Annual Report • Dec 31, 2010
Annual Report
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Market overview
Financial analysis
Statement of comprehensive income
Statement of changes in equity Statement of cash flow
Income statement
Balance sheet
Group
Notes
| Q1 interim report | 28 April |
|---|---|
| Q2 interim report | 21 July |
| Q3 interim report | 25 October |
The 2011 Annual General Meeting will be held at Cirkus in Stockholm on Friday 25 March.
Swedbank's annual report is offered to all new shareholders and distributed to those who have requested it. The interim reports are not printed, but are available at www.swedbank.se/ir, where the annual report can be ordered as well.
While every care has been taken in the translation of this annual report, readers are reminded that the original annual report, signed by the Board of Directors, is in Swedish.
The result for the year amounted to SEK 7 444m (–10 511).
Earnings per share were SEK 6.43 (–10.66).
The return on equity was 8.1 per cent (–12.5).
Net interest income decreased by 21 per cent to SEK 16 329m (20 765).
Net commission income increased by 22 per cent to SEK 9 525m (7 825).
Net gains and losses on financial items decreased by 13 per cent to SEK 2 400m (2 770).
Expenses decreased by 1 per cent to SEK 17 642m (17 848).
Net credit impairments amounted to SEK 2 810m (24 641).
Risk-weighted assets decreased by 10 per cent to SEK 541bn.
The core Tier 1 capital ratio increased according to Basel 2 to 13.9 per cent (12.0).
The Board of Directors recommends a dividend of SEK 2.10 per common share and SEK 4.80 per preference share for the financial year 2010 (0).
*Excluding the Swedish National Debt Office and repos.
1st quarter The 2010 Annual General Meeting elected Lars Idermark as the new Chair and Siv Svensson and Göran Hedman as new members of the Board of Directors.
The Large Corporates & Institutions business area was created to strengthen the offering and better capitalise on business opportunities in these customer groups.
2nd quarter Swedbank left the state guarantee programme.
Catrin Fransson was appointed head of the Retail business area.
3rd quarter Swedbank's Board of Directors resolved to amend the performance-based remuneration programme for 2010. The new programme is the first of its kind in the Swedish banking market.
Thomas Eriksson was appointed CEO of Swedbank Robur.
Mikael Björknert was appointed head of the new Group function, Group Business Support, and a member of the Group Executive Committee.
Swedbank and the savings banks, together with Danske Bank, Handelsbanken, Nordea and SEB, decided to establish a company responsible for a common infrastructure for the bank's ATMs in Sweden.
Baltic Banking reported a profit for the first time since the fourth quarter of 2008.
4th quarter Swedbank acquired the remaining 49 per cent of First Securities in Norway.
New cooperation agreements were reached with the savings banks. The agreement takes effect on 1 July 2011.
Profit for the year
Swedbank is a bank for the many households and businesses, offering a wide range of financial products and services. The key is a traditional banking model that focuses on close customer relationships and advisory services, where customer needs are the top priority. We are dedicated to help customers achieve a stable and sustainable financial situation.
| retail | large corporates & institutions | baltic banking | ||||
|---|---|---|---|---|---|---|
| operations | Sweden is Swedbank's largest market. Our customers are offered a wide range of financial products and services through more than 340 branches and teller services through a large number of stores. The cooperation with the savings banks adds another 260 branches. Through the Internet Bank, with over 20 million visits a month, the Telephone Bank and the mobile bank, Swedbank is open 24 hours a day. Swedbank Mortgage as well as the subsidi ary bank in Luxembourg and the repre sentative office in Spain are part of the business area. |
In Large Corporates & Institutions we have consolidated our Nordic and Baltic offering for companies, financial institu tions, organisations and banks. Large companies are defined as those with annual sales of over SEK 2bn or with more complex needs. Formed in 2010, the new business area has fully integrated the former Swedbank Markets. The same applies to First Securities, which has been wholly owned by Swedbank since Novem ber 2010. The business area has a strong position in equities, fixed income and currencies and is a major provider of financing solutions. |
Baltic Banking offers a complete range of financial products and banking services to private and corporate customers in Estonia, Latvia and Lithuania. Baltic Banking offers services through an extensive retail network as well as through the Telephone bank and the Internet bank. Swedbank holds leading positions in several key market segments in the Baltic markets, with its largest market share in Estonia. |
|||
| markets | Sweden, Luxembourg and Spain | Latvia, Lithuania, the US, Russia and China | Sweden, Norway, Denmark, Finland, Estonia, | Estonia, Latvia and Lithuania | ||
| volumes* | Lending SEK 873bn (of which private SEK 583bn) |
Deposits SEK 347bn (of which private SEK 250bn) |
Lending SEK 130bn | Deposits SEK 74bn | Lending SEK 130bn (of which private SEK 65bn) |
Deposits SEK 93bn (of which private SEK 52bn) |
| income and profit |
Income SEK 16 203m |
Profit for the year SEK 5 301m |
Income SEK 6 306m |
Profit for the year SEK 2 307m |
Income SEK 6 187m |
Profit for the year SEK -7m |
| customers | Private 4.1 million | Corporate and organisations 419 000 |
Private 5.4 million | Corporate and organisations 269 000 |
||
| branches | Around 600 (including savings banks) | 220 | ||||
| share of swedbank's total lending |
66% | 23% | 10% | |||
| share of swedbank's profit before impair ments** |
52% | 21% | 24% |
* Loans to and deposits from the public excluding the Swedish National Debt Office and repos.
** Based on above-mentioned business areas, i.e. excluding Group Functions.
Swedbank has over 9.6 million private customers and more than 700 000 corporate and organisational customers served through more than 900 branches in 13 countries, principally the four home markets of Sweden, Estonia, Latvia and Lithuania. Swedbank is a full-service bank whose operations are concentrated in traditional products and services. Swedbank is the largest bank in Sweden based on number of customers and is the leader in many market segments.
The bank consists of six business areas supported by Group functions.
For more information on market shares, see page 168.
| Key figures | 2010 | 2009 |
|---|---|---|
| Return on equity, % | 8.1 | –12.5 |
| Tier 1 capital ratio (Basel 2), % | 15.2 | 13.5 |
| Core Tier 1 capital ratio (Basel 2), % | 13.9 | 12.0 |
| Cost/income ratio | 0.57 | 0.51 |
| Credit impairment ratio, % | 0.20 | 1.74 |
| Share of impaired loans, gross, % | 2.53 | 2.85 |
| Profit for the year attributable to: | ||
| Shareholders of Swedbank AB, SEKm | 7 444 | –10 511 |
| Risk-weighted assets (Basel 2), SEKbn | 541 | 603 |
| Total assets, SEKbn | 1 716 | 1 795 |
| Lending to the public, SEKbn* | 1 146 | 1 192 |
| Deposits from the public, SEKbn* | 517 | 497 |
| *Excluding the Swedish National Debt Office and repos. |
| asset management | russia & ukraine | ektornet | |||
|---|---|---|---|---|---|
| Asset Management comprises the subsidi The business area was formed in April ary group Swedbank Robur, which offers 2010 as a result of organisational changes over 150 funds, discretionary asset in the Swedbank Group and comprises management and pension management and Swedbank's banking operations in Russia is by far Sweden's biggest player in socially and Ukraine. Swedbank's products and responsible investments. Customers include services are offered to both private and private customers, businesses, institutions, corporate customers. The decision to municipalities, county councils, foundations change the focus of the Russian business and insurance companies. The products are to supporting corporate customers from sold and distributed primarily by Retail and the bank's home markets means that the Baltic Banking as well as the savings banks private customer offering will be gradu in Sweden, but also through third-party ally phased out. At the end of 2010 distributors and directly to institutional Swedbank had 5 branches in Russia and customers. The market share in Sweden is 92 in Ukraine. 24 per cent. |
the bank's repossessed assets, mainly office is located in Stockholm, and repos sessed properties are managed through and real estate expertise. |
An independent subsidiary of Swedbank AB, Ektornet acquires, manages and develops properties. Its mission is to recover as much value as possible over time, while minimis ing the cost of ownership of the assets. A significant share of the holdings is located in the Baltic countries, though also in the Nordic region, the US and Ukraine. The head local subsidiaries with their own resources |
|||
| Sweden, Estonia, Latvia and Lithuania | Russia and Ukraine | Sweden, Estonia, Latvia, Lithuania, Norway, Finland, Ukraine and the US |
|||
| Assets under management SEK 736bn |
Lending SEK 13bn (of which private SEK 4bn) |
Deposits SEK 3bn (of which private SEK 1bn) |
|||
| Income SEK 1 608m |
Profit for the year SEK 575m |
Income SEK 680m |
Profit for the year SEK 419m |
Income SEK 118m |
Profit for the year SEK –212m |
| Private 3.9 million | Corporate and organisations 25 000 |
Private 103 000 | Corporate and organisations 18 000 |
||
| 97 | |||||
| 1% | |||||
| 5% | –1% | –1% |
When 2010 began, we looked to the future with humility and confidence. Our goal was to lay the foundation of a customerfocused and long-term sustainable bank and to report a profit for the full-year.
I am therefore very proud of what we succeeded in achieving together and that we have been able to draw constructive lessons from the crisis and build anew for the future. I would like to thank all and each one of the bank's employees for their individual contributions to what can be summed up as follows:
Swedbank is now stronger than in a long time, with greater opportunity to choose its own path and carve out its own identity. We are working resolutely and with conviction on a number of issues that will continue into 2011.
We have worked hard to regain the market's confidence, and today Swedbank is a stronger, more resilient bank than in several years. An important lesson from the financial crisis for Swedbank and other banks is to maintain full control over liquidity risks and ensure long-term financing, rather than maximise profitability from a short-term perspective. The banking sector should do more itself to strengthen long-term stability and transparency. We otherwise run the risk of recurring crises entailing more regulation that could impede the industry as well as the real economy.
The Board of Directors has adopted new goals for the bank's risk appetite and risk tolerance, which serve as cornerstones to ensure that Swedbank remains a robust bank going forward. Our stress tests confirm the bank's resiliency and that it is sufficiently capitalised, even under very weak macroeconomic conditions. During the last year Swedbank has been among the European banks with good access to international funding markets. We stand strong today, and the bank's relative funding costs have improved compared with other Nordic banks. Given the bank's risk level and large, stable base of deposits, not least among private customers, our goal is to have the lowest funding costs compared with our peers over time.
Customers with a personal banking contact have maintained confidence in the bank through the crisis. We are now working on several fronts to further increase the general confidence in the bank. We are doing so by safeguarding our customers' long-term interests, even when we have to make tough decisions. This means that we sometimes call for public debate on certain issues, as was the case with mortgage loans. It is disquieting that the credit expansion among Swedish households in the last ten years has been four times greater than the country's economic growth. Buying a home is the biggest financial decision many households make. A high loan-to-value ratio and variable-rate mortgages can then cause problems when interest rates rise, unless borrowers have built up a buffer by consistently amortising and saving. In the Baltic countries, the safety net for the infirm, elderly and unemployed is weaker than in Sweden. Consequently, the risk of over-indebtedness is higher, especially if falling prices, higher interest rates and income loss all coincide.
While encouraging a debate on mortgage loans in Sweden, Swedbank also raised the loan-to-value ratio requirement on its loan applications. As a result, the bank lost nearly half of its share of loan sales for a period of time. Now that our arguments have gained a foothold and a mortgage cap has been introduced in Sweden, more prudent lending practices have become more accepted and widespread.
President and CEO Michael Wolf
For business customers with more complex needs, the bank has consolidated its competence in one business area – Large Corporates & Institutions – where we can offer sector-specific expertise and a wide range of capital market services that support other customer segments as well.
We are working resolutely to improve the organisation and increase its earnings capacity. The bank's governance model and organisational structure have been reassessed to create more rational processes.
The transition from a product to an advisory organisation requires that every frontline employee has the right support and competence. In the end, however, it is the commitment of employees that will determine our success. At Swedbank, employees should be able to grow professionally and as individuals. Employee surveys and student rankings of the most popular places to work indicate that the bank is headed in the right direction.
A bank's core competency is assessing and pricing risk. If the price is too high, customers will go to competitors. And if it is too low, it could set an unsustainable precedent that later hurts customers and the bank. The effectiveness and reliability of the bank's risk processes are critical. A combination of risk
control and professional judgment is needed, which is made easier by close customer relationships.
Swedbank's broad customer base gives it the critical mass needed to develop innovative solutions and automate everyday transactions, for example. For a bank that wants to welcome everyone, it is especially important to free up as much time as possible for personal interaction with customers.
"The transition from a product to an advisory organisation requires that every frontline employee has the right support and competence. In the end, however, it is the commitment of employees that will determine our success."
