Swedish Banks: SHB, Nordea, Swedbank

Europe Equity Research 27 July 2010

Swedish banks: SHB, Nordea,

Swedbank

Minimal changes post q2 results, maintain Swedbank

OW, Nordea N and SHB relative UW

• Maintaining ratings post q2 2010 results with JPMe ave 1% Banks increase to July 2011E SOTP price targets post q2 results. For SHB Nana Francois, CFAAC (UW), Nordea (N) and Swedbank (OW) we have changed our July 31st (44-20) 7325-6424 2011 PTs by 0%, 0% and 1% respectively to 164 SEK, 68 SEK and 85 [email protected] SEK respectively, with 6% average increase to our 2011E earnings Kian Abouhossein driven by loan losses. (44-20) 7325-1523 [email protected] • Q2 in general showed continuation of earlier trends whilst Swedish J.P. Morgan Securities Ltd. guidance was positive. The Q2 results showed– i) limited pick up in corporate volumes (+1% qoq after -3% in q1 for SHB, +2% qoq after Next catalysts +2% in q1 for Nordea, -1% qoq after -3% in q1 for Swed); ii) continued funding-driven margin pressure; and iii) better than normalised domestic Swedbank q3 results loan loss progression (2bp recoveries in Sweden for SHB, 0bp for Nordea and 4bp in Retail and net recoveries in Corporate for Swedbank). Nordea q3 results In terms of guidance the banks were i) positive about the corporate volume outlook (reflected in increased fee based activity and increasing SHB q3 results credit commitments); ii) confident that rising Swedish rates would have an overall positive impact on deposit margins which would not be fully offset by competitive impacts on the deposit side or continued pricing pressure on the corporate asset side; and iii) positive about domestic asset quality with all internal rating indicating a strong outlook in line with domestic trends of falling bankruptcies, strong corporate and consumer confidence – though we would note that the very low interest environment is likely providing support from an asset quality perspective. • Overall we remain comfortable with the slight premium in Nordic valuations at 1.2x 2011E P/NAV vs. 1.0x P/NAV for European banks due to i) more comfortable funding situation with many banks pre- funded for debt maturing in 2010 and continued access to liquid domestic covered bond markets; ii) limited exposure to higher risk European geographies, confirmed in the CEBS stress test results released on Friday 23rd July; and iii) interest rate rising cycle already commenced in Norway and beginning in Sweden supporting improving deposit margins. We feel the premium is excessive in SHB trading at 1.4x 2011E P/NAV with JPMe 13% RoNAV on 10bp of loan losses in out 2011E estimates, whilst for Swedbank we could see further 25%-30% potential to a normalised Baltic returns (JPMe ~15% normalised RoNAV vs. 30% pre-crisis, and 2% RoNAV in our 2011E estimates). Equity Ratings and Price Targets Mkt Cap Rating Price Target Company Symbol (Skr mn) Price(Skr ) Cur Prev Cur Prev Svenska Handelsbanken SHBa.ST 125,667.6 201.30 UW n/c 164.00 165.00 Nordea Bank AB NDA.ST 285,617.8 70.75 N n/c 68.00 n/c Swedbank SWEDa.ST 62,041.3 80.25 OW n/c 85.00 84.00 Source: Company data, Bloomberg, J.P. Morgan estimates. n/c = no change. All prices as of 26 Jul 10. See page 15 for analyst certification and important disclosures, including non-US analyst disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

Handelsbanken

Remains expensive on a relative basis

Underweight Svenska Handelsbanken (SHBa.ST;SHBA SS) Company Data FYE Dec 2009A 2010E 2010E 2011E 2011E Price (Skr) 201.30 (Old) (New) (Old) (New) Date Of Price 26 Jul 10 Adj. EPS FY (Skr) 16.37 17.17 17.21 16.72 17.68 Price Target (Skr) 164.00 Adj P/E FY 12.3 11.7 11.7 12.0 11.4 Price Target End 31 Jul 11 NAV/Sh FY (Skr) 121.5 131.2 125.4 139.0 134.0 Date P/NAV FY 1.7 1.5 1.6 1.4 1.5 52-week Range 218.70 - ROE FY 12.9% 12.4% 12.7% 11.4% 12.5% (Skr) 165.00 ROA FY 0.5% 0.5% 0.5% 0.4% 0.4% Mkt Cap (Skr bn) 125.7 Dividend (Net) FY (Skr) 8.00 8.93 9.04 8.86 9.37 Shares O/S (mn) 624 Net Attributable Income FY 10,245 10,708 10,815 10,426 10,996 Mkt Cap ($ bn) 17.2 (Skr mn) Source: Company data, Bloomberg, J.P. Morgan estimates.

After q2 results in which NII Table 1: SHB Summary P&L and Key items disappointed and the bottom line Summary P&L SEK mn 4Q09 1Q10 2Q10 Y/Y Q/Q Act vs. JPMe was rescued by costs and very Net interest income 5,359 5,316 5,082 -10% -4% -5% low loan loss provisions, we Net commission income 1,995 1,983 1,988 7% 0% 0% have upgraded our 2011 eps Net gains/losses 497 500 424 -22% -15% 16% results by 7% entirely driven by Total revenues 7,967 8,009 7,653 -7% -4% -3% loan loss provisions. We note Total expenses -4,058 -3,666 -3,745 -2% 2% -4% that balance sheet trends were Gross Operating Income 3,909 4,343 3,908 -11% -10% -2% not inline with the trend of Net Loan Losses -691 -551 -369 -61% -33% -26% falling P&L charges with NPLs Operating earnings 3,221 3,792 3,539 3% -7% 2% Effective tax rate, % 22% 26% 29% are up +9% qoq albeit leading to Net profit 2,499 2,824 2,520 0% -11% -1% a low 0.58% gross NPL Underlying Net profit 2,499 2,694 2,520 0% -6% -1%

Key Items Lending to the public 1,477 1,468 1,484 -1% 1% 0% RWAs 602 589 587 -11% 0% 0% Customer deposits 550 581 580 2% 0% Shareholders' equity 83 85 83 7% -3% -5% NAV 76 78 76 -5% Core tier one capital 64 65 66 -1% NPLs 9 8 9 -1% 9% Key ratios C/I ratio, % 51% 46% 49% LLPs JPM 19 bp 15 bp 10 bp JPM gross NPL ratio 0.58% 0.54% 0.58% NPL coverage 62% 73% 68% NAVPS 119 125 121 Op Profit by business area Branch office ops 2,769 3,074 3,129 7% 2% 4% Capital Markets 372 397 309 -49% -22% 14% Asset Management 135 163 154 -631% -6% -3% Other operations -188 -13 -212 19% 1531% 196% Eliminations 131 168 157 21% -7% 34% Source: Company reports and J.P. Morgan estimates

