FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Dated February 1, 2018
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
Aktiebolaget Svensk Exportkredit
Swedish Export Credit Corporation
(Translation of Registrant’s Name into English)
Klarabergsviadukten
61-63
SE-101 23 Stockholm
Sweden
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
| Form 20-F x | Form 40-F o |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): N/A
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): N/A
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
| Yes o | No x |
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
Incorporation by Reference
This Report on Form 6-K, including the exhibits hereto, is hereby incorporated by reference, in its entirety, into the registration statement on Form F-3 (File No. 333-221336) of Aktiebolaget Svensk Exportkredit (publ) (“SEK”).
This Report comprises the following:
1. Registrant’s report for the fourth quarter of 2017. |
|
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: February 1, 2018
| AB Svensk Exportkredit | |
|
| |
| (Swedish Export Credit Corporation) | |
|
| |
| By: | /s/ Catrin Fransson |
|
|
|
|
| Catrin Fransson, Chief Executive Officer |
Summary
Net interest revenues, quarterly
Operating profit, quarterly
After-tax return on equity, quarterly
Total capital ratio, quarterly
January-December 2017
· Net interest revenues Skr 1,683 million (2016: Skr 1,747 million)
· Operating profit Skr 1,007 million (2016: Skr 1,002 million)
· Net profit Skr 772 million (2016: Skr 780 million)
· New lending Skr 89.3 billion (2016: Skr 54.8 billion)
· Basic and diluted earnings per share Skr 193 (2016: Skr 195)
· After-tax return on equity 4.5 percent (2016: 4.6 percent)
Fourth quarter of 2017
· Net interest revenues Skr 405 million (4Q16: Skr 457 million)
· Operating profit Skr 341 million (4Q16: Skr 213 million)
· Net profit Skr 263 million (4Q16: Skr 166 million)
· New lending Skr 11.5 billion (4Q16: Skr 9.6 billion)
· Basic and diluted earnings per share Skr 66 (4Q16: Skr 42)
· After-tax return on equity 6.0 percent (4Q16: 3.9 percent)
Equity and balances
· Total capital ratio 23.0 percent (year-end 2016: 25.1 percent)
· Total assets Skr 264.4 billion (year-end 2016: Skr 299.4 billion)
· Loans, outstanding and undisbursed Skr 268.0 billion (year-end 2016: Skr 263.5 billion)
· Proposed ordinary dividend Skr 232 million (year-end 2016: Skr 234 million)
Statement by the CEO
Growing need for export financing
The positive trend for Swedish exports continues. SEK’s Export Credit Trends Survey, from November 26, 2017, shows that exporters perceive their financial situation as even stronger than in the spring.
The need for financing in connection with export businesses has increased for both small and medium-sized enterprises (SME’s) and major companies. This applies to how they view both the current situation and the coming 12 months. The increase in export order intake these companies are describing are expected to lead to more jobs in Sweden.
The positive trend for Swedish exports was also reflected in SEK’s lending. New lending during the fourth quarter of 2017 amounted to approximately Skr 11.5 billion (4Q16: Skr 9.6 billion). In 2017, SEK signed total new loan agreements corresponding to Skr 89.3 billion (2016: Skr 54.8 billion) to the Swedish export industry and its customers during 2017.
SEK continued its efforts to reach new clients and to broaden its business with existing clients throughout the year. Solicitation of new and existing clients has been successful, and SEK has concluded deals with large and medium-sized companies.
During 2017, SEK worked together with other export promotion agencies within the Swedish Government’s Team Sweden Initiative. We participated in events such as delegation trips to Mexico, Colombia, Indonesia and China.
Net interest revenues decreased by 4 percent during 2017, totaling Skr 1,683 million (2016: Skr 1,747 million). Net interest revenues was affected negatively by a higher resolution fee of Skr 193 million (2016: Skr 102 million). Operating profit for 2017 totaled Skr 1,007 million (2016: Skr 1,002 million). Net results of financial transactions had a negative impact on profit of Skr 102 million (2016: expense Skr 110 million), primarily due to unrealized changes in market value. SEK has good liquidity and strong capitalization. The total capital ratio as of December 31, 2017 was 23.0 percent (year-end 2016: 25.1 percent). The annualized return on equity for 2017 amounted to 4.5 percent (2016: 4.6 percent). SEK’s Board of Directors has decided that dividends to the owner (the Swedish government) amount to 30 percent of earnings, which is in line with the dividend policy.
SEK remains well-prepared to finance the Swedish export industry and to thereby strengthen Swedish exporters’ competitiveness.
“My perception is that export companies want various sources of finances, of which SEK is one. The fact that the companies also foresee a need for financing moving forward, points to their belief in continued favorable growth for Swedish exports”
Catrin Fransson, CEO
Operations
New lending, quarterly
SEK’s markets for new lending Jan-Dec 2017
New transactions for new and existing clients
In 2017, SEK’s efforts to broaden the scope of its business with existing clients resulted in several new transactions. Moreover, efforts to solicit new clients have been successful and resulted in business with many new clients.
Year-on-year, new lending was significantly higher in the fourth quarter and amounted to Skr 11.5 billion (4Q16: Skr 9.6 billion). In total, new lending in 2017 amounted to Skr 89.3 billion (2016: Skr 54.8 billion).
The increase in new lending volume was primarily attributable to high demand for export credit lending to exporters’ customers. The new lending to Swedish exporters was also higher as compared to the previous year. During the year, export credits in the form of officially supported export credits (CIRR loans) were significant, primarily in the telecom sector.
Despite good access to financing in the capital markets for the largest exporters, new lending to this customer group has been strong. Together with increased demand from medium-sized exporters this has contributed to high volumes.
New lending
Skr bn |
| Jan-Dec 2017 |
| Jan-Dec 2016 |
|
Lending to Swedish exporters1 |
| 21.6 |
| 18.1 |
|
Lending to exporters’ customers2 |
| 67.7 |
| 36.7 |
|
Total |
| 89.3 |
| 54.8 |
|
CIRR loan as percentage of new financial transactions |
| 41 | % | 20 | % |
1 Of which Skr 0.7 billion (year-end 2016: Skr 0.1 billion) had not been disbursed at period end.
2 Of which Skr 35.1 billion (year-end 2016: Skr 8.3 billion) had not been disbursed at period end.
New borrowing, quarterly
Long-term borrowing
SEK’s markets for new borrowing Jan-Dec 2017
Competitive borrowing
Capital markets in 2017 were stable with high liquidity. SEK completed several public financing transactions during the year as well as a large volume of structured debt, mainly in the Japanese Uridashi market. SEK remains one of the largest foreign issuers in the Uridashi market. In 2017, SEK remained competitive with other borrowers and was able to borrow at advantageous levels both in the public and structured markets.
During the fourth quarter, an unusually high volume of structured debt was redeemed related to the development of the Nikkei Index, as a consequence of an upswing in the Japanese stock market. In combination with the maturity and disbursement of new lending, the unusually high volume of structured debt redemption has led to a reduction in liquidity investments. However, SEK continues to have strong liquidity for new lending and remains well-prepared to meet the future financing needs of the Swedish export industry.
SEK’s borrowing
Skr bn |
| Jan-Dec 2017 |
| Jan-Dec 2016 |
|
New long-term borrowings |
| 82.4 |
| 70.4 |
|
Outstanding senior debt |
| 224.8 |
| 252.9 |
|
Repurchase and redemption of own debt |
| 38.7 |
| 15.0 |
|
Comments on the consolidated financial accounts
January-December 2017
Operating profit amounted to Skr 1,007 million (2016: Skr 1,002 million). Net profit was Skr 772 million (2016: Skr 780 million).
Net interest revenues
Net interest revenues amounted to Skr 1,683 million (2016: Skr 1,747 million), a decrease of 4 percent compared to the previous year. Net interest revenues were affected negatively by a higher resolution fee of Skr 193 million (2016: Skr 102 million), which SEK is required to pay to a fund to support the recovery of credit institutions. The higher fee was partially offset by higher market interest rates and lower borrowing costs.
Skr bn, average |
| Jan-Dec |
| Jan-Dec |
| Change |
|
Total loans |
| 201.9 |
| 206.9 |
| -2 | % |
Liquidity investments |
| 64.0 |
| 65.5 |
| -2 | % |
Interest-bearing assets |
| 265.9 |
| 272.4 |
| -2 | % |
Interest-bearing liabilaties |
| 241.0 |
| 245.4 |
| -2 | % |
Net results of financial transactions
Net results of financial transactions amounted to Skr -102 million (2016: Skr -110 million), mainly due to unrealized losses related to changes in the fair value of the credit spreads on SEK’s own debt, where increased credit spreads have had a negative effect on net profit. This was partially offset by unrealized gains related to the fair value of currency swaps.
Operating expenses
Skr mn |
| Jan-Dec |
| Jan-Dec |
| Change |
|
Personnel expenses |
| -320 |
| -308 |
| 4 | % |
Other administrative expenses |
| -232 |
| -236 |
| -2 | % |
Depreciation and impairment of non-financial assets |
| -45 |
| -46 |
| -2 | % |
Total operating expenses |
| -597 |
| -590 |
| 1 | % |
Operating expenses increased somewhat compared to the previous year, mainly due to increased personnel expenses, which were partially offset by a decrease in other administrative expenses. In 2017, a provision of Skr 7 million was made for the individual variable remuneration in the system. During the previous year, a reversal of Skr 4 million for the previous employee incentive scheme was made. Beginning in 2017, SEK
introduced a system for individual variable remuneration for permanent employees with customer or business responsibility, with the exception of members of the executive management team. In 2017, the cost for the remuneration could amount to a maximum of Skr 12 million.
Net credit losses
Net credit losses amounted to Skr 51 million (2016: Skr -16 million). In 2017, a provision of Skr -59 million was made for anticipated credit losses relative to individually-assessed counterparties. During 2017, a previous reserved loss of Skr 47 million was realized. The collectively-assessed credits reserve decreased by Skr 80 million during the year. The decrease was due to improvements in the assessment basis in preparation for the introduction of the new process under IFRS 9 beginning in 2018 (see Notes 1 and 4). The collectively-assessed credits reserve amounted to Skr 90 million at December 31, 2017 (year-end 2016: Skr 170 million).
Other comprehensive income
Skr mn |
| Jan-Dec |
| Jan-Dec |
| Change |
|
Items to be reclassified to operating profit |
| -124 |
| -123 |
| -1 | % |
of which available-for-sale securities |
| -33 |
| 46 |
| -172 | % |
of which other comprehensive income effects related to cash-flow hedges |
| -91 |
| -169 |
| 46 | % |
Items not to be reclassified to operating profit |
| -4 |
| -26 |
| 85 | % |
Other comprehensive income before tax |
| -128 |
| -149 |
| 14 | % |
A major part of the items to be reclassified to operating profit related to cash flow hedges. The effect was related to reclassification from other comprehensive income to net interest revenues due to the fact that hedging instruments previously were included in cash flow hedges.