The savings banks are Swedbank's largest partner, with around 30 per cent of the bank's Swedish business volumes. Therefore, I am especially pleased with the new cooperation agreements the bank signed with them and am convinced that it will increase the professional dynamic between us. Our shared history, goals and business strategy will strengthen us and benefit our customers.
Swedbank gets its unique strength from a combination of corporate responsibility and business practices. Swedbank has been part of the local community and has operated close to its customers for two centuries. In Sweden, for example, the Young Jobs project contributed to 1 500 trainee positions with Swedbank, the savings banks and our corporate customers in 2010. Swedbank supports the organisation Ung Företagsamhet, which was among the first to distribute economic textbooks in Estonia, Latvia and Lithuania. In Estonia and Latvia, the bank is also playing a role in supporting graduates who want to teach in neighbourhoods with deprived children as part of the Teach First charity. Other examples include the bank's support for youth sports and participation in arena construction. For Swedbank, which reaches so many people, community development is critical to its own development. Swedbank can certainly do even more and be even better. The willingness is there, from the smallest branch to the executive management and the Board.
In 2010 we built for the future. 2011 will be an exciting year in many ways. The economies in Swedbank's home markets have begun to recover after the crisis. Estonia joined the eurozone on 1 January 2011. Demand for corporate credits is expected to increase in the Nordic and Baltic regions. However, a worsening global business cycle could change this picture.
The debate on adequate debt levels and increased savings is likely to continue, as will the discussion on the right financial regulations.
A continued economic recovery will benefit Swedbank through higher interest rate levels and further strenghtened credit quality. In 2011 Swedbank expects Swedish mortgage loans to grow in line with or to slightly exceed nominal GDP growth. Moreover, we expect that corporate lending in Sweden will grow modestly and that lending volumes in Baltic Banking will bottom out during the year. The repricing of corporate loans that do not reach our desired return, together with maturing state guaranteed funding, will give support to net interest income. Expenses excluding staff costs are expected to stay stable.
We expect a gradual improvement in profit before impairments. Credit impairments are expected to remain low with the potential for recoveries in the Baltic countries, Russia and Ukraine.
We are nearly halfway through the comprehensive cultural change that was initiated when I took over as CEO. The work will continue for a number of years to ensure stable, sustainable profitability.
I would like to extend a warm thanks to all employees, shareholders, Board members and others who make our future possible and promising.
Stockholm, February 2011
michael wolf President and CEO
Swedbank's Board of Directors decided in early 2011 to introduce a profitability target and a capitalisation target as well as to amend the bank's dividend policy. The new dividend policy takes effect in the financial year 2011.
There has been a consistent theme throughout the bank's history, from the first Swedish savings bank in 1820 through the local agricultural credit societies of the early 20th century to today's bank built on relationships with people and businesses. Close contact with the customer and local community has been our focus since the very beginning. When the savings banks were founded, their mission was to promote prosperity and security through financial planning. Swedbank's purpose today is to promote a sound and sustainable financial situation for many households and businesses. This means that by being proactive, offering advice and educating the public, we encourage a sound financial situation among our customers and in society in general. By a sound financial situation we mean achieving a balance in the short and long term. By sustainability we mean acting in a way that ensures long-term social, economic and environmental benefits for people, ourselves and society as a whole.
Swedbank currently has four geographical home markets: Sweden, Estonia, Latvia and Lithuania. To support business in these markets, Swedbank is also established in neighbouring markets such as Finland, Norway, Denmark and Russia as well as certain other countries such as the US , China, Luxembourg and Spain. Swedbank also conducts banking operations in Ukraine.
Simple Our services and employees must be easily accessible and easy to understand.
Everything we do, we do with the customer in mind. Our advice is adapted to each customer's needs, and we provide them the financial tools to handle life's challenges and opportunities. We want to create a friendly, uncomplicated banking experience for everyone.
We shall be a straightforward, honest and reliable partner. Customers and
other stakeholders should feel comfortable and secure with our services and how we act. We like being challenged by new ideas, new people and new ways to serve our customers and communities.
We are committed to improving the long-term financial health of people,
businesses and society. We offer innovative and sustainable financial solutions. Our employees are helpful and reliable. We shall keep our promises. We help our customers to make sound decisions and to achieve their goals in a sustainable way.
We make it possible for people, businesses and society to grow Swedbank – beyond financial growth
Swedbank is a bank for the many, meaning an inclusive rather than exclusive bank. Our aim is to maintain large customer bases, long-term customer relationships and high market shares in our home markets. Swedbank serves many households and businesses. We achieve cost efficiencies through large customer bases and business volumes, coordination and efficient processes. Our goal is to deliver service in the most effective way possible in terms of quality and cost.
We firmly believe that a traditional banking model focused on close customer relationships and advisory services best promotes Swedbank's purpose. This advice is always based on customers' needs, not the bank's products.
Close customer relationships and a high level of service are enabled by a widespread branch network, coupled with highly advanced Internet, Telephone and Mobile banks as well as ATMs. Always being available for customers on their terms through a variety of channels is strategically more important than whether or not we manage every financial service ourselves. Mutual funds, property insurance and debit and credit cards are among the financial services Swedbank offers Swedish customers from other suppliers. This service is enhanced through collaboration with the savings banks and franchises of Swedbank Fastighetsbyrå (real estate brokerage), Swedbank Juristbyrå (legal services) and Swedbank Företagsförmedling (company sales) as well as alliances with other suppliers.
All of Swedbank's business operations are managed locally with decentralised decision-making as close to the customer as possible. Local organisations with responsibility for customers and credit are supported by shared product systems, decision support systems as well as rules and regulations. Coordinating product development and production between business areas and throughout the Group is an important part of this.
Decentralised decisionmaking puts stringent demands on governance and monitoring as well as continuous competence development and considerable investment in ongoing staff training.
Swedbank shall maintain a low risk level. Swedbank's longterm risk profile shall be managed so that the core Tier 1 ratio impact from a severely stressed scenario, defined in the annual Internal Capital Adequacy Assessment Process (ICAAP), shall be no more than three percentage points. A vast majority of exposures shall be in mature markets such as Sweden. Good risk diversification is achieved through a broad base of customers and businesses from many different industries. The bank is also to maintain a sustainable balance between lending and deposits in all its markets. Customers' cash flow, solvency and collateral are always the key lending variables. Strong internal control of credit, market and operational risks ensures the desired long-term risk profile.
Our priorities in 2010 were to reduce risks in the bank, adapt operations to lower business volumes and take a comprehensive approach to responsibilities, governance and control. Increasing customer satisfaction, which declined during the financial crisis, was also a top priority.
Priorities 2011
Our priorities in 2011 shifts focus from crisis management to optimising operating effectiveness at the same time that we will grow in areas where we see growth potential.
More details on page 11
After the significant decline in 2009, customer satisfaction rose slightly in most of our markets in 2010. However, there is still great potential for improvement before we reach desired levels.
Through our new service concepts within Retail, we improve service and give customers a better overview of their financial situation. In the same way, we have consolidated our best and most useful services for small businesses. The concept has produced a clearer customer offering with higher sales and revenue.
In Baltic Banking, the organisation has gradually transitioned from a product focus to a customer focus.
To better meet the demand from large companies and institutions with more complex needs, the Large Corporates & Institutions business area was formed during the year. Here a new sector-oriented organisation has been created to enhance our competitive edge. In November the remaining 49 per cent of the Norwegian investment bank First Securities was acquired. This strengthens our competence and offering of capital market-related services for private customers, companies and institutions.
Measures to improve governance and monitoring have facilitated a more decentralised organisation where decision-making authority, with a larger mandate and faster decisions, has shifted closer to customers.
Improved macroeconomic conditions, coupled with active efforts to reduce credit and liquidity risks, led to a significant reduction in the total risk level during the year. Since the end of 2008 the exposure to Eastern Europe has been reduced by more than SEK 100bn. At the same time corporate lending to other countries (primarily Sweden) has decreased by about SEK 60bn, while Swedish residential mortgage lending increased by SEK 65bn. This has significantly lowered credit risk, and the dependence on unsecured funding has been reduced by about SEK 150bn.
In addition, risks were further reduced when Estonia joined the EMU.
Lending in Sweden accounted for 86 per cent of total lending on 31 December 2010, compared with 83 per cent on 31 December 2009.
Because the inflow of new impaired loans during the year was low, credit impairments gradually decreased to the point where net recoveries were reported during the fourth quarter.
Profit for the year increased by approximately SEK 18bn mainly due to lower credit impairments.
Profit before impairments decreased by 21 per cent during the year. Net interest income was under pressure due to low interest rates and a decline in lending volumes mainly in the Baltic countries, Russia and Ukraine. In addition, trading-related income was unusually high in 2009 due to very favourable market conditions. During the second quarter 2010 Swedbank's net interest income bottomed out. The Riksbank has begun to raise its repo rate, which primarily helped net interest income in Retail.
Baltic Banking has also seen a positive trend in net interest income as local interest rates have fallen. Credit demand among Swedish companies gradually increased during the year. Rising demand is also evident in the Baltic countries.
During the year expenses decreased by SEK 200m at the same time that variable staff costs rose by SEK 323m. The decrease mainly consists of currency effects and further capacity adjustments to lower business volumes in the Baltic countries, Russia and Ukraine. The number of employees was reduced by 2 053 during the year to 17 224.
The average maturity of capital market funding was extended by another 6 months and at year-end was 27 months. During the year Swedbank also strenghtened its liquidity buffer significantly. The bank's lower risk level, combined with active measures to inform the market, has led to great investor interest in Swedbank's bonds. In April the bank left the state guarantee programme. No funding has been arranged under the state guarantee since summer 2009. All repos with central banks expired during the year at the same time that the state guaranteed funding was reduced from about SEK 240bn to SEK 150bn, half of which matures in 2011. Today Swedbank's dependence on capital market funding largely consists of covered bonds, which have been a relatively stable funding source through the crisis. The bank's strong deposit base limits its dependence on unsecured funding. This provides predictability, security and competitive strength.
The core Tier 1 capital ratio rose from 12.0 to 13.9 per cent during the year (Basel 2). This was the result of net profit for the year and because risk-weighted assets decreased by SEK 62bn.
Average maturity of capital market funding
Swedbank strives for mutually beneficial long-term customer relationships. To increase the customer value of our services, we invest in the breadth and depth of our financial advisors' skills. We will be even better at advising our customers with more advanced needs. With offerings adapted to customers' needs and situations, Swedbank will be able to meet a larger share of their total banking needs. To make it easier for customers to do their daily banking, we will further improve our internet- and telephone-based services. By further formalising governance, we are decentralising business decisions as close to the customer as possible.
Swedbank strives for sustainable growth. This means that Swedbank will not grow faster than what we feel is sustainable for our customers and ourselves, regardless of market growth. We will continue to emphasise our service concepts in Retail. By investing in capital markets, competence and products, we will broaden and strengthen our offerings for corporates as well as private customers. This will facilitate deeper and broader customer relationships, and increase our share of the non-lending-based services. We will also broaden the bank's offerings in the savings market to include more insurance and investment solutions.
With high market shares in all four home markets, we have the opportunity to utilise economies of scale. We will exploit this by further integrating various parts of the Group, whose history includes different banks, segments and geographies. By rationalising, standardising and simplifying processes within IT, support, and product development, we will be able to improve quality and efficiency while reducing complexity and operational risks. A new organisation, Group Business Support, which is fully active from 1 January 2011, has responsibility for consolidating these units in the Group. In addition, we will continue our cost focus and seek ways to do business more costeffectively.
As a wholesale funding dependent bank, we will maintain assets of indisputable quality at a high-level. We continue to cement a homogenous credit culture across the Group to large degree based on our Swedish credit management. Enhanced portfolio management will help to further reduce asset risks. Wholesale funding is arranged primarily through stable funding sources such as AAA-rated covered bonds. Ensuring the quality of our cover pool is therefore a high priority. Swedbank has the largest deposit base in all home markets. The size of our deposits will limit potential lending growth. The dependence on unsecured funding is to be limited, and matched against assets of corresponding maturity.
The bank has been part of the local community and worked closely with its customers for two centuries. It is in these interactions with customers that our values are reflected and the bank's brand is shaped.
In an increasingly competitive marketplace, the importance of a clearly communicated and well differentiated brand increases. Consequently, the associations that set the Swedbank brand apart are important in determining which customers the bank can attract, as well as our ability to build loyalty to the bank among existing customers.
Swedbank has a unique experience from combining social benefits with professionalism. We demonstrate our community engagement on a broad as well as local basis. Our customer relations must be distinguished by openness, simplicity and caring. This is the image we want to project in Swedbank's current branding efforts.
