Annual and Sustainability Report Our customers and stakeholders We are always putting our customers' needs at the core of our business. Their high expectations for both personal and digital services, for quality advice and sustainable solutions drive SEB’s business development and offerings. Our 15,500 employees work as a team to serve our customers and create value for our shareholders and for the societies where we operate. 2,000 Large corporations 1,100 Financial institutions 400,000 Small and medium-sized companies Of these, some 272,000 are home bank customers. 4,000,000 Private individuals Of these some 1.5 million are home bank customers. 15,500 Employees 268,000 Shareholders Society Contents Introduction This is SEB 1 Statement of the Chair 6 Statement of the President 8 Value creation Business environment 12 Long-term value creation 14 Overall targets and outcome 16 Our business Strategy and business plan 20 Our customers 28 Our employees 32 Our shareholders 36 Our role in society 38 Sustainability Sustainability report 40 Report of the Directors Financial review of the group 60 Risk, liquidity and capital management 74 Corporate governance 80 Financial statements and notes Financial statements 96 Notes to the financial statements 106 Five-year summary 188 Proposal for the distribution of profit 190 Signatures of the Board of Directors and the President 191 Auditor's report 192 Sustainability notes 196 Other information 215 Definitions 215 Pages 59–191 constitute SEB's formal annual report. SEB's sustainability work is described in the sustainability report on pages 40–58 and 196–213. Contents Introduction — This is SEB We enable people and businesses to realise their ideas Being a leading northern European corporate bank, innovation, entrepreneurship and an international perspective are part of our DNA. Our vision is to provide world-class service. We do this through long-term relationships, personal advice and digital services – and by supporting our customers in the transition to a more sustainable world. SEB Annual and Sustainability Report 2020 — 1 Introduction — This is SEB Curiosity about the future for more than 160 years We have a long tradition of supporting people and companies and helping drive development. Engagement and curiosity about the future have guided us ever since we welcomed our first customer more than 160 years ago. With value-creating advice, innovation and a focus on long-term relationships, we are changing together with our customers and the communities in which we operate. 1856 1878 1972 With his leg in a splint, after The industrial revolution is followed Stockholms Enskilda falling in the slush on a street by an international structural crisis. Bank and Skandinaviska in Stockholm's Old Town, The bank is dragged into the economic Banken merge to become entrepreneur André Oscar downturn and is forced to choose Skandinaviska Enskilda Wallenberg founds Stockholms between declaring some companies Banken, a name that is Enskilda Bank. His goal during bankrupt or actively helping them later changed to SEB. A key this period of pioneering spirit in get back on their feet. In many cases rationale for the merger was Sweden is to provide inventors – Atlas Copco is an example – the to give the banks a better and entrepreneurs with capital bank decided on the latter course of chance to meet growing for industrial initiatives. action. Still today, we are there for our international competition. customers in both good times and bad. 1864 1927 1996 Not a day too soon, Alida Sven Wingquist, inventor of SEB becomes one of the first Rossander becomes the the ball bearing and founder banks in the world to provide first female employee in of industry giant SKF, was an all its services on the Internet our bank and in the global early customer of SEB. When his for private customers. After banking industry. As André co-workers Gustaf Larson and just a couple of weeks, the Oscar Wallenberg put it: Assar Gabrielsson want to build a bank has 40,000 Internet “womenfolk possess machine based on his inventions, banking customers, and attributes of orderliness, SEB also helps out. The company today the majority of our conscientiousness and is called Volvo, and the first car customer interactions are perseverance not inferior rolls out of the factory digital, which in turn frees up to those of men”. on 14 April 1927. time for in-person meetings. 2 — SEB Annual and Sustainability Report 2020 2000 2020 and onwards We have a long history of following With the effects of the Covid-19 our customers as they expand pandemic hurting people and internationally. In the early 2000s, businesses, we are doing our we expand our home markets to utmost to support our customers. also include Germany and the Baltic We are standing firmly by their countries. More than half the bank’s side – just as we have during workforce is now employed outside previous crises – and are continuing of Sweden and today, 20 years later, our work to create long-term SEB is represented in 20 countries. value for customers, employees, shareholders and the communities in which we operate. 