Items not to be reclassified to operating profit were related to revaluation of defined benefit pensions.
Fourth quarter of 2017
Operating profit for the fourth quarter of 2017 amounted to Skr 341 million (4Q16: Skr 213 million). Net profit was Skr 263 million (4Q16: Skr 166 million).
Net interest revenues
Net interest revenues for the fourth quarter of 2017 amounted to Skr 405 million (4Q16: Skr 457 million), a decrease of 11 percent compared to the corresponding period in the previous year. A higher resolution fee, which SEK is required to pay to a fund to support the recovery of credit institutions, and a decrease in reclassification from other comprehensive income to net interest revenues, due to the fact that hedging instruments previously were included in cash flow hedges, had a negative impact on net interest revenues. Increased market interest rates partially offset the negative impact.
Skr bn, average |
| Oct-Dec |
| Oct-Dec |
| Change |
|
Total loans |
| 194.6 |
| 206.9 |
| -6 | % |
Liquidity investments |
| 66.0 |
| 74.3 |
| -11 | % |
Interest-bearing assets |
| 260.6 |
| 281.2 |
| -7 | % |
Interest-bearing liabilaties |
| 237.4 |
| 259.7 |
| -9 | % |
Net results of financial transactions
Net results of financial transactions for the fourth quarter of 2017 amounted to Skr 41 million (4Q16: Skr -60 million). Valuation effects from foreign exchange (FX) swaps and basis spreads had a positive impact, while unrealized value changes relating to changes in credit spreads in SEK’s own debt, together with improvements in the method for valuing credits in hedging relationships, had a negative impact.
Operating expenses
Skr mn |
| Oct-Dec |
| Oct-Dec |
| Change |
|
Personnel expenses |
| -85 |
| -85 |
| 0 | % |
Other administrative expenses |
| -61 |
| -61 |
| 0 | % |
Depreciation and impairment of non-financial assets |
| -10 |
| -12 |
| -17 | % |
Total operating expenses |
| -156 |
| -158 |
| -1 | % |
Beginning in 2017, SEK introduced a system for individual variable remuneration for permanent employees with customer or business responsibility, with the exception of members of the executive management team. The remuneration at the company level is capped at a maximum of two months’ salary for those who qualify. During the fourth quarter of 2017, a provision of Skr 2 million (4Q16: -) related to the remuneration in the system was made.
Net credit losses
For the fourth quarter of 2017, net credit losses amounted to Skr 58 million (4Q16: Skr -15 million). In the fourth quarter of 2017, a provision of Skr -5 million was made for anticipated credit losses relative to individually-assessed counterparties. Due to improvements in the assessment basis in preparation for the introduction of the new process under IFRS 9 beginning in 2018, a reversal of Skr 60 million was made to the collectively-assessed credits reserve (see Note 1 and 4). The collectively-assessed credits reserve amounted to Skr 90 million at December 31, 2017 (year-end 2016: Skr 170 million).
Statement of Financial Position
Total assets and liquidity investments
Liquidity investments and outstanding loans decreased compared to the end of 2016. Liquidity investments decreased during the fourth quarter due to early redemption of structured debt related to the Nikkei Index and the strong performance of the Japanese stock market. SEK has not replaced this debt yet because of continued strong new lending capacity. Maturities and repayments caused outstanding loans to decrease, which was not significantly offset by the new lending because new lending was primarily attributable to export credits of which only a small portion had been disbursed as of December 31, 2017.
Skr bn |
| December 31, |
| December 31, |
| Change |
|
Total assets |
| 264.4 |
| 299.4 |
| -12 | % |
Liquidity investments |
| 55.7 |
| 72.3 |
| -23 | % |
Outstanding loans |
| 195.1 |
| 208.7 |
| -7 | % |
of which loans in the CIRR-system |
| 49.1 |
| 49.8 |
| -1 | % |
Total exposures amounted to Skr 327.2 billion on December 31, 2017 (year-end 2016: Skr 340.7 billion). SEK’s exposures to central and regional governments as well as financial institutions have decreased as exposures to corporates have increased (see Note 10).
Liabilities and equity
As of December 31, 2017, the aggregate volume of available funds and shareholders’ equity exceeded the aggregate volume of loans outstanding and loans committed at all maturities. Accordingly, SEK considers all of its outstanding commitments to be covered through maturity.
In 2017, SEK had a credit facility in place with the Swedish National Debt Office of up to Skr 125 billion. To date, SEK has not utilized the credit facility. The credit facility can only be utilized for loans covered by the officially supported export credits system (CIRR). In December 2017, the Swedish Parliament confirmed that the credit facility will continue to be available in 2018 in an amount up to Skr 125 billion.
Capital adequacy
SEK maintains strong capitalization, with a total capital ratio of 23.0 percent (year-end 2016: 25.1 percent) and healthy liquidity. The change in capital ratios compared to the year-end 2016 is primarily due to SEK applying the internal ratings-based (IRB) approach to exposures to central and regional governments and to multilateral development banks beginning in the first quarter of 2017 (see Note 9).
Percent |
| December 31, 2017 |
| December 31, 2016 |
|
Common Equity Tier 1 capital ratio |
| 20.6 |
| 22.1 |
|
Tier 1 capital ratio |
| 20.6 |
| 22.1 |
|
Total capital ratio |
| 23.0 |
| 25.1 |
|
Leverage ratio |
| 5.9 |
| 5.3 |
|
LCR according to the Swedish FSA |
| 505 |
| 383 |
|
LCR according to the EU Commision’s delegated act |
| 169 |
| 215 |
|
Net stable funding ratio (NSFR) |
| 140 |
| 132 |
|
Rating
|
| Skr |
| Foreign currency |
Moody’s |
| Aa1/Stable |
| Aa1/Stable |
Standard & Poor’s |
| AA+/Stable |
| AA+/Stable |
Dividend
The Board of Directors has resolved to propose the payment of a dividend of Skr 232 million (2016: Skr 234 million) at the Annual General Meeting, corresponding to the company’s dividend policy of 30 percent of the profit for the year.
Other events
At an Extraordinary General Meeting held on November 21, 2017, Teppo Tauriainen chose to leave the Board after three years of service. In connection with that the Board elected Anna Brandt as a Director of the Board of Directors of SEK.
On December 20, the Swedish National Debt Office took a formal decision on plans for managing banks and other financial institutions in a crisis and also set minimum requirement for own funds and eligible liabilities (MREL). The decision by the Swedish National Debt Office sets an MREL for SEK of 7.1 percent of total liabilities and own funds calculated as per the resolution regulations. This corresponds to a minimum requirement of 28.0 percent of risk-weighted assets. The requirement applies from January 1, 2018, and in its press release, the Swedish National Debt Office noted that all of the institutions, including SEK, already met this requirement.
Risk factors and the macro environment
Various risks arise as part of SEK’s operations. SEK’s primary exposure is to credit risk, but the company is also exposed to market, liquidity, refinancing, operational and sustainability risks. For a more detailed description of SEK’s risk factors, refer to the Risk and Capital Management section in SEK’s 2016 Annual Report.
The annualized rate of Swedish GDP growth was 2.9 percent for the third quarter and the unemployment rate was 6.4 percent as of November 2017. The consumer price index rose 1.9 percent on an annualized basis as of November 2017 and the repo rate remained fixed at negative 0.5 percent. According to Statistics Sweden (SCB), in the third quarter, Swedish exports grew 0.7 percent compared with the prior quarter. Exports of goods increased 1.1 percent and exports of services declined 0.3 percent.
The economic statistics indicate a strong Swedish economy. Exports of goods posted healthy growth, while growth in exports of services has levelled off. Export volumes have increased for essentially all categories of goods compared with the first three quarters last year. Foreign trade statistics showed continued strong vehicle exports and the same trend applied to trade in minerals, such as iron ore, and for iron and steel. Germany remains Sweden’s most important trading partner and has posted healthy growth during the year. However, trade with the US has slowed, most likely due to President Trump’s protectionist trade policy stance. World trade has increased on pace with improvements in the global economy, mainly attributable to increased demand from emerging markets. Following a slight slowdown in emerging market imports in 2015 and 2016, a clear upward trend became evident in 2017.
Financial markets remained stable despite political uncertainty, mainly due to Brexit and US policy. Political uncertainty and geopolitical risks linked to rising tensions could impact the real economy and the financial system.
Financial targets
Profitability target
| A return on equity of at least 6 percent over time.
|
Dividend policy
| Payment of an ordinary dividend of 30 percent of the profit for the year.
|
Capital target | Under normal conditions, SEK’s total capital ratio is to exceed the Swedish FSA’s total capital adequacy requirement by 1 to 3 percentage points. Currently, the capital target means that the total capital ratio should amount to 17-19 percent.