Based on its purpose, values and vision, Swedbank developed a new communication concept during the year, "Life under the Oak," to reinforce its image as a stable bank with a strong heritage and one that, like an oak, stands for sustainable growth. The various characters used in the campaign symbolise the
bank's broad-based target groups. Initial ads stress the bank's long tradition as an educator of the public. By tying into the needs customers have of financial services to live a secure life, we let the characters in the modern version dramatise our service promise as a modern relationship bank. The bank's purpose is further underscored by sponsorship activities that support children and young adults.
For more information on swedbank's community engagement, see page 42.
The new branding concept initially underscored the bank's purpose and vision. Going forward the focus of the stories in the animated world of "Life under the Oak" will be on the modern advisory bank.
Understanding of the message in the initial branding campaign was high and conformed well to the bank's overarching message strategy.
Compared with similar branding campaigns, the "Life under the Oak" concept generated significantly higher share (31%) of people who noticed the campaign, could say who was behind it and understood the message than is normally the case in Sweden (9%).
swedbank sponsors sports, cultural activities and communities locally as well as regionally.
Teach First is a national initiative to improve the quality of education in Estonia and Latvia. Through Teach First school children meet young, enthusiastic teachers recruited among college graduates for a commitment of two years.
Angels over Latvia. Every December Swedbank supports "Angels over Latvia," a charity that attracts gifts and donations for children who, due to a hereditary disease or accident, are in need of long-term treatment or rehabilitation whose cost is not covered by state health programmes.
Through an entrepreneurial programme called Make the Stars Shine, Swedbank identifies and supports young business leaders in starting up projects. The bank also supports companies founded by students by passing on business experience in all its home markets.
Extensive measures were taken by the bank during the year to get a better holistic approach on responsibilities, governance and control. This is rooted in the bank's purpose: to promote a sound and sustainable financial situation for the many households and companies – and for the bank itself. The holistic approach includes risk control, sustainability work and human resource development.
Swedbank's purpose is to promote sound and sustainable financial development for the many households and businesses.
To do so, the bank must be financially sound and sustainable in the long term itself. Swedbank has long played an active role as a positive force in society, not least in the local community. By striving to fulfil our purpose on a consistent basis, we will continue to play an important and dynamic role.
Our fundamental values have not changed much over the years. We are simple, open and caring. This makes it possible to live up to our purpose every day. The world in which we operate, on the other hand, is complex and constantly changing. As a guiding principle in our daily operations, we have clarified how to act through the bank's Code of Conduct.
Swedbank's Code of Conduct governs our interactions with customers, shareholders and the companies we own, employees and colleagues, partners and suppliers, competitors and authorities as well as the public and the community. The code is not a tool to build the bank's culture, but a tool to maintain it.
In addition to the legal responsibility of the Board of Directors and the CEO in the Group and in the various subsidiaries, there is a new governance model now being implemented. By combining clear job descriptions with decentralisation, it is designed to delegate a larger share of decision-making authority as close to each transaction and customer as possible.
The governance model requires clearly defined goals, strategies, policies and guidelines that explain how the bank works in various respects, an effective operating structure and a simple, unambiguous reporting structure. The goal is an organisation that quickly and effectively responds to changing customer needs and market conditions and thereby better serves the bank's purpose. Our reporting routines ensure that we receive the necessary information to navigate effectively in a changing world.
The bank is organised into six business areas that are a blend of geographical areas and market areas: Retail, Large Corporates & Institutions, Baltic Banking, Asset Management, Russia & Ukraine and Ektornet. The heads of the business
areas report to the CEO on an ongoing basis, are responsible for implementing strategies and business plans, and have full operating responsibility within these parameters.
In addition, the following seven Group functions span across all business areas: Group Finance, Risk, Compliance, Corporate Affairs, HR, Legal and Group Business Support (GBS), which will be fully operational from 1 January 2011. The Group functions ensure that effective, uniform standards and routines are maintained within the various areas of responsibility. Furthermore, GBS will promote operational excellence within the bank.
The Group Executive Committee (GEC) and Senior Management ensure that the organisation as a whole accomplishes its goals, strategies and policies. The former plays an advisory role, while the latter serves as a forum for discussion and validation. Also important are the Asset and Liability Committee (ALCO), which addresses issues concerning the balance sheet, liquidity and financial risk; the Group's Risk and Compliance Committee, which is responsible for efficiency improvements and issues involving operational risks and compliance; and the GEC's Remuneration Committee, which proposes compensation systems and proposes variable remuneration for employees to the Board's Compensation Committee.
To balance the delegation of authority, rules for "escalation" have been established to clarify the circumstances when various issues should be referred to the next level, or to the CEO and the Board of Directors to review the goals and strategies. This ensures that those ultimately responsible for the bank's operations retain the necessary overall control.
In addition to the CEO's management model, Internal Audit serves as an auditing function independent from the CEO directly subordinate to the Board of Directors.
Risk management is the core of all banking, and maintaining well-balanced risk exposure is a fundamental strategic issue crucial to Swedbank's earnings. The financial crisis made it clear that risk exposure had become unhealthy in the industry.
This was also the case for Swedbank, which underwent a major international expansion in the years prior to the crisis. Based on a low risk strategy (see page 9), Swedbank worked
Vision & goals swedbank was founded to promote prosperity and security through financial
the opportunity to develop and will be encouraged to report any wrongdoings without fear of reprisal. planning. this is still the platform for all our operations, and the goals we formulate are with this in mind. Strategy & risk appetite our strategies are the choices we make to reach our goals. the framework for business planning is determined by our risk appetite, which ensures that our decisions and actions optimise risks and business opportunities. Board of Directors & committees overall responsibility for swedbank rests with the board of directors. the board sets goals and establishes strategies and guidelines on how operations are run. to optimise the board's work, a number of committees have been established for especially important issues. Risk management risk management is part of the day-to-day work of every bank. we identify, monitor and respond to risks within the framework of the risk appetite we have defined. Employees we promote a culture of commitment, where every employee understands the company, our purpose and goals, the industry as a whole, the markets we operate in, and the challenges and risks we face. stakeholders and provide reliable reports with operational, financial and compliance related information. Governance, sustainability and internal control Information & communication Vision & goals Strategy & risk appetite Board of Directors & committees Delegation of responsibility and organisation Reporting and monitoring Risk management Employees Culture
Culture we will build on a corporate culture based on our values and purpose. every employee will have
Reporting and monitoring maintaining an effective monitoring system gives our employees a sense of security and is a sign of quality for the bank as a whole. the reports make it possible to monitor progress in meeting business goals and other important changes required for evaluations and decisions in the event of a change in direction.
Information & communication we will maintain an ongoing dialogue with our
Delegation of responsibility and organisation delegation is an important part of swedbank's control model. the branches have a clear mandate to effectively respond to customers' needs and wishes. considerable emphasis is placed on bridging complex structures and promoting collaboration and an exchange of knowledge between units and business areas.
in 2010 on reducing risk (see page 10), which led to a better risk balance. With lower credit risk in the bank, our focus is now on operational risk. By rationalising, standardising and simplifying processes within IT, support and product development, we will be able to improve quality and efficiency, and also reduce the complexity. The organisational changes with clear and uniformed guidelines, together with effective control functions when business decisions are moved closer to the customer, also lower operational risk. Remuneration programmes have been established for the same purpose (see page 46).
As with risk management, we see our sustainability work as an integral part of business operations. Swedbank is strongly committed to various social issues and has, for example, joined the industry in establishing responsible mortgage lending policies and has taken various initiatives to create jobs for young people (see page 42).
Ensuring that it has the right competencies is one of Swedbank's most important future issues, and is critical if the bank is to live up to its purpose, goals and strategies. The transition from a product-oriented organisation to an advisory organisation entail major challenges. Maintaining the commitment, focus and motivation of all our employees is based in this process on a thorough understanding of the bank's purpose and strategies (see pages 8–9).
The global economy recovered more quickly than expected in 2010. The European debt crisis and risk of renewed concerns in global financial markets, rising commodity prices and overheating risks in emerging economies mean, however, that the global economy still rests on shaky ground.
In 2010 the global economy recovered more quickly than expected from the financial crisis and its effects on the real economy. The strongest expansion was in emerging economies led by China. In countries with a mountain of private or public debt such as Ireland, Greece and Portugal, GDP growth has been modest and will remain weak going forward when extensive spending cuts are made in 2011 to reduce rapidly rising government debts. The economies in the Nordic countries and Germany have generated growth rates exceeding the EU average. Fiscal challenges and the risk of renewed concerns in global financial markets, rising commodity prices and overheating risks in emerging economies mean, however, that global economic growth still rests on shaky ground.
After major production losses in 2009, the Swedish and Baltic economies have begun to improve. The strongest recovery during the year was in Sweden, where GDP rose by slightly over 5 per cent, essentially recouping all the production that had previously been lost. The Baltic countries, on the other hand, still have a long way to go to return to earlier production levels, and debt and/or budget consolidation are keeping down the recovery.
The main drivers behind the strong growth in the Swedish economy come from the industrial sector, which is benefitting from growing global demand for input and investment goods. A strong increase in export volumes and substantial growth in industrial production have also given corporate investment a
kick-start. The high level of business activity has been followed by increased hiring needs in the private service sector and industry, as unemployment dropped to 7.1 per cent at year-end. Sweden's finances improved in 2010, and today they are among the strongest in the EU. Due to increased resource utilisation and growing household debt, the Riksbank decided to gradually raise its benchmark interest rate from 0.25 per cent to 1.25 per cent in December 2010. Higher debt levels create the risk of lower future consumption when interest rates rise in the years ahead. Monetary tightening and sound government finances have strengthened the Swedish krona, which could hurt export companies in 2011, at the same time that global growth is expected to slow compared with the previous year.
Growth in the Baltic countries is primarily driven by an export-led recovery, at the same time that the countries have become stronger competitively due to declining labour costs and increased productivity. However, domestic demand – consumption and investment – remained weak. Fiscal austerity and high unemployment are hurting consumer spending notwithstanding a slight improvement in retail sales in late 2010. Higher food and energy prices could limit household spending. The introduction of the euro in Estonia at the start of 2011 is having a positive effect in the form of lower business risks and increasing confidence in the Estonian economy. In Latvia and Lithuania, further budget cuts are planned in the years ahead to meet the Maastricht criteria and qualify for EMU membership in 2014.
% 20
Unemployment
The financial crisis damaged confidence in the banking sector around the world. During the year the role of banks was called into question and debated more than before. In the early summer 2010, the European Banking Authority, CEBS, conducted stress tests of European banks. All four major Swedish banks passed the tests.
Right before the financial crisis the Nordic banking industry showed high profitability, in many cases with returns on equity of over 20 per cent. This was the product of efficient banks with competitive cost/income ratios and low credit impairments. The financial crisis led to substantially higher credit impairments and in combination with record-low interest rates dramatically affected profitability, particularly for banks with heavy exposure in the Baltic region, Eastern Europe and to some extent Denmark. As a reaction, Nordic banks have strengthened their capitalisation, and in Sweden the majority of banks have issued stock. Today Swedish banks have among the highest Tier 1 capital ratios in Europe. The international capital adequacy requirements will increase after the introduction of Basel 3, which will be phased in starting in 2013. This, together with the risk of further volatility in global capital markets, makes strong capitalisation necessary if the banks are to remain stable and be able to guarantee financing in a scenario with slower economic growth.
Beginning in the middle of 2010 interest rates began to rise. This paves the way for gradually improving profitability for the banking sector as a whole. In October the loans Swedish banks received from the Riksbank at fixed interest rates began to mature. The fact that none of them were extended reflects the reduction in risks in the Swedish banking sector.
In an international comparison, the banking sector is fairly concentrated in Swedbank's home markets.
In Sweden, Swedbank, Handelsbanken, Nordea, SEB and Danske Bank accounted for about 85 per cent of deposits and lending in 2010, according to the Riksbank. These major banks offer a wide range of financial products and services and compete in all key product segments. Swedbank is the biggest in retail banking and has a leading market position in mortgage loans (27 per cent), deposits from private customers (24 per cent) and fund management (24 per cent). In the Swedish corporate market, the bank's share was 17 per cent for lending as well as for deposits at the end of 2010. Consumers have been more willing to change banks in recent years in an otherwise generally stable market. In the last year banking customers have shown a tendency to turn to the major banks due to turbulence among the smaller players.
The Estonian banking sector is even more concentrated than Sweden's. The market is dominated by foreign companies. Together, Swedbank, SEB, Nordea and Sampo (Danske Bank) control around 90 per cent. Swedbank had a market share of 55 per cent for deposits from private customers and 47 per cent for lending. In the Estonian corporate market, the bank's share is 40 per cent for both lending and deposits.
Latvia has a more fragmented market where local banks account for 30 to 50 per cent of the various segments. In 2010 Swedbank accounted for 23 per cent of household deposits and 27 per cent of household lending. In the corporate market, Swedbank's share is 21 per cent for lending and 10 per cent for deposits.
