end-2013 to an all-time high of SEK1,535bn at end-June 2014, and total net inflow

in the same period was SEK42.7bn. A similar trend was also reported by many of SEB‟s

Swedish peers. To improve efficiency and increase cross-selling the bank aims to integrate the

expertise of its Wealth Management and Life operations.

Life: Focus on Sale of Unit-Linked Products

Fitch expects Life Insurance to remain a stable profit generator for SEB. Unit-linked policies

0

10

20

30

40

50

60

70

2011 2012 2013 1H14

(%)

Cost/Income Ratio

SEB Peer average

Source: Banks data, adjusted by Fitch

02468

101214161820

2011 2012 2013 1H14

(%)

Operating ROAE

SEB Peer average

Source: Banks data, adjusted by Fitch

Figure 9 Merchant Banking Operating Income (SEKm) 1H14 2013

Markets 3,096 5,594 Coverage and investment banking

4,552 8,628

Transaction banking 1,563 2,507 Total 9,211 16,729

Source: SEB, Fitch

Banks

Skandinaviska Enskilda Banken AB

October 2014 7

represent around 80% of sales. While traditional products with guarantees create an earnings

challenge in the current low interest rate environment, this is not a material risk to the bank.

Baltics: Profitability Focus

SEB focuses on strengthening profitability among its existing customer base and expanding its

advisory services among its corporate clients. Lending volumes are currently stable. Fitch

expects continued growth in earnings.

Figure 10

Capitalisation and Leverage

Solid Capitalisation and Leverage

SEB‟s risk-weighted capital ratios are solid and compare well with peers, although they lag

some Swedish competitors. At end-2013, the bank used the Advanced and Foundation internal

ratings-based approach to calculate around 60% and 20% of its total credit exposure,

respectively. It ultimately aims to roll out internal models for all credit exposure except central

bank and public sector lending. The bank‟s adjusted leverage of 4.7% at end-June 2014 is in

line with its peer group.

High Regulatory Requirements

Fitch expects SEB to maintain its strong capital ratios, in particular in light of its wholesale

funding reliance and the need to maintain investor confidence. The Swedish regulator has

proposed new capital requirements for the large Swedish banks, including SEB. Based on end-

June 2014 data, it is estimated that the bank must maintain a minimum common equity Tier 1

(CET1) ratio of 15.4%, compared to a reported ratio of 16.0%. SEB had previously

communicated a CET1 target of 13% but this will be revised once the new regulatory

requirements are finalised. SEB targets a minimum dividend payout ratio of 40%.

Figure 11 Figure 12

-2

-1

0

1

2

3

4

5

6

Sweden(59%)

Denmark(8%)

Norway(8%)

Germany(7%)

Finland(4%)

Lithuania(4%)

Latvia(3%)

Estonia(3%)

(%) 2012 2013 2014F 2015F 2016F

Source: Fitch, 19 September 2014

GDP Growth(%) = country's share of SEB's total operating income in 2013 (4% is in other markets)

0

5

10

15

20

25

End-2011 End-2012 End-2013 End-June2014

(%)

Total capital - SEBFitch core capital - SEBFitch core capital - peer averageTotal capital - peer average

Source: Banks data, adjusted by Fitch

Risk-Weighted Capital Ratios

0

1

2

3

4

5

6

End-2011 End-2012 End-2013 End-June2014

(%) SEB Peer average

a Tangible common equity/tangible assets less insurance assets and net derivativesSource: Banks data, adjusted by Fitch

Adjusted Leveragea

Banks

Skandinaviska Enskilda Banken AB

October 2014 8

Funding and Liquidity

Wholesale Funded Although Less than Local Peers

SEB is reliant on wholesale funding, although to a less extent than its local peers. This is due to

its relatively high weighting towards corporate banking. Retail loans are funded mostly by a

combination of covered bonds and deposits, while corporate lending is almost entirely deposit

funded.

The Swedish covered bond market is very deep and liquid, with limited refinancing risk in

Fitch‟s opinion. There is a structural shortage of deposits in the banking system in Sweden as

households prefer to invest in savings products offered by pension funds and insurance

companies. These entities have a need to invest in low-risk Swedish krona-denominated

assets, which creates a stable demand for highly rated covered bonds, in particular since there

is a limited supply of government debt.

The bank has some senior unsecured funding, and Fitch expects it to maintain a diversified

long-term funding structure. It retained good access to the debt capital markets through the

financial crisis, and Fitch expects this to continue.

The corporate deposit base is monitored closely by the bank and has historically been sticky.

SEB benefits from strong customer relationships and a substantial part of this funding is

operational deposits which Fitch believes would be less volatile in the event of a stress.

SEB‟s encumbrance is lower than most Nordic peers, reflecting less use of covered bond

funding. Its adjusted asset encumbrance ratio (encumbered assets/(total assets – derivatives –

insurance assets)) of 24% at end-June 2014 was acceptable (17% excluding unused

overcollateralisation in the covered bonds‟ pool). Covered bonds represent most of the

encumbrance.

Strong Liquidity Critical for Investor Confidence

SEB, like its Nordic peers, maintains strong liquidity. This is critical in light of the bank‟s

wholesale funding and corporate deposit base. At end-June 2014, the liquidity portfolio

amounted to SEK411bn. Including the bank‟s extended liquidity reserve, which takes into

account both unused overcollateralisation in its covered bonds cover pool and net trading

assets held outside the treasury operation, the bank‟s total liquidity buffer was SEK686bn.