2008 SEB works together with the World Bank to create the first green bond, earmarked for projects in developing countries aimed at reducing carbon dioxide emissions. As a bank we have an important role in the sustainable transition and work actively to support our customers and contribute to a more sustainable world. SEB Annual and Sustainability Report 2020 — 3 Introduction — This is SEB SEB in summary Our business is strong and diversified, creating value for all our stakeholders. Diversified income 2020, % Financial value created 2020, SEK 42bn Nordic peers1) SEB Interest paid to customers 11 and bondholders Retail 65 39 banking Salaries, pensions and 13 benefits to employees 25 43 Large corporates and institutions 10 Payments to suppliers Asset 7 12 Taxes and social management 7 security charges 3 6 Life insurance 1 Regulatory fees 1) Income breakdown for Swedbank, SHB, Nordea, No dividends to the shareholders were paid in 2020 (for 2019). See p. 65. Danske Bank and DNB. Business units only (indicative). Important events and trends Key targets and figures The Covid-19 pandemic temporarily halted the global economy, Board’s financial targets 2020 2019 followed by unprecedented political and monetary response. Dividend payout ratio at 40 per cent or more SEB has not received any governmental relief, and throughout of earnings per share, per cent 531) 02) the year, our financial strength enabled us to support our Common Equity Tier 1 capital ratio of customers. SEK 139bn in pandemic-related credit requests around 150 basis points over requirement3), from large corporates was processed. basis points 840 250 Return on equity competitive with peers4), The surprisingly strong housing market in Sweden supported per cent 10.3 13.8 continued demand for mortgages. Private consumption held up The financial targets are revised from 2021. See p. 66. well, while corporate card utilisation was negatively impacted by restricted travelling and remote work. Key figures Operating income, SEK m 49,717 50,134 Demand for sustainability-related products continued to grow. Operating profit, SEK m 20,846 24,894 SEB advised on vaccine-related bonds, green bonds, and sustainability-linked financing solutions. Return on equity, per cent 9.7 13.7 Cost/income ratio 0.46 0.46 SEB was ranked as number 1 in Prospera’s annual survey among Earnings per share, SEK 7.28 9.33 Nordic large corporates, an advancement from the number 1 1) 2) position among Swedish large corporates in 2019. Dividend per share, SEK 4.10 0.00 Leverage ratio, per cent 5.1 5.1 The Swedish FSA closed its review on SEB’s governance Liquidity Coverage Ratio (LCR), per cent 163 218 and internal controls of the Baltic subsidiaries and issued an administrative fine of SEK 1bn. SEB continued focusing on the 1) Board proposal. 2) The 2019 dividend proposal was reverted and the AGM fight against financial crime and money laundering. decided that no dividend would be paid out. 3) Regulatory requirement estimated by SEB: 12.6% (15.1). The Board of Directors proposes a dividend of SEK 4.10 per share, 4) Outcome excluding items affecting comparability. in line with the Swedish FSA’s recommendation of d istributing maximum 25 per cent of 2019 and 2020 net profits. 4 — SEB Annual and Sustainability Report 2020 We have a unique customer base and market position, serving our customers in our home markets and beyond. Home markets • Sweden • Norway • Denmark • Finland • Estonia • Latvia • Lithuania • Germany • United Kingdom International network • Beijing • Hong Kong • Kiev • Luxembourg • New Delhi • New York • São Paulo • Shanghai • Singapore • St. Petersburg • Warsaw We are well positioned versus our peers with a track record of strong profitable growth. Our peers 2020 Our profit development1), SEK bn Cost/income ratio1) 50 0.8 2.3%2) 32 0.6 0.4%2) 23 21 21 0.4 10 3.9%2) Return on equity (%)1) 0.2 2 6 10 14 18 2000 2010 2020 SEB Nordic peers European Bank Index SX7E, estimated on rolling 12 months Income Expenses Operating profit 1) Excluding items affecting comparability. 1) Excluding items affecting comparability. 2) Compound Annual Growth Rate (CAGR). SEB Annual and Sustainability Report 2020 — 5 Introduction — Statement from the Chair Standing strong in a changing world 2020 was a challenging year for most people, families and businesses. My thoughts go out to all who have been affected by the pandemic. On the part of SEB, we have done our utmost to stand by our customers’ side during these tough times. The ability of people and organisations to come customers – in branch offices, in digital channels, together to counter the effects of the pandemic has through support functions and in business develop- been remarkable.