Like Sweden, the banking market in Lithuania is dominated by a few major players. Swedbank accounted for 32 per cent of household deposits and 26 per cent of household lending. In the corporate market, the bank's share was 21 per cent for lending and 22 per cent for deposits.
In all the Baltic countries, competition has begun to increase again as the economy recovers and profitability improves on the heels of considerably lower credit impairments.
Sources: Statistics Sweden, Estonian Central Bank, Association of Commercial Banks of Latvia, The Financial and Capital Market Commission (Latvia), Association of Lithuanian Banks, public interim reports and Swedbank estimates
Swedbank's profit amounted to SEK 7.4bn for the full-year, an increase of SEK 18bn compared with 2009. The improvement was mainly due to significantly lower credit impairments in the Baltic countries, Russia and Ukraine. During the second half of 2010 higher interest rates had a positive impact on Swedbank's net interest income. The trend remains positive.
Swedbank reported a profit for the year of SEK 7 444m, compared with a loss of SEK 10 551m in the previous year. Significantly lower credit impairments were the main reason for the improved result. The return on equity was 8.1 per cent (–12.5). The cost/income ratio was 0.57 (0.51).
Profit before impairments excluding non-recurring items decreased by 20 per cent to SEK 13 344m. Retail reported lower profit before impairments and non-recurring items due to lower market interest rates and lower corporate lending. The largest decrease among the business areas was in Large Corporates & Institutions, where income was unusually high in 2009 as a result of very favourable market conditions. Baltic Banking was largely successful in compensating for lower income from smaller business volumes and lower market interest rates with cost cuts. Asset Management reported a higher profit before one-offs as a result of increased assets under management. Group functions reported an improved result from Group Treasury, partly due to valuation effects from basis spreads and repurchased subordinated loans. When arranged in euro, capital market funding is usually swapped into SEK. These swaps are marked to market. Historically the volatility in the swap cost has been low. In 2010 the cost increased significantly but also produced a positive valuation effect, while funding costs in SEK increased.
Income excluding non-recurring items amounted to SEK 30 986m, a decrease of 11 per cent. Fluctuations in exchange rates, primarily the rise in the Swedish krona against the euro and the Baltic currencies, reduced reported income by SEK 923m.
| Profit before impairments, excluding non-recurring items, by business area, |
||
|---|---|---|
| SEKm | 2010 | 2009 |
| Retail | 7 530 | 7 820 |
| Large Corporates & Institutions | 3 104 | 5 070 |
| Baltic Banking | 3 403 | 3 391 |
| Russia & Ukraine | –191 | 623 |
| Asset Management | 752 | 553 |
| Ektornet | –152 | –26 |
| Group functions | –1 102 | –1 310 |
| Total excl. FX effects | 13 344 | 16 121 |
| FX effects | 491 | |
| Total | 13 344 | 16 612 |
Net interest income decreased by SEK 4 436m or 21 per cent mainly due to lower net lending volumes, extended durations of wholesale funding, higher costs for liquidity reserves and lower market interest rates. Net interest income was also adversely affected by a lower return on the investment portfolio used to hedge interest rates of low-yielding deposit accounts and equity, a mismatch between funding and lending (nose and tail effects) and less favourable trading conditions. However, the net interest income trend turned during the second half of the year.
Lending has decreased by SEK 46bn or 4 per cent in one year. Volumes fell in the Baltic countries, Russia and Ukraine. In Sweden and the other Nordic countries, corporate lending decreased, while mortgage lending to private customers rose. This shift resulted in lower net interest income, since interest margins are lower in Sweden than in the other countries and lower on mortgages than on corporate lending.
| Non-recurring items by | |||
|---|---|---|---|
| business area (BA) SEKm |
BA | 2010 full-year |
2009 full-year |
| Income | |||
| Branch sales | R | 3 | 397 |
| VISA Sweden | R | 322 | |
| Refund of fund fees | AM | –540 | |
| Refund of fund fees | BB | –88 | |
| Tallinn Stock Exchange | BB | 15 | |
| EADR | R&U | –6 | |
| Aktia | GSST | 24 | |
| MasterCard | BB | 55 | |
| Total income | 58 | 124 | |
| Expenses | |||
| Withdrawal from bonus reserve | BB | –198 | |
| Total expenses | 0 | –198 | |
| Impairments | |||
| Impairment of goodwill | LC&I | 5 | |
| Impairment of goodwill | R&U | 14 | 1 300 |
| Total amortisation | 14 | 1 305 | |
| Tax expense | |||
| Branch sales | R | 1 | 105 |
| Refund of fund fees | AM | –150 | |
| Withdrawal from bonus reserve | BB | 28 | |
| MasterCard | BB | 2 | |
| Total tax | 3 | –17 | |
| Profit for the period | 41 | –966 |
| Income analysis Group, SEKm |
2010 | 2009 |
|---|---|---|
| Lending and deposits | 16 690 | 17 628 |
| Treasury, trading and capital market products | 3 871 | 7 091 |
| Asset management | 3 966 | 3 237 |
| Payment and cards | 3 346 | 3 258 |
| Insurance | 936 | 915 |
| Associates | 624 | 544 |
| Other income | 1 776 | 1 286 |
| Stability fee | –223 | –224 |
| Non-recurring items | 58 | 124 |
| Total excl. FX effects | 31 044 | 33 859 |
| FX effects | 923 | |
| Total income | 31 044 | 34 782 |
Net commission income increased by 14 per cent excluding the non-recurring expense for refunded fund management fees in Asset Management last year. Asset management commissions increased by 25 per cent due to an equity-related appreciation in assets under management.
Net gains and losses on financial items at fair value decreased by 13 per cent. However, the trading result in Large Corporates & Institutions was very high in 2009 due to very favourable market conditions. Within Group Treasury (Group functions) the market valuation of funding operations positively affected net gains and losses on financial items at fair value as partly mentioned earlier. The impact on earnings of these changes in value will be small over time, although there could be considerable volatility between quarters.
Expenses were unchanged last year excluding both dissolved bonus reserves in Baltic Banking and exchange rate effects. Variable staff costs amounted to SEK 340m (215). Of the variable staff costs, the costs associated with the "Remuneration program 2010" accounted for SEK 255m. The provision is based on an estimated performance amount of SEK 386m, including social insurance expenses, of which SEK 214m in cash and SEK 172m for deferred remuneration in the form of shares. Of the latter amount, 12/50, i.e. SEK 41m, has been charged against profit for the year. The remaining SEK 131m will be accrued through February 2014.
Expenses for problem loans and repossessed collateral in FR&R and Ektornet amounted to SEK 714m (427). Expenses in Baltic Banking excluding FR&R decreased by SEK 605m or 20 per cent in local currency. In Russia & Ukraine, expenses excluding FR&R fell by SEK 318m or 28 per cent in local currency. In one year the number of full-time employees was reduced by 2 049, of whom 1 625 were in Russia & Ukraine, 508 in Baltic Banking and 167 in Retail. At the same time the number of employees rose by 111 in Ektornet, by 92 in Large Corporates & Institutions, by 22 in Group Functions and by 22 in Asset Management.
| Expense analysis Group, SEKm |
2010 | 2009 |
|---|---|---|
| Reversal of bonus reserve | –198 | |
| FR&R och Ektornet | 714 | 427 |
| Swedish Banking | 8 616 | 8 592 |
| Large Corporates & Institutions | 3 151 | 2 805 |
| Baltic Banking | 2 472 | 3 077 |
| Russia & Ukraine | 814 | 1 132 |
| Asset Management | 856 | 753 |
| Other and eliminations | 1 019 | 827 |
| Current franchise | 16 928 | 17 187 |
| Total excl. FX effects | 17 642 | 17 416 |
| FX effects | 432 | |
| Total expenses | 17 642 | 17 848 |
Impairment of intangible assets attributable to Russian Banking operations amounted to SEK 14m during the first quarter and SEK 23m for a subsidiary of the Baltic group during the third quarter. In the previous year impairment losses of SEK 1 300m were attributable to Ukrainian Banking and SEK 5m to Russian investment banking.
Net credit impairments fell to SEK 2 810m (24 641), of which Baltic Banking accounted for SEK 3 363m (14 888). Of the reported credit impairments, SEK 1 405m (21 794) related to net provisions, of which individual provisions for impaired loans amounted to SEK 3 143m (17 042) and portfolio provisions for loans individually deemed not to be impaired were SEK –1 738m (4 752). Net write-offs amounted to SEK 1 405m (2 847). The credit impairment ratio decreased to 0.20 per cent (1.74).
The tax expense amounted to SEK 2 472m, corresponding to an effective tax rate of 25 per cent.
Swedbank's Annual General Meeting on 26 March elected Lars Idermark, Siv Svensson and Göran Hedman as new members of the Board of Directors. Board members Ulrika Francke, Berith Hägglund-Marcus, Anders Igel, Helle Kruse Nielsen, Pia Rudengren, Anders Sundström and Karl-Henrik Sundström were re-elected. Lars Idermark was elected as the new Chair, succeeding Carl Eric Stålberg, who had been Chair since 2002.
According to Swedbank's dividend policy, the dividend shall amount to around 40 percent of profit for 2010 excluding one-off items. The size of the annual dividend is based on the latest dividend and is determined with reference to expected profit trends, the capital considered necessary to develop operations and the market's required return. The Board of Directors recommends that the Annual General Meeting approve a dividend of SEK 2.10 (0) per ordinary share and 4.80 (0) per preference share. If a dividend is paid, the preference share has the preferential right to a dividend of SEK 4.80. For more information about the preference rights, see page 48.
Profit for the financial year attributable
| to shareholders | 7 072 |
|---|---|
| Retained earnings | 15 038 |
| Total available | 22 110 |
shareholders receive cash dividend of (seKm):
| SEK 2.10 per ordinary share | 2 000 |
|---|---|
| and SEK 4.80 per preference share | 995 |
| To be carried forward | 19 115 |
The proposal is based on all ordinary and preference shares outstanding as of 31 December 2010.
Unrealised changes in the value of assets and liabilities at fair value have had a net effect on equity of SEK –871m.
A continued economic recovery will benefit Swedbank through higher interest rate levels and strong credit quality. In 2011 Swedbank expects Swedish mortgage loans to grow in line with or to slightly exceed nominal GDP growth. Moreover, we expect that corporate lending in Sweden will grow modestly and that lending volumes in Baltic Banking will bottom out during the year. The repricing of corporate loans that do not reach our desired return, together with maturing state guaranteed funding, will give support to net interest income. Expenses excluding staff costs are expected to stay stable.
We expect a gradual improvement in profit before impairments. Credit impairments are expected to remain low with the potential for recoveries in the Baltic countries, Russia and Ukraine.
On 23 February 2010, Standard & Poor's Ratings Services affirmed Swedbank AB's and Swedbank Mortgage AB's long-term ratings of A and short-term ratings of A-1. Standard & Poor's changed its outlook from negative to stable.
On 22 June Moody's confirmed Swedbank AB's and Swedbank Mortgage AB's ratings of A2 long-term and P-1 shortterm and changed its outlook from negative to stable.
| Swedbank AB | Swedbank Mortgage AB |
Covered bonds | |||||
|---|---|---|---|---|---|---|---|
| Rating | Outlook Rating | Outlook Rating | Outlook | ||||
| Standard & Poor's | |||||||
| Short | A-1 | Stable | A-1 | Stable | |||
| Long | A | Stable | A | Stable | AAA | Stable | |
| Moody's | |||||||
| Short | P-1 | Stable | P-1 | Stable | |||
| Long | A2 | Stable | A2 | Stable | Aaa | -* | |
| Financial strength (BFSR) |
D+ | Stable | |||||
| Fitch | |||||||
| Short | F1 | Stable | |||||
| Long | A | Stable |
BFSR = Bank Financial Strength Rating
* Based on Moody's rating methodology for covered bonds no outlook is assigned.
On 16 August Standard & Poor's affirmed its AAA rating on Swedbank Mortgage's covered bond programme with a stable outlook. At the same time the covered bonds were removed from Standard & Poor's watch list.
On 6 October the ratings agency Fitch restored its monitoring of Swedbank AB at the bank's request. Fitch assigned Swedbank AB a long-term rating of A, a short-term rating of F1 and a stable outlook.
At the bank's request Moody's removed its rating on the bank's subsidiaries in Russia and Ukraine on 12 October.
On 16 November Moody's placed Swedbank AB and Swedbank Mortgage AB on review for possible upgrade.
Swedbank's Board of Directors decided in early 2011 to introduce a profitability target and a capitalisation target and to amend the bank's dividend policy.
for more information on the new financial targets, see page 7.
