FINANCIAL INSTITUTIONS

CREDIT OPINION4 September 2019

Update

RATINGS

Sparbanken SydDomicile Sweden

Long Term CRR A3

Type LT Counterparty RiskRating - Fgn Curr

Outlook Not Assigned

Long Term Debt Not Assigned

Long Term Deposit Baa1

Type LT Bank Deposits - FgnCurr

Outlook Stable

Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.

Contacts

Niclas Boheman +46.8.5179.6561AVP-Analystniclas.boheman@moodys.com

Stelios Kyprou +357.2569.3002Associate Analyststelios.kyprou@moodys.com

Sean Marion +44.20.7772.1056MD-Financial Institutionssean.marion@moodys.com

CLIENT SERVICES

Americas 1-212-553-1653

Asia Pacific 852-3551-3077

Japan 81-3-5408-4100

EMEA 44-20-7772-5454

Sparbanken SydUpdate to credit analysis

SummarySparbanken Syd's issuer and deposit ratings are Baa1/P-2, reflecting the bank's Baseline CreditAssessment (BCA) and Adjusted BCA of baa3, and a two-notch uplift according to Moody'sAdvanced Loss Given Failure (LGF) analysis. The outlooks assigned to long-term depositrating and issuer rating are stable.

The baa3 BCA reflects (1) the bank's broadly stable asset quality, with its ratio of problemloans to gross loans at 1.0% as of year-end 2018; and (2) its strong capitalisation, with itsratio of tangible common equity (TCE) to risk-weighted assets (RWA) at 18.8% as of year-end 2018. These strengths are balanced by (1) the consistently low profitability, and (2) theincreased market funding as the bank starts issuing higher volumes of unsecured and secureddebt.

The bank's Counterparty Risk (CR) Assessment is positioned at A3(cr)/P-2(cr) and theCounterparty Risk Ratings (CRRs) are positioned at A3/P-2, incorporating three notches ofuplift above the BCA according to LGF.

Exhibit 1

Rating Scorecard - Key financial ratios

1.0% 18.8%

0.1%

9.6% 31.8%

0%

5%

10%

15%

20%

25%

30%

35%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Asset Risk:Problem Loans/

Gross Loans

Capital:Tangible Common

Equity/Risk-WeightedAssets

Profitability:Net Income/

Tangible Assets

Funding Structure:Market Funds/

Tangible BankingAssets

Liquid Resources: LiquidBanking

Assets/TangibleBanking Assets

Solvency Factors (LHS) Liquidity Factors (RHS)

Sparbanken Syd (BCA: baa3) Median baa3-rated banks

So

lve

ncy F

acto

rs

Liq

uid

ity F

acto

rs

These represent our Banks Scorecard ratios, whereby asset risk and profitability reflect the weaker of either the latest reportedor the average of last three year-end and latest reported ratios. Capital is the latest reported figure. Funding structure and liquidresources ratios reflect the latest year-end figures.Source: Moody's Banking Financial Metrics

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Credit strengths

» BCA benefits from Sweden’s Strong+ Macro Profile

» Good asset quality, but deteriorating coverage ratio increases probability of additional loan loss provisions

» Sound capitalisation, but limited capacity to raise new equity capital in case of urgent need

» Sizeable liquidity portfolio and large volumes of deposits

Credit challenges

» Deteriorating funding profile following the termination of a partnership agreement to fund mortgages

» Weak profitability and cost efficiency compared with those of its peers in the Nordics

OutlookThe outlook is stable, reflecting the progress Sparbanken Syd has made to date to set up the covered bond programme, limiting therisk that the bank will leave the partnership with SBAB Bank AB (publ) (SBAB, long-term bank deposits A1 stable, senior unsecureddebt A1 stable, BCA baa1) without alternative sources of funding. Even though the bank is still awaiting regulatory approvals for thecovered bond programme, it has the ability to manage the process because of flexibility in the buyback plan over the coming years.This will give Sparbanken Syd maneuverability to tackle challenges, such as increasing capitalisation, through the issuance of capitalinstruments. Furthermore, as the bank starts buying back mortgages on its own balance sheet and fund these through covered bonds,the increased margins that it retains compared with the current set-up point to a higher profitability in the coming years.