|
Key performance indicators (Unaudited except for Jan-Dec 2016)
Skr mn (if not otherwise indicated) |
| Oct-Dec 2017 |
| Jul-Sep 2017 |
| Oct-Dec 2016 |
| Jan-Dec 2017 |
| Jan-Dec 2016 |
|
New lending |
| 11,517 |
| 29,067 |
| 9,624 |
| 89,305 |
| 54,856 |
|
of which to Swedish exporters |
| 6,436 |
| 2,147 |
| 4,175 |
| 21,643 |
| 18,107 |
|
of which to exporters’ customers |
| 5,081 |
| 26,920 |
| 5,449 |
| 67,662 |
| 36,749 |
|
CIRR-loans as a percentage of new lending |
| 11 | % | 67 | % | 0 | % | 41 | % | 20 | % |
Loans, outstanding and undisbursed |
| 268,034 |
| 271,907 |
| 263,483 |
| 268,034 |
| 263,483 |
|
|
|
|
|
|
|
|
|
|
|
|
|
New long-term borrowings |
| 11,819 |
| 16,325 |
| 8,905 |
| 82,441 |
| 70,388 |
|
Outstanding senior debt |
| 224,833 |
| 245,883 |
| 252,948 |
| 224,833 |
| 252,948 |
|
|
|
|
|
|
|
|
|
|
|
|
|
After-tax return on equity |
| 6.0 | % | 3.2 | % | 3.9 | % | 4.5 | % | 4.6 | % |
Proposed ordinary dividend |
| — |
| — |
| — |
| 232 |
| 234 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1 capital ratio |
| 20.6 | % | 18.9 | % | 22.1 | % | 20.6 | % | 22.1 | % |
Tier 1 capital ratio |
| 20.6 | % | 18.9 | % | 22.1 | % | 20.6 | % | 22.1 | % |
Total capital ratio |
| 23.0 | % | 21.1 | % | 25.1 | % | 23.0 | % | 25.1 | % |
Leverage ratio |
| 5.9 | % | 5.4 | % | 5.3 | % | 5.9 | % | 5.3 | % |
Liquidity coverage ratio (LCR) according to the Swedish FSA |
| 505 | % | 620 | % | 383 | % | 505 | % | 383 | % |
Liquidity coverage ratio (LCR) according to the EU Commision’s delegated act |
| 169 | % | 385 | % | 215 | % | 169 | % | 215 | % |
Net stable funding ratio (NSFR) |
| 140 | % | 144 | % | 132 | % | 140 | % | 132 | % |
See definitions on page 29.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED EXCEPT FOR JAN-DEC 2016)
Skr mn |
| Note |
| Oct-Dec 2017 |
| Jul-Sep 2017 |
| Oct-Dec 2016 |
| Jan-Dec 2017 |
| Jan-Dec 2016 |
|
Interest revenues |
|
|
| 1,019 |
| 1,004 |
| 887 |
| 3,896 |
| 3,188 |
|
Interest expenses |
|
|
| -614 |
| -578 |
| -430 |
| -2,213 |
| -1,441 |
|
Net interest revenues |
| 2 |
| 405 |
| 426 |
| 457 |
| 1,683 |
| 1,747 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net fee and commission expense |
|
|
| -7 |
| -8 |
| -11 |
| -28 |
| -29 |
|
Net results of financial transactions |
| 3 |
| 41 |
| -113 |
| -60 |
| -102 |
| -110 |
|
Total operating income |
|
|
| 439 |
| 305 |
| 386 |
| 1,553 |
| 1,608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel expenses |
|
|
| -85 |
| -67 |
| -85 |
| -320 |
| -308 |
|
Other administrative expenses |
|
|
| -61 |
| -49 |
| -61 |
| -232 |
| -236 |
|
Depreciation and impairment of non-financial assets |
|
|
| -10 |
| -12 |
| -12 |
| -45 |
| -46 |
|
Total operating expenses |
|
|
| -156 |
| -128 |
| -158 |
| -597 |
| -590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit before net credit losses |
|
|
| 283 |
| 177 |
| 228 |
| 956 |
| 1,018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net credit losses |
| 4 |
| 58 |
| 3 |
| -15 |
| 51 |
| -16 |
|
Operating profit |
|
|
| 341 |
| 180 |
| 213 |
| 1,007 |
| 1,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expenses |
|
|
| -78 |
| -42 |
| -47 |
| -235 |
| -222 |
|
Net profit1 |
|
|
| 263 |
| 138 |
| 166 |
| 772 |
| 780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income related to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Items to be reclassified to profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities2 |
|
|
| -5 |
| 0 |
| 6 |
| -33 |
| 46 |
|
Derivatives in cash flow hedges2 |
|
|
| -12 |
| -22 |
| -38 |
| -91 |
| -169 |
|
Tax on items to be reclassified to profit or loss |
|
|
| 3 |
| 5 |
| 7 |
| 27 |
| 27 |
|
Net items to be reclassified to profit or loss |
|
|
| -14 |
| -17 |
| -25 |
| -97 |
| -96 |
|
Items not to be reclassified to profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revaluation of defined benefit plans |
|
|
| -9 |
| 18 |
| 9 |
| -4 |
| -26 |
|
Tax on items not to be reclassified to profit or loss |
|
|
| 2 |
| -4 |
| -2 |
| 1 |
| 6 |
|
Net items not to be reclassified to profit or loss |
|
|
| -7 |
| 14 |
| 7 |
| -3 |
| -20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income |
|
|
| -21 |
| -3 |
| -18 |
| -100 |
| -116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income1 |
|
|
| 242 |
| 135 |
| 148 |
| 672 |
| 664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 The entire profit is attributable to the shareholder of the Parent Company. 2 See the Consolidated Statement of Changes in Equity. | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Skr |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share3 |
|
|
| 66 |
| 35 |
| 42 |
| 193 |
| 195 |
|
3 Net profit divided by average number of shares, which amounts to 3,990,000 for each period.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED EXCEPT FOR JAN-DEC 2016)
Skr mn |
| Note |
| December 31, 2017 |
| December 31, 2016 |
|
Assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
| 5 |
| 1,231 |
| 7,054 |
|
Treasuries/government bonds |
| 5 |
| 4,382 |
| 3,687 |
|
Other interest-bearing securities except loans |
| 5 |
| 39,807 |
| 49,901 |
|
Loans in the form of interest-bearing securities |
| 4, 5 |
| 41,125 |
| 46,222 |
|
Loans to credit institutions |
| 4, 5 |
| 23,198 |
| 26,190 |
|
Loans to the public |
| 4, 5 |
| 141,111 |
| 147,909 |
|
Derivatives |
| 5, 6 |
| 7,803 |
| 12,005 |
|
Property, plant, equipment and intangible assets |
|
|
| 88 |
| 123 |
|
Other assets |
|
|
| 3,556 |
| 4,167 |
|
Prepaid expenses and accrued revenues |
|
|
| 2,091 |
| 2,184 |
|
Total assets |
|
|
| 264,392 |
| 299,442 |
|
|
|
|
|
|
|
|
|
Liabilities and equity |
|
|
|
|
|
|
|
Borrowing from credit institutions |
| 5 |
| 2,317 |
| 3,756 |
|
Senior securities issued |
| 5 |
| 222,516 |
| 249,192 |
|
Derivatives |
| 5, 6 |
| 16,480 |
| 22,072 |
|
Other liabilities |
|
|
| 826 |
| 2,374 |
|
Accrued expenses and prepaid revenues |
|
|
| 2,063 |
| 2,036 |
|
Deferred tax liabilities |
|
|
| 531 |
| 559 |
|
Provisions |
|
|
| 45 |
| 51 |
|
Subordinated securities issued |
| 5 |
| 2,040 |
| 2,266 |
|
Total liabilities |
|
|
| 246,818 |
| 282,306 |
|
|
|
|
|
|
|
|
|
Share capital |
|
|
| 3,990 |
| 3,990 |
|
Reserves |
|
|
| 30 |
| 130 |
|
Retained earnings |
|
|
| 13,554 |
| 13,016 |
|
Total equity |
|
|
| 17,574 |
| 17,136 |
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
|
| 264,392 |
| 299,442 |
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY IN SUMMARY (UNAUDITED EXCEPT FOR JAN-DEC 2016)
|
|
|
|
|
| Reserves |
|
|
|
|
| ||
Skr mn |
| Equity |
| Share capital |
| Hedge |
| Fair value |
| Defined |
| Retained |
|
Opening balance of equity January 1, 2016 |
| 16,828 |
| 3,990 |
| 228 |
| -1 |
| 19 |
| 12,592 |
|
Net profit Jan-Dec, 2016 |
| 780 |
|
|
|
|
|
|
|
|
| 780 |
|
Other comprehensive income Jan-Dec, 2016 |
| -116 |
|
|
| -132 |
| 36 |
| -20 |
|
|
|
Total comprehensive income Jan-Dec, 2016 |
| 664 |
|
|
| -132 |
| 36 |
| -20 |
| 780 |
|
Dividend |
| -356 |
|
|
|
|
|
|
|
|
| -356 |
|
Closing balance of equity December 31, 20161 |
| 17,136 |
| 3,990 |
| 96 |
| 35 |
| -1 |
| 13,016 |
|
Net profit Jan-Dec, 2017 |
| 772 |
|
|
|
|
|
|
|
|
| 772 |
|
Other comprehensive income Jan-Dec, 2017 |
| -100 |
|
|
| -71 |
| -26 |
| -3 |
|
|
|
Total comprehensive income Jan-Dec, 2017 |
| 672 |
|
|
| -71 |
| -26 |
| -3 |
| 772 |
|
Dividend |
| -234 |
|
|
|
|
|
|
|
|
| -234 |
|
Closing balance of equity December 31, 20171 |
| 17,574 |
| 3,990 |
| 25 |
| 9 |
| -4 |
| 13,554 |
|
1 The entire equity is attributable to the shareholder of the Parent Company.
STATEMENT OF CASH FLOWS IN THE CONSOLIDATED GROUP IN SUMMARY (UNAUDITED EXCEPT FOR JAN-DEC 2016)
Skr mn |
| Jan-Dec 2017 |
| Jan-Dec 2016 |
|
Operating activities |
|
|
|
|
|
Operating profit |
| 1,007 |
| 1,002 |
|
|
|
|
|
|
|
Adjustments for non-cash items in operating profit |
| 319 |
| 287 |
|
Income tax paid |
| -365 |
| -276 |
|
Changes in assets and liabilities from operating activities |
| 8,489 |
| 1,769 |
|
Cash flow from operating activities |
| 9,450 |
| 2,782 |
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Capital expenditures |
| -10 |
| -39 |
|
Cash flow from investing activities |
| -10 |
| -39 |
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Change in senior debt |
| -9,919 |
| 2,637 |
|
Derivatives, net |
| -4,931 |
| -182 |
|
Dividend paid |
| -234 |
| -356 |
|
Cash flow from financing activities |
| -15,084 |
| 2,099 |
|
|
|
|
|
|
|
Cash flow for the period |
| -5,644 |
| 4,842 |
|
Cash and cash equivalents at beginning of the period |
| 7,054 |
| 2,258 |
|
Cash flow for the period |
| -5,644 |
| 4,842 |
|
Exchange-rate differences on cash and cash equivalents |
| -179 |
| -46 |
|
Cash and cash equivalents at end of the period1 |
| 1,231 |
| 7,054 |
|
1 Cash and cash equivalents include, in this context, cash at banks that can be immediately converted into cash and short-term deposits for which the time to maturity does not exceed three months from trade date.
NOTES
Note 1. Applied accounting principles and impacts from changes in accounting principles
Note 2. Net interest revenues
Note 3. Net results of financial transactions
Note 4. Impairment and past-due receivables
Note 5. Financial assets and liabilities at fair value
Note 6. Derivatives
Note 7. CIRR-system
Note 8. Pledged assets and contingent liabilities
Note 9. Capital adequacy
Note 10. Exposures
Note 11. Transactions with related parties
Note 12. Events after the reporting period
All amounts are in Skr million, unless otherwise indicated. All figures concern the Consolidated Group, unless otherwise indicated.
Note 1. Applied accounting principles and impacts from changes in accounting principles
This condensed year-end report is presented in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting. The Group’s consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) together with the interpretations from IFRS Interpretations Committee (IFRS IC). The IFRS standards applied by SEK are all endorsed by the European Union (EU). The accounting also follows the additional standards imposed by the Annual Accounts Act for Credit Institutions and Securities Companies (1995:1559) (ÅRKL) and the regulation and general guidelines issued by the Swedish Financial Supervisory Authority, “Annual Reports in Credit Institutions and Securities Companies” (FFFS 2008:25). In addition to this, the supplementary accounting rules for groups (RFR 1) issued by the Swedish Financial Reporting Board have been applied. SEK also follows the state’s general guidelines regarding external reporting in accordance with its corporate governance policy and guidelines for state-owned companies.