In order to effectively manage Swedbank's capitalisation within the bank's risk appetite and capitalisation target, the Board has proposed that the Annual General Meeting authorise the Board to decide to acquire of the Bank's own ordinary and/or preference shares of up to 10 per cent of the total number of shares (including acquisitions of own shares through the securities operations).
Retail posted a strong result for 2010. Activities to strengthen the bank's advisory services and offerings were in focus during the year.
In 2010 portions of local retail administration were centralised in order to free up time and resources for more customer-oriented work with greater decision-making authority. The basis for increasing local decision-making authority is the belief that decisions are best made locally, as close to customers as possible. The mandate for branch managers has therefore been increased and clarified. The decentralisation that began in 2009 and was completed in 2010 means that every branch manager reports directly to an immediate regional manager, who in turn is a member of the Swedish management.
We have a responsibility to illuminate the risks facing our customers' long-term financial situation. In 2009 we therefore took a clear stand in the Swedish mortgage market by getting involved in the debate on risk-taking by customers when they take on mortgage lending. At the same time we introduced tighter requirements on, among other things, loan-to-value ratios for mortgages by generally capping first mortgages at 75 per cent of the property value and second mortgages at 10 per cent. This led to a lower share of new sales. Since a nationwide mortgage cap was introduced in autumn 2010, forcing all lenders to follow the same rules, our share of new sales has recovered. At the same time, extended mortgage advice has resulted in many positive discussions with customers. The credit quality of our mortgage portfolio is satisfactory. To continue providing adequate mortgage advice and at the same time take macro- economic variables into consideration will be just as important in the years to come, even if it could mean lower market shares.
To give our customers advice on their overall financial situation, we need more time with each customer. Through a clear segmentation with different concepts for different customer groups, all of which include a service promise from the bank, we will be able to better help customers achieve a sustainable financial situation – businesses and individuals. A key customer concept launched in 2010 has been very well received and attracted over 200 000 key customers.
Swedbank has a strong tradition of social responsibility and ethical standards. Together with the savings banks, we launched an initiative called Young Jobs, which has generated over 1 500 trainee positions for young people around the country with Swedbank and the savings banks as well as with our customers.
During the year the agreements with the independent savings banks were extended. Cooperation with the savings banks is important to our joint distribution and means that together we are present in over 600 locations in Sweden. The agreements take effect on 1 July 2011.
The branch structure was modified during the year by consolidating 42 branches into larger units.
Together with a number of other major banks, Swedbank and the savings banks have formed a company to create a common ATM infrastructure in Sweden.
Catrin Fransson was appointed head of the business area during the year.
In the annual Universum Swedish Student Survey, Swedbank ranked fifth among prospective employers. Among companies in the financial industry, Swedbank was first.
The shift from transactions to customer relationships remains a priority. Through segmentation and by offering concepts such as Key Customer, Premium and Private Banking for private customers, as well as Better Business for corporate customers we can deepen our customers' relationships with Swedbank. Special emphasis will be placed on affluent and private banking customers, as well as on small and mediumsized enterprises (SME) and midcorps (companies with sales of at least SEK 100m).
As part of our effort to provide more time for advice and relationship building with customers, we will work actively to reduce cash handling in Sweden. In many cases today there are simple and widely available alternatives to cash. Reduced cash handling is also in line with Swedbank's vision of a sustainable society, since environmental impact is reduced, and security for employees and customers is increased.
Profit for 2010 amounted to SEK 5 301m (5 710).
Net interest income decreased by 10 per cent compared with the previous year. The decline was mainly due to lower interest rates, but also to higher funding costs and a decrease in corporate lending.
The total volume of deposits increased by 9 per cent. Swedbank's share of household deposits was unchanged compared with the beginning of the year at 24 per cent. Swedbank's share of corporate deposits improved. In a market with declining volumes, the bank's share increased to 17 per cent (16).
Swedbank's lending to private customers increased by nearly 5 per cent, while the total market growth was 9 per cent. Growth related exclusively to mortgages. Since the latter part of 2009 there has been a gradual increase in new lending at interest rates fixed for longer than 3 months. Swedbank's market share for residential mortgages was 27 per cent (28) at year-end. The bank's credit policy remains restrictive.
Corporate lending volume decreased by 2 per cent and the market share for corporate lending was 17 per cent (18 per cent).
Net commission income was 17 per cent higher than last year. Higher stock prices and better defined customer offerings, which resulted in strong sales, contributed to the increase. Customers who signed up for Swedbank's new service concepts have utilised the bank's products and services to a larger extent than earlier.
Swedbank Insurance had one of its best years ever in 2010 in terms of profitability and premium income. The company's assets under management amounted to nearly SEK 100bn on 31 December 2010 (80).
Expenses were in line with the same period last year. The number of employees was reduced during the year by 167.
Credit quality remained good in both the private and corporate markets. Credit impairments remained low, decreasing against the previous year. The share of impaired loans was 0.18 per cent and the credit impairment ratio was 0.03 per cent.
| SEKbn | 2010 | 2009 |
|---|---|---|
| Lending | 897 | 876 |
| Deposits | 347 | 318 |
| Mutual funds and insurance | 275 | 253 |
| Other investment volume | 17 | 22 |
| Risk-weighted assets (Basel 2) | 222 | 244 |
| Total assets | 1 006 | 956 |
| SEKm | 2010 | 2009 |
|---|---|---|
| Net interest income | 10 100 | 11 166 |
| Net commission income | 4 292 | 3 672 |
| Net gains and losses on financial items at fair value | 184 | 150 |
| Other income | 1 627 | 2 209 |
| Total income | 16 203 | 17 197 |
| Staff costs | 3 964 | 3 972 |
| Other expenses | 4 706 | 4 686 |
| Total expenses | 8 670 | 8 658 |
| Profit before impairments | 7 533 | 8 539 |
| Impairment of intangible assets | ||
| Impairment of tangible assets | ||
| Credit impairments | 272 | 833 |
| Operating profit | 7 261 | 7 706 |
| Tax expense | 1 951 | 1 988 |
| Profit for the year attributable to: | ||
| Shareholders in Swedbank AB | 5 301 | 5 710 |
| Non-controlling interests | 9 | 8 |
| 2010 | 2009 | |
|---|---|---|
| Return on allocated equity, % | 24.0 | 27.8 |
| Cost/income ratio | 0.54 | 0.50 |
| Credit impairment ratio, % | 0.03 | 0.10 |
| Share of impaired loans, % | 0.18 | 0.23 |
| Customer satisfaction* | ||
| Satisfied private customers, % | 70 | 70 |
| Satisfied corporate customers, % | 68 | 65 |
| VOICE index | 783 | 785 |
| Full-time employees | 5 571 | 5 738 |
| * According to SKI. |
Sweden is Swedbank's largest market, with 4.1 million private customers and over 400 000 corporate and organisational customers. Through the 340 branches of Swedbank and 257 branches of the savings banks, we offer our customers a complete range
of financial products and services. The retail network is complemented by teller services at a large number of stores. Through the Internet Bank, which generates over 20 million visits a month, as well as the Telephone Bank and Mobile bank, Swedbank is
open 24 hours a day. Swedbank Mortgage as well as the subsidiary bank in Luxembourg and representative office in Spain are part of the business area.
for more information on market shares, see page 168.
To strengthen the offering for large customers, the Large Corporates & Institutions business area was formed in 2010. The business area is comprised of a number of teams of specialists in various sectors. The purpose of the reorganisation is to increase expertise and better meet the diverse needs of customers.
stronger offering for customers with more complex needs
As an element in the bank's efforts to strengthen its offering for large companies and institutions, the Large Corporates & Institutions business area was formed in March 2010. It consists of all the operations that were previously part of Swedbank Markets as well as Large Corporates, Trade Finance and Swedbank's branch offices outside Sweden and the Baltic countries. Large corporates are defined as companies with sales over SEK 2bn per year or companies with more complex needs. This could, for example, mean a company that operates in more than one country or that needs more sophisticated currency, option or structured financing solutions.
Swedbank's new business model shifts the emphasis from individual product areas to value-creating advice. In Large Corporates & Institutions this means strengthening customer relationships through improved sales work with customer teams specialised in various sectors as well as more customised business development and follow-up. To do so we have to clearly define roles and responsibilities and structure operations based on each customer's needs and situation. By increasing the mandate of customer service representatives and at the same time strengthening administrative support in the form of better processes and IT systems, we can now offer customised solutions that are more adaptable to changes in the marketplace.
The work to further improve service for businesses and institutions by strengthening the Nordic/Baltic product and customer offering continued in 2010. The objective is to significantly increase the number of customer relationships where Swedbank is the principal banking partner. A business presence was established in Finland already in late 2009, when a team of stockbrokers and analysts was recruited. In 2010 the Helsinki office was expanded to include a trading team focused on customer trading in the fixed income and currency markets. This, together with the acquisition of the remainder of the Norwegian investment bank First Securities, which had previously been partly owned, has strengthened the bank's Nordic/Baltic offering. Today we can offer customers advice and expertise covering the entire Nordic and Baltic equity, derivative and capital markets.
A new management has been recruited for the research operations with the aim of further strengthening Swedbank's research product. These operations cover over 170 companies in the Nordic and Baltic markets. In the company Starmine's ranking of recommendation and forecast accuracy in the area of small and mid caps, Swedbank ranked high. In addition, Swedbank was named the winner of AQ Research's survey on the accuracy of recommendations on the 30 most heavily traded companies on NASDAQ OMX Stockholm. During the year First Securities received the six top rankings in the business periodical Kapital's ranking of Norwegian players, including best macro, strategy and credit analysts.
To ensure a thorough understanding of various industries and offer more proactive advice, the customer organisation in Large Corporates has been organised in the following sectors: Real Estate, Industry, Shipping & Offshore, Services, Retail, Telecoms, Energy and Healthcare. The Institutions area comprises three sectors: Financial Institutions, Banks and Organisations. This creates a larger product offering better designed to generate higher advice-based income.
The implementation of the advisory-focused business model will continue. Distribution capacity will be expanded and offerings, routines and processes will be further developed with the goal of creating value for customers and their businesses. The ambition is to both deepen and broaden the relationship with companies and institutions in the Nordic/ Baltic financial and capital markets, but also to attract international investors who wish to invest in these markets. The acquisition of First Securities has brought the business area cutting-edge competence and experience in the Norwegian market as well as in research, investment banking and marketing in general. The integration of First Securities will continue in 2011.
Profit for 2010 amounted to SEK 2 307m (2 946).
Net interest income decreased by 24 per cent compared with the previous year largely due to a decline in net interest income related to trading and capital market products and lower lending volumes.
Lending decreased by SEK 20bn. Lending to large corporates decreased during the first three quarters as Swedbank focused on risk-adjusted return. Exposures where the desired returns could not be achieved have been eliminated whenever possible. Activities targeting both current and new customers increased during the fourth quarter, and new lending grew compared with the previous quarter.
Net commissions rose by 22 per cent during the year mainly due to an increase in loan syndications and after M&A activity stabilised at a higher level than the previous year, which has raised demand for acquisition financing.
Net gains and losses on financial items at fair value decreased by 44 per cent. Trading and capital market income was earned in 2009 in exceptionally favourable market conditions, with interest rates clearly trending lower and substantially lower credit spreads. This led to a significant increase primarily in net gains and losses on financial items at fair value, though also in net interest income.
Total expenses excluding provisions for profit-based compensation rose by SEK 242m. The increase was mainly due to the higher number of employees and higher IT costs. Provisions for variable staff costs increased by SEK 58m.
Risk-weighted assets attributable to the business area decreased by SEK 7.9bn to SEK 156.3bn on 31 December.
| SEKbn | 2010 | 2009 |
|---|---|---|
| Lending * | 130 | 150 |
| Deposits * | 74 | 69 |
| Mutual funds and insurance | 15 | 16 |
| Other investment volume | 23 | 28 |
| Risk-weighted assets (Basel 2) | 156 | 164 |
| Total assets | 430 | 438 |
* Excl. Swedish Nat'l Debt Office & repurchase agreements
| SEKm | 2010 | 2009 |
|---|---|---|
| Net interest income | 2 817 | 3 712 |
| Net commission income | 1 955 | 1 609 |
| Net gains and losses on financial items at fair value | 1 446 | 2 583 |
| Other income | 88 | 108 |
| Total income | 6 306 | 8 012 |
| Staff costs | 1 489 | 1 316 |
| Other expenses | 1 713 | 1 586 |
| Total expenses | 3 202 | 2 902 |
| Profit before impairments | 3 104 | 5 110 |
| Impairment of intangible asset | 5 | |
| Impairment of tangible assets | 7 | |
| Credit impairments | –1 | 1 093 |
| Operating profit | 3 105 | 4 005 |
| Tax expense | 768 | 996 |
| Profit for the year attributable to: | ||
| Shareholders in Swedbank AB | 2 307 | 2 946 |
| Non-controlling interests | 30 | 63 |
| 2010 | 2009 | |
|---|---|---|
| Return on allocated equity, % | 13.8 | 19.7 |
| Cost/income ratio | 0.51 | 0.36 |
| Credit impairment ratio, % | 0.00 | 0.39 |
| Share of impaired loans, gross, % | 0.25 | 0.34 |
| VOICE index | 764 | 782 |
| Full-time employees | 1 229 | 1 137 |
Share of Swedbank's profit before impairments 21%
In Large Corporates & Institutions Swedbank has consolidated its offering for large Nordic and Baltic companies, financial institutions, organisations and banks with sales exceeding SEK 2bn or more complex needs. Formed in 2010, the new business area has fully integrated the former Swedbank Markets. The same applies to First Securities, which has
been wholly owned by Swedbank since November 2010.