SEB‟s liquidity coverage ratio (LCR), based on Swedish regulation, was 127% at end-June

2014. A significant part of the liquidity portfolio is in foreign currency, and the bank‟s EUR and

USD LCR were 345% and 330%, respectively.

Figure 14

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2014 2015 2016 2017 2018 2019 2020 >2020

(SEKm)

SEB Maturity Profile

Senior secured Senior unsecured Senior subordinated Junior subordinated

a As of 14 Oct 2014Source: Bloomberga

Figure 13

Source: SEB, Fitch

Deposits -corporate

29%

Covered bonds 17%CPs/CDs

16%

Deposits -individuals

13%

FIs and central banks10%

Seniorunsecured

8%

Deposits -public

5%

Subordinated2%

Non-Equity Funding MixEnd-June 2014

Banks

Skandinaviska Enskilda Banken AB

October 2014 9

Support

Support Less Certain Within Next One to Two Years

In Fitch's view, there is a clear intention ultimately to reduce implicit state support for financial

institutions in the EU, as demonstrated by a series of legislative, regulatory and policy

initiatives. As an EU member country, Sweden is subject to the requirements of the Bank

Recovery and Resolution Directive (BRRD). However, the country was notable in its desire for

flexibility in the application of BRRD, in part because of its experience of cleaning up banks in

its 1990s crisis, but also because it has a concentrated, largely homogenous banking sector

that relies on attracting international and foreign currency funding. For this reason, prudential

requirements for its banks are high. In maintaining control over supervision and resolution

decisions, Sweden has more flexibility to interpret and apply BRRD than Banking Union

member countries, for example. However, Sweden is bound by EU state aid rules, meaning it

does not have full control over support decisions.

The Support Rating and Support Rating Floor are primarily sensitive to the progress made in

implementing a resolution regime in Sweden. As outlined in its report 'Sovereign Support for

Banks: Rating Path Expectations' dated 27 March 2014, Fitch believes that support for

systemically important Swedish banks, while likely to be less certain within the next one to two

years, is still likely to be highly probable, meaning that SEB's Support Rating is likely to be

downgraded to '2' from '1' and the Support Rating Floor revised down to 'BBB-' from 'A-'.

Banks

Skandinaviska Enskilda Banken AB

October 2014 10

Appendix

Merchant Banking

This division incorporates SEB‟s investment and corporate banking operations servicing large

corporate clients and institutional customers. Active in about 20 countries, its strategic objective

is to expand its presence in the Nordic and German markets. Its operations are primarily

customer driven through corporate lending and other financial products. It benefits from being a

large entity on the Nordic and Baltic stock exchanges.

Retail Banking

SEB‟s Swedish retail operations (including SME customers) and its pan-Nordic card business

are reported under this segment. SEB focuses on the more wealthy part of the population and

most of its clients are urban white-collar workers or entrepreneurs. A strategic objective is to

grow market share among domestic private and SME clients.

SEB Kort, SEB‟s charge and debit-card business, has a Nordic-wide strategy, with good market

shares of in all four countries.

Wealth Management

This comprises asset management and private banking for private individuals and institutional

investors. Around 25% of assets under management are from outside Sweden, mainly other

Nordic countries and Germany. The German fund management operation is being dismantled.

Life

This division consists of SEB Trygg Liv in Sweden (the largest domestic unit-linked insurance

provider), SEB Pension in Denmark (the country‟s fourth-largest private pension company), and

SEB‟s life and pension operations outside these two markets (including in the Baltics, which

management considers to have good long-term prospects). SEB is among the top three life

insurance companies in the three Baltic states.

Assets under management totalled SEK536.3bn at end-June 2014, a 10% increase from end-

2013. Unit-linked life insurance products continue to increase, representing 75% of total

premiums in H114. SEB‟s share of Swedish new unit-linked business was 17% in the 12

months to end-March 2014.

Baltics

The Baltics division comprises SEB‟s private banking and advisory services for retail and SME

customers in Estonia, Latvia and Lithuania. Having grown aggressively in these markets up to

2006, SEB faced material and disproportionate LICs in 2008 and 2009. It has since significantly

restructured the division, and reviewed and provided for the credit risk. SEB‟s deposit market

shares amount to approximately 20%, 10% and 30% in Estonia, Latvia and Lithuania,

respectively; its market shares for lending are approximately 25%, 20% and 30%.