Factors that could lead to an upgradeFactors that could lead to an upgrade include a combination of (1) successful issuance of both covered bonds and sufficient Tier 1 andTier 2 capital instruments, while maintaining sustainable levels of profitability to support its future growth; and (2) maintaining orincreasing its levels of loss-absorbing obligations protecting creditors and depositors in case of failure.

Factors that could lead to a downgradeSparbanken Syd's rating could be downgraded if (1) the bank's strategy to buy back its mortgage portfolio fails either through aninability to set up a covered bond programme, or inability to raise enough capital to grow its balance sheet; (2) the bank's asset riskdeteriorates; (3) its profitability deteriorates, leading to recurring losses and lower capital generation; (4) there is increased exposure tohigh-risk sectors; or (5) there is a change in the liability structure, with a smaller buffer of loss-absorbing obligations.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 4 September 2019 Sparbanken Syd: Update to credit analysis

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Key indicators

Exhibit 2

Sparbanken Syd (Unconsolidated Financials) [1]12-182 12-172 12-162 12-152 12-142 CAGR/Avg.3

Total Assets (SEK Million) 10,633.9 10,143.9 9,368.3 9,171.1 8,196.2 6.74

Total Assets (USD Million) 1,199.4 1,238.9 1,031.2 1,087.8 1,047.0 3.54

Tangible Common Equity (SEK Million) 1,179.2 1,169.2 1,140.6 1,126.9 1,102.0 1.74

Tangible Common Equity (USD Million) 133.0 142.8 125.6 133.7 140.8 (1.4)4

Problem Loans / Gross Loans (%) 1.0 0.8 1.0 1.5 1.7 1.25

Tangible Common Equity / Risk Weighted Assets (%) 18.8 19.2 17.5 17.5 18.4 18.36

Problem Loans / (Tangible Common Equity + Loan Loss Reserve) (%) 5.9 5.0 6.3 8.4 9.3 7.05

Net Interest Margin (%) 1.6 1.7 1.8 1.9 2.3 1.95

PPI / Average RWA (%) 0.5 0.5 -0.5 -0.1 0.9 0.26

Net Income / Tangible Assets (%) 0.2 0.3 -0.2 -0.1 0.3 0.15

Cost / Income Ratio (%) 89.0 88.3 113.3 103.2 81.0 95.05

Market Funds / Tangible Banking Assets (%) 9.6 10.1 7.7 11.6 10.3 9.95

Liquid Banking Assets / Tangible Banking Assets (%) 31.8 27.2 22.7 24.1 19.3 25.05

Gross Loans / Due to Customers (%) 86.9 94.1 98.1 101.8 109.1 98.05

[1] All figures and ratios are adjusted using Moody's standard adjustments. [2] Basel III - fully-loaded or transitional phase-in; IFRS. [3] May include rounding differences due to scaleof reported amounts. [4] Compound Annual Growth Rate (%) based on time period presented for the latest accounting regime. [5] Simple average of periods presented for the latestaccounting regime. [6] Simple average of Basel III periods presented.Sources: Moody's Investors Service, company filings

ProfileSparbanken Syd is Sweden’s oldest savings bank, primarily operating in Skåne county in the southernmost parts of Sweden. After nearly200 years of operations, the bank is well established in the region among retail as well as corporate customers. Sparbanken Syd is theonly independent savings bank in Sweden and the bank does not have any shareholders, in accordance with its structure as a savingsbank. As of year-end 2018, the bank had total assets of SEK10.6 billion (€1 billion).

Recent DevelopmentsThe search for a new CEO, who will replace Susanne Kallur who is stepping down as of beginning September 2019, will be reinitiated.Öyvind Thomassen, who was supposed to join Sparbanken as the new CEO has declined, and will instead rejoin Sbanken ASA (A3stable, baa1).