The accounting policies, methods of computation and presentation of the Consolidated Group and the Parent Company are, in all material aspects, the same as those used for the 2016 annual financial statements except for the Statement of Cash Flows in the Consolidated Group and the Consolidated Statement of Changes in Equity that starting in the third quarter of 2017 are presented in summary form. All cash flows from derivatives are included in Cash flow from financing activities in the Statement of Cash Flows in the Consolidated Group in summary form, as compared to the earlier presentation, which divided these cash flows between operating activities and financing activities. The year-end report does not include all the
disclosures required in the annual financial statements, and should be read in conjunction with the company’s annual financial statements as of December 31, 2016.
Future changes to IFRS
IFRS 9 Financial instruments replaces IAS 39 Financial Instruments: Recognition and Measurement and enters force from January 1, 2018. The impact of the transition to IFRS 9 on SEK is summarized as follows:
As of January 1, 2018, SEK has assessed liquidity investments, which were previously classified as available-for-sale assets. The conclusion of the assessment was that liquidity investments are included in a portfolio where the business model entails measurement at fair value and, accordingly, they are recognized at fair value through profit or loss (FVTPL). Liquidity investments that were previously classified at fair value pursuant to the fair value option (FVO) are also classified at FVTPL due to the portfolio’s business model. Certain fixed-rate liquidity investments were subject to hedge accounting and, as of January 1, 2018, these hedge accounting relationships have been terminated since liquidity investments are now measured at FVTPL.
SEK’s lending meets the conditions for the solely payments of principal and interest (SPPI) tests and uses a business model that aims to collect contractual cash flows, which means SEK’s lending will be measured at amortized cost.
SEK previously applied a separate classification for derivatives in hedge accounting. As of January 1, 2018, derivatives in hedge accounting will not be separated into a separate category and will instead be categorized together with other derivatives at FVTPL.
Gains and losses that arise from changes in SEK’s own credit risk on liabilities classified in accordance with FVO are recognized in the Credit risk reserve under Other comprehensive income and are not reclassified to profit or loss.
The principle applied for the impairment of exposures has changed from the approach based on incurred credit loss events under IAS 39 to instead be based on expected credit losses. IFRS 9 states that all assets measured at amortized cost, including credit commitments and financial guarantees,
are to be tested for any impairment need, which differs from IAS 39, where collective provisions are not made for off-balance-sheet items or financial assets available-for-sale. The implementation of expected credit loss (ECL) models means lower initial impairment but is expected to result in higher volatility over time.
As of December 31, 2017, the transition to IFRS 9 had a total impact on the Group’s equity of Skr 14 million. IFRS 9 has no material impact on capital adequacy and large exposures. SEK will not be restating comparative periods. Comparative information for 2017 will be reported pursuant to IAS 39 and will not be comparable with the information presented for 2018. Differences arising from the introduction of IFRS 9 will be recognized directly in retained
earnings as of January 1, 2018. Beginning January 1, 2018, SEK will also apply IFRS 9 for hedge accounting.
The IASB has also adopted IFRS 15 Revenue from Contracts with Customers, which became mandatorily effective beginning January 1, 2018. IFRS 15 is not applicable for financial instruments or leasing agreements. IFRS 15 is not expected to have a material effect on SEK’s financial statements, capital adequacy or large exposures. There are no other IFRS or IFRS IC interpretations that are not yet applicable that are expected to have a material impact on SEK’s financial statements, capital adequacy or large exposures.
Note 2. Net interest revenues
Skr mn |
| Oct-Dec 2017 |
| Jul-Sep 2017 |
| Oct-Dec 2016 |
| Jan-Dec 2017 |
| Jan-Dec 2016 |
|
Interest revenues |
|
|
|
|
|
|
|
|
|
|
|
Loans to credit institutions |
| 222 |
| 207 |
| 147 |
| 789 |
| 546 |
|
Loans to the public |
| 576 |
| 565 |
| 554 |
| 2,265 |
| 1,992 |
|
Loans in the form of interest-bearing securities |
| 146 |
| 158 |
| 177 |
| 629 |
| 722 |
|
Interest-bearing securities excluding loans in the form of interest-bearing securities |
| 125 |
| 131 |
| 97 |
| 458 |
| 364 |
|
Derivatives |
| -81 |
| -87 |
| -118 |
| -372 |
| -552 |
|
Administrative remuneration CIRR-system1 |
| 30 |
| 31 |
| 30 |
| 125 |
| 116 |
|
Other assets |
| 1 |
| -1 |
| 0 |
| 2 |
| 0 |
|
Total interest revenues |
| 1,019 |
| 1,004 |
| 887 |
| 3,896 |
| 3,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expenses |
|
|
|
|
|
|
|
|
|
|
|
Interest expenses |
| -566 |
| -530 |
| -402 |
| -2,020 |
| -1,339 |
|
Resolution fee |
| -48 |
| -48 |
| -28 |
| -193 |
| -102 |
|
Total interest expenses |
| -614 |
| -578 |
| -430 |
| -2,213 |
| -1,441 |
|
Net interest revenues |
| 405 |
| 426 |
| 457 |
| 1,683 |
| 1,747 |
|
1 Including administrative remuneration for concessionary loans by Skr 2 million during 2017 (2016:Skr 2 million).
Note 3. Net results of financial transactions
Skr mn |
| Oct-Dec 2017 |
| Jul-Sep 2017 |
| Oct-Dec 2016 |
| Jan-Dec 2017 |
| Jan-Dec 2016 |
|
Derecognition of financial instruments not measured at fair value through profit or loss |
| -13 |
| 9 |
| 1 |
| -1 |
| 4 |
|
Financial assets or liabilities at fair value through profit or loss |
| 102 |
| -99 |
| -67 |
| -48 |
| -80 |
|
Financial instruments under fair-value hedge accounting |
| -46 |
| -26 |
| 7 |
| -53 |
| -32 |
|
Currency exchange effects on all assets and liabilities excl. currency exchange effects related to revaluation at fair value |
| -2 |
| 3 |
| -1 |
| 0 |
| -2 |
|
Total net results of financial transactions |
| 41 |
| -113 |
| -60 |
| -102 |
| -110 |
|
SEK’s general business model is to hold financial instruments measured at fair value to maturity. The net fair value changes that occur, mainly related to changes in credit spreads on SEK’s own debt and basis-spreads, and recognized in net results of financial transactions. The changes could be significant in a single reporting period, but will not affect earnings over time since the lifetime cumulative changes in the instrument’s market value will net to zero if it is held to maturity and is a performing instrument. When financial instruments are not held to maturity, realized gains and losses can occur, as in cases where SEK repurchases its own debt, or where lending
is repaid early and the related hedging instruments are terminated prematurely. These effects are presented in the table above under the line items “Derecognition of financial instruments not measured at fair value through profit or loss”, “Financial assets or liabilities at fair value through profit or loss” and “Financial instruments under fair-value hedge accounting”. “Financial assets or liabilities at fair value through profit or loss” and “Financial instruments under fair-value hedge accounting” include realized as well as unrealized changes in fair value.
Note 4. Impairment and past-due receivables
Skr mn |
| Oct-Dec 2017 |
| Jul-Sep 2017 |
| Oct-Dec 2016 |
| Jan-Dec 2017 |
| Jan-Dec 2016 |
|
Impairment of financial assets |
| -5 |
| -27 |
| -18 |
| -59 |
| -23 |
|
Reversal of previous write-downs |
| 63 |
| 30 |
| 3 |
| 110 |
| 7 |
|
Net impairment and reversals |
| 58 |
| 3 |
| -15 |
| 51 |
| -16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Established losses |
| — |
| — |
| — |
| -47 |
| — |
|
Reserves applied to cover established credit losses |
| — |
| -1 |
| — |
| 46 |
| — |
|
Recovered credit losses |
| 0 |
| 1 |
| 0 |
| 1 |
| 0 |
|
Net credit losses1 |
| 58 |
| 3 |
| -15 |
| 51 |
| -16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve of impairment of financial assets |
|
|
|
|
|
|
|
|
|
|
|
Opening balance |
| -212 |
| -217 |
| -238 |
| -254 |
| -236 |
|
Reserves applied to cover established credit losses |
| — |
| -1 |
| — |
| 46 |
| — |
|
Net impairment and reversals |
| 58 |
| 3 |
| -15 |
| 51 |
| -16 |
|
Currency effects |
| -1 |
| 3 |
| -1 |
| 2 |
| -2 |
|
Closing balance |
| -155 |
| -212 |
| -254 |
| -155 |
| -254 |
|
1 As a result of improvements in the assessment basis in preparation for the introduction of the new process under IFRS 9 from 2018, a decrease of the reserve for collectively-assessed credits of Skr 60 million has been made. The reserve amounted to Skr -90 million as of December 31, 2017 (year-end 2016: Skr -170 million).
Past-due receivables
Receivables past-due have been recorded at the amounts expected to be received at settlement.
Skr mn |
| December 31, 2017 |
| December 31, 2016 |
|
Past-due receivables |
|
|
|
|
|
Aggregate amount of principal and interest less than, or equal to, 90 days past-due |
| 136 |
| 55 |
|
Aggregate amount of principal and interest more than 90 days past-due1 |
| 10 |
| 44 |
|
Principal amount not past-due on such receivables |
| 494 |
| 3,778 |
|
Total Past-due receivables |
| 640 |
| 3,877 |
|
1 Of the aggregate amount of principal and interest past due, Skr 3 million (year-end 2016: Skr 38 million) was due for payment more than three months but less than, or equal to, six months before the end of the reporting period, Skr 3 million (year-end 2016: Skr 4 million) was due for payment more than six months but less than, or equal to, nine months before the end of the reporting period, and Skr 5 million (year-end 2016: Skr 2 million) was due for payment more than nine months before the end of the reporting period.
Note 5. Financial assets and liabilities at fair value
|
| December 31, 2017 |
| ||||
Skr mn |
| Book value |
| Fair value |
| Surplus value (+)/ |
|
Cash and cash equivalents |
| 1,231 |
| 1,231 |
| — |
|
Treasuries/governments bonds |
| 4,382 |
| 4,382 |
| — |
|
Other interest-bearing securities except loans |
| 39,807 |
| 39,807 |
| — |
|
Loans in the form of interest-bearing securities |
| 41,125 |
| 42,352 |
| 1,227 |
|
Loans to credit institutions |
| 23,198 |
| 23,451 |
| 253 |
|
Loans to the public |
| 141,111 |
| 144,935 |
| 3,824 | 1 |
Derivatives |
| 7,803 |
| 7,803 |
| — |
|
Total financial assets |
| 258,657 |
| 263,961 |
| 5,304 |
|
|
|
|
|
|
|
|
|
Borrowing from credit institutions |
| 2,317 |
| 2,317 |
| — |
|
Senior securities issued |
| 222,516 |
| 223,465 |
| 949 |
|
Derivatives |
| 16,480 |
| 16,480 |
| — |
|
Subordinated securities issued |
| 2,040 |
| 2,047 |
| 7 |
|
Total financial liabilities |
| 243,353 |
| 244,309 |
| 956 |
|
|
| December 31, 2016 |
| ||||
Skr mn |
| Book value |
| Fair value |
| Surplus value (+)/ |
|
Cash and cash equivalents |
| 7,054 |
| 7,054 |
| — |
|
Treasuries/governments bonds |
| 3,687 |
| 3,687 |
| — |
|
Other interest-bearing securities except loans |
| 49,901 |
| 49,911 |
| 10 |
|
Loans in the form of interest-bearing securities |
| 46,222 |
| 47,210 |
| 988 |
|
Loans to credit institutions |
| 26,190 |
| 26,240 |
| 50 |
|
Loans to the public |
| 147,909 |
| 150,338 |
| 2,429 | 1 |
Derivatives |
| 12,005 |
| 12,005 |
| — |
|
Total financial assets |
| 292,968 |
| 296,445 |
| 3,477 |
|
|
|
|
|
|
|
|
|
Borrowing from credit institutions |
| 3,756 |
| 3,756 |
| — |
|
Senior securities issued |
| 249,192 |
| 250,151 |
| 959 |
|
Derivatives |
| 22,072 |
| 22,072 |
| — |
|
Subordinated securities issued |
| 2,266 |
| 2,265 |
| -1 |
|
Total financial liabilities |
| 277,286 |
| 278,244 |
| 958 |
|
1 Skr 1,346 million of the surplus value (year-end 2016: Skr 1,721 million) is mainly related to CIRR loans. See note 7 for more information regarding the CIRR-system.