Banks

Skandinaviska Enskilda Banken AB

October 2014 11

Skandinaviska Enskilda Banken AB

Income Statement30 Jun 2014 31 Dec 2013 31 Dec 2012 31 Dec 2011

6 Months - Interim6 Months - Interim As % of Year End As % of Year End As % of Year End As % of

USDm SEKm SEKm SEKm SEKm

Unaudited Unaudited Unqualified Unqualified Unqualified

1. Interest Income on Loans n.a. n.a. - 37,636.0 1.67 41,441.0 1.91 41,010.0 1.92

2. Other Interest Income 3,664.0 24,617.0 2.08 12,087.0 0.54 12,353.0 0.57 15,153.0 0.71

3. Dividend Income n.a. n.a. - 72.0 0.00 75.0 0.00 115.0 0.01

4. Gross Interest and Dividend Income 3,664.0 24,617.0 2.08 49,795.0 2.21 53,869.0 2.48 56,278.0 2.64

5. Interest Expense on Customer Deposits n.a. n.a. - 11,222.0 0.50 14,694.0 0.68 15,652.0 0.73

6. Other Interest Expense 2,211.2 14,856.0 1.26 19,674.0 0.87 21,465.0 0.99 23,610.0 1.11

7. Total Interest Expense 2,211.2 14,856.0 1.26 30,896.0 1.37 36,159.0 1.67 39,262.0 1.84

8. Net Interest Income 1,452.8 9,761.0 0.83 18,899.0 0.84 17,710.0 0.82 17,016.0 0.80

9. Net Gains (Losses) on Trading and Derivatives 274.9 1,847.0 0.16 4,231.0 0.19 4,714.0 0.22 4,072.0 0.19

10. Net Gains (Losses) on Other Securities 11.5 77.0 0.01 352.0 0.02 (109.0) (0.01) (27.0) (0.00)

11. Net Gains (Losses) on Assets at FV through Income Statement n.a. n.a. - (179.0) (0.01) (73.0) (0.00) (53.0) (0.00)

12. Net Insurance Income 247.4 1,662.0 0.14 3,255.0 0.14 3,428.0 0.16 3,197.0 0.15

13. Net Fees and Commissions 1,181.6 7,939.0 0.67 14,664.0 0.65 13,620.0 0.63 14,175.0 0.66

14. Other Operating Income 34.8 234.0 0.02 314.0 0.01 (424.0) (0.02) (271.0) (0.01)

15. Total Non-Interest Operating Income 1,750.2 11,759.0 0.99 22,637.0 1.00 21,156.0 0.98 21,093.0 0.99

16. Personnel Expenses 1,035.0 6,954.0 0.59 14,029.0 0.62 14,596.0 0.67 14,325.0 0.67

17. Other Operating Expenses 580.9 3,903.0 0.33 8,258.0 0.37 9,056.0 0.42 9,188.0 0.43

18. Total Non-Interest Expenses 1,616.0 10,857.0 0.92 22,287.0 0.99 23,652.0 1.09 23,513.0 1.10

19. Equity-accounted Profit/ Loss - Operating n.a. n.a. - 17.0 0.00 19.0 0.00 48.0 0.00

20. Pre-Impairment Operating Profit 1,587.1 10,663.0 0.90 19,266.0 0.86 15,233.0 0.70 14,644.0 0.69

21. Loan Impairment Charge 80.5 541.0 0.05 1,155.0 0.05 937.0 0.04 (710.0) (0.03)

22. Securities and Other Credit Impairment Charges n.a. n.a. - n.a. - 62.0 0.00 403.0 0.02

23. Operating Profit 1,506.6 10,122.0 0.86 18,111.0 0.80 14,234.0 0.66 14,951.0 0.70

24. Equity-accounted Profit/ Loss - Non-operating n.a. n.a. - n.a. - n.a. - n.a. -

25. Non-recurring Income n.a. n.a. - 16.0 0.00 1.0 0.00 0.0 0.00

26. Non-recurring Expense 2.4 16.0 0.00 n.a. - n.a. - n.a. -

27. Change in Fair Value of Own Debt n.a. n.a. - n.a. - n.a. - n.a. -

28. Other Non-operating Income and Expenses n.a. n.a. - n.a. - n.a. - 2.0 0.00

29. Pre-tax Profit 1,504.2 10,106.0 0.85 18,127.0 0.80 14,235.0 0.66 14,953.0 0.70

30. Tax expense 304.8 2,048.0 0.17 3,338.0 0.15 2,093.0 0.10 2,942.0 0.14

31. Profit/Loss from Discontinued Operations n.a. n.a. - (11.0) (0.00) (488.0) (0.02) (1,155.0) (0.05)

32. Net Income 1,199.4 8,058.0 0.68 14,778.0 0.66 11,654.0 0.54 10,856.0 0.51

33. Change in Value of AFS Investments 104.3 701.0 0.06 1,105.0 0.05 1,276.0 0.06 722.0 0.03

34. Revaluation of Fixed Assets n.a. n.a. - n.a. - n.a. - n.a. -

35. Currency Translation Differences 55.5 373.0 0.03 75.0 0.00 (386.0) (0.02) (134.0) (0.01)

36. Remaining OCI Gains/(losses) (46.0) (309.0) (0.03) 4,506.0 0.20 (1,706.0) (0.08) 911.0 0.04

37. Fitch Comprehensive Income 1,313.2 8,823.0 0.75 20,464.0 0.91 10,838.0 0.50 12,355.0 0.58

38. Memo: Profit Allocation to Non-controlling Interests n.a. n.a. - 6.0 0.00 22.0 0.00 37.0 0.00

39. Memo: Net Income after Allocation to Non-controlling Interests 1,199.4 8,058.0 0.68 14,772.0 0.66 11,632.0 0.54 10,819.0 0.51

40. Memo: Common Dividends Relating to the Period n.a. n.a. - 8,725.0 0.39 6,004.0 0.28 3,795.0 0.18

41. Memo: Preferred Dividends Related to the Period n.a. n.a. - n.a. - n.a. - n.a. -

Exchange rate USD1 = SEK6.71860 USD1 = SEK6.42380 USD1 = SEK6.50450 USD1 = SEK6.88770