Detailed credit considerationsSweden's Strong(+) Macro Profile incorporated in Sparbanken Syd's BCASparbanken Syd's rating incorporates our assessment of Sweden’s Macro Profile of Strong+1, reflecting a diverse and competitiveeconomy, robust public institutions and a stable political environment that supports consensus-oriented policymaking. However,we view Swedish household debt levels and the multiyear growth of household debt as key vulnerabilities to the financial system, asreflected in our Macro Profile.

Strategy to set up a covered bond programme will lead to increased reliance on market fundingIn late November 2017, SBAB, a key funding partner of Sparbanken Syd, unilaterally decided to terminate an asset purchase programmeit had established with Sparbanken Syd to fund the bank's mortgages. The termination of the funding arrangement is credit negative,because the ability sell mortgages to SBAB has been a central part of Sparbanken Syd's funding profile, with most of the bank'smortgages (representing over 50% of the bank's total lending) being funded through this channel. The partnership had enabledSparbanken Syd to sell its mortgages to SBAB for a commission, thereby moving them off the balance sheet, reducing funding needsas well as credit risk and capital requirements, while maintaining customer relationships. The partnership formally ends in November2019, but an agreement with SBAB gives Sparbanken Syd some flexibility to buy back the sold mortgages over time.

Sparbanken Syd has a strategy to set up its independent covered programme, and has initiated the regulatory application process andstarted readying its IT platforms for this major change. The launch of the covered bond programme will increase the bank's reliance on

3 4 September 2019 Sparbanken Syd: Update to credit analysis

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market funding, but the bank will also need to issue senior unsecured debt to maintain liquidity and sufficient overcollateralisation inthe cover pool.

Deteriorating coverage of problem loans increases risk of higher provisionsAsset risk is strong by global standards and has stabilised in recent years. Although the ratio of problem loans to gross loans slightlyincreased to 1.0% as of year-end 2018 from 0.8% in 2017, it is still lower than the 1.66% reported in 2014 (Exhibit 3). If the bankacquires the stock of mortgages that have been sold to SBAB, the bank's asset quality will improve, while the bank's loan book willcontinue to feature some geographical and sector concentration risks. Cost of risk has been very low in recent years, which is partly dueto releases from loan loss reserves. This has caused a deterioration in the banks problem loan coverage to 35% as of year-end 2018compared to 49% as of year-end 2017 and 67% as of year-end 2016. In a more adverse scenario, the low coverage could lead to rapidincreases in loan loss provisions. The bank has significant exposure to small and medium-sized enterprises (SMEs), which can be ofhigher risk in a downturn, with these customers accounting for around half of the risk the bank retains on its balance sheet.

The bank's strategy to expand its retail mortgage business entails overcoming a number of hurdles, including increasing capitalisation,ramping up enough funding and setting up necessary operational capacity. While mortgages continue to be sold to SBAB, SparbankenSyd's ambition is to reacquire the stock of the mortgages it had originated when the partnership with SBAB ends. As a result,Sparbanken Syd's on-balance sheet mortgage lending will increase in line with planned buybacks over a couple of years. Whilethe overall problem loan ratio would improve because a higher share of the loan portfolio is made up of mortgages loans withtypically lower levels of defaults than SMEs, Sparbanken Syd would need to take all necessary provisioning on its own balance sheet.The partnership with SBAB offered a degree of risk sharing on the mortgages, with eventual provisions being deducted from thecommissions that Sparbanken Syd receives from SBAB. We expect the net effect of taking back the mortgage book to be positive forthe bank's asset risk, underpinned by a relatively higher share of low-risk retail mortgages compared with SME lending.

As of year-end 2018, the total originated loan volume (mostly mortgages) sold to SBAB was SEK9.6 billion, an increase of 8%compared with the SEK8.8 billion recorded as of year-end 2017.