2 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

Table 2: SHB JPMe 2010 and 2011 earnings revisions SEK bn 2010 2011 Old New % change Old New % change Revenues 31.9 31.0 -3% 33.2 32.6 -2% Costs -15.4 -15.1 -2% -17.0 -16.2 -5% Pre provision profit 16.6 15.9 -4% 16.2 16.4 1% Provisions -2.1 -1.4 -32% -2.3 -1.6 -34% Tax rate 26% 26% 26% 26% Adj Net profit 10.7 10.7 0% 10.3 11.0 7%

Loan loss provisions 14 9 -32% 15 10 -34% Earnings per share 17.17 17.21 0% 16.47 17.68 7%

PT 165 164 0% Source: Company reports and J.P. Morgan estimates

Handelsbanken valuation We have more or less maintained our Price Target level at 164 SEK (165 SEK previously) despite the 7% earnings increase for 2011E as this is entirely driven by provisions and we believe our 2011E estimates reflect “better than normalised” loan losses at 10bp in 2011E. In this context we feel that 1.2x P/NAV fairly reflects the 13% RoNAV delivered at this level of loan losses, compared to the 1.5x P/NAV for 2011E which the current market price implies. In comparison to Nordea, if we were to increase SHB’s loan losses to Nordea’s normalised level of 25bp that would result in a 15% earnings downgrade to our 2011E numbers, with RoNAV at 11.8% for SHB vs 12.7% for Nordea at 25bp of loan losses on our estimates).

Table 3: SHB July 31st 2011E SOTP valuation SEK SOTP Adj Profit % P/E Capital % P/NAV RoNAV Value per % 2011E 2011E share Sweden 7,428 68% 9.0 x 45,792 55% 1.5 x 16.2 % 108 65% UK 452 4% 9.0 x 4,101 5% 1.0 x 11.0 % 7 4% Denmark 407 4% 8.0 x 3,417 4% 1.0 x 11.9 % 5 3% Finland 260 2% 8.0 x 4,101 5% 0.5 x 6.3 % 3 2% Norway 1,395 13% 9.0 x 8,653 10% 1.5 x 16.1 % 20 12% Int 46 0% 8.0 x 2,050 2% 0.2 x 2.2 % 1 0% Capital Mkts 852 8% 8.0 x 4,028 5% 1.7 x 21.2 % 11 7% AM 412 4% 10.0 x 6,665 8% 0.6 x 6.2 % 7 4% Other ops -255 -2% 10.0 x 4,541 5% 1.0 x -5.6 % -4 -2% Excess capital 4,541 1.0 x 7 4% Total 10,996 100% 9.3 x 83,349 100% 1.2 x 13.9% 164 100% Source: J.P. Morgan estimates

3 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

Nordea Bank AB

Earnings upgrade on loan losses, remain Neutral on the stock

Neutral Nordea Bank AB (NDA.ST;NDA SS) Company Data FYE Dec 2009A 2010E 2010E 2011E 2011E Price (Skr) 70.75 (Old) (New) (Old) (New) Date Of Price 26 Jul 10 Adj. EPS FY (€) 0.60 0.58 0.57 0.60 0.67 Price Target (Skr) 68.00 Adj P/E FY 12.5 12.9 13.2 12.5 11.2 Price Target End 31 Jul 11 NAV/Sh FY (€) 4.8 5.0 5.0 5.3 5.4 Date P/NAV FY 1.6 1.5 1.5 1.4 1.4 52-week Range (Skr) 79.10 - ROE FY 11.5% 10.3% 10.0% 10.2% 11.1% 59.30 ROA FY 0.5% 0.4% 0.4% 0.4% 0.4% Mkt Cap (Skr bn) 285.6 Dividend (Net) FY (Skr) 0.20 0.27 0.27 0.27 0.30 Shares O/S (mn) 4,037 Net Attributable Income FY 2,314 2,343 2,342 2,424 2,694 Mkt Cap ($ bn) 39.1 (€ mn) Source: Company data, Bloomberg, J.P. Morgan estimates.

Despite the operating profit miss Table 4: Nordea Summary P&L and Key items on the group level in q2, the Summary P&L, EUR mn 4Q09 1Q10 2Q10 Y/Y % Q/Q % Act vs. JPM miss was largely driven by the Net interest income 1,299 1,235 1,249 -4% 1% 1% corporate centre, and solid Net commission income 463 475 538 31% 13% 7% divisional performance both on Trading inc 351 548 289 -51% -47% -34% the pre provision and loan loss Total revenues 2,158 2,303 2,161 -8% -6% -3% lines support our 11% eps Total expenses -1,219 -1,164 -1,186 6% 2% -2% upgrade (2% upgrade to pre Gross Operating Income 939 1,139 975 -22% -14% -4% provision profits and 24% Net Loan Losses -347 -261 -245 -42% -6% -8% reduction in loan losses down to Operating earnings 592 878 730 -11% -17% -2% Effective tax rate % 24% 27% 26% 24bp in 2011, in line with mgt Net profit 448 642 537 -13% -16% -1% guidance of 25bp as a Underlying net profit 496 642 500 -19% -22% -8% normalised level. Key Items Loans to the public 282 292 303 9% 3% 1% RWAs 172 179 185 9% 3% 1% Customer deposits 154 160 161 8% 1% Shareholders' equity 22 22 23 9% 3% 1% NAV 19 19 20 7% 3% 1% Core tier one capital 17 17 17 -6% NPLs 4.2 4.5 4.4 25% -1% Key ratios C/I ratio, % 56% 51% 55% Net LLPs, bp 49 bp 37 bp 38 bp NPL ratio 1.5% 1.5% 1.4% NPL coverage 52% 54% 56% NAVPS (EUR) 4.8 4.8 4.9 Op Profit by business Denmark 86 104 110 6% 17% Finland 86 92 89 -3% -12% Norway 90 100 149 49% 38% Sweden 143 146 226 55% 56% Other -4 -1 1 -200% -200% Financial Inst 50 46 57 24% -4% Shipping 81 58 79 36% 36% Other 2 13 -12 -192% Life 50 64 40 -38% 122% Private Banking 13 13 15 15% 11% Group Corporate Centre -19 60 -109 -282% 1457% Group Functions and Eliminations -76 22 41 86% 32% Source: Company reports and J.P. Morgan estimates

4 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

Table 5: Nordea 2010 and 2011 earnings revisions EUR bn 2010 2011 Old New % change Old New % change Revenues 8.9 8.9 0% 9.2 9.4 3% Costs -4.7 -4.8 2% -4.9 -5.0 3% Pre provision profit 4.2 4.1 -3% 4.3 4.4 2% Provisions -1.0 -0.9 -10% -1.1 -0.8 -24% Tax rate 27% 26% 25% 25% Adj Net profit 2.3 2.3 -2% 2.4 2.7 11%

Loan loss provisions 35 31 -11% 33 24 -29% Earnings per share 0.58 0.57 -2% 0.60 0.67 11%

Price Target 68 68 0% Source: J.P. Morgan estimates

Nordea valuation We have maintained our PT at 68 SEK, as our earnings upgrade for 2011E is almost entirely driven by normalisation of loan losses with a 24% cut in 2011E loan losses down to 24bp (vs. mgt guidance of loan losses ~25bp being a normal level).