Earning Assets

Earning

Assets

Earning

Assets

Earning

Assets

Banks

Skandinaviska Enskilda Banken AB

October 2014 12

Skandinaviska Enskilda Banken AB

Balance Sheet30 Jun 2014 31 Dec 2013 31 Dec 2012 31 Dec 2011

6 Months - Interim6 Months - Interim As % of Year End As % of Year End As % of Year End As % of

USDm SEKm Assets SEKm Assets SEKm Assets SEKm Assets

AssetsA. Loans

1. Residential Mortgage Loans 65,687.3 441,327.0 16.63 427,142.0 17.19 402,052.0 16.39 368,346.0 15.61

2. Other Mortgage Loans 6,106.6 41,028.0 1.55 40,643.0 1.64 36,437.0 1.49 34,966.0 1.48

3. Other Consumer/ Retail Loans 6,759.9 45,417.0 1.71 43,713.0 1.76 43,233.0 1.76 44,567.0 1.89

4. Corporate & Commercial Loans 107,052.8 719,245.0 27.10 630,528.0 25.38 599,608.0 24.44 580,719.0 24.61

5. Other Loans 5,996.8 40,290.0 1.52 79,626.0 3.20 87,892.0 3.58 95,922.0 4.07

6. Less: Reserves for Impaired Loans 940.4 6,318.0 0.24 6,520.0 0.26 8,836.0 0.36 10,541.0 0.45

7. Net Loans 190,663.1 1,280,989.0 48.27 1,215,132.0 48.90 1,160,386.0 47.30 1,113,979.0 47.21

8. Gross Loans 191,603.5 1,287,307.0 48.51 1,221,652.0 49.16 1,169,222.0 47.66 1,124,520.0 47.66

9. Memo: Impaired Loans included above 1,273.6 8,557.0 0.32 9,453.0 0.38 13,795.0 0.56 16,558.0 0.70

10. Memo: Loans at Fair Value included above n.a. n.a. - n.a. - n.a. - n.a. -

B. Other Earning Assets

1. Loans and Advances to Banks 13,145.0 88,316.0 3.33 92,287.0 3.71 112,919.0 4.60 179,110.0 7.59

2. Reverse Repos and Cash Collateral 21,357.1 143,490.0 5.41 107,433.0 4.32 106,524.0 4.34 102,445.0 4.34

3. Trading Securities and at FV through Income 46,669.7 313,555.0 11.82 321,951.0 12.96 277,891.0 11.33 232,300.0 9.85

4. Derivatives 24,862.3 167,040.0 6.29 142,776.0 5.75 170,600.0 6.95 167,821.0 7.11

5. Available for Sale Securities 7,373.1 49,537.0 1.87 48,903.0 1.97 50,599.0 2.06 57,377.0 2.43

6. Held to Maturity Securities 13.1 88.0 0.00 85.0 0.00 82.0 0.00 282.0 0.01

7. Equity Investments in Associates 200.3 1,346.0 0.05 1,274.0 0.05 1,252.0 0.05 1,289.0 0.05

8. Other Securities n.a. n.a. - n.a. - n.a. - n.a. -

9. Total Securities 100,475.7 675,056.0 25.44 622,422.0 25.05 606,948.0 24.74 561,514.0 23.80

10. Memo: Government Securities included Above n.a. n.a. - n.a. - n.a. - n.a. -

11. Memo: Total Securities Pledged n.a. n.a. - n.a. - n.a. - n.a. -

12. Investments in Property n.a. n.a. - 10,804.0 0.43 10,074.0 0.41 9,901.0 0.42

13. Insurance Assets 50,829.6 341,504.0 12.87 311,897.0 12.55 277,447.0 11.31 269,557.0 11.42

14. Other Earning Assets 0.0 0.0 0.00 n.a. - n.a. - n.a. -

15. Total Earning Assets 355,113.4 2,385,865.0 89.90 2,252,542.0 90.65 2,167,774.0 88.36 2,134,061.0 90.45

C. Non-Earning Assets

1. Cash and Due From Banks 27,456.6 184,470.0 6.95 173,950.0 7.00 191,445.0 7.80 148,042.0 6.27

2. Memo: Mandatory Reserves included above n.a. n.a. - n.a. - n.a. - n.a. -

3. Foreclosed Real Estate n.a. n.a. - n.a. - n.a. - n.a. -

4. Fixed Assets 1,628.0 10,938.0 0.41 949.0 0.04 1,133.0 0.05 1,243.0 0.05

5. Goodwill 1,563.7 10,506.0 0.40 10,408.0 0.42 10,460.0 0.43 10,487.0 0.44

6. Other Intangibles 1,038.9 6,980.0 0.26 6,763.0 0.27 6,827.0 0.28 7,385.0 0.31

7. Current Tax Assets n.a. n.a. - 6,702.0 0.27 6,915.0 0.28 6,403.0 0.27

8. Deferred Tax Assets n.a. n.a. - 1,586.0 0.06 2,010.0 0.08 2,562.0 0.11

9. Discontinued Operations 134.0 900.0 0.03 n.a. - n.a. - 2,005.0 0.08

10. Other Assets 8,056.0 54,125.0 2.04 31,934.0 1.29 66,892.0 2.73 47,193.0 2.00

11. Total Assets 394,990.6 2,653,784.0 100.00 2,484,834.0 100.00 2,453,456.0 100.00 2,359,381.0 100.00