Exhibit 3

Asset risk is stabilisingExhibit 4

Low cost of risk due to release of loan loss reserves causesdeterioration in coverage ratio

1.66%

1.45%

1.04%

0.83%

1.00%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

2014 2015 2016 2017 2018

Problem Loans % Gross Loans(NPL Ratio)

NPL Ratio-Nordics Savings Banks Average

Average of Moody's rated Nordics Savings banks problem loans to gross loans ratio(including Skandiabanken AB and Länsförsäkringar Bank AB)Source: Banks' financial statements, Moody’s Investors Service

0.28%

0.17%

0.06%

-0.06%

0.02%

52%55%

67%

49%

35%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

-0.10%

-0.05%

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

2014 2015 2016 2017 2018

Cost of Risk (Loan loss provisions % Gross loans) (LHS)

Loan loss reserves/problem loans (RHS)

Source: Banks' financial statements, Moody’s Investors Service

Since a change in management in 2011, a more rigorous credit process has been implemented, resulting (among other improvements)in slower on-balance-sheet growth and more focus on mortgage lending. Stricter requirements on the board members’ level ofexpertise were also implemented at that time. Corporate governance and formalised risk management processes have had a highpriority, and ultimately resulted in decreased credit losses and improved asset quality.

The Asset Risk score reflects the low level of problem loans and the improving trend, as well as a comparably higher ratio of problemloans than its Swedish peers with geographical and sector concentration risks.

4 4 September 2019 Sparbanken Syd: Update to credit analysis

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Strong, but weakening, capitalisation as balance sheet growsSparbanken Syd’s capitalisation is strong, with ratio of TCE to RWA of 18.8% and TCE over total assets of 11.1% as of year-end 2018.However, because of low profitability, internal capital generation is weak. Furthermore, because of the planned buyback of mortgages,capitalisation will weaken in the next two to three years as the balance sheet grows. Nonetheless, we expect capitalisation to remainsimilar to that of its peers, with ratio of TCE to RWA not falling below 15%. Sparbanken Syd aims to issue capital instruments, likelyboth AT1s and Tier 2 capital, to maintain capital levels as mortgage exposure increases.

The bank reported a Common Equity Tier 1 capital ratio of 19.4% at end-June 2019 up from 18.7% at year-end 2018. Total capitaladequacy ratio increased to 21.9% at end-June 2019 from 21.0% as of year-end 2018. The bank has a sizeable headroom above itsregulatory minimum Common Equity Tier 1 requirement of 14.1%, including a Pillar 2 requirement of 1.6% as of year-end 2018. Thebank's internal capital adequacy target is a minimum of 16%, which gives a 2.0% buffer above the regulatory requirement. SparbankenSyd applies the standardised approach to measuring credit risk.

We expect raising additional capital in times of stress could be difficult, given the bank’s organisational structure as a savings bankwithout strategic corporate shareholders or direct capital market access.

Exhibit 5

Sparbanken Syd demonstrates strong capital metrics

13.4%12.3% 12.2%

11.5% 11.4%

18.4% 17.5% 17.5% 19.2% 18.9%

0%

5%

10%

15%

20%

25%

2014 2015 2016 2017 Jun-18

Tangible common equity % Total assets Tangible common equity % Risk weighted assets

TCE % TA - Nordic saving banks average TCE % RWA - Nordic saving banks average

Average of Nordic savings banks we rate (including SkandiaBanken AB and Länsförsäkringar Bank) as of year-end 2018.Sources: Banks' financial statements, Moody's Investors Service

Based upon our assessment of the bank’s capitalisation, we assign Sparbanken Syd a Capital score of a3, four notches below the macroadjusted score. This reflects the expected downward trend in bank's high capitalisation and its lack of direct access to capital markets.

Profitability will remain low in the coming year, while a successful acquisition of the mortgage portfolio will improvemarginsAs a pure savings bank, Sparbanken Syd operates with lower expectations of return on equity than a commercial bank, which partlyexplains its lower profitability. Profitability will be helped by increased margins on mortgages, because these are taken back on thebalance sheet. However, because of limited economies of scale, profitability will remain low, with a net income to tangible assets rangeof 0.2%-0.3%.