Table 6: Nordea July 31st 2011E SOTP valuation EUR mn SOTP Adj Profit % P/E Capital % P/NAV RoNAV Value % 2011E 2011E Per share Nordic Banking 1,780 66% 9.8 x 14,735 67% 1.2 x 12.1 % 41 60% Denmark 424 16% 9.5 x 3,959 18% 1.0 x 10.7 % 9 14% Finland 332 12% 9.5 x 3,079 14% 1.0 x 10.8 % 7 11% Norway 458 17% 10.0 x 3,079 14% 1.5 x 14.9 % 11 16% Sweden 560 21% 10.0 x 4,399 20% 1.3 x 12.7 % 13 19% Functions 6 0% 9.0 x 220 1% 0.2 x 2.7 % 0 0% Inst & Internat. 552 20% 9.4 x 3,299 15% 1.6 x 16.7 % 12 18% Fin Institutions 139 5% 9.5 x 440 2% 3.0 x 31.6 % 3 5% Shipping, Oil, Int 229 8% 9.0 x 880 4% 2.3 x 26.0 % 5 7% New Europe 202 7% 8.7 x 1,759 8% 1.0 x 11.5 % 4 6% Other IIB 5 0% 9.0 x 220 1% 0.2 x 2.4 % 0 0% Other operations 280 10% nm 4,172 19% 1.4 x 6.7 % 13 20% Life 120 4% nm 3,512 16% 1.2 x 3.4 % 10 15% Private Banking 47 2% 10.0 x 440 2% 1.1 x 10.7 % 1 2% Other 119 4% 8.0 x 220 1% 4.3 x 54.3 % 2 3%

Corp centre 20 1% 8.0 x 440 2% 0.4 x 4.6 % 0 1% Functions, elim 63 2% 8.0 x -653 -3% -0.8 x -9.7 % 1 2%

Total 2,694 100% 10.7 x 21,993 100% 1.3x 12.7% 68 100% Source: J.P.Morgan estimates

5 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

Swedbank

Operating weakness were expected, loan losses improving, strong franchise value beyond 2011E

Overweight Swedbank (SWEDa.ST;SWEDA SS) Company Data FYE Dec 2009A 2010E 2010E 2011E 2011E Price (Skr) 80.25 (Old) (New) (Old) (New) Date Of Price 26 Jul 10 Adj. EPS FY (Skr) (8.47) 2.79 4.65 7.49 7.55 Price Target (Skr) 85.00 Adj P/E FY NM 28.8 17.3 10.7 10.6 Price Target End 31 Jul 11 NAV/Sh FY (Skr) 62.2 65.0 64.3 72.5 68.8 Date P/NAV FY 1.3 1.2 1.2 1.1 1.2 52-week Range (Skr) 83.30 - ROE FY -11.2% 3.5% 5.9% 8.9% 9.2% 43.43 ROA FY -0.5%0.2%0.3%0.5%0.5% Mkt Cap (Skr bn) 62.0 Dividend (Gross) FY (Skr) 0.00 0.00 1.00 0.00 2.00 Shares O/S (mn) 773 Net Attributable Income FY (10,511) 3,236 4,153 8,688 7,514 Mkt Cap ($ bn) 8.5 (Skr mn) Source: Company data, Bloomberg, J.P. Morgan estimates.

Loan losses are falling faster Table 7: Swedbank Summary P&L and Key Items than expected, down more than SEK mn 4Q09 1Q10 2Q10 Y/Y % Q/Q % Act vs. JPMe 1bn SEK qoq, with mgt guidance Net interest income 4,702 4,023 3,799 -28% -6% -3% that the general trend for loan Net commission income 2,273 2,282 2,395 22% 5% 3% losses should be continued Trading inc 262 647 822 16% 27% 56% decline (even taking into Total revenues 7,982 7,667 7,772 -16% 1% 4% account the loan loss recoveries Total expenses -4,300 -4,391 -4,423 0% 1% 0% in Large corporate and in Russia Gross Operating Income 3,682 3,276 3,349 -31% 2% 10% & Ukraine which supported the Net Loan Losses -5,355 -2,210 -963 -86% -56% -53% 28bp loss level in Q2 after 64bp Operating earnings -1,673 1,002 2,258 -222% 125% 126% Effective tax rate % -6% 47% 30% in Q1. with steadying Baltic NPL Net profit -1,804 536 1,567 -178% 192% 161% trend (+1% growth in Q1 qoq and Underlying net profit -2,421 550 1,554 -159% 183% 159% +2% growth qoq in Q2). We have cut our operating Key Items Lending to the public 1,291 1,214 1,239 -3% 2% 3% earnings slightly for 2011E Customer deposits 504 511 529 13% 4% reflecting the lower bottoming Shareholders' equity 90 89 91 12% 2% 1% level for NII after greater than NAV 72 72 74 2% expected weakness in Q2, but NPLs 40.5 40.3 42.7 44% 6% 7% have also cut our loan loss o/w Baltics 26.6 26.7 27.3 25% 2% provisions down to 24bp from o/w International 10.8 10.8 12.3 149% 14% 27bp in our previous estimates, Key ratios with loan losses in the Baltics C/I ratio, % 54 % 57 % 57 % still standing above 100bp (from NPL ratio 3.19% 3.25% 3.37% 283bp in Q2) NPL coverage 65% 66% 64% NAVPS 64 64 66 Op profit by division Retail 1,852 1,604 1,623 -31% 1% 18% Baltic Banking -2,771 -1,386 -375 -86% -73% -63% Russia and Ukraine -1,258 49 82 -104% 67% 82% Large corps and institutions 490 811 889 -16% 10% 35% Asset Management 73 208 177 99% -15% -18% Shared Services and Group Staffs -33 -233 -92 -86% -61% -59% Ektornet -26 -37 -46 24% -4% Source: Company reports and J.P. Morgan estimates

6 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

Table 8: Swedbank 2010 and 2011 earnings revisions SEK bn 2010 2011 Old New % change Old New % change Revenues 31.0 30.6 -1% 33.7 32.9 -3% Costs -18.0 -17.6 -2% -18.6 -18.1 -2% Pre provision profit 13.1 13.0 -1% 15.2 14.7 -3% Provisions -7.9 -5.1 -36% -3.7 -3.2 -12% Tax rate 36% 29% 24% 23% Adj Net profit 3.2 5.4 67% 8.7 8.8 1%

Loan loss provisions 62 40 -36% 27 24 -12% Earnings per share 2.79 4.65 67% 7.49 7.55 1%

Price Target 84 85 1% Source: J/.P. Morgan estimates

Swedbank valuation We have marginally increased our PT to 85 SEK (84 SEK), and note that we expect Swedbank to deliver an 11% RoNAV in 2011E whilst still only delivering a 2% RoNAV on 1/3 of its capital situated in the Baltics. Normalised returns in the Baltics (JPMe 15% compared to 30% RoNAVs pre crisis) could theoretically create further 25%-30% value potential.