Determination of fair value
The determination of fair value is described in the Annual Report for 2016, see Note 1 (h) (viii) Principles for determination of fair value of financial instruments and (ix) Determination of fair value of certain types of financial instruments.
Financial assets in fair value hierarchy
|
| Financial assets at fair value through |
| Available-for-sale |
| ||||||||||||
Skr mn |
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
|
Cash and cash equivalents |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Treasuries/governments bonds |
| — |
| — |
| — |
| — |
| 4,382 |
| — |
| — |
| 4,382 |
|
Other interest-bearing securities except loans |
| — |
| 113 |
| — |
| 113 |
| — |
| 39,694 |
| — |
| 39,694 |
|
Loans in the form of interest-bearing securities |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Loans to credit institutions |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Loans to the public |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Derivatives |
| — |
| 5,829 |
| 1,974 |
| 7,803 |
| — |
| — |
| — |
| — |
|
Total, December 31, 2017 |
| — |
| 5,942 |
| 1,974 |
| 7,916 |
| 4,382 |
| 39,694 |
| — |
| 44,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total, December 31, 2016 |
| 1,368 |
| 9,868 |
| 2,519 |
| 13,755 |
| 4,643 |
| 47,464 |
| — |
| 52,107 |
|
Financial liabilities in fair value hierarchy
|
| Financial liabilities at fair value through profit or loss |
| ||||||
Skr mn |
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
|
Borrowing from credit institutions |
| — |
| — |
| — |
| — |
|
Borrowing from the public |
| — |
| — |
| — |
| — |
|
Senior securities issued |
| — |
| 20,450 |
| 42,995 |
| 63,445 |
|
Derivatives |
| — |
| 13,660 |
| 2,820 |
| 16,480 |
|
Subordinated securities issued |
| — |
| — |
| — |
| — |
|
Total, December 31, 2017 |
| — |
| 34,110 |
| 45,815 |
| 79,925 |
|
|
|
|
|
|
|
|
|
|
|
Total, December 31, 2016 |
| 1 |
| 40,597 |
| 52,553 |
| 93,151 |
|
There were no transfers made between levels during the period January-December 2017 (year-end 2016: Skr - million).
Financial assets and liabilities at fair value in Level 3, December 31, 2017
Skr mn |
| January 1, |
| Purchases |
| Settlements |
| Transfers |
| Transfers |
| Gains (+) |
| Currency |
| December |
|
Other interest-bearing securities except loans |
| 257 |
| — |
| -250 |
| — |
| — |
| -6 |
| -1 |
| — |
|
Senior securities issued 1 |
| -48,217 |
| -19,077 |
| 24,627 |
| — |
| — |
| 1,044 |
| -1,372 |
| -42,995 |
|
Derivatives, net |
| -2,404 |
| 3 |
| -4,342 |
| — |
| — |
| -1,202 |
| 7,099 |
| -846 |
|
Net assets and liabilities, 2017 |
| -50,364 |
| -19,074 |
| 20,035 |
| — |
| — |
| -164 |
| 5,726 |
| -43,841 |
|
Financial assets and liabilities at fair value in Level 3, December 31, 2016
Skr mn |
| January 1, |
| Purchases |
| Settlements |
| Transfers |
| Transfers |
| Gains (+) |
| Currency |
| December |
|
Other interest-bearing securities except loans |
| 261 |
| — |
| — |
| — |
| — |
| -4 |
| 0 |
| 257 |
|
Senior securities issued |
| -38,709 |
| -15,279 |
| 10,176 |
| — |
| — |
| -651 |
| -3,424 |
| -47,887 |
|
Derivatives, net |
| -2,551 |
| -1,259 |
| -263 |
| — |
| — |
| 722 |
| 947 |
| -2,404 |
|
Net assets and liabilities, 2016 |
| -40,999 |
| -16,538 |
| 9,913 |
| — |
| — |
| 67 |
| -2,477 |
| -50,034 |
|
1 In senior securities, a security was identified as Level 3 as of December 31, 2016 and, as a result, the opening balance has been adjusted.
2 Gains and losses through profit or loss, including the impact of exchange rates, is reported as interest net revenue and results of financial transactions. The unrealized fair value changes for assets and liabilities, including the impact of exchange rates, held as of December 31, 2017, amounted to a Skr 768 million loss (year-end 2016: Skr 12 million profit) and are reported as net results of financial transactions.
Uncertainty of valuation of Level 3 instruments
As the estimation of the parameters included in the models to calculate the market value of Level 3-instruments is associated with subjectivity and uncertainty, SEK has, in accordance with IFRS 13, conducted an analysis of the difference in fair value of Level 3-instruments using other established parameter values. Option models and discounted cash flows are used to value the Level 3-instruments. For Level 3-instruments with a longer duration where extrapolated discount curves are used, a sensitivity analysis has been conducted with regards to the interest. The revaluation of the portfolio is made using an interest rate shift of +/- 10 basis points. For the Level 3-instruments that are significantly affected by different types of correlations, which are not based on observable market data, a revaluation has been made by shifting the correlations. The basis for this sensitivity analysis is therefore the revaluation of the relevant part of the portfolio, where the correlations have been adjusted by +/- 10 percentage points. After the
revaluation is performed, the max/min value for each transaction is identified. For Level 3-instruments that are significantly affected by non-observable market data, such as SEK’s own creditworthiness, a revaluation has been made by shifting the credit curve. The revaluation is made by shifting the credit spreads by +/- 10 basis points, which has been assessed as a reasonable change of SEK’s credit spread. The analysis shows the impact of the non-observable market data on the market value. In addition, the market value will be affected by observable market data.
The result of the analysis corresponds with SEK’s business model where issued securities are linked with a matched hedging derivative. The underlying market data is used to evaluate the issued security as well as to evaluate the fair value in the derivate. This means that a change in fair value of the issued security, excluding SEK’s own credit spread, is offset by an equally large change in fair value in the derivative.
Sensitivity analysis — level 3 assets and liabilities
|
| December 31, 2017 |
| ||||||||||
Assets and liabilities |
| Fair Value |
| Unobservable |
| Range of estimates |
| Valuation method |
| Sensitivity |
| Sensitivity |
|
Interest rate |
| 0 |
| Credit spreads |
| 10BP - (10BP) |
| Discounted cash flow |
| 0 |
| 0 |
|
Sum other interest-bearing securities except loans |
| 0 |
|
|
|
|
|
|
| 0 |
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
| -171 |
| Correlation |
| 0.78 - (0.02) |
| Option Model |
| 1 |
| -1 |
|
Interest rate |
| 1,001 |
| Correlation |
| 0.19 - (0.37) |
| Option Model |
| -192 |
| 178 |
|
FX |
| -1,512 |
| Correlation |
| 0.89 - (0.81) |
| Option Model |
| 24 |
| -22 |
|
Other |
| -164 |
| Correlation |
| 0.63 - (0.05) |
| Option Model |
| 0 |
| 0 |
|
Sum derivatives, net |
| -846 |
|
|
|
|
|
|
| -167 |
| 155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
| -680 |
| Correlation |
| 0.78 - (0.02) |
| Option Model |
| -1 |
| 1 |
|
|
|
|
| Credit spreads |
| 10BP - (10BP) |
| Discounted cash flow |
| 11 |
| -11 |
|
Interest rate |
| -42,168 |
| Correlation |
| 0.19 - (0.37) |
| Option Model |
| 195 |
| -181 |
|
|
|
|
| Credit spreads |
| 10BP - (10BP) |
| Discounted cash flow |
| 106 |
| -103 |
|
FX |
| -34 |
| Correlation |
| 0.89 - (0.81) |
| Option Model |
| -25 |
| 23 |
|
|
|
|
| Credit spreads |
| 10BP - (10BP) |
| Discounted cash flow |
| 92 |
| -92 |
|
Other |
| -113 |
| Correlation |
| 0.63 - (0.05) |
| Option Model |
| 0 |
| 0 |
|
|
|
|
| Credit spreads |
| 10BP - (10BP) |
| Discounted cash flow |
| 3 |
| -3 |
|
Sum senior securities issued |
| -42,995 |
|
|
|
|
|
|
| 381 |
| -366 |
|
Total effect on profit or loss2 |
|
|
|
|
|
|
|
|
| 214 |
| -211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other interest-bearing securities except loans, December 31, 2016 |
| 257 |
|
|
|
|
|
|
| 0 |
| 0 |
|
Derivatives, net, December 31, 2016 |
| -2,404 |
|
|
|
|
|
|
| -186 |
| 176 |
|
Senior securities issued, |
| -47,887 |
|
|
|
|
|
|
| 413 |
| -403 |
|
Total effect on profit or loss, December 31, 2016 |
|
|
|
|
|
|
|
|
| 227 |
| -227 |
|
1 Represents the range of correlations that SEK has determined market participants would use when pricing the instruments. The structures are represented both in the security and the derivative hedging the bond. The sensitivity analysis is based on a shift in the interval for correlation between 0.1 and –0.1. The correlation is expressed as a value between 1 and –1, where 0 indicates no relationship, 1 indicates maximum positive relationship and -1 indicates maximum negative relationship. The maximum correlation in the range of unobservable inputs can thus be from 1 to –1. The table presents the scenario analysis of the effect on Level 3-instruments, with maximum positive and negative changes.
2 Of the total impact on profit or loss, the sensitivity effect of SEK’s own credit spread was Skr 211 million (year-end 2016: Skr 244 million) under a maximum scenario and Skr -208 million (year-end 2016: Skr -244 million) under a minimum scenario.