The planned buybacks of the SBAB mortgage loans is likely to increase revenue and margins from the retail market, but this isassociated with initially higher costs for setting up a covered bond programme. Because of the relatively small mortgage portfolio, itwill be difficult to achieve the economies of scale that is usually associated with covered bond programmes. The cost-efficiency ratioof Sparbanken Syd is weak at 89% in 2018, compared with 88% in 2017, and we expect extra costs of setting up alternative fundingchannels to constrain any improvement in 2019. Any positive effects of the mortgage reacquisition is likely to develop in 2020 or 2021.

For the first six months 2019, the bank reports SEK9 million in net income, a doubling of its results for the first half year 2018, mainlydue to improved net interest income, but also lower taxes. Operating profit of SEK12.3 million was 21% higher than SEK10.1 in 2018.

5 4 September 2019 Sparbanken Syd: Update to credit analysis

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Net interest income increased by 7% due to higher margins and higher volumes of debt securities. While total income increased 6.6%to SEK 145 million, costs increased by 6.1% to SEK132 million in the first six months 2019.

For the full year 2018, the bank's net profitability decreased to SEK19.2 million from SEK29.9 million in 2017, driven by an increasein operating and administrative expenses and loan-loss provision charges of SEK5.4 million. Net income to tangible assets remainedrelatively stable at 0.2% in 2018, compared with 0.3% for 2017 (after adjustments for one-offs). The bank's earnings remained strainedin 2018, reflecting low lending rates, increased funding costs and intense competition. Net interest margins slightly declined to 1.6%in 2018 from 1.7% in 2017 and 1.8% in 2016. In addition, net fee and commission income remained unchanged at SEK108 million in2018 compared with the same period a year earlier, but still remained around 16% higher from the level in 2016 because of the largervolumes of originated mortgages and savings products. While 2017 and 2018 results were helped by release of loan loss reserves, it islikely that the bank will need to increase provisions going forward. Together with costs relating to setting up a covered bond programand higher personnel expenses, 2019 will generate lower earnings than previous years.

Sparbanken Syd opened a new branch office in Kristianstad in the spring of 2018, which partly explains the 9% increase in the bank'sadministrative costs in 2018 compared with the same period a year earlier. Costs related to new regulations were also incurred in 2018.

We assign Sparbanken Syd a Profitability Score of b3 reflects the ongoing profitability challenges while taking into account ourexpectations of increased margins on mortgages.

Sparbanken Syd to start its own covered bond programme and increase senior unsecured fundingWe expect market funding to increase substantially over the coming years, because the bank plans to start its own covered bondprogramme, complemented by higher issuances of senior unsecured debt. The 12-month deposit growth of 6.3% as of year-end 2018is sound but insufficient to fully meet the bank’s growing funding needs.

The amount of originated loans off the balance sheet (around SEK9.6 billion as of year-end 2018) is greater than the volume of loansretained by the bank on its balance sheet. The bank's partnership with SBAB will be terminated on 30 November 2019, after which thebank intends to buy back the mortgage portfolio to keep the client relationship.

As of year-end 2018, deposits represented 87% of non-equity funding. We expect Sparbanken Syd to significantly increase itsdependence on market funding, both through issuance of senior unsecured debt to be able to take a higher share of mortgages on itsbalance sheet.

In June 2017, the bank issued SEK300 million in senior unsecured debt resulting in SEK850 million total amount of senior unsecureddebt outstanding as of year-end 2018. Furthermore, the bank has a SEK150 million subordinated bond maturing in 2024. SparbankenSyd's market funding ratio is currently lower than peers, at 9.6% as of year-end 2018, a slight decrease compared with 10.1% as of year-end 2017.

We assign the bank a Funding Structure score of ba1, incorporating six notches of downward adjustment, reflecting that the bank willneed to increase its share of market funding considerably over the next two to three years.

Liquid assets provide buffer against increasing wholesale fundingWe assign Sparbanken Syd a Liquidity score of baa1, reflecting a large stock of high-quality liquid assets. Sparbanken Syd has a strongliquidity reserve, composed of a stock of high-quality liquid assets, comprising highly rated covered bonds and government securities.This results in a ratio of liquid assets to tangible banking assets of 31.8% as of year-end 2018. Additionally, Sparbanken Syd has a lowconcentration among deposits, which further underpins the bank’s liquidity.