Table 9: Swedbank July 31st 2011E SOTP valuation SEK mn SOTP Adj Profit % P/E Capital % P/NAV RoNAV Value % 2011E 2011E Per share Retail 5,435 62% 10 x 21,426 27% 2.4 x 25.4 % 45 52% Baltic Banking 519 6% nm 27,173 34% 0.5 x 1.9 % 12 14% Russia , Ukraine 7 0% 8 x 3,736 5% 0.0 x 0.2 % 0 0% Large corps 2,299 26% 9 x 16,155 20% 1.3 x 14.2 % 18 21% AM, Insurance 738 8% 8 x 2,200 3% 2.7 x 33.6 % 5 6% Other -247 -3% 8 x -2 -2% Excess capital 9,072 11% 1.0 x 8 9%

Total 8,751 100% 11 x 79,762 100% 1.3 x 11.3% 85 100% Source: J.P. Morgan estimates

7 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

Valuation Methodology and Risks

Handelsbanken (Underweight; Price Target Skr 164.00) Valuation Methodology We use a SOTP methodology to value Handelsbanken.

Risks to Our View The key risks to our rating and PT being achieved include the following Downside risk from general asset quality deterioration in Sweden Downside risk of high Swedish real estate exposure, given our expectations of more negative market developments. Downside risk from international exposure, including the UK Downside risk from likely increase in concentration risk, as international banks increasingly return their focus on their core markets and Swedish banks are obliged to take larger percentages of the syndications as they roll over. Upside risks from more benign Swedish macro developments, reducing loan loss provisions below our expectations. Nordea Bank AB (Neutral; Price Target Skr 68.00) Valuation Methodology We use a SOTP valuation methodology to value Nordea.

Risks to Our View The key risks to our rating and PT being achieved include: Intensifying competition, putting particular pressure on Nordea’s deposit margins Exposure to potential problem sectors including Baltics, Poland, Russia, Shipping, Private Equity Overhang remaining from expected sale of government stake Better than expected asset quality development Better than expected net interest margin progression from corporate repricing Potential support from further buying by Sampo Swedbank (Overweight; Price Target Skr 85.00) Valuation Methodology We use a SOTP valuation methodology to value Swedbank.

Risks to Our View The key risks to our rating and PT being achieved include: Rising domestic Swedish loan losses Rising loan losses in the Baltics, Russia and Ukraine, driving operating losses Funding: utilisation of government guaranteed funding is not sustainable in the longer term More benign macro developments supported stronger earnings generation and lower loan losses Positive equity market developments supporting Asset Management

8 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

JPM Q-Profile Svenska Handelsbanken A (SWEDEN / Financials) As Of: 23-Jul-2010 [email protected]

Local Share Price Current: 202.60 12 Mth Forward EPS Current: 17.95 250.00 25.00

200.00 20.00

150.00 15.00

100.00 10.00

50.00 5.00

0.00 0.00 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10

Earnings Yield (& local bond Yield) Current: 9% Implied Value Of Growth* Current: -11.67%

18% 12Mth fwd EY US BY Proxy 0.60 16% 0.40 14% 0.20 0.00 12% -0.20 10% -0.40 8% -0.60 6% -0.80 4% -1.00 2% -1.20 0% -1.40 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10

PE (1Yr Forward) Current: 11.3x Price/Book Value Current: 1.5x

20.0x 3.0x PBV hist PBV Forward 18.0x 2.5x 16.0x 14.0x 2.0x 12.0x 10.0x 1.5x 8.0x 1.0x 6.0x 4.0x 0.5x 2.0x 0.0x 0.0x Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10

ROE (Trailing) Current: 12.86 Dividend Yield (Trailing) Current: 4.16 25.00 12.0

10.0 20.00

8.0 15.00 6.0 10.00 4.0

5.00 2.0

0.00 0.0 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10

Summary

Svenska Handelsbanken A 17220.79 As Of: 23-Jul-10 SWEDEN 57.58677 SEDOL 5703661 Local Price: 202.60 Financials Commercial Banks EPS: 17.95 Latest Min Max Median Average 2 S.D.+ 2 S.D. - % to Min % to Max % to Med % to Avg 12mth Forward PE 11.29x 6.13 17.78 11.09 11.08 15.01 7.16 -46% 58% -2% -2% P/BV (Trailing) 1.53x 0.76 2.82 1.82 1.82 2.68 0.95 -50% 85% 20% 19% Dividend Yield (Trailing) 4.16 1.69 10.04 3.37 3.54 6.70 0.37 -59% 141% -19% -15% ROE (Trailing) 12.86 12.59 23.04 16.68 17.22 22.10 12.34 -2% 79% 30% 34% Implied Value of Growth -11.7% -1.26 0.37 0.05 0.04 0.46 -0.37 -982% 420% 145% 138%

Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, J.P. Morgan Calcs * Implied Value Of Growth = (1 - EY/Cost of equity) where cost of equity =Bond Yield + 5.0% (ERP)

9 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

JPM Q-Profile Nordea Bank AB (SWEDEN / Financials) As Of: 23-Jul-2010 [email protected]

Local Share Price Current: 70.65 12 Mth Forward EPS Current: 0.63 100.00 1.20 90.00 1.00 80.00 70.00 0.80 60.00 50.00 0.60 40.00 0.40 30.00 20.00 0.20 10.00 0.00 0.00 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10

Earnings Yield (& local bond Yield) Current: 8% Implied Value Of Growth* Current: -6.20%

20% 12Mth fwd EY US BY Proxy 1.00 18% 0.50 16% 14% 0.00 12% 10% -0.50 8% -1.00 6% 4% -1.50 2% 0% -2.00 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10

PE (1Yr Forward) Current: 11.9x Price/Book Value Current: 1.3x

25.0x 3.5x PBV hist PBV Forward

3.0x 20.0x 2.5x

15.0x 2.0x

1.5x 10.0x

1.0x 5.0x 0.5x

0.0x 0.0x Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10

ROE (Trailing) Current: 10.26 Dividend Yield (Trailing) Current: 3.67 25.00 25.0

20.00 20.0

15.00 15.0

10.00 10.0

5.00 5.0

Summary

Nordea Bank AB 38835.29 As Of: 23-Jul-10 SWEDEN 89.50661 SEDOL 5380031 Local Price: 70.65 Financials Commercial Banks EPS: 0.63 Latest Min Max Median Average 2 S.D.+ 2 S.D. - % to Min % to Max % to Med % to Avg 12mth Forward PE 11.87x 5.39 21.50 10.83 11.31 16.33 6.30 -55% 81% -9% -5% P/BV (Trailing) 1.32x 0.45 2.86 1.59 1.62 2.78 0.45 -66% 117% 21% 23% Dividend Yield (Trailing) 3.67 2.08 22.01 3.97 5.95 16.07 -4.18 -43% 499% 8% 62% ROE (Trailing) 10.26 7.21 22.50 14.90 15.22 23.26 7.19 -30% 119% 45% 48% Implied Value of Growth -6.2% -1.57 0.45 0.06 0.02 0.57 -0.53 -2437% 832% 194% 128%

Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, J.P. Morgan Calcs * Implied Value Of Growth = (1 - EY/Cost of equity) where cost of equity =Bond Yield + 5.0% (ERP)

10 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

JPM Q-Profile Swedbank AB (SWEDEN / Financials) As Of: 23-Jul-2010 [email protected]

Local Share Price Current: 79.70 12 Mth Forward EPS Current: 4.87 250.00 25.00

20.00 200.00 15.00

150.00 10.00

5.00 100.00

0.00 50.00 -5.00

0.00 -10.00 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10

Earnings Yield (& local bond Yield) Current: 6% Implied Value Of Growth* Current: 23.05%

35% 12Mth fwd EY US BY Proxy 3.00 30% 2.00 25% 1.00 20% 15% 0.00

10% -1.00 5% -2.00 0% -3.00 -5% -10% -4.00 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10

PE (1Yr Forward) Current: 16.4x Price/Book Value Current: 0.8x

80.0x 3.5x PBV hist PBV Forward

60.0x 3.0x

2.5x 40.0x 2.0x 20.0x 1.5x 0.0x 1.0x

-20.0x 0.5x

-40.0x 0.0x Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10

ROE (Trailing) Current: -7.69 Dividend Yield (Trailing) Current: 0.00 30.00 18.0 25.00 16.0 20.00 14.0 15.00 12.0 10.00 10.0 5.00 8.0 0.00 6.0 -5.00 4.0 -10.00 2.0 -15.00 0.0 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10

Summary

Swedbank AB 10375.39 As Of: 23-Jul-10 SWEDEN 77.62843 SEDOL 4846523 Local Price: 79.70 Financials Commercial Banks EPS: 4.87 Latest Min Max Median Average 2 S.D.+ 2 S.D. - % to Min % to Max % to Med % to Avg 12mth Forward PE 16.38x -20.00 75.00 11.32 11.02 31.95 -9.92 -222% 358% -31% -33% P/BV (Trailing) 0.85x 0.14 2.38 1.71 1.54 2.68 0.41 -83% 180% 101% 82% Dividend Yield (Trailing) 0.00 0.00 15.58 4.00 4.13 8.46 -0.20 ROE (Trailing) -7.69 -11.95 24.33 16.43 13.97 30.98 -3.05 -55% 416% 314% 282% Implied Value of Growth 23.1% -3.07 1.89 0.10 0.08 1.24 -1.09 -1432% 721% -57% -67%

Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, J.P. Morgan Calcs * Implied Value Of Growth = (1 - EY/Cost of equity) where cost of equity =Bond Yield + 5.0% (ERP)

11 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

Handelsbanken: Summary of Financials

Profit and Loss Statement Ratio Analysis Skr in millions, year end Dec FY08A FY09A FY10E FY11E FY12E Skr in millions, year end Dec FY08A FY09A FY10E FY11E FY12E Per Share Data Net interest income 19,223 22,000 20,757 22,047 - EPS Reported 19.16 16.37 17.21 17.68 - % Change Y/Y 23.2% 14.4% (5.6%) 6.2% - EPSAdjusted 18.01 16.37 17.21 17.68 - Non-interest income 10,667 10,335 10,217 10,596 - % Change Y/Y 3.6% (9.1%) 5.1% 2.7% - Fees & commissions 6,795 7,393 8,069 8,740 - DPS 7.00 8.009.04 9.37 - % change Y/Y (12.3%) 8.8% 9.1% 8.3% - % Change Y/Y (48.1%) 14.3% 13.0% 3.6% - Trading revenues 3,169 2,457 1,538 1,289 - Dividend yield 3.5% 4.0% 4.5% 4.7% - % change Y/Y 3.8% (22.5%) (37.4%) (16.2%) - Payout ratio 36.5% 48.9% 52.5% 53.0% - Other Income 184 118 219 160 - BV per share 120.24 133.27 136.75 145.39 - Total operating revenues 29,890 32,335 30,974 32,643 - NAV per share 108.92 121.53 125.38 134.02 - % change Y/Y 10.2% 8.2% (4.2%) 5.4% - Shares outstanding 623.5 623.5 621.9 621.9 - Admin expenses -13,229 -15,219 -15,068 -16,208 - % change Y/Y 7.0% 15.0% (1.0%) 7.6% - Return ratios Other expenses 716 0 0 0 - RoRWA 1.7% 1.5%1.8% 1.8% - Pre-provision operating profit 16,661 17,11615,906 16,434 - Pre-tax ROE 20.4% 16.5% 17.0% 16.5% - % change Y/Y 12.9% 2.7% (7.1%) 3.3% - ROE 15.0% 12.9%12.7% 12.5% - Loan loss provisions -1,605 -3,392 -1,426 -1,556 - RoNAV 16.5% 14.2%13.9% 13.6% - Other provisions - - - - - Earnings before tax 15,772 13,724 14,480 14,878 - Revenues % change Y/Y 3.5% (13.0%) 5.5% 2.7% - NIM (NII / RWA) 1.1% 1.2% 1.0% 1.0% - Tax (charge) (3,382) (3,519) (3,778) (3,882) - Non-IR / average assets - - - - - % Tax rate 22.1% 25.6% 26.1% 26.0% - Total rev / average assets 1.5% 1.5% 1.4% 1.3% - Minorities 0 0 0 0 - NII / Total revenues 64.3% 68.0%67.0% 67.5% - Net Income (Reported) 12,131 10,245 10,815 10,996 - Fees / Total revenues 22.7% 22.9% 26.0% 26.8% - Trading / Total revenues 10.6% 7.6% 5.0% 3.9% -

Balance sheet Skr in millions, year end Dec FY08A FY09A FY10E FY11E FY12E Skr in millions, year end Dec FY08A FY09A FY10E FY11E FY12E

ASSETS Cost ratios Net customer loans 1,481,471 1,477,183 1,514,243 1,688,182 - Cost / income 44.3% 47.1%48.6% 49.7% - % change Y/Y 14.6% (0.3%) 2.5% 11.5% - Cost / assets 0.6% 0.7% 0.6% 0.6% - Loan loss reserves 2,745 5,380 5,637 6,255 - Staff numbers - - - - - Investments 166,368 176,002 166,022 172,663 - Other interest earning assets 0 0 0 0 - Balance Sheet Gearing % change Y/Y - - - - - Loan / deposit 272.4% 268.7% 255.9% 269.1% - Average interest earnings assets 1,769,218 1,879,503 1,987,646 2,195,537 - Investments / assets 7.7% 8.3% 7.0% 6.8% - Goodwill 7,057 7,3197,068 7,068 - Loan / assets 68.6% 69.6%63.8% 66.2% - Other assets 503,888 462,339 685,033 682,380 - Customer deposits / liabilities 26.1% 27.0% 25.9% 25.5% - Total assets 2,158,784 2,122,843 2,372,366 2,550,293 - LT Debt / liabilities - - - - -