Fair value related to credit risk
|
| Fair value originating from credit risk |
| The period’s change in fair value |
| ||||
Skr mn |
| December 31, 2017 |
| December 31, 2016 |
| Jan–Dec 2017 |
| Jan–Dec 2016 |
|
CVA/DVA, net1 |
| -8 |
| -14 |
| 6 |
| 9 |
|
OCA2 |
| -578 |
| -383 |
| -195 |
| 1 |
|
1 Credit value adjustment (CVA) and Debt value adjustment (DVA) reflects how the counterparties’ credit risk as well as SEK’s own credit rating affects the fair value of derivatives.
2 Own credit adjustment (OCA) reflects how the changes in SEK’s credit rating affects the fair value of financial liabilities measured at fair value through profit and loss.
Note 6. Derivatives
Derivatives by categories
|
| December 31, 2017 |
| December 31, 2016 |
| ||||||||
Skr mn |
| Assets |
| Liabilities |
| Nominal |
| Assets |
| Liabilities |
| Nominal |
|
Interest rate-related contracts |
| 3,797 |
| 9,239 |
| 245,788 |
| 4,309 |
| 9,909 |
| 244,854 |
|
Currency-related contracts |
| 3,756 |
| 6,772 |
| 139,614 |
| 7,115 |
| 10,302 |
| 137,656 |
|
Equity-related contracts |
| 250 |
| 303 |
| 13,246 |
| 581 |
| 1,683 |
| 24,829 |
|
Contracts related to commodities, credit risk, etc. |
| 0 |
| 166 |
| -1,183 |
| — |
| 178 |
| 2,662 |
|
Total derivatives |
| 7,803 |
| 16,480 |
| 397,465 |
| 12,005 |
| 22,072 |
| 410,001 |
|
In accordance with SEK’s policies with regard to counterparty, interest rate, currency exchange, and other exposures, SEK uses, and is a party to, different kinds of derivative instruments, mostly various interest rate-related and currency
exchange-related contracts primarily to hedge risk exposure inherent in financial assets and liabilities. These contracts are carried at fair value in the statements of financial position on a contract-by-contract basis.
Note 7. CIRR-system
Pursuant to the company’s assignment as stated in its owner instruction issued by the Swedish government, SEK administers credit granting in the Swedish system for officially supported export credits (CIRR-system). SEK receives compensation from the Swedish government in the form of an administrative fee, which is calculated based on the principal amount outstanding.
All assets and liabilities related to the CIRR-system are included in the consolidated statement of financial position and in the Parent Company’s balance sheet since SEK bears the credit risk for the lending and acts as the counterparty for lending and borrowing. Unrealized revaluation effects on derivatives related to the CIRR-system are recognized on a net basis under Other assets.
SEK has determined that the CIRR-system should be considered an assignment whereby SEK acts as an agent on behalf of the Swedish government, rather than being the principal in individual transactions. Accordingly, interest income, interest expense and other costs pertaining to CIRR-system assets and liabilities are not recognized in SEK’s statement of comprehensive income.
The administrative compensation received by SEK from the Swedish government is recognized as part of interest income
in SEK’s statement of comprehensive income since the commission received in compensation is equivalent to interest. Any income for SEK that arises from its credit arranger role is recognized in SEK’s statement of comprehensive income under net interest income. Refer also to Note 1 (f) in the 2016 Annual Report.
The administrative fee paid by the state to SEK as compensation is recognized in the CIRR-system as administrative compensation to SEK. Arrangement fees to SEK are recognized together with other arrangement fees such as interest expenses. Refer to the following tables.
In addition to the CIRR-system, SEK administers the Swedish government’s previous concessionary credit program according to the same principles as the CIRR-system. No new lending is being offered under the concessionary credit program. As of December 31, 2017, loans outstanding amounted to Skr 754 million (year-end 2016: Skr 991 million) and, for the January to December 2017 period, the government noted a negative result of Skr -48 million (2016: Skr -53 million). For the January to December 2017 period, administrative compensation to SEK amounted to Skr -2 million (2016: Skr -2 million).
Statement of Comprehensive Income for the CIRR-system
Skr mn |
| Oct-Dec 2017 |
| Jul-Sep 2017 |
| Oct-Dec 2016 |
| Jan-Dec 2017 |
| Jan-Dec 2016 |
|
Interest revenues |
| 353 |
| 319 |
| 321 |
| 1,343 |
| 1,185 |
|
Interest expenses |
| -309 |
| -280 |
| -259 |
| -1,115 |
| -961 |
|
Net interest revenues |
| 44 |
| 39 |
| 62 |
| 228 |
| 224 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest compensation |
| 0 |
| 12 |
| 9 |
| 26 |
| 121 |
|
Foreign exchange effects |
| 0 |
| -2 |
| -1 |
| -6 |
| 4 |
|
Profit before compensation to SEK |
| 44 |
| 49 |
| 70 |
| 248 |
| 349 |
|
Administrative remuneration to SEK |
| -30 |
| -30 |
| -30 |
| -123 |
| -114 |
|
Operating profit CIRR-system |
| 14 |
| 19 |
| 40 |
| 125 |
| 235 |
|
Reimbursement to (–) / from (+) the State |
| -14 |
| -19 |
| -40 |
| -125 |
| -235 |
|
Statement of Financial Position for the CIRR-system (included in SEK’s statement of financial position)
Skr mn |
| December 31, 2017 |
| December 31, 2016 |
|
Cash and cash equivalents |
| 10 |
| 55 |
|
Loans |
| 49,124 |
| 49,802 |
|
Derivatives |
| 522 |
| 321 |
|
Other assets |
| 3,472 |
| 3,414 |
|
Prepaid expenses and accrued revenues |
| 364 |
| 352 |
|
Total assets |
| 53,492 |
| 53,944 |
|
|
|
|
|
|
|
Liabilities |
| 49,252 |
| 49,991 |
|
Derivatives |
| 3,789 |
| 3,576 |
|
Accrued expenses and prepaid revenues |
| 451 |
| 377 |
|
Total liabilities and equity |
| 53,492 |
| 53,944 |
|
�� |
|
|
|
|
|
Commitments |
|
|
|
|
|
Committed undisbursed loans |
| 69,166 |
| 49,080 |
|
Binding offers |
| 628 |
| 2,911 |
|
Note 8. Pledged assets and contingent liabilities
Skr mn |
| December 31, 2017 |
| December 31, 2016 |
|
Collateral provided |
|
|
|
|
|
Cash collateral under the security agreements for derivative contracts |
| 10,314 |
| 11,621 |
|
|
|
|
|
|
|
Contingent assets |
|
|
|
|
|
Guarantee commitments |
| 3,360 |
| 3,027 |
|
|
|
|
|
|
|
Commitments |
|
|
|
|
|
Committed undisbursed loans |
| 72,914 |
| 54,783 |
|
Binding offers |
| 1,211 |
| 4,630 |
|
Note 9. Capital adequacy
Capital adequacy analysis
|
| December 31, 2017 |
| December 31, 2016 |
|
Capital ratios excl. of buffer requirements1 |
|
|
|
|
|
Common Equity Tier 1 capital ratio |
| 20.6 | % | 22.1 | % |
Tier 1 capital ratio |
| 20.6 | % | 22.1 | % |
Total capital ratio |
| 23.0 | % | 25.1 | % |
Institution-specific Common Equity Tier 1 capital requirement incl. buffers2 |
| 8.4 | % | 8.0 | % |
of which minimum Common Equity Tier 1 requirement |
| 4.5 | % | 4.5 | % |
of which Capital conservation buffer |
| 2.5 | % | 2.5 | % |
of which Countercyclical Buffer |
| 1.4 | % | 1.0 | % |
of which Systemic Risk Buffer |
| — |
| — |
|
Common Equity Tier 1 capital available to meet buffers3 |
| 14.6 | % | 16.1 | % |
Total capital ratio according to Basel I floor4 |
| 21.9 | % | 22.8 | % |
1 Capital ratios excl. of buffer requirements are the quotients of the relevant capital measure and the total risk exposure amount. The minimum requirements according to CRR (Regulation (EU) No 575/2013 of the European Parliament and of the Council of June 26, 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012) have fully come into force in Sweden without regard to the transitional period. The minimum requirements are 4.5 percent, 6.0 percent and 8.0 percent related to Common Equity Tier 1 capital, Tier 1 capital and total Own Funds respectively. The change in capital ratios compared to year-end 2016 is primarily due to SEK applying the internal rating-based (IRB) approach to exposures to central and regional governments and to multilateral development banks.
2 Expressed as a percentage of total risk exposure amount. Beginning March 31, 2017, the 4.5 percent minimum requirement is shown separately to clarify the summation of this ratio.
3 Common Equity Tier 1 capital ratio as reported less minimum requirement of 4.5 percent (excluding buffer requirements) and less 1.5 percent, consisting of Common Equity Tier 1 used to meet the Tier 1 requirements, since SEK does not have any Additional Tier 1 capital. Beginning March 31, 2017, the ratio thus exclusively expresses the availability to meet buffer requirements. The year-end 2016 value has been recalculated to reflect this change in methodology.
4 The minimum requirement is 8.0 percent.
For further information on capital adequacy and risks, see the section entitled “Risk and capital management” in SEK’s Annual Report for 2016.
Own funds — Adjusting items
Skr mn |
| December 31, 2017 |
| December 31, 2016 |
|
Share capital |
| 3,990 |
| 3,990 |
|
Retained earnings |
| 12,782 |
| 12,236 |
|
Accumulated other comprehensive income and other reserves |
| 30 |
| 130 |
|
Independently reviewed profit net of any foreseeable charge or dividend |
| 540 |
| 546 |
|
Common Equity Tier 1 (CET1) capital before regulatory adjustments | �� | 17,342 |
| 16,902 |
|
Additional value adjustments due to prudent valuation |
| -396 |
| -444 |
|
Intangible assets |
| -66 |
| -101 |
|
Fair value reserves related to gains or losses on cash flow hedges |
| -25 |
| -96 |
|
Gains or losses on liabilities valued at fair value resulting from changes in own credit standing |
| 446 |
| 281 |
|
Negative amounts resulting from the calculation of expected loss amounts |
| -65 |
| — |
|
Total regulatory adjustments to Common Equity Tier 1 capital |
| -106 |
| -360 |
|
Total Common Equity Tier 1 capital |
| 17,236 |
| 16,542 |
|
Additional Tier 1 capital |
| — |
| — |
|
Total Tier 1 capital |
| 17,236 |
| 16,542 |
|
Tier 2-eligible subordinated debt |
| 2,049 |
| 2,267 |
|
Credit risk adjustments1 |
| — |
| 12 |
|
Total Tier 2 capital |
| 2,049 |
| 2,279 |
|
Total Own funds |
| 19,285 |
| 18,821 |
|
|
|
|
|
|
|
Total Own funds according to Basel I floor |
| 19,350 |
| 18,809 |
|
1 Expected loss amount calculated according to the IRB approach is a gross deduction from own funds. The gross deduction is decreased by impairment related to exposures for which expected loss is calculated. Excess amounts of such impairment will increase own funds. This increase is limited to 0.6 percent of SEK’s risk exposure amount according to the IRB approach related to exposures to central governments, corporates and financial institutions. As of December 31, 2017, the limitation rule has not had any effect (year-end 2016: no effect).