Liabilities and Equity

D. Interest-Bearing Liabilities

1. Customer Deposits - Current 131,168.2 881,267.0 33.21 835,917.0 33.64 845,405.0 34.46 837,624.0 35.50

2. Customer Deposits - Savings n.a. n.a. - n.a. - n.a. - n.a. -

3. Customer Deposits - Term n.a. n.a. - n.a. - n.a. - n.a. -

4. Total Customer Deposits 131,168.2 881,267.0 33.21 835,917.0 33.64 845,405.0 34.46 837,624.0 35.50

5. Deposits from Banks 28,394.6 190,772.0 7.19 167,522.0 6.74 156,284.0 6.37 174,957.0 7.42

6. Repos and Cash Collateral 2,869.5 19,279.0 0.73 19,961.0 0.80 28,835.0 1.18 50,375.0 2.14

7. Other Deposits and Short-term Borrowings 54,792.1 368,126.0 13.87 340,084.0 13.69 319,693.0 13.03 267,508.0 11.34

8. Total Deposits, Money Market and Short-term Funding 217,224.4 1,459,444.0 54.99 1,363,484.0 54.87 1,350,217.0 55.03 1,330,464.0 56.39

9. Senior Debt Maturing after 1 Year 55,854.8 375,266.0 14.14 366,767.0 14.76 334,798.0 13.65 322,365.0 13.66

10. Subordinated Borrowing 4,502.1 30,248.0 1.14 13,008.0 0.52 14,577.0 0.59 14,950.0 0.63

11. Other Funding 0.0 0.0 0.00 n.a. - n.a. - n.a. -

12. Total Long Term Funding 60,356.9 405,514.0 15.28 379,775.0 15.28 349,375.0 14.24 337,315.0 14.30

13. Derivatives 21,834.6 146,698.0 5.53 138,159.0 5.56 159,780.0 6.51 152,430.0 6.46

14. Trading Liabilities 15,825.8 106,327.0 4.01 75,705.0 3.05 76,770.0 3.13 79,817.0 3.38

15. Total Funding 315,241.7 2,117,983.0 79.81 1,957,123.0 78.76 1,936,142.0 78.91 1,900,026.0 80.53

E. Non-Interest Bearing Liabilities

1. Fair Value Portion of Debt n.a. n.a. - n.a. - n.a. - n.a. -

2. Credit impairment reserves n.a. n.a. - n.a. - n.a. - n.a. -

3. Reserves for Pensions and Other 339.1 2,278.0 0.09 1,992.0 0.08 5,572.0 0.23 5,845.0 0.25

4. Current Tax Liabilities n.a. n.a. - 1,997.0 0.08 2,440.0 0.10 1,605.0 0.07

5. Deferred Tax Liabilities n.a. n.a. - 8,395.0 0.34 8,501.0 0.35 9,367.0 0.40

6. Other Deferred Liabilities n.a. n.a. - n.a. - n.a. - n.a. -

7. Discontinued Operations 256.2 1,721.0 0.06 n.a. - n.a. - 1,962.0 0.08

8. Insurance Liabilities 50,672.6 340,449.0 12.83 315,512.0 12.70 285,973.0 11.66 269,683.0 11.43

9. Other Liabilities 10,140.4 68,129.0 2.57 67,200.0 2.70 95,611.0 3.90 57,995.0 2.46

10. Total Liabilities 376,649.9 2,530,560.0 95.36 2,352,219.0 94.66 2,334,239.0 95.14 2,246,483.0 95.21

F. Hybrid Capital

1. Pref. Shares and Hybrid Capital accounted for as Debt n.a. n.a. - 9,801.0 0.39 9,704.0 0.40 10,159.0 0.43

2. Pref. Shares and Hybrid Capital accounted for as Equity n.a. n.a. - n.a. - n.a. - n.a. -

G. Equity

1. Common Equity 17,755.3 119,291.0 4.50 119,646.0 4.82 111,975.0 4.56 104,214.0 4.42

2. Non-controlling Interest 4.9 33.0 0.00 33.0 0.00 90.0 0.00 261.0 0.01

3. Securities Revaluation Reserves 309.4 2,079.0 0.08 1,378.0 0.06 273.0 0.01 (1,003.0) (0.04)

4. Foreign Exchange Revaluation Reserves (244.8) (1,645.0) (0.06) (2,018.0) (0.08) (2,422.0) (0.10) (1,279.0) (0.05)

5. Fixed Asset Revaluations and Other Accumulated OCI 515.9 3,466.0 0.13 3,775.0 0.15 (403.0) (0.02) 546.0 0.02

6. Total Equity 18,340.7 123,224.0 4.64 122,814.0 4.94 109,513.0 4.46 102,739.0 4.35

7. Total Liabilities and Equity 394,990.6 2,653,784.0 100.00 2,484,834.0 100.00 2,453,456.0 100.00 2,359,381.0 100.00

8. Memo: Fitch Core Capital 14,643.4 98,383.0 3.71 97,639.0 3.93 86,637.0 3.53 79,072.0 3.35

9. Memo: Fitch Eligible Capital 14,643.4 98,383.0 3.71 97,639.0 3.93 86,637.0 3.53 79,072.0 3.35

Exchange rate USD1 = SEK6.71860 USD1 = SEK6.42380 USD1 = SEK6.50450 USD1 = SEK6.88770