Support and structural considerationsAffiliate supportSparbanken Syd is an independent savings bank, and consequently the bank does not benefit from any affiliate support.

Loss Given Failure (LGF) AnalysisWe apply our Advanced LGF Analysis on Sparbanken Syd because the bank is subject to the European Union Bank Recovery andResolution Directive, which we consider an operational resolution regime. For this analysis, we assume that equity and losses stand at

6 4 September 2019 Sparbanken Syd: Update to credit analysis

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3% and 8%, respectively, of tangible banking assets in a failure scenario. We also assume a 25% run-off of junior wholesale depositsand a 5% run-off in preferred deposits. Moreover, we assign a 25% probability to junior deposits being preferred to senior unsecureddebt. These are in line with our standard assumptions. We assume the bank's junior deposits to account for 26% of total deposits, inline with banks with a diversified deposit base.

Based on Sparbanken Syd's balance-sheet structure as of year-end 2018, our Advanced LGF Analysis indicates a two-notch LGF upliftfor the long-term issuer and deposit ratings above the BCA of baa3 because of the buffer of subordinated debt and the volumes ofsenior unsecured debt.

Government supportSparbanken Syd’s national market share in lending on own book is small at around 0.06% as of year-end 2018. If we include alloriginated mortgage loans as well, the bank’s national market share is around 0.13%. Given the limited scope of the bank’s operationsand its low national market share in lending, we assume a low probability of government support in case of need. As a result,Sparbanken Syd’s deposit and issuer ratings do not benefit from any uplift because of government support.

Counterparty Risk (CR) AssessmentCR Assessments are opinions of how counterparty obligations are likely to be treated if a bank fails, and are distinct from debt anddeposit ratings in that they (1) take into account only the risk of default rather than expected loss, and (2) apply to counterpartyobligations and contractual commitments rather than debt or deposit instruments. The CR Assessment is an opinion of thecounterparty risk related to a bank's covered bonds, contractual performance obligations (servicing), derivatives (for example, swaps),letters of credit, guarantees and liquidity facilities. The CR Assessment takes into account the issuer's standalone strength as well asthe likelihood of affiliate and government support in the event of need, reflecting the expected seniority of these obligations in theliabilities hierarchy. The CR Assessment also incorporates other steps authorities can take to preserve the key operations of a bank,should it enter a resolution.

Sparbanken Syd's CR Assessment is positioned at A3(cr)/P-2(cr)The CR Assessment is positioned three notches above the Adjusted BCA of baa3, based on the buffer against default provided by juniordeposits, senior unsecured debt, and subordinated debts and does not benefit from any government support.

Counterparty Risk Ratings (CRRs)CRRs are opinions of the ability of entities to honour the uncollateralised portion of non-debt counterparty financial liabilities (CRRliabilities) and also reflect the expected financial losses in the event such liabilities are not honoured. CRR liabilities typically relate totransactions with unrelated parties. Examples of CRR liabilities include the uncollateralised portion of payables arising from derivativestransactions and the uncollateralised portion of liabilities under sale and repurchase agreements. CRRs are not applicable to fundingcommitments or other obligations associated with covered bonds, letters of credit, guarantees, servicer and trustee obligations, andother similar obligations that arise from a bank performing its essential operating functions.

Sparbanken Syd's CRRs are positioned at A3/P-2The CRRs are positioned three notches above the Adjusted BCA of baa3, reflecting extremely low loss given failure from the highvolume of instruments that are subordinated to CRR liabilities.

About Moody's Bank ScorecardOur scorecard is designed to capture, express and explain in summary form our Rating Committee's judgement. When read inconjunction with our research, a fulsome presentation of our judgement is expressed. As a result, the output of our scorecardmay materially differ from that suggested by raw data alone (though it has been calibrated to avoid the frequent need for strongdivergence). The scorecard output and the individual scores are discussed in rating committees and may be adjusted up or down toreflect conditions specific to each rated entity.