LIABILITIES Asset Quality / Capital Customer deposits 543,760 549,748 591,773 627,280 - Loan loss reserves / loans 0.2% 0.4% 0.4% 0.4% - % change Y/Y 6.0% 1.1% 7.6% 6.0% - NPLs / loans 0.4% 0.6% 0.6% 0.4% - Long term funding 61,434 59,005 54,194 55,278 - LLP / RWA 0.22% 0.56% 0.24% 0.23% - Interbank funding 319,113 239,790 280,536 291,757 - Loan loss reserves / NPLs 51.1% 62.4% 60.0% 90.3% - Average interest bearing liabs 1,820,016 1,814,618 2,013,979 2,192,288 - Growth in NPLs 115.2% 60.5% 9.0% (26.2%) - Other liabilities - - - - - RWAs 722,002 602,330 589,827 666,832 - Retirement benefit liabilities - - - - - % YoY change 16.1% (16.6%) (2.1%) 13.1% - Shareholders' equity 74,964 83,088 85,045 90,417 - Core Tier 1 7.8% 10.7% 12.2% 11.6% - Minorities 1 1 0 0 - Total Tier 1 10.5% 14.2% 15.5% 14.5% - Total liabilities & Shareholders Equity 2,158,784 2,122,843 2,372,366 2,550,293 -

Source: Company reports and J.P. Morgan estimates.

12 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

Nordea Bank AB: Summary of Financials

Profit and Loss Statement Ratio Analysis € in millions, year end Dec FY08A FY09A FY10E FY11E FY12E € in millions, year end Dec FY08A FY09A FY10E FY11E FY12E Per Share Data Net interest income 5,124 5,307 5,047 5,480 - EPS Reported 1.05 0.60 0.58 0.67 - % Change Y/Y 19.7% 3.6% (4.9%) 8.6% - EPSAdjusted 1.05 0.60 0.57 0.67 - Non-interest income 3,097 3,766 3,853 3,932 - % Change Y/Y (6.6%) (42.7%) (5.6%) 17.6% - Fees & commissions 1,855 1,682 2,019 2,234 - DPS 0.20 0.200.27 0.30 - % change Y/Y (13.3%) (9.3%) 20.0% 10.7% - % Change Y/Y (59.9%) 0.1% 33.1% 12.5% - Trading revenues 1,028 1,931 1,656 1,538 - Dividend yield 2.7% 2.7% 3.6% 4.0% - % change Y/Y (13.4%) 87.8% (14.2%) (7.1%) - Payout ratio 19.1% 33.3% 46.0% 45.0% - Other Income 172 105 120 132 - BV per share 6.84 5.55 5.81 6.21 - Total operating revenues 8,221 9,073 8,900 9,413 - NAV per share 5.86 4.82 5.05 5.45 - % change Y/Y 5.9% 10.4% (1.9%) 5.8% - Shares outstanding 2,590.0 4,037.0 4,037.0 4,037.0 - Admin expenses 2,574 2,723 2,822 2,912 - % change Y/Y 7.8% 5.8% 3.6% 3.2% - Return ratios Other expenses 1,780 1,789 1,955 2,090 - RoRWA 1.6% 1.4%1.2% 1.3% - Pre-provision operating profit 3,867 4,561 4,123 4,411 - Pre-tax ROE 19.4% 13.7% 13.6% 14.4% - % change Y/Y 4.5% 17.9% (9.6%) 7.0% - ROE 15.6% 11.5%10.0% 11.1% - Loan loss provisions -452 -1,487 -934 -798 - RoNAV - 13.3% 11.5% 12.7% - Other provisions - - - - - Earnings before tax 3,415 3,074 3,188 3,613 - Revenues % change Y/Y (9.2%) (10.0%) 3.7% 13.3% - NIM (NII / RWA) 1.6% 1.5% 1.3% 1.3% - Tax (charge) (723) (756) (839) (903) - Non-IR / average assets 0.7% 0.8% 0.7% 0.7% - % Tax rate 21.0% 24.6% 26.3% 25.0% - Total rev / average assets 1.9% 1.8% 1.6% 1.6% - Minorities - (4) (7) (15) - NII / Total revenues 62.3% 58.5% 56.7% 58.2% - Net Income (Reported) 2,722 2,314 2,342 2,694 - Fees / Total revenues 22.6% 18.5% 22.7% 23.7% - Trading / Total revenues 12.5% 21.3% 18.6% 16.3% -

Balance sheet € in millions, year end Dec FY08A FY09A FY10E FY11E FY12E € in millions, year end Dec FY08A FY09A FY10E FY11E FY12E

ASSETS Cost ratios Net customer loans 265,100 282,411 317,859 349,645 - Cost / income 53.0% 49.7% 53.7% 53.1% - % change Y/Y 8.3% 6.5% 12.6% 10.0% - Cost / assets 0.9% 0.9% 0.8% 0.8% - Loan loss reserves 1,170 2,223 2,368 2,283 - Staff numbers - - - - - Investments - -- - - Other interest earning assets 27,060 30,05517,874 18,049 - Balance Sheet Gearing % change Y/Y (7.6%) 11.1% (40.5%) 1.0% - Loan / deposit 178.4% 183.9% 189.9% 198.9% - Average interest earnings assets 324,276 360,974 389,307 410,765 - Investments / assets 11.7% 16.3% 12.2% 12.0% - Goodwill 2,535 2,9473,089 3,089 - Loan / assets 55.9% 55.6%53.5% 57.4% - Other assets - - - - - Customer deposits / liabilities 32.6% 31.7% 29.3% 30.1% - Total assets 474,074 507,544 594,147 609,001 - LT Debt / liabilities 23.0% 25.7% 23.7% 23.1% -

LIABILITIES Asset Quality / Capital Customer deposits 148,591 153,577 167,423 175,794 - Loan loss reserves / loans 0.4% 0.8% 0.7% 0.7% - % change Y/Y 4.4% 3.4% 9.0% 5.0% - NPLs / loans 0.8% 1.5% 1.4% 1.2% - Long term funding 108,989 130,519 140,880 140,880 - LLP / RWA 0.27% 0.86% 0.48% 0.37% - Interbank funding 51,932 52,190 55,323 55,323 - Loan loss reserves / NPLs 52.6% 52.4% 53.6% 52.7% - Average interest bearing liabs 298,738 330,596 357,644 376,002 - Growth in NPLs 68.4% 90.6% 4.2% (1.9%) - Other liabilities - - - - - RWAs 168,600 172,000 196,194 212,948 - Retirement benefit liabilities - - - - - % YoY change (1.7%) 2.0% 14.1% 8.5% - Shareholders' equity 17,803 22,50023,546 25,163 - Core Tier 1 6.7% 8.6% 8.2% 8.2% - Minorities 78 8081 81 - Total Tier 1 7.4% 10.2% 9.0% 9.0% - Total liabilities & Shareholders Equity 474,074 507,544 594,147 609,001 -

Source: Company reports and J.P. Morgan estimates.