Minimum capital requirements exclusive of buffer
|
| December 31, 2017 |
| December 31, 2016 |
| ||||||||
Skr mn |
| EAD1 |
| Risk exposure |
| Minimum |
| EAD1 |
| Risk exposure |
| Minimum |
|
Credit risk standardized method |
|
|
|
|
|
|
|
|
|
|
|
|
|
Central governments |
| — |
| — |
| — |
| 145,531 |
| 963 |
| 77 |
|
Regional governments |
| — |
| — |
| — |
| 19,904 |
| — |
| — |
|
Multilateral development banks |
| — |
| — |
| — |
| 1,900 |
| — |
| — |
|
Corporates |
| 1,316 |
| 1,316 |
| 105 |
| 1,450 |
| 1,450 |
| 116 |
|
Total credit risk standardized method |
| 1,316 |
| 1,316 |
| 105 |
| 168,785 |
| 2,413 |
| 193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit risk IRB method |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 161,429 |
| 9,331 |
| 747 |
| — |
| — |
| — |
|
Financial institutions2 |
| 38,163 |
| 12,688 |
| 1,015 |
| 44,947 |
| 14,089 |
| 1,127 |
|
Corporates 3 |
| 104,630 |
| 53,763 |
| 4,301 |
| 95,519 |
| 51,104 |
| 4,088 |
|
Assets without counterparty |
| 121 |
| 121 |
| 10 |
| 123 |
| 123 |
| 10 |
|
Total credit risk IRB method |
| 304,343 |
| 75,903 |
| 6,073 |
| 140,589 |
| 65,316 |
| 5,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit valuation adjustment risk |
| n.a. |
| 1,989 |
| 159 |
| n.a. |
| 2,526 |
| 202 |
|
Foreign exchange risk |
| n.a. |
| 1,326 |
| 106 |
| n.a. |
| 999 |
| 81 |
|
Commodities risk |
| n.a. |
| 13 |
| 1 |
| n.a. |
| 14 |
| 1 |
|
Operational risk |
| n.a. |
| 3,284 |
| 263 |
| n.a. |
| 3,669 |
| 293 |
|
Total |
| 305,659 |
| 83,831 |
| 6,707 |
| 309,374 |
| 74,937 |
| 5,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment according to Basel I floor |
| n.a. |
| 4,503 |
| 360 |
| n.a. |
| 7,572 |
| 606 |
|
Total incl. Basel I floor |
| n.a. |
| 88,334 |
| 7,067 |
| n.a. |
| 82,509 |
| 6,601 |
|
1 Exposure at default (EAD) shows the size of the outstanding exposure at default.
2 Of which counterparty risk in derivatives: EAD Skr 4,131 million (year-end 2016: Skr 4,515 million), Risk exposure amount of Skr 1,574 million (year-end 2016: Skr 1,784 million) and Capital requirement of Skr 126 million (year-end 2016: Skr 143 million).
3 Of which related to specialized lending: EAD Skr 2,478 million (year-end 2016: Skr 2,853 million), Risk exposure amount of Skr 1,643 million (year-end 2016: Skr 1,942 million) and Capital requirement of Skr 131 million (year-end 2016: Skr 155 million).
Credit risk
For risk classification and quantification of credit risk, SEK uses the IRB approach. Specifically, SEK applies the Foundation Approach. Under the Foundation Approach, the company determines the probability of default within one year (PD) for each of its counterparties, while the remaining parameters are established in accordance with CRR. The Swedish Financial Supervisory Authority has approved SEK’s IRB approach. Certain exposures are, by permission from the Swedish Financial Supervisory Authority, exempted from application of the IRB approach, and, instead, the standardized approach is applied. Beginning March 31, 2017, by permission from the Swedish Financial Supervisory Authority, the IRB approach has been applied also to SEK’s exposures to central and regional governments and to multilateral development banks. Minimum capital requirements for these exposures increased due to the expanded IRB approach, which explains a great deal of the 14 percent increase in SEK’s total minimum capital requirements for credit risk between December 31, 2016 and December 31, 2017. Counterparty risk exposure amounts in derivatives are calculated in accordance with the mark-to-market method.
Credit valuation adjustment risk
Credit valuation adjustment risk shall be calculated for all over-the-counter derivative contracts, except for credit derivatives used as credit protection and transactions with a qualifying central counterparty. SEK calculates this capital requirement according to the standardized method.
Foreign exchange risk
Foreign exchange risk is calculated according to the standardized approach, whereas the scenario approach is used for calculating the gamma and volatility risks.
Commodities risk
Capital requirements for commodity risk are calculated in accordance with the simplified approach under the standardized approach. The scenario approach is used for calculating the gamma and volatility risks.
Operational risk
Capital requirement for operational risk is calculated according to the standardized approach. The company’s operations are divided into business areas as defined in the CRR. The capital requirement for each area is calculated by multiplying a factor depending on the business area by an income indicator. The factors applicable for SEK are 15 percent and 18 percent. The income indicators consist of the average operating income for the past three financial years for each business area.
Transitional rules
CRR states that the previously applicable transition rules, i.e. the Basel I floor, will continue to apply until 2017. According to the transitional rules, the capital requirement should be calculated in parallel on the basis of the Basel I rules. To the extent that the Basel I-based capital requirement, reduced to 80 percent, exceeds the capital requirement based on CRR, the capital requirement under the above mentioned Basel I-based rules should constitute the minimum capital requirement.
Capital buffer requirements
SEK expects to meet capital buffer requirements with Common Equity Tier 1 capital. The mandatory capital conservation buffer is 2.5 percent. The countercyclical buffer rate that will be applied to exposures located in Sweden was increased from 1.5 percent to 2.0 percent as of March 19, 2017. As of December 31, 2017, the capital requirement related to relevant exposures in Sweden is 67 percent (year-end 2016: 69 percent) of the total relevant capital requirement regardless of location; this fraction is also the weight applied on the Swedish buffer rate when calculating SEK’s countercyclical capital buffer. Buffer rates activated in other countries may have effects on SEK, but as most capital requirements from relevant credit exposures are related to Sweden, the potential effect is limited. As of December 31, 2017, the contribution to SEK’s countercyclical buffer from buffer rates in other countries was 0.05 percentage points (year-end 2016: 0.01 percentage points). SEK has not been classified as a systemically important institution by any financial regulatory authority. The capital buffer requirements for systemically important institutions that came into force January 1, 2016, will hence not apply to SEK.
Leverage Ratio
Skr mn |
| December 31, |
| December 31, |
|
Exposure measure for the leverage ratio |
|
|
|
|
|
On-balance sheet exposures |
| 249,244 |
| 278,324 |
|
Off-balance sheet exposures |
| 42,168 |
| 35,626 |
|
Total exposure measure |
| 291,412 |
| 313,950 |
|
Leverage ratio |
| 5.9 | % | 5.3 | % |
The leverage ratio is defined by CRR as the quotient of the Tier 1 capital and an exposure measure. Currently there is no minimum requirement for the leverage ratio.
Internally assessed economic capital excl. buffer
Skr mn |
| December 31, |
| December 31, |
|
Credit risk |
| 6,898 |
| 7,481 |
|
Operational risk |
| 142 |
| 182 |
|
Market risk |
| 1,573 |
| 1,597 |
|
Other risks |
| 170 |
| 258 |
|
Capital planning buffer |
| 2,005 |
| 1,668 |
|
Total |
| 10,788 |
| 11,186 |
|
SEK regularly conducts an internal capital adequacy assessment process, during which the company determines how much capital is needed in order to cover its risks. The result of SEK’s assessment of capital adequacy is presented above. For more information regarding the internal capital adequacy assessment process and its methods, please see the Risk and Capital management section of SEK’s Annual Report for 2016.
Note 10. Exposures
Net exposures are reported after taking into consideration effects of guarantees and credit default swaps. Amounts are calculated in accordance with capital adequacy calculations, but before the application of credit conversion factors.