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Rating methodology and scorecard factors

Exhibit 6

Sparbanken SydMacro FactorsWeighted Macro Profile Strong + 100%

Factor HistoricRatio

InitialScore

ExpectedTrend

Assigned Score Key driver #1 Key driver #2

SolvencyAsset RiskProblem Loans / Gross Loans 1.0% aa3 ↑↑ baa1 Sector concentration Geographical

concentrationCapitalTangible Common Equity / Risk Weighted Assets(Basel III - transitional phase-in)

18.8% aa2 ↓↓ a3 Access to capital

ProfitabilityNet Income / Tangible Assets 0.1% b3 ↑ b3 Expected trend

Combined Solvency Score a2 baa2LiquidityFunding StructureMarket Funds / Tangible Banking Assets 9.6% a1 ↓↓ ba1 Expected trend Extent of market

funding relianceLiquid ResourcesLiquid Banking Assets / Tangible Banking Assets 31.8% a2 ↓↓ baa1 Expected trend

Combined Liquidity Score a1 baa3Financial Profile baa2Qualitative Adjustments Adjustment

Business Diversification 0Opacity and Complexity 0Corporate Behavior -1

Total Qualitative Adjustments -1Sovereign or Affiliate constraint AaaScorecard Calculated BCA range baa2 - ba1Assigned BCA baa3Affiliate Support notching 0Adjusted BCA baa3

Balance Sheet in-scope(SEK Million)

% in-scope at-failure(SEK Million)

% at-failure

Other liabilities 1,075 10.1% 1,915 18.0%Deposits 8,240 77.5% 7,400 69.6%

Preferred deposits 6,098 57.3% 5,793 54.5%Junior deposits 2,142 20.1% 1,607 15.1%Senior unsecured bank debt 850 8.0% 850 8.0%Dated subordinated bank debt 150 1.4% 150 1.4%Equity 319 3.0% 319 3.0%Total Tangible Banking Assets 10,634 100.0% 10,634 100.0%

De Jure waterfall De Facto waterfall NotchingDebt ClassInstrumentvolume +

subordination

Sub-ordination

Instrumentvolume +

subordination

Sub-ordination

De Jure De FactoLGF

NotchingGuidance

vs.Adjusted

BCA

AssignedLGF

notching

AdditionalNotching

PreliminaryRating

Assessment

Counterparty Risk Rating 27.5% 27.5% 27.5% 27.5% 3 3 3 3 0 a3Counterparty Risk Assessment 27.5% 27.5% 27.5% 27.5% 3 3 3 3 0 a3(cr)Deposits 27.5% 4.4% 27.5% 12.4% 2 3 2 2 0 baa1

8 4 September 2019 Sparbanken Syd: Update to credit analysis

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Instrument Class Loss GivenFailure notching

Additionalnotching

Preliminary RatingAssessment

GovernmentSupport notching

Local CurrencyRating

ForeignCurrency

RatingCounterparty Risk Rating 3 0 a3 0 A3 A3Counterparty Risk Assessment 3 0 a3(cr) 0 A3(cr)Deposits 2 0 baa1 0 Baa1 Baa1[1] Where dashes are shown for a particular factor (or sub-factor), the score is based on non-public information.Source: Moody’s Investors Service

Ratings

Exhibit 7Category Moody's RatingSPARBANKEN SYD

Outlook StableCounterparty Risk Rating A3/P-2Bank Deposits Baa1/P-2Baseline Credit Assessment baa3Adjusted Baseline Credit Assessment baa3Counterparty Risk Assessment A3(cr)/P-2(cr)Issuer Rating Baa1ST Issuer Rating P-2

Source: Moody's Investors Service

Endnotes1 Please refer to Sweden's Macro Profile: Strong+, published on 31 October 2018.

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Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (includingcorporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating,agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintainpolicies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO andrated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually atwww.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s InvestorsService Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intendedto be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, yourepresent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly orindirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as tothe creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’sOverseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a NationallyRecognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by anentity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registeredwith the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferredstock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it feesranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

REPORT NUMBER 1189122

10 4 September 2019 Sparbanken Syd: Update to credit analysis