To guarantee maximum customer focus and high quality services, the business area is organised in 11 sectors. At the same time that the team is building unique industry competence, cutting-edge skills are continuously added through the business area's product specialists in cash management, trade finance, corporate finance, securities services and asset management. The business area has a strong position in equities, fixed income and foreign exchange in terms of brokerage services and research. The bank is also a major provider of financing solutions.
The business area's responsibility also includes serving Retail, Baltic Banking and the savings banks.
The Baltic economies have begun to recover after the severe recession. The priorities shifted during the year from crisis management to developing and implementing a sustainable strategy focused on profitability. Strong customer relationships and proximity to customers are the cornerstones of this strategy.
In 2010 the focus gradually shifted from crisis management, with emphasis on credit quality and cost savings, to building a long-term sustainable bank with improved profitability. Increasing customer confidence in the bank and strengthening its positions in key segments were the highest priorities.
The European Union's Economic and Financial Affairs Council (ECOFIN) decided during the year to admit Estonia to the EMU on 1 January 2011. Swedbank has been preparing for Estonia's accession since 2009.
In 2010 the risk management organisation primarily focused on restructuring loans to borrowers who had payment problems. In cases where restructurings were not deemed successful, the bank has tried to recover as much value as possible by selling collateral.
During the recession Swedbank's Baltic Financial Restructuring and Recovery teams (BFR&R) have been responsible for managing a large number of business loans where the borrowers have had financial problems, especially in the real estate sector. The organisation has tried to find financial solutions that are sustainable for both the customer and the bank. In 2010 a number of loans that had been handled and reconstructed by the BFR&R teams during crisis were transferred back to ordinary banking operations. This process will continue in 2011.
The introduction of a more customer-oriented business model continued during the year. Stronger internal processes, common throughout the Group, combined with an increased degree of formalisation and monitoring, allow greater decisionmaking authority to those who have direct customer contact.
In order to contribute to our customers' sustainable financial development, Swedbank set up the Institute of Private Finances in Estonia, Latvia and Lithuania in 2010. Through educating the public, these institutes enable customers to better understand their financial situation.
In 2009 significant capacity adjustments were made due to the slowdown in economic activity. Staff reductions were made and the number of branches was reduced.
In 2010 productivity and quality improvements were prioritised activities – such as standardisation of products, services, processes and job descriptions.
Baltic Banking's strategic priorities are designed to enable customer-oriented operations based on long-term holistic relationships. This represents a shift from transactions to relationships, where advice is the key. To reach our desired long-term positioning, we will strive to better understand customers and their needs, so that we can provide them with the right offerings. The competence of our advisors will also be strengthened.
Meeting customers' needs and behaviours through the right type of channel is important in order to offer the right type of service. Consequently, we will reassess the structure of distribution channels, and investments will be made in electronic channels.
Swedbank will continue to work closely with the Estonian, Latvian and Lithuanian governments, central banks and capital markets to promote financial sustainability and increase confidence in the region. Building strong relationships at different levels of society remains a top priority.
Baltic Banking reported a loss of SEK 7m for 2010, compared with a loss of SEK 9 758m in 2009. In local currency the business area reported a profit of EUR 10m. The improved result was mainly due to significantly lower credit impairments.
Net interest income was unchanged from 2009 in local currency. In the fourth quarter fee income was reclassified in line with Group accounting principles. The change increased net interest income by SEK 191m while reducing other income correspondingly. The annual decline in net interest income excluding the reclassification was 5 per cent. Baltic Banking continues to benefit from low local interest rates and a stronger Euribor rate.
Lending volumes decreased by 12 per cent in local currency. Despite the increase in new sales activity during the second half of 2010, the general deleveraging trend in the Baltic countries continued.
Deposits increased by 3 per cent in local currency, with the largest increase in Lithuania.
Net commission income improved by 3 per cent in local currency compared with 2009. Payment commissions increased the most, in line with the economic recovery.
Net gains and losses on financial items at fair value fell in local currency by 47 per cent year-on-year. This was mainly due to the unrealised decline in the fair value of interestbearing securities.
Expenses declined by 9 per cent in local currency. In 2009 accrued bonus reserves of SEK 198m were reversed. Without the reversal, expenses declined by 14 per cent in local currency. In 2010 the focus was on continuous productivity improvements. As a result of more efficient operations, the decrease in expenses was higher than the decrease in total income during the year. The credit impairment level decreased significantly, fluctuating around zero for all three countries during the second half of 2010.
Share of Swedbank's profit before impairments 24%
| SEKbn | 2010 | 2009 |
|---|---|---|
| Lending * | 130 | 170 |
| Deposits * | 93 | 103 |
| Mutual funds & insurance | 20 | 19 |
| Risk-weighted assets (Basel 2) | 136 | 165 |
| Total assets | 172 | 224 |
* Excluding Swedish National Debt Office and repos.
| SEKm | 2010 | 2009 |
|---|---|---|
| Net interest income | 3 771 | 4 235 |
| Net commission income | 1 533 | 1 655 |
| Net gains and losses on financial items at fair value | 341 | 719 |
| Other income | 542 | 763 |
| Total income | 6 187 | 7 372 |
| Staff costs | 1 032 | 1 361 |
| Other expenses | 1 697 | 1 973 |
| Total expenses | 2 729 | 3 334 |
| Profit before impairments | 3 458 | 4 038 |
| Impairment of intangible assets | 23 | |
| Impairment of tangible assets | 261 | 223 |
| Credit impairments | 3 363 | 14 888 |
| Operating profit | –189 –11 073 | |
| Tax expense | –182 | –1 315 |
| Profit for the year attributable to: Shareholders in Swedbank AB |
–7 | –9 758 |
| 2010 | 2009 | |
|---|---|---|
| Return on allocated equity, % | –0.0 | –31.6 |
| Cost/income ratio | 0.44 | 0.45 |
| Credit impairment ratio, % | 2.05 | 6.67 |
| Share of impaired loans, gross, % | 15.54 | 14.23 |
| Customer satisfaction * | ||
| Private index, Estonia | 6.5 | 5.6 |
| Corporate index, Estonia | 6.1 | 6.0 |
| Private index, Latvia | 6.2 | 5.2 |
| Corporate index, Latvia | 5.3 | 4.9 |
| Private index, Lithuania** | 49 | 50 |
| Corporate index, Lithuania** | 59 | 51 |
| VOICE index | 831 | 796 |
| Full-time employees | 5 416 | 5 924 |
* Source TRIM index. Scale 1–10, were 10 is highest score. **Scale 1–100.
Baltic Banking offers a broad range of products and banking services, including mortgages, business and consumer loans, savings and current accounts, life insurance and leasing in Estonia, Latvia and Lithuania. The
Baltic operations have about 5.7 million private and corporate customers and offer services through an extensive retail network comprising 220 branches as well as the Telephone Bank and the Internet Bank.
Swedbank holds leading positions in several key market segments in the Baltic markets, with its largest market share in Estonia. for more information on market shares, see page 168.
Swedbank Robur is one of the largest asset managers in the Nordic region. In 2010 the business area built on the organisational changes initiated in 2009. The purpose is to simplify internal processes and routines and making them more efficient, while also clarifying the customer offering.
Swedbank Robur's goal is to increase the value of its customer offering and thereby strengthen its market position as a leading player both among current customers and in terms of the growth of new assets under management. To achieve this, management expertise and the fund offering will be clairfied.
Swedbank Robur mainly works with three categories of customers: institutional investors, retail customers of Swedbank and the savings banks, and third-party distributors. Every customer group has its own specific needs, and during the year intensive work was done to adapt product offerings, packaging and services for the various groups. The aim is to increase sales and profitability in all distribution channels.
A reassessment of the management process was launched at the start of the year. Asset management today utilises what is called alpha-beta separation. The aim of an active alpha philosophy is to generate a higher return after fees than a given comparative index. The goal of beta management is to generate a return after fees corresponding to a relevant index. Previously the process was divided by market and geographical area.
In order to explain the range of investment options in a way that enables customers to understand what to expect, funds are now being categorised by accessibility, predictability and solid risk-adjusted returns. Accessibility refers to holdings in emerging markets or difficult-to-access markets e.g. due to restrictions. Beta investing offers predictability; while alpha investing is associated with good risk-adjusted returns and higher yield requirements. The categorisation will be completed in 2011, and the asset management organisation is gradually being adapted to reflect the new product categories.
Pending European mutual fund rules will make it possible in the second half of 2011 to offer the same fund in different countries and to combine funds more simply than before. This will make it easier to adapt supply to demand. Swedbank Robur manages over 150 funds, and its goal is to reduce this number by about 30 per cent, which is expected to take a few years.
An organisational change implemented in 2009 consolidated all of Swedbank's asset management operations in Swedbank Robur. The focus in 2010 was on integrating management services and various administrative systems in the Swedish operations, where asset management will be handled. Latvia and Lithuania are integrated, while the integration of the Estonian fund management company will take place in 2011, after Estonia joins the EMU. The goal of the reorganisation is to coordinate the customer offering, improve risk control and take advantage of economies of scale.
We will further strengthen governance and controls. The risk control work that began in 2009 was therefore a focus in 2010 as well. A number of processes have been reviewed to create methods that will improve efficiency and quality as well as reduce operational risk. This has led to changes in the processes, strengtened control functions and automated controls.
In the autumn Thomas Eriksson was appointed CEO of Swedbank Robur and head of the Asset Management business area.
Swedbank Robur received a number of awards in 2010. "Banco Ideell Miljö" was named socially responsible fund of the year by fondmarknaden.se. In the annual awards for analysts of the year presented by Dagens Industri and Morningstar, Robur finished second in the category small and mid-cap Sweden funds and third in the category Nordic funds.
Measures to adapt the management organisation to the new processes will continue in 2011. This includes adapting the product range, packaging and services to various customer categories. One of the priorities is to increase sales outside home markets and the Nordic region. Measures to attract and retain talented employees and develop leadership will continue with a focus on developing the corporate culture.
Profit for the year amounted to SEK 575m (–50).
Measured in gross investments, the Swedish mutual fund market grew by SEK 110bn year-on-year to SEK 709bn. Net contributions to the Swedish fund market amounted to SEK 86bn, a decrease of 22 per cent compared with 2009. The total gross inflow to Swedbank Robur was SEK 96bn, while the net flow was SEK –3.8bn. Retail accounted for a negative net inflow of SEK 4.5bn, including insurance savings and PPM, while third-party sales contributed a net inflow.
In the discretionary management, Swedbank Robur had positive net flows from institutional clients of SEK 12.3bn.
Income increased by 22 per cent excluding refunded management fees of SEK 628m resulting from incorrect charges in the previous year. The increase in income was due to higher assets under management, largely due to increased market values. Positive net flows from institutional and third-party sales also contributed to the increase in income. Income from discretionary management excluding Swedbank Robur's funds amounted to SEK 139m (119).
In 2009 SEK 20m was reserved for possible penalties to the Swedish Financial Supervisory Authority for violating flagging rules. The penalties were in fact less than SEK 1m, due to which the difference, SEK 19m, affected net commissions positively during the year. Five per cent of operating income was attributable to operations in the Baltic countries.