Banks

Skandinaviska Enskilda Banken AB

October 2014 13

Skandinaviska Enskilda Banken AB

Summary Analytics30 Jun 2014 31 Dec 2013 31 Dec 2012 31 Dec 2011

6 Months - Interim Year End Year End Year End

A. Interest Ratios

1. Interest Income on Loans/ Average Gross Loans n.a. 3.06 3.45 3.60

2. Interest Expense on Customer Deposits/ Average Customer Deposits n.a. 1.27 1.78 2.04

3. Interest Income/ Average Earning Assets 2.14 2.23 2.48 2.73

4. Interest Expense/ Average Interest-bearing Liabilities 1.45 1.52 1.90 2.21

5. Net Interest Income/ Average Earning Assets 0.85 0.85 0.82 0.82

6. Net Int. Inc Less Loan Impairment Charges/ Av. Earning Assets 0.80 0.79 0.77 0.86

7. Net Interest Inc Less Preferred Stock Dividend/ Average Earning Assets 0.85 0.85 0.82 0.82

B. Other Operating Profitability Ratios

1. Non-Interest Income/ Gross Revenues 54.64 54.50 54.43 55.35

2. Non-Interest Expense/ Gross Revenues 50.45 53.66 60.86 61.70

3. Non-Interest Expense/ Average Assets 0.84 0.88 0.99 1.05

4. Pre-impairment Op. Profit/ Average Equity 17.67 17.10 13.99 14.35

5. Pre-impairment Op. Profit/ Average Total Assets 0.83 0.76 0.64 0.65

6. Loans and securities impairment charges/ Pre-impairment Op. Profit 5.07 6.00 6.56 (2.10)

7. Operating Profit/ Average Equity 16.77 16.07 13.07 14.65

8. Operating Profit/ Average Total Assets 0.79 0.71 0.60 0.67

9. Taxes/ Pre-tax Profit 20.27 18.41 14.70 19.67

10. Pre-Impairment Operating Profit / Risk Weighted Assets 3.59 2.10 1.73 1.77

11. Operating Profit / Risk Weighted Assets 3.41 1.97 1.62 1.81

C. Other Profitability Ratios

1. Net Income/ Average Total Equity 13.35 13.11 10.70 10.64

2. Net Income/ Average Total Assets 0.63 0.58 0.49 0.48

3. Fitch Comprehensive Income/ Average Total Equity 14.62 18.16 9.95 12.11

4. Fitch Comprehensive Income/ Average Total Assets 0.69 0.81 0.45 0.55

5. Net Income/ Av. Total Assets plus Av. Managed Securitized Assets n.a. n.a. n.a. n.a.

6. Net Income/ Risk Weighted Assets 2.72 1.61 1.33 1.31

7. Fitch Comprehensive Income/ Risk Weighted Assets 2.97 2.23 1.23 1.49

D. Capitalization

1. Fitch Core Capital/ Risk Weighted Assets 16.45 10.65 9.85 9.55

2. Fitch Eligible Capital/ Risk Weighted Assets 16.45 10.65 9.85 9.55

3. Tangible Common Equity/ Tangible Assets 4.01 4.26 3.75 3.58

4. Tier 1 Regulatory Capital Ratio 17.90 11.80 11.60 13.01

5. Total Regulatory Capital Ratio 20.50 11.70 11.50 12.50

6. Core Tier 1 Regulatory Capital Ratio 16.00 11.00 10.10 11.20

7. Equity/ Total Assets 4.64 4.94 4.46 4.35

8. Cash Dividends Paid & Declared/ Net Income n.a. 59.04 51.52 34.96

9. Cash Dividend Paid & Declared/ Fitch Comprehensive Income n.a. 42.64 55.40 30.72

10. Cash Dividends & Share Repurchase/Net Income n.a. n.a. n.a. n.a.

11. Internal Capital Generation 13.19 4.93 5.16 6.87

E. Loan Quality

1. Growth of Total Assets 6.80 1.28 3.99 8.24

2. Growth of Gross Loans 5.37 4.48 3.98 3.20

3. Impaired Loans/ Gross Loans 0.66 0.77 1.18 1.47

4. Reserves for Impaired Loans/ Gross Loans 0.49 0.53 0.76 0.94

5. Reserves for Impaired Loans/ Impaired Loans 73.83 68.97 64.05 63.66

6. Impaired loans less Reserves for Impaired Loans/ Fitch Core Capital 2.28 3.00 5.72 7.61

7. Impaired Loans less Reserves for Impaired Loans/ Equity 1.82 2.39 4.53 5.86

8. Loan Impairment Charges/ Average Gross Loans 0.09 0.09 0.08 (0.06)

9. Net Charge-offs/ Average Gross Loans 0.14 0.30 0.23 0.23

10. Impaired Loans + Foreclosed Assets/ Gross Loans + Foreclosed Assets 0.66 0.77 1.18 1.47

F. Funding

1. Loans/ Customer Deposits 146.07 146.15 138.30 134.25

2. Interbank Assets/ Interbank Liabilities 46.29 55.09 72.25 102.37

3. Customer Deposits/ Total Funding (excluding derivatives) 44.71 45.96 47.59 47.93