Total net exposures
Skr bn |
| Credits & interest-bearing |
| Undisbursed credits, |
| Total |
| ||||||||||||||||||
Classified by type of |
| December 31, |
| December 31, |
| December 31, |
| December 31, |
| December 31, |
| December 31, |
| ||||||||||||
counterparty |
| Amount |
| % |
| Amount |
| % |
| Amount |
| % |
| Amount |
| % |
| Amount |
| % |
| Amount |
| % |
|
Central governments |
| 97.1 |
| 39.6 |
| 117.3 |
| 42.9 |
| 70.0 |
| 85.1 |
| 56.4 |
| 84.1 |
| 167.1 |
| 51.1 |
| 173.7 |
| 51.0 |
|
Regional governments |
| 11.4 |
| 4.7 |
| 19.9 |
| 7.3 |
| — |
| — |
| — |
| — |
| 11.4 |
| 3.5 |
| 19.9 |
| 5.8 |
|
Multilateral development banks |
| 0.0 |
| 0.0 |
| 1.9 |
| 0.7 |
| — |
| — |
| — |
| — |
| 0.0 |
| 0.0 |
| 1.9 |
| 0.6 |
|
Public Sector Entity |
| 0.4 |
| 0.2 |
| — |
| — |
| — |
| — |
| — |
| — |
| 0.4 |
| 0.1 |
| — |
| — |
|
Financial institutions |
| 32.7 |
| 13.3 |
| 39.8 |
| 14.5 |
| 5.9 |
| 7.2 |
| 5.4 |
| 8.0 |
| 38.6 |
| 11.8 |
| 45.2 |
| 13.2 |
|
Corporates |
| 103.4 |
| 42.2 |
| 94.7 |
| 34.6 |
| 6.3 |
| 7.7 |
| 5.3 |
| 7.9 |
| 109.7 |
| 33.5 |
| 100.0 |
| 29.4 |
|
Total |
| 245.0 |
| 100.0 |
| 273.6 |
| 100.0 |
| 82.2 |
| 100.0 |
| 67.1 |
| 100.0 |
| 327.2 |
| 100.0 |
| 340.7 |
| 100.0 |
|
Net exposure by region and exposure class, as of December 31, 2017
Skr bn |
| Middle |
| Asia excl. |
| Japan |
| North |
| Oceania |
| Latin |
| Sweden |
| West countries |
| Central- and |
| Total |
|
Central governments |
| — |
| 0.7 |
| 4.0 |
| 2.4 |
| — |
| 0.9 |
| 145.1 |
| 10.9 |
| 3.1 |
| 167.1 |
|
Regional governments |
| — |
| — |
| — |
| — |
| — |
| — |
| 11.2 |
| 0.2 |
| — |
| 11.4 |
|
Multilateral development banks |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 0.0 |
| — |
| 0.0 |
|
Public Sector Entity |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 0.4 |
| — |
| 0.4 |
|
Financial institutions |
| — |
| 3.0 |
| 0.5 |
| 9.6 |
| 1.2 |
| 1.1 |
| 6.9 |
| 16.0 |
| 0.3 |
| 38.6 |
|
Corporates |
| 4.9 |
| 3.6 |
| 1.7 |
| 2.9 |
| — |
| 3.3 |
| 72.2 |
| 21.0 |
| 0.1 |
| 109.7 |
|
Total |
| 4.9 |
| 7.3 |
| 6.2 |
| 14.9 |
| 1.2 |
| 5.3 |
| 235.4 |
| 48.5 |
| 3.5 |
| 327.2 |
|
Net exposure by region and exposure class, as of December 31, 2016
Skr bn |
| Middle Africa/ |
| Asia excl. |
| Japan |
| North |
| Oceania |
| Latin |
| Sweden |
| West |
| Central- and |
| Total |
|
Central governments |
| — |
| 3.6 |
| 2.8 |
| 3.8 |
| — |
| 0.9 |
| 140.7 |
| 18.6 |
| 3.3 |
| 173.7 |
|
Regional governments |
| — |
| — |
| — |
| — |
| — |
| — |
| 18.0 |
| 1.9 |
| — |
| 19.9 |
|
Multilateral development banks |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 1.9 |
| — |
| 1.9 |
|
Financial institutions |
| — |
| 1.1 |
| 1.4 |
| 9.2 |
| 0.6 |
| 1.3 |
| 7.2 |
| 24.1 |
| 0.3 |
| 45.2 |
|
Corporates |
| 3.9 |
| 1.8 |
| 1.4 |
| 2.4 |
| — |
| 3.2 |
| 68.7 |
| 18.4 |
| 0.2 |
| 100.0 |
|
Total |
| 3.9 |
| 6.5 |
| 5.6 |
| 15.4 |
| 0.6 |
| 5.4 |
| 234.6 |
| 64.9 |
| 3.8 |
| 340.7 |
|
Net exposure European countries, excluding Sweden
Skr bn |
| December 31, 2017 |
| December 31, 2016 |
|
France |
| 10.3 |
| 14.0 |
|
United Kingdom |
| 7.7 |
| 8.5 |
|
Finland |
| 7.1 |
| 7.8 |
|
Norway |
| 6.2 |
| 5.9 |
|
Denmark |
| 4.8 |
| 8.4 |
|
Germany |
| 4.7 |
| 6.9 |
|
Poland |
| 3.1 |
| 3.3 |
|
The Netherlands |
| 2.6 |
| 2.8 |
|
Spain |
| 2.6 |
| 2.1 |
|
Belgium |
| 0.9 |
| 0.6 |
|
Switzerland |
| 0.5 |
| 1.6 |
|
Luxembourg |
| 0.4 |
| 4.8 |
|
Ireland |
| 0.4 |
| 0.4 |
|
Latvia |
| 0.2 |
| 0.3 |
|
Iceland |
| 0.2 |
| 0.3 |
|
Italy |
| 0.1 |
| 0.0 |
|
Russia |
| 0.1 |
| 0.1 |
|
Estonia |
| 0.1 |
| 0.1 |
|
Austria |
| 0.1 |
| 0.6 |
|
Hungary |
| 0.0 |
| 0.1 |
|
Portugal |
| — |
| 0.1 |
|
Total |
| 52.1 |
| 68.7 |
|
Note 11. Transactions with related parties
Transactions with related parties are described in Note 28 in SEK’s Annual Report for 2016. No material changes have taken place in relation to transactions with related parties compared to the descriptions in the Annual Report for 2016.
Note 12. Events after the reporting period
No events with significant impact on the information in this report have occurred after the end of the reporting period.
The Board of Directors and the Chief Executive Officer confirm that this Interim report provides a fair overview of the Parent Company’s and the Consolidated Group’s operations and their respective financial position and results, and describes material risks and uncertainties facing the Parent Company and other companies in the Consolidated Group.
Stockholm, February 1, 2018
AB SVENSK EXPORTKREDIT
SWEDISH EXPORT CREDIT CORPORATION
Lars Linder-Aronson | Cecilia Ardström | Anna Brandt |
Chairman of the Board | Director of the Board | Director of the Board |
|
|
|
Reinhold Geijer | Hans Larsson | Susanne Lithander |
Director of the Board | Director of the Board | Director of the Board |
Lotta Mellström |
| Ulla Nilsson |
Director of the Board |
| Director of the Board |
Catrin Fransson
Chief Executive Officer
Annual General Meeting
The Annual General Meeting will be held on April 24, 2018.
Annual Report
The Company´s Annual Report is expected to be available at SEK´s web-site www.sek.se beginning February 22, 2018.
SEK has established the following expected dates for the publication of financial information and other related matters:
April 24, 2018 | Interim Report for the period January 1, 2018 — March 31, 2018 |
July 17, 2018 | Interim Report for the period January 1, 2018 — June 30, 2018 |
October 23, 2018 | Interim Report for the period January 1, 2018 — September 30, 2018 |
The report contains information that SEK will disclose pursuant to the Securities Markets Act and/or the Financial Instruments Trading Act. The information was submitted for publication on February 1, 2018 14:00 (CET).
Additional information about SEK, including investor presentations and the Annual Report for the financial year 2016, is available at www.sek.se. Information available on or accessible through SEK’s website is not incorporated herein by reference.
Definitions
Alternative performance measures (see *)
Alternative performance measures (APMs) are key performance indicators that are not defined under IFRS or in the Capital Requirements Directive IV (CRD IV) or in regulation (EU) No. 575/2013 on prudential requirements for credit institutions and investment firms (CRR). SEK has chosen to present these, either because they are in common use within the industry or because they accord with SEK’s assignment from the Swedish government. The APMs are used internally to monitor and manage operations, and are not considered to be directly comparable with similar key performance indicators presented by other companies. For additional information regarding the APMs, refer to www.sek.se.
*After-tax return on equity
Net profit, expressed as a percentage per annum of the current year’s average equity (calculated using the opening and closing balances for the report period).
*Average interest-bearing assets
The total of cash and cash equivalents, treasuries/government bonds, other interest-bearing securities except loans, loans in the form of interest-bearing securities, loans to credit institutions and loans to the public. Calculated using the opening and closing balances for the report period.
*Average interest-bearing liabilities
The total of outstanding senior debt and subordinated securities issued. Calculated using the opening and closing balances for the report period.
Basic and diluted earnings per share (Skr)
Net profit divided by the average number of shares, which amounted to 3,990,000 for each period.
*CIRR loans as percentage of new lending
The proportion of officially supported export credits (CIRR) of new lending.
CIRR-system
The CIRR-system comprises of the system of officially supported export credits (CIRR).
Common Equity Tier 1 capital ratio
The capital ratio is the quotient of total common equity tier 1 capital and the total risk exposure amount.
Large companies
Companies with an annual turnover of more than Skr 5 billion.
Leverage ratio
Tier 1 capital expressed as a percentage of the exposure measured under CRR (refer to Note 9).
Liquidity coverage ratio (LCR)
The liquidity coverage ratio is a liquidity metric that shows SEK’s highly liquid assets in relation to the company’s net cash outflows for the next 30 calendar days. An LCR of 100 percent means that the company’s liquidity reserve is of sufficient size to enable the company to manage stressed liquidity outflows over a period of 30 days. Unlike the Swedish FSA’s rules, the EU rules take into account the outflows that correspond to the need to pledge collateral for derivatives that would arise as a result of the effects of a negative market scenario.
Loans
Lending pertains to all credit facilities provided in the form of interest-bearing securities, and credit facilities granted by traditional documentation. SEK considers these amounts to be useful measurements of SEK’s lending volumes. Accordingly, comments on lending volumes in this report pertain to amounts based on this definition.
*Loans, outstanding and undisbursed
The total of loans in the form of interest-bearing securities, loans to credit institutions, loans to the public and loans, outstanding and undisbursed. Deduction is made for cash collateral under the security agreements for derivative contracts and deposits with time to maturity exceeding three months (see the Statement of Financial Position and Note 8).
Medium-sized companies
Companies with an annual turnover between Skr 500 million and Skr 5 billion, inclusive.
Net stable funding ratio (NSFR)
This ratio measures stable funding in relation to the company’s illiquid assets over a one-year, stressed scenario in accordance with Basel III.
*New lending
New lending includes all new committed loans, irrespective of tenor. Not all new lending is reported in the Consolidated Statement of Financial Position and the Consolidated Statement of Cash Flows since certain portions comprise committed undisbursed loans (see Note 8). The amounts reported for committed undisbursed loans may change when presented in the Consolidated Statement of Financial Position due to changes in exchange rates, for example.
*New long-term borrowings
New borrowings with maturities exceeding one year, for which the amounts are based on the trade date.
*Outstanding senior debt
The total of borrowing from credit institutions, borrowing from the public and senior securities issued.
Repurchase and redemption of own debt
The amounts are based on the trade date.
Swedish exporters
SEK’s clients that directly or indirectly promote Swedish export.
Tier 1 capital ratio
The capital ratio is the quotient of total tier 1 capital and the total risk exposure amount.
Total capital ratio
The capital ratio is the quotient of total own funds and the total risk exposure amount.
Unless otherwise stated, amounts in this report are in millions (mn) of Swedish kronor (Skr), abbreviated “Skr mn” and relate to the group consisting of the Parent Company and its consolidated subsidiaries (together, the “Group” or the “Consolidated Group”). AB Svensk Exportkredit (SEK), is a Swedish corporation with the identity number 556084-0315, and with its registered office in Stockholm, Sweden. SEK is a public limited liability company as defined in the Swedish Companies Act. In some instances, under Swedish law, a public company is obliged to add “(publ.)” to its company name.
About SEK
Mission | Our mission is to ensure access to financial solutions for the Swedish export industry on commercial and sustainable terms. The mission includes administration of the officially supported CIRR system. |
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Vision | SEK’s vision is to strengthen the competitiveness of Swedish exporters and, thereby help to create employment and sustainable growth in Sweden. |
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|
Our clients | SEK’s offering is aimed at Swedish exporters and their customers and, currently, our clients are mainly represented among the 100 largest Swedish exporters with sales exceeding Skr 5 billion. Starting in 2015, we have also expanded our offering to reach medium-sized exporters with sales of more than Skr 500 million. |
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Our partnerships | We have close partnerships with other export promotion agencies in Sweden such as EKN, Business Sweden, Almi and Swedfund. We also work together with numerous Swedish and international banks. |
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Employees | SEK has about 260 employees and its head office is located in Stockholm, Sweden. SEK also has a representative office in Gothenburg. |
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Core values | SEK is governed by our core values: solution orientation, collaboration and professionalism. |
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SEK’s history | SEK has helped the Swedish export industry with financing solutions for the past 55 years. The Swedish government and the largest banks founded SEK in 1962, and the government became the sole owner in 2003. |