Expenses increased by 13 per cent in 2010 compared with the previous year. This was due to the additional resources allocated to compliance, risk management and control. Aside from expenses for new services, IT investments increased.
| SEKbn | 2010 | 2009 |
|---|---|---|
| Net fund contributions, Sweden | –4 | 20 |
| Market share, net fund contributions, Sweden, % | neg. | 15 |
| Mutual funds | 484 | 448 |
| Market share, assets under management, Sweden, % | 24 | 27 |
| Total assets under management, incl. discretionary | 736 | 670 |
| SEKm | 2010 | 2009 |
|---|---|---|
| Net interest income | –17 | –23 |
| Net commission income | 1 592 | 655 |
| Net gains and losses on financial items at fair value | 9 | 42 |
| Other income | 24 | 16 |
| Total income | 1 608 | 690 |
| Staff costs | 440 | 340 |
| Other expenses | 416 | 416 |
| Total expenses | 856 | 756 |
| Profit before impairments | 752 | –66 |
| Impairment of intangible assets | ||
| Impairment of tangible assets | ||
| Credit impairments | ||
| Operating profit | 752 | –66 |
| Tax expense | 177 | –16 |
| Profit for the year attributable to: | ||
| Shareholders in Swedbank AB | 575 | –50 |
| 2010 | 2009 | |
|---|---|---|
| Return on allocated equity, % | 35.4 | –3.3 |
| Cost/income ratio | 0.53 | 1.10 |
| VOICE index | n.a. | 744 |
| Full-time employees | 313 | 291 |
Swedbank Robur is a wholly owned subsidiary of Swedbank. Formed in 1967, it is one of the oldest fund management companies in Sweden. Swedbank Robur is represented in Swedbank's home markets and offers over 150 funds, discretionary asset management and pension management. Swedbank Robur is by far Sweden's biggest player in socially responsible investments. At year-end assets under management with some form of ethical criteria amounted to
SEK 280 billion, corresponding to more than one third of total assets under management. Swedbank Robur's customers include private customers, companies, institutions, municipalities, county councils, foundations and insurance companies. With some 2.8 million customers in Sweden, Swedbank Robur has a market share of 24 per cent. In the Baltic countries Swedbank Robur had around 1.1 million customers. Total assets under management amounted to SEK 736 billion.
Swedbank Robur has received environmental certification and has adopted environmental and ethical criteria in its ownership policy. In addition, it has signed the UN's Principles for Responsible Investment. Corporate governance is an integral part of Swedbank Robur's investment process, where a strong commitment to ethical and environmental issues is a key element.
In line with our overall strategy to focus on our home markets, the restructuring of the operations in Russia and Ukraine continued in 2010. As a result, the focus in Russia has shifted primarily to supporting the bank's corporate customers in home markets. In Ukraine, operations have been adapated to lower business volumes.
The economies in Russia and Ukraine showed signs of recovery in 2010. Industrial production increased and unemployment fell in both countries. The recovery is also visible in the banking sector, where lending volumes rose, especially corporate lending. Swedbank has acted very restrictively. New lending has been modest, and the focus has instead been on adapting the organisation in Ukraine and Russia to lower business volumes by adjusting its structure and costs. Further strengthening of the risk organisation and efforts to recover anticipated credit impairments have been the priorities.
A decision was made in early 2010 to change the operating focus of Swedbank Russia to primarily supporting Swedbank's corporate customers from its home markets: Sweden, Estonia, Latvia and Lithuania. Implementation of the change began during the second quarter. Private customer operations will gradually be phased out and lending in the corporate segment will increasingly shift primarily to home-market customers. As a result, lending to private customers decreased by 15 per cent or SEK 257m during the year.
To adapt costs to the new, more focused strategy, the number of employees was reduced by 50 per cent to 284 and the number of branches was cut from 8 to 5. Adjustments will continue in 2011.
Elena Lozovaya was named the new CEO of Swedbank in Russia in 2010.
The organisational adjustments in Ukraine are now nearly completed. The number of branches has been reduced from over 200 in early 2009 to 92 at year-end 2010. The number of employees has been reduced during the year by 1 326 people to 1 554.
During the year, Swedbank's special risk team for restructuring and recovery, FR&R, was established in Ukraine. The team has been restructuring loans, in the process helping the bank to recover previous provisions.
Credit quality in the loan portfolio is expected to further improve as Swedbank places high quality requirements on new lending to small and medium-sized companies.
The ongoing change in operating focus in Russia, where the private customer offering is gradually being phased out and the corporate offering is primarily targeting customers in home markets, will continue in 2011.
In Ukraine, the work to optimise the current structure and improve process efficiency and quality is continuing.
The work to restructure loans and recover debts by the FR&R teams remains a top priority for the business area.
Profit for the period amounted to SEK 419m, compared with a loss of SEK 8 423m for the same period the previous year. The improvement was primarily due to the stabilisation of credit quality and cost cutting in both Ukraine and Russia.
Impairment of tangible assets of SEK 254m for property taken over and closed branches was taken in the fourth quarter in line with the strategic repositioning during the year in both markets.
Net interest income for the period was 64 per cent lower than the previous year as a result of loan portfolio amortisation, impaired loans and limited new lending.
To adjust to lower business volumes, expenses were reduced by 28 per cent compared with the same period last year.
Net recoveries of SEK 859m from a number of successful restructurings and decrease in portfolio provisions offset the impairment of tangible assets, primarily assets taken over in Ukraine.
| SEKbn | 2010 | 2009 |
|---|---|---|
| Lending * | 15 | 20 |
| Deposits * | 3 | 7 |
| Risk-weighted assets (Basel 2) | 18 | 23 |
| Total assets | 17 | 24 |
* Excluding Swedish National Debt Office and repos.
| SEKm | 2010 | 2009 |
|---|---|---|
| Net interest income | 638 | 1 766 |
| Net commission income | 81 | 101 |
| Net gains and losses on financial items at fair value | –71 | –44 |
| Other income | 32 | 14 |
| Total income | 680 | 1 837 |
| Staff costs | 368 | 511 |
| Other expenses | 503 | 701 |
| Total expenses | 871 | 1 212 |
| Profit before impairments | –191 | 625 |
| Impairment of intangible assets | 14 | 1 300 |
| Impairment of tangible assets | 254 | 219 |
| Credit impairments | –859 | 7 782 |
| Operating profit | 400 | –8 676 |
| Tax expense | –19 | –251 |
| Profit for the year attributable to: | ||
| Shareholders in Swedbank AB | 419 | –8 423 |
| Non-controlling interests | –2 |
| 2010 | 2009 | |
|---|---|---|
| Return on allocated equity, % | 11.0 | –230.5 |
| Cost/income ratio | 1.28 | 0.66 |
| Credit impairment ratio, % | –4.35 | 21.72 |
| Share of impaired loans, gross, % | 46.2 | 37.69 |
| VOICE index | 718 | 694 |
| Full-time employees | 1 847 | 3 472 |
Share of Swedbank's profit before impairments –1%
The Russia & Ukraine business area comprises Swedbank's banking operations in Russia and Ukraine and was formed in April 2010 as a result of organisational changes in the Swedbank Group. Before the changes the business area was called International Banking and included the branches in
the Nordic region, US and China, which have now been transferred to Large Corporates & Institutions.
Swedbank currently offers products and services for both private and corporate customers in Russia and Ukraine. Because of the decision to change the focus of the Russian
business to supporting corporate customers from the bank's home markets, the bank will gradually phase out its private customer offering.
At the end of 2010 Swedbank had five branches in Russia and 92 in Ukraine.
Ektornet is an independent subsidiary of Swedbank tasked to manage the Group's repossessed assets, which are mainly comprised of real estate. The business area also serves an advisory function for other parts of Swedbank on matters involving, for example, reconstructions.
Ektornet's operations in 2010 were primarily focused on creating an efficient organisation with functioning processes, mainly for property repossessions. Ektornet is represented in the Nordic region, the Baltic countries, the US and Ukraine, and is preparing an organisation in Russia. Different laws, tax regulations and limitations on repossessions, as well as the fact that these markets are in different stages of recovery, make it difficult to provide an overall valuation of the property portfolio. Each market sector is therefore assessed individually. At year-end Ektornet had taken over properties valued at SEK 2 872m (517); see the market specification on the next page. Properties worth an additional SEK 255m had been acquired but not yet registered, mainly in Latvia. Further, shares in a US apartment project valued at SEK 183m were taken over. In total, repossessed assets amounted to SEK 3 310m. Property repossessions are expected to continue until 2013, at which point the value of the repossessed assets will reach an estimated SEK 5–10bn, of which the Baltic countries are expected to account for about two thirds.
The property holdings in the three Baltic countries mainly consist of smaller units, primarily residential apartments, along with a number of larger project properties. The process for these holdings is to manage them and in some cases finalise the projects.
The Swedish property portfolio currently consists of a large retail property in Västerås and a number of residential apartments in Karlskrona, which are gradually being sold off. In Norway, the holding consists of a hotel and golf resort in Kragerö, southwest of Oslo, which includes condominiums, land, a golf course and hotel. The land and condominiums are being sold, while the hotel is being managed in partnership with Choice Hotels. A reassessment of the business model is under way. The Finnish portfolio consists of five large office buildings, three of which are in Helsinki, one in Tampere and one in Oulu.
In the US, Ektornet has a development property with attractive construction rights in central Los Angeles that is currently leased out for parking, as well as shares in a condominium consortium in Miami. Both units are for sale.
The Ukrainian portfolio consists of a retail/office property.
A large part of the property portfolio consists of apartments, project properties and other non-income generating assets. Cash flow and operating income are therefore expected to be negative in the years to come. The result for 2010 was SEK –212m (–20) and is expected to remain negative in 2011 at about SEK 200–300m. The result is largely dependent on sales activities, which are expected to increase. During the year, properties mainly consisting of small and singular assets were sold for SEK 84m with a gain of SEK 17m.
Ektornet reports its properties at cost rather than fair value, and only impairments are recognised. The properties are
Ektornet manages repossessed assets with a long-term aim of recouping the value that was written down when the bank took over and transferred the assets to Ektornet
appraised annually, which means that properties acquired in previous years are revalued. For properties acquired during the current year, the acquisition valuation is used unless important events have affected it. The values are based on the properties' development potential from a five-year perspective. Impairments during the year totalled SEK 85m, which was charged against profit. The valuations also indicated surplus values, which are not recognised against profit.
The focus in 2011 will be on developing and managing the portfolio through value-creation measures. The aim is to raise the value of each asset through marketing, leasing and property development. This could also include completing the construction of unfinished properties so that they can be sold at a higher value once the market becomes more liquid. The goal, as far as possible, is to offset the losses that the bank realised when each loan became impaired and to cover investment and development costs to manage the properties. Recoveries will thus be possible over time.
Ektornet acquires, manages and develops the bank's repossessed properties in order to recover as much value as possible over time, while minimising the cost of ownership of the assets. This is done through development and other value-creation measures. A significant share of the holdings is located in the Baltic countries, though also in the Nordic region, US and Ukraine.
Ektornet works closely with the bank's local FR&R teams and contributes real estate expertise to create proactive solutions e.g. early advice in reconstructions. The aim is to avoid situations that lead to a repossession.
Ektornet was officially formed in 2009 and functions as an independent business area within Swedbank. The head office is located in Stockholm. Repossessed properties are managed through local subsidiaries with their own resources and real estate expertise.
| 2010 | 2009 | |
|---|---|---|
| Book value, SEKm | 2 872 | 517 |
| - Estonia | 469 | 150 |
| - Latvia | 851 | 64 |
| - Lithuania | 206 | – |
| - Sweden | 270 | – |
| - Norway | 116 | 173 |
| - Finland | 765 | – |
| - USA | 122 | 130 |
| - Ukraine | 73 | – |
| Surface area, hectares | 563 | |
| Project properties (IAS 2), area, sq.m. | 257 510 | |
| Management properties (IAS 40), area, sq.m. | 339 029 | |
| Number of properties | 1 951 | 198 |
| Vacancy rate (IAS 40), % | 50 | |
| Number of employees | 150 | 39 |
| SEKm | 2010 | 2009 |
|---|---|---|
| Net interest income | –21 | –1 |
| Net commission income | ||
| Net gains and losses on financial items at fair value | 31 | 2 |
| Other income | 108 | |
| Total income | 118 | 1 |
| Staff costs | 74 | 2 |
| Other expenses | 196 | 25 |
| Total expenses | 270 | 27 |
| Profit before impairments | –152 | –26 |
| Impairment of intangible assets | ||
| Impairment of tangible assets | 85 | |
| Credit impairments | ||
| Operating profit | –237 | –26 |
| Tax expense | –25 | –6 |
| Profit for the year attributable to: | ||
| Shareholders of Swedbank AB | –212 | –20 |
Group functions are an independent unit that serves as administrative support for other parts of the bank. During the year Group Business Support, which is responsible for the bank's products and production, was formed.
Group functions consist of Group Finance, Risk, Corporate Affairs (communication, strategic marketing and community relations), Human Resources, Legal, Compliance and Group Business Support, fully operational from 1 January 2011.
The purpose of the Group functions is to support and capitalise on economies of scale in the bank's business operations. They also develop Group-level guidelines and processes as well as compile, analyse and provide information to the CEO and Board of Directors. Group functions comprise 2 698 full-time positions.