Banks

Skandinaviska Enskilda Banken AB

October 2014 14

Skandinaviska Enskilda Banken AB

Reference Data30 Jun 2014 31 Dec 2013 31 Dec 2012 31 Dec 2011

6 Months - Interim6 Months - Interim As % of Year End As % of Year End As % of Year End As % of

USDm SEKm Assets SEKm Assets SEKm Assets SEKm Assets

A. Off-Balance Sheet Items

1. Managed Securitized Assets Reported Off-Balance Sheet n.a. n.a. - n.a. - n.a. - n.a. -

2. Other off-balance sheet exposure to securitizations n.a. n.a. - n.a. - n.a. - n.a. -

3. Guarantees n.a. n.a. - 90,325.0 3.64 81,488.0 3.32 70,204.0 2.98

4. Acceptances and documentary credits reported off-balance sheet n.a. n.a. - 996.0 0.04 509.0 0.02 374.0 0.02

5. Committed Credit Lines 83,277.5 559,508.0 21.08 486,844.0 19.59 407,423.0 16.61 390,352.0 16.54

6. Other Contingent Liabilities 16,051.1 107,841.0 4.06 12,078.0 0.49 12,178.0 0.50 23,426.0 0.99

7. Total Business Volume 494,319.2 3,321,133.0 125.15 3,075,077.0 123.75 2,955,054.0 120.44 2,843,737.0 120.53

8. Memo: Risk Weighted Assets 89,030.8 598,162.0 22.54 917,040.0 36.91 879,237.0 35.84 827,615.0 35.08

9. Fitch Adjustments to Risk Weighted Assets n.a. n.a. - n.a. - n.a. - n.a. -

10. Fitch Adjusted Risk Weighted Assets 89,030.8 598,162.0 22.54 917,040.0 36.91 879,237.0 35.84 827,615.0 35.08

B. Average Balance Sheet

Average Loans 186,030.7 1,249,865.7 47.10 1,228,547.2 49.44 1,202,321.0 49.01 1,139,299.8 48.29

Average Earning Assets 345,601.7 2,321,959.7 87.50 2,234,098.0 89.91 2,169,296.8 88.42 2,063,543.8 87.46

Average Assets 386,486.4 2,596,647.7 97.85 2,536,604.0 102.08 2,383,787.8 97.16 2,243,613.4 95.09

Average Managed Securitized Assets (OBS) n.a. n.a. - n.a. - n.a. - n.a. -

Average Interest-Bearing Liabilities 307,786.1 2,067,892.0 77.92 2,034,999.4 81.90 1,906,729.8 77.72 1,776,150.8 75.28

Average Common equity 17,547.2 117,892.7 4.44 113,468.2 4.57 110,742.2 4.51 104,353.2 4.42

Average Equity 18,115.0 121,707.3 4.59 112,684.4 4.53 108,891.2 4.44 102,037.8 4.32

Average Customer Deposits 129,529.3 870,255.7 32.79 884,705.8 35.60 827,473.4 33.73 766,950.4 32.51

C. Maturities

Asset Maturities:

Loans & Advances < 3 months 45,870.7 308,187.0 11.61 381,018.0 15.33 322,187.0 13.13 317,550.0 13.46

Loans & Advances 3 - 12 Months 39,108.4 262,754.0 9.90 23,699.0 0.95 249,266.0 10.16 214,540.0 9.09

Loans and Advances 1 - 5 Years 84,632.4 568,611.0 21.43 534,282.0 21.50 473,396.0 19.30 448,001.0 18.99

Loans & Advances > 5 years 21,051.6 141,437.0 5.33 151,003.0 6.08 188,473.0 7.68 202,924.0 8.60

Debt Securities < 3 Months n.a. n.a. - 20,926.0 0.84 23,566.0 0.96 14,492.0 0.61

Debt Securities 3 - 12 Months n.a. n.a. - 38,644.0 1.56 37,781.0 1.54 40,883.0 1.73

Debt Securities 1 - 5 Years n.a. n.a. - 154,810.0 6.23 158,112.0 6.44 149,764.0 6.35

Debt Securities > 5 Years n.a. n.a. - 73,891.0 2.97 69,994.0 2.85 82,951.0 3.52

Loans & Advances to Banks < 3 Months 9,277.4 62,331.0 2.35 72,785.0 2.93 86,350.0 3.52 79,744.0 3.38

Loans & Advances to Banks 3 - 12 Months 1,596.9 10,729.0 0.40 10,866.0 0.44 10,653.0 0.43 8,356.0 0.35

Loans & Advances to Banks 1 - 5 Years 2,218.9 14,908.0 0.56 17,698.0 0.71 22,598.0 0.92 32,471.0 1.38

Loans & Advances to Banks > 5 Years 51.8 348.0 0.01 821.0 0.03 5,680.0 0.23 7,454.0 0.32

Liability Maturities:

Retail Deposits < 3 months 111,592.4 749,745.0 28.25 723,910.0 29.13 715,614.0 29.17 733,511.0 31.09

Retail Deposits 3 - 12 Months 10,199.7 68,528.0 2.58 47,097.0 1.90 37,104.0 1.51 41,702.0 1.77

Retail Deposits 1 - 5 Years 5,734.7 38,529.0 1.45 32,517.0 1.31 29,773.0 1.21 28,698.0 1.22

Retail Deposits > 5 Years 3,641.4 24,465.0 0.92 32,393.0 1.30 62,914.0 2.56 55,001.0 2.33