13 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

Swedbank: Summary of Financials

Profit and Loss Statement Ratio Analysis Skr in millions, year end Dec FY08A FY09A FY10E FY11E FY12E Skr in millions, year end Dec FY08A FY09A FY10E FY11E FY12E Per Share Data Net interest income 21,702 20,765 15,508 16,774 - EPS Reported 14.08 -9.06 3.58 6.48 - % Change Y/Y 13.3% (4.3%) (25.3%) 8.2% - EPSAdjusted 14.65 (8.47) 4.65 7.55 - Non-interest income 14,761 14,017 15,103 16,092 - % Change Y/Y (37.8%) (157.8%) (154.9%) 62.4% - Fees & commissions 8,830 7,825 9,456 10,044 - DPS 4.50 0.001.00 2.00 - % change Y/Y (10.6%) (11.4%) 20.8% 6.2% - % Change Y/Y (50.0%) (100.0%) - 100.0% - Trading revenues 2,351 2,770 2,618 2,629 - Dividend yield 6.0% 0.0% 1.3% 2.7% - % change Y/Y 39.0% 17.8% (5.5%) 0.4% - Payout ratio 32.0% -0.0% 27.9% 30.9% - Other Income 3,580 3,422 3,029 3,420 - BV per share 111.54 77.33 79.40 83.92 - Total operating revenues 36,463 34,782 30,611 32,866 - NAV per share 86.22 62.19 64.26 68.78 - % change Y/Y 10.8% (4.6%) (12.0%) 7.4% - Shares outstanding 773.1 1,159.6 1,159.6 1,159.6 - Admin expenses 19,035 19,173 17,602 18,132 - % change Y/Y 18.9% 0.7% (8.2%) 3.0% - Return ratios Other expenses 0 (9,201) (9,465) (10,055) - RoRWA 1.7% (1.5%) 0.9% 1.4% - Pre-provision operating profit 17,428 15,60913,009 14,734 - Pre-tax ROE 16.6% (10.6%) 8.4% 11.8% - % change Y/Y 3.1% (10.4%) (16.7%) 13.3% - ROE 14.7% (11.2%) 5.9% 9.2% - Loan loss provisions 3,156 25,070 5,107 3,209 - RoNAV 19.4% (14.2%) 7.4% 11.3% - Other provisions - - - - - Earnings before tax 14,272 -9,462 7,723 11,525 - Revenues % change Y/Y (12.4%) (166.3%) (181.6%) 49.2% - NIM (NII / RWA) 1.4% 1.3% 1.0% 1.0% - Tax (charge) (2,880) (981) (2,273) (2,708) - Non-IR / average assets 0.9% 0.8% 0.9% 1.0% - % Tax rate 20.2% (42.8%) 29.4% 23.5% - Total rev / average assets 2.1% 1.9% 1.9% 2.0% - Minorities (52) (69) (60) (66) - NII / Total revenues 59.5% 59.7% 50.7% 51.0% - Net Income (Reported) 10,887 (10,511) 4,153 7,514 - Fees / Total revenues 24.2% 22.5% 30.9% 30.6% - Trading / Total revenues 6.4% 8.0% 8.6% 8.0% -

Balance sheet Skr in millions, year end Dec FY08A FY09A FY10E FY11E FY12E Skr in millions, year end Dec FY08A FY09A FY10E FY11E FY12E

ASSETS Cost ratios Net customer loans 1,287,424 1,290,667 1,280,779 1,359,524 - Cost / income 52.2% 55.1% 57.5% 55.2% - % change Y/Y 13.4% 0.3% (0.8%) 6.1% - Cost / assets 1.1% 1.1% 1.0% 0.9% - Loan loss reserves 6,374 26,225 24,631 19,014 - Staff numbers - - - - - Investments - -- - - Other interest earning assets 262,230 262,746271,277 280,234 - Balance Sheet Gearing % change Y/Y (9.4%) 0.2% 3.2% 3.3% - Loan / deposit 253.2% 255.9% 244.1% 244.5% - Average interest earnings assets 1,518,856 1,578,953 1,592,033 1,655,042 - Investments / assets 7.4% 9.5%9.7% 9.7% - Goodwill 17,308 15,36815,368 15,368 - Loan / assets 71.1% 71.9%69.3% 70.0% - Other assets - - - - - Customer deposits / liabilities 29.5% 29.6% 29.9% 30.2% - Total assets 1,811,690 1,794,687 1,848,528 1,940,954 - LT Debt / liabilities 32.8% 39.2% 39.9% 40.7% -

LIABILITIES Asset Quality / Capital Customer deposits 508,456 504,424 524,601 556,077 - Loan loss reserves / loans 0.5% 2.1% 1.9% 1.4% - % change Y/Y 10.9% (0.8%) 4.0% 6.0% - NPLs / loans 0.8% 3.2% 3.4% 2.8% - Long term funding 593,365 703,258 738,421 790,110 - LLP / RWA 0.34% 3.20% 0.83% 0.49% - Interbank funding 316,730 231,687 231,687 231,687 - Loan loss reserves / NPLs 29.8% 61.9% 11.6% 8.3% - Average interest bearing liabs 1,399,159 1,470,329 1,505,592 1,576,001 - Growth in NPLs 244.0% 282.9% 9.0% (12.6%) - Other liabilities - - - - - RWAs 696,505 603,431 614,774 652,571 - Retirement benefit liabilities - - - - - % YoY change 16.0% (13.4%) 1.9% 6.1% - Shareholders' equity 86,462 89,97492,375 97,621 - Core Tier 1 9.7% 11.6% 12.2% 12.3% - Minorities 232 304 304 304 - Total Tier 1 11.1% 13.5% 13.7% 13.7% - Total liabilities & Shareholders Equity 1,811,690 1,794,687 1,848,528 1,940,954 -

Source: Company reports and J.P. Morgan estimates.