Other Deposits < 3 Months n.a. n.a. - n.a. - n.a. - n.a. -

Other Deposits 3 - 12 Months n.a. n.a. - n.a. - n.a. - n.a. -

Other Deposits 1 - 5 Years n.a. n.a. - n.a. - n.a. - n.a. -

Other Deposits > 5 Years n.a. n.a. - n.a. - n.a. - n.a. -

Deposits from Banks < 3 Months 26,563.7 178,471.0 6.73 164,128.0 6.61 152,814.0 6.23 178,287.0 7.56

Deposits from Banks 3 - 12 Months 1,146.2 7,701.0 0.29 5,038.0 0.20 5,754.0 0.23 4,588.0 0.19

Deposits from Banks 1 - 5 Years 300.5 2,019.0 0.08 4,209.0 0.17 2,749.0 0.11 4,463.0 0.19

Deposits from Banks > 5 Years 384.2 2,581.0 0.10 5,439.0 0.22 8,951.0 0.36 13,526.0 0.57

Senior Debt Maturing < 3 months 32,120.5 215,805.0 8.13 154,900.0 6.23 137,652.0 5.61 199,597.0 8.46

Senior Debt Maturing 3-12 Months 22,671.5 152,321.0 5.74 134,163.0 5.40 134,541.0 5.48 40,616.0 1.72

Senior Debt Maturing 1- 5 Years 45,485.8 305,601.0 11.52 85,635.0 3.45 76,288.0 3.11 68,739.0 2.91

Senior Debt Maturing > 5 Years 10,369.0 69,665.0 2.63 22,628.0 0.91 19,264.0 0.79 13,011.0 0.55

Total Senior Debt on Balance Sheet 110,646.9 743,392.0 28.01 397,326.0 15.99 367,745.0 14.99 321,963.0 13.65

Fair Value Portion of Senior Debt n.a. n.a. - n.a. - n.a. - n.a. -

Covered Bonds n.a. n.a. - 309,525.0 12.46 286,746.0 11.69 260,423.0 11.04

Subordinated Debt Maturing < 3 months n.a. n.a. - 3,892.0 0.16 3.0 0.00 n.a. -

Subordinated Debt Maturing 3-12 Months 1,161.6 7,804.0 0.29 n.a. - n.a. - n.a. -

Subordinated Debt Maturing 1- 5 Year 1,906.6 12,810.0 0.48 4,488.0 0.18 7,037.0 0.29 n.a. -

Subordinated Debt Maturing > 5 Years 1,433.9 9,634.0 0.36 4,628.0 0.19 4,378.0 0.18 n.a. -

Total Subordinated Debt on Balance Sheet 4,502.1 30,248.0 1.14 13,008.0 0.52 14,577.0 0.59 14,950.0 0.63

Fair Value Portion of Subordinated Debt n.a. n.a. - n.a. - n.a. - n.a. -

D. Equity Reconciliation

1. Equity 18,340.7 123,224.0 4.64 122,814.0 4.94 109,513.0 4.46 102,739.0 4.35

2. Add: Pref. Shares and Hybrid Capital accounted for as Equity n.a. n.a. - n.a. - n.a. - n.a. -

3. Add: Other Adjustments n.a. n.a. - n.a. - n.a. - n.a. -

4. Published Equity 18,340.7 123,224.0 4.64 122,814.0 4.94 109,513.0 4.46 102,739.0 4.35

E. Fitch Eligible Capital Reconciliation

1. Total Equity as reported (including non-controlling interests) 18,340.7 123,224.0 4.64 122,814.0 4.94 109,513.0 4.46 102,739.0 4.35

2. Fair value effect incl in own debt/borrowings at fv on the B/S- CC only 0.0 0.0 0.00 0.0 0.00 0.0 0.00 0.0 0.00

3. Non-loss-absorbing non-controlling interests 0.0 0.0 0.00 0.0 0.00 0.0 0.00 0.0 0.00

4. Goodwill 1,563.7 10,506.0 0.40 10,408.0 0.42 10,460.0 0.43 10,487.0 0.44

5. Other intangibles 1,038.9 6,980.0 0.26 6,763.0 0.27 6,827.0 0.28 7,385.0 0.31

6. Deferred tax assets deduction 0.0 0.0 0.00 649.0 0.03 809.0 0.03 1,016.0 0.04

7. Net asset value of insurance subsidiaries 1,094.7 7,355.0 0.28 7,355.0 0.30 4,780.0 0.19 4,779.0 0.20

8. First loss tranches of off-balance sheet securitizations 0.0 0.0 0.00 0.0 0.00 0.0 0.00 0.0 0.00

9. Fitch Core Capital 14,643.4 98,383.0 3.71 97,639.0 3.93 86,637.0 3.53 79,072.0 3.35

10. Eligible weighted Hybrid capital 0.0 0.0 0.00 0.0 0.00 0.0 0.00 0.0 0.00

11. Government held Hybrid Capital 0.0 0.0 0.00 0.0 0.00 0.0 0.00 0.0 0.00

12. Fitch Eligible Capital 14,643.4 98,383.0 3.71 97,639.0 3.93 86,637.0 3.53 79,072.0 -

Exchange Rate USD1 = SEK6.71860 USD1 = SEK6.42380 USD1 = SEK6.50450 USD1 = SEK6.88770

Banks

Skandinaviska Enskilda Banken AB

October 2014 15

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