14 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. Important Disclosures

• Market Maker/ Liquidity Provider: JPMSL and/or an affiliate is a market maker and/or liquidity provider in Handelsbanken, Nordea Bank AB, Swedbank. • Lead or Co-manager: JPMSI or its affiliates acted as lead or co-manager in a public offering of equity and/or debt securities for Handelsbanken, Nordea Bank AB within the past 12 months. • Client of the Firm: Handelsbanken is or was in the past 12 months a client of JPMSI; during the past 12 months, JPMSI provided to the company investment banking services and non-investment banking securities-related services. Nordea Bank AB is or was in the past 12 months a client of JPMSI; during the past 12 months, JPMSI provided to the company investment banking services, non- investment banking securities-related services and non-securities-related services. Swedbank is or was in the past 12 months a client of JPMSI; during the past 12 months, JPMSI provided to the company investment banking services, non-investment banking securities-related services and non-securities-related services. • Investment Banking (past 12 months): JPMSI or its affiliates received in the past 12 months compensation for investment banking services from Handelsbanken, Nordea Bank AB, Swedbank. • Investment Banking (next 3 months): JPMSI or its affiliates expect to receive, or intend to seek, compensation for investment banking services in the next three months from Handelsbanken, Nordea Bank AB, Swedbank. • Non-Investment Banking Compensation: JPMSI has received compensation in the past 12 months for products or services other than investment banking from Handelsbanken, Nordea Bank AB, Swedbank. An affiliate of JPMSI has received compensation in the past 12 months for products or services other than investment banking from Nordea Bank AB, Swedbank.

Handelsbanken (SHBa.ST) Price Chart

371 Date Rating Share Price Price Target N Skr220 UW Skr100 (Skr) (Skr) 318 25-Jan-07 UW 213.50 173.00 N Skr173 N Skr224 N Skr190 UW Skr124 UW Skr99 UW Skr134 UW Skr165 30-Jan-07 N 214.50 173.00 265 20-Feb-07 N 219.50 220.00 UW Skr173N Skr218 N Skr205 UW Skr133UW Skr75 UW Skr124 UW Skr160 24-Apr-07 N 214.50 218.00 212 Price(Skr) 19-Jul-07 N 201.50 224.00 159 28-Feb-08 N 176.50 205.00 23-Apr-08 N 184.00 190.00 106 16-Oct-08 UW 133.00 133.00 26-Nov-08 UW 136.00 124.00 53 16-Mar-09 UW 111.00 75.00 07-May-09 UW 145.00 99.00 0 28-Jul-09 UW 166.00 100.00 Sep Jun Mar Dec Sep Jun 06 07 08 08 09 10 15-Sep-09 UW 181.50 124.00 30-Oct-09 UW 187.00 134.00 Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Break in coverage Sep 29, 2005 - Oct 14, 2005. This chart shows J.P. Morgan's continuing coverage of this stock; the 22-Feb-10 UW 193.30 160.00 current analyst may or may not have covered it over the entire period. 10-May-10 UW 196.20 165.00 J.P. Morgan ratings: OW = Overweight, N = Neutral, UW = Underweight.

15 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

Nordea Bank AB (NDA.ST) Price Chart

Date Rating Share Price Price Target 150 N Skr116 N Skr55 UW Skr64 (Skr) (Skr) 25-Jan-07 OW 86.27 114.00 125 N Skr114 N Skr120 N Skr79 UW Skr49 N Skr68 30-Jan-07 N 86.11 114.00 05-Mar-07 N 81.67 116.00 100 OW Skr114N Skr118 N Skr101 N Skr87 N Skr51 UW Skr67N Skr67 17-May-07 N 90.86 118.00 Price(Skr) 22-Jul-07 N 85.88 120.00 75 13-Feb-08 N 73.64 101.00 16-Oct-08 N 53.30 87.00 50 26-Nov-08 N 44.89 79.00 10-Feb-09 N 38.50 55.00 25 07-May-09 N 63.30 51.00 28-Jul-09 UW 67.00 49.00 0 15-Sep-09 UW 71.40 64.00 Sep Jun Mar Dec Sep Jun 06 07 08 08 09 10 30-Oct-09 UW 77.80 67.00 22-Feb-10 N 68.20 67.00 Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Break in coverage Sep 29, 2005 - Oct 14, 2005. This chart shows J.P. Morgan's continuing coverage of this stock; the 10-May-10 N 66.95 68.00 current analyst may or may not have covered it over the entire period. J.P. Morgan ratings: OW = Overweight, N = Neutral, UW = Underweight.

Swedbank (SWEDa.ST) Price Chart

420 Date Rating Share Price Price Target N Skr60OW Skr76 (Skr) (Skr) 350 25-Jan-07 N 222.51 300.00 OW Skr300 OW Skr259 OW Skr225 N Skr77 N Skr54 N Skr75 OW Skr84 30-Jan-07 OW 219.20 300.00 280 24-Oct-07 OW 165.02 284.00 N Skr300 OW Skr284OW Skr238 N Skr112 N Skr29 N Skr59 OW Skr80 28-Oct-07 OW 157.16 259.00 Price(Skr) 210 18-Feb-08 OW 139.38 238.00 24-Apr-08 OW 139.79 225.00

140 16-Oct-08 N 61.42 112.00 31-Oct-08 N 51.49 77.00

70 16-Mar-09 N 19.77 29.00 07-May-09 N 44.87 54.00 28-Jul-09 N 44.46 60.00 0 18-Aug-09 N 61.00 59.00 Sep Jun Mar Dec Sep Jun 06 07 08 08 09 10 15-Sep-09 N 67.00 75.00 30-Oct-09 OW 60.50 76.00 Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Break in coverage Sep 29, 2005 - Oct 14, 2005. This chart shows J.P. Morgan's continuing coverage of this stock; the 22-Feb-10 OW 66.30 80.00 current analyst may or may not have covered it over the entire period. 10-May-10 OW 74.20 84.00 J.P. Morgan ratings: OW = Overweight, N = Neutral, UW = Underweight.

Explanation of Equity Research Ratings and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] J.P. Morgan Cazenove’s UK Small/Mid-Cap dedicated research analysts use the same rating categories; however, each stock’s expected total return is compared to the expected total return of the FTSE All Share Index, not to those analysts’ coverage universe. A list of these analysts is available on request. The analyst or analyst’s team’s coverage universe is the sector and/or country shown on the cover of each publication. See below for the specific stocks in the certifying analyst(s) coverage universe.

16 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

Coverage Universe: Nana Francois, CFA: Danske Bank (DANSKE.CO), DnB NOR (DNBNOR.OL), Handelsbanken (SHBa.ST), Jyske Bank (JYSK.CO), Nordea Bank AB (NDA.ST), SEB (SEBa.ST), Swedbank (SWEDa.ST), Sydbank (SYDB.CO)

J.P. Morgan Equity Research Ratings Distribution, as of June 30, 2010 Overweight Neutral Underweight (buy) (hold) (sell) JPM Global Equity Research Coverage 46% 42% 12% IB clients* 49% 46% 31% JPMSI Equity Research Coverage 44% 48% 9% IB clients* 68% 61% 53% *Percentage of investment banking clients in each rating category. For purposes only of NASD/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category.

Valuation and Risks: Please see the most recent company-specific research report for an analysis of valuation methodology and risks on any securities recommended herein. Research is available at http://www.morganmarkets.com , or you can contact the analyst named on the front of this note or your J.P. Morgan representative.

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17 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

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18 Nana Francois, CFA Europe Equity Research (44-20) 7325-6424 27 July 2010 [email protected]

“Other Disclosures” last revised March 1, 2010.