During the year Swedbank implemented several organisational changes, the most extensive of which was the creation of Group Business Support, which will be responsible for the bank's products and production, IT, internal services and process efficiencies. The purpose of the new Group-level organisation is to serve as a business support, which in turn will raise the quality of services and improve efficiencies in the Group.
In 2010 the Group-level IT organisation and the two product units for cards and payments were integrated in Group Business Support. Other units will be integrated in 2011.
Following the reorganisation, Group IT is one of the largest IT operations in the Nordic and Baltic regions, with around 1 650 employees and revenues of SEK 2.8bn. Swedbank's total IT expenses amounted to SEK 3.4bn in 2010, or 19 per cent of total expenses. Of the IT expenses, 27 per cent related to systems development.
Group Treasury, which is part of Group Finance, ensures that the Group has sufficient liquidity to contribute to financial stability, setting internal interest rates as a basis for business operations, and, through capital market funding, covering the financing needs of Swedbank and its subsidiaries. Moreover, it manages and finances the Group's strategic shareholdings and interest-bearing holdings while also evaluating the Group's capital needs and preparing proposals for future capitalisation e.g. through share buyback programmes or subordinated loan issues. Group Treasury's organisation and processes were substantially strengthened during the year. As of year-end Group Treasury managed capital market funding of SEK 762bn.
The representaive office in Japan was closed during the year.
Preventing and managing risk is central to Swedbank's operations. Risk management begins with our business operations – in meetings with customers, for example – and encompasses every employee. Within Swedbank, a separate risk organisation ensures that risk management is conducted efficiently and in accordance with Group-wide procedures.
Risks arise in all financial operations. Swedbank shall have a low risk level. A strong common risk culture within the bank, with decision-making and responsibility kept close to the customer, serves as the foundation for efficient risk management and, by extension, a strong risk-adjusted return. A clear majority of credit exposures should be in mature markets such as Sweden. Swedbank achieves a favourable risk distribution by means of a broad customer base among private individuals and companies in many different industries.
As a financial partner, it is in the bank's interest that its customers do not take unnecessary risks. This is why meeting with them is so important. Personal meetings provide an opportunity to give the customer advice on their entire financial situation. The customer's solvency is analysed primarily with a focus on cash flow as well as collateral, and forms the basis for all lending. The long-term risk profile that the bank aims for is ensured by means of a favourable risk culture, clear operating guidelines and strong internal control of credit, market and operational risks.
The risk organisation, which is organised under the Chief Risk Officer (CRO), is comprised of three specialised units: the risk control organisation, the credit organisation and Swedbank's special units to handle problem loans (FR&R).
Successful risk management requires a strong risk culture and common approach throughout the bank. Swedbank's risk management is built on three lines of defence and a sophisticated risk process. The Board of Directors has adopted an Enterprise Risk Management (ERM) policy detailing the risk
framework, as well as risk management roles and responsibilities. In addition to this framework, and as protection against unforeseen losses, Swedbank maintains a capital buffer. The ERM policy also includes guidelines on the size of this buffer based on the level of risk currently being taken by the bank.
Swedbank's business units and subsidiaries bear full responsibility for the risks their operations create. Our local branches are the closest to customers and therefore know the customer and specific market best. They are also in the best position to assess risk. By delegating responsibility, the organisation can more quickly respond if problems arise. Clear procedures and processes are in place for how credit is approved, reviewed and managed in the event a borrower incurs problems meeting payments. The bank's special units for problem loans work with individual companies considered to be at risk of encountering financial problems, in order to find a solution that both helps the customer and mitigates the bank's risk as early as possible.
Risk management is based on clear targets and strategies, policies and guidelines explaining how the bank operates in various regards, an efficient operating structure and a simple, clear reporting structure. Standardised risk classification tools are in place to support the lending process.
The second line of defence consists of the Credit, Risk Control and Compliance organisations.
These functions shall uphold principles and frameworks for risk management and facilitate risk assessment. They shall also promote a sound risk culture and in this way strengthen
business operations by supporting and training employees of the bank's business areas. These functions have been reinforced in the wake of the financial crisis. Risk Control and Compliance also conduct independent reviews.
The Credit organisation issues internal regulations, such as mandate structures for credit decisions, or minimum requirements for customer cash flow and collateral. There is business expertise in the Group that supports the business organisation and the risk assessment, e.g. for larger credit exposures. For exposures above certain sizes, the decisions are taken in credit committees headed by someone from the Credit organisation. These decisions are taken in credit committees in order to create a duality with the business organisation.
The independent risk function, Group Risk Control, is responsible for identification, quantification, analysis and reporting of all risks. Group Risk Control conducts regular analyses of how external and socio-economic events might impact the Group. This work is done within a matrix organisation, where specialized units for each risk type work with methodology development and consolidation on Group level, and local Risk Control units in each business area identify, analyse and report risks. All risks are assessed based on the likelihood that a particular event will occur and its consequences.
To complement these, stress tests are carried out to assess the effects of more dramatic, but possible, external changes, such as the effects of falling home prices, increased unemployment and low or negative economic growth. These stress tests contribute to the assessment of whether or not measures need to be taken to mitigate the Group's risk.
Each large business unit has a local compliance function that identifies and reports compliance risks and helps management address these risks.
The Internal Audit, an independent review board directly subordinate to the Board of Directors, conducts regular reviews of management and risk control, as well as other internal controls. The purpose of the Internal Audit is also to generate value by contributing to lasting improvements in operations.
| Risk | Description |
|---|---|
| Credit risk | The risk that a counterparty, or obligor, fails to meet contractual obligations to Swedbank and the risk that collateral will not cover the claim. |
| Market risk | The risk that changes in interest rates, exchange rates and equity prices will lead to a decline in the value of Swedbank's net assets, including derivatives. |
| Liquidity risk | The risk that Swedbank cannot fulfil its payment commitments on any given due date without significantly raising the cost of obtaining means of payment. |
| Operational risk | The risk of losses resulting from inadequate or failed internal processes or routines, human error, incorrect systems or external events. |
| Other risks | Includes earnings volatility risk, insurance risk, pension risk, strategic risk, reputational risk and security risk. |
A number of different types of risk arise within the framework of a bank's operations, including credit risk, operational risk, market risk and liquidity risk. For Swedbank, whose customer base mainly consists of private individuals and small and medium-sized companies, credit risk is the dominant type.
Credit risks are included on the asset side of the balance sheet. Every time the bank lends money, it incurs a risk that the customer will have difficulty fulfilling its commitment to the bank. The bank's profitability and financial position are affected by the risks inherent in its customers' operations. In turn, customers' operations are dependent on macroeconomic and political conditions. Consequently, credit losses fluctuate in accordance with the business cycle.
Swedbank's lending to the public consists largely of residential mortgages in Sweden, with very low risk. They are primarily financed through borrowing from the capital market in the form of covered bonds. Corporate lending is dominated by small and medium-sized companies in Sweden and is largely financed through funds deposited by the public. The level of risk here is somewhat higher, though still relatively low. The risk in the bank's other lending (in the Baltic countries, Russia and Ukraine) is higher, but with differences between countries. Estonia, which joined the euro zone in 2011, has recovered the fastest of the Baltic countries and is considered to have a lower risk profile than Latvia and Lithuania. The risk level in Russia and Ukraine is considered to be higher than in the Baltic countries.
SEKbn
In relation to lending, deposits remain relatively low in certain of these countries, and we are working actively to improve the balance between lending and deposits to achieve sustainable growth in all markets.
The bank works with operational risks on an ongoing basis, improving processes, accessibility and security. Established methods are employed to identify operational risks and follow up on action plans.
Swedbank's market risks arise mainly in connection with the financial products that the bank offers to meet customer needs and to finance operations. Interest rate risk, relatively speaking the greatest market risk, arises as a natural element on both the asset and liability sides of the bank's operations through, for example, customer demands for different fixed interest terms on deposits and loans. The bank centralises all interest rate risk to a limited number of business units for the purpose of managing this risk efficiently, partly by matching of maturities and partly using derivative instruments. Currency risk mainly arises through the bank's international operations.
Access to long-term financing is imperative to adequately manage Swedbank's liquidity risks. Consequently, Swedbank has established well-diversified operations through a number of short- and long-term borrowing programmes in a number of capital markets. Swedbank's covered bonds, which are directly secured through the bank's low-risk Swedish mortgage lending, contributes strongly to the bank's financing. In addition, a liquidity reserve consisting of securities with a high level of creditworthiness can be pledged to central banks or divested on very short notice. The financial crisis underscored the importance of liquidity management and financing strategy and that the public view of the level of risk in the credit portfolio has a major influence over a bank's opportunities to finance itself.
The overall risk level in Swedbank was further reduced in 2010. Since the end of 2008 the exposure to Eastern Europe has declined by more than SEK 100bn. At the same time corporate lending to other countries (mainly Sweden) has been reduced by about SEK 60bn, while Swedish residential mortgage lending has increased by about SEK 65bn. As a result, the credit risk has been reduced significantly. Moreover, the bank's funding and liquidity situation has improved, its need for unsecured funding has declined by about SEK 150bn. The average duration of its capital market funding has been extended. Measures to clarify Swedbank's risk appetite toward the Board of Directors and the CEO were a priority during the year. Within the credit organisation, processes have been developed to determine levels of risk that will improve control of the loan portfolio. In addition, methods to connect the bank's assets and liabilities from a risk standpoint have been refined.
Measures introduced in 2009 to reduce risks in the Group continued in 2010. This was primarily done by reducing the Group's lending outside Sweden, i.e. in the Baltic countries, Ukraine and Russia. Risk reduction continued more selectively in 2010 as the bank's credit quality stabilised. Corporate lending in Sweden decreased in 2010, but the slowdown gradually eased during the year. At the same time lending continued to increase in segments with historically lower risk, especially residential mortgage lending in Sweden.
As the situation has stabilised and improved, Swedbank has become more willing to selectively increase its corporate lending, primarily in the Nordic region as well as in certain areas in the Baltic countries. Demand in the Baltic countries
remains limited, however, while the Swedish market is showing signs of higher activity.
Swedbank's mortgage loans in Sweden are the part of the credit portfolio that generated the strongest growth in 2010. Swedish mortgage regulations were tightened during the year when the Swedish Financial Supervisory Authority introduced a mortgage cap of 85 per cent of a property's value. Although its credit policy was already restrictive, Swedbank further tightened its mortgage requirements in December 2010 in addition to the SFSA's new rules. For example, the interest expenses households must be able to afford in relation to current interest rates and the amortisation requirements on second mortgages were both raised. More than half of Swedbank Mortgages' customers amortise their first mortgages. The repayment rating score of customers who were granted mortgages in 2009 and 2010 is higher on average than between 2004 and 2008.
Swedbank measures the customers' repayment ability with an internal rating. In Sweden, the internal rating improved among corporate customers during the latter part of the year. In the Baltic countries, the internal rating declined in early 2010, but stabilised during the second half of the year.
A number of stress tests conducted during the year showed that the bank as a whole and its credit portfolio are highly resilient to a major slowdown in economic conditions. In its Internal Capital Adequacy Assessment Process (ICAAP) for 2010, Swedbank exceeded the minimum required core Tier 1 capital ratio by a significant margin. The Committee of European Banking Supervisors' (CEBS) stress tests of European banks came up with similar results for Swedbank as well as for other major Swedish banks. In addition to these stress tests, Swedbank conducted a number of internal tests. In terms of real estate, the bank tested its Swedish mortgage portfolio and portfolio for commercial properties, which resulted in low credit impairments.
Impaired loans decreased in 2010 in all three Baltic countries as well as in Russia and Ukraine. The trend was most evident during the second half-year as impaired loans declined due to amortisations by customers, restructurings and write-offs. The lower intake of new impaired loans, along with the fact that the bank has now worked its way through the entire credit portfolio, especially its high-risk commitments, affected FR&R's work, which is being adapted to the improved credit quality.
Credit impairments decreased significantly in the Baltic countries in 2010, with a gradual improvement during the year. In Russia and Ukraine, net recoveries were made throughout 2010, which contributed positively to results in these countries. This was due to improved macroeconomic conditions as well as active efforts to deal with problem loans. Impaired loans as well as credit impairments in the Swedish operations remained very low.
The bank is improving its management of the credit portfolio. A unit for this purpose was established during the year, and processes have been developed to set risk-taking levels in relation to the bank's risk appetite. This is being done through restrictions to reduce the exposure to various types of risk as well as by implementing processes to mitigate excessive risk-taking. Another measure to improve credit quality has been the continued focus on risk-adjusted return on capital (RAROC).
In 2010 efforts to harmonise Group-wide rules and work processes within the bank continued. To improve and adapt the credit approval process to the new business structure, a new credit committee structure was created during the year. In this new structure, duality is ensured between units engaged in restructuring work (FR&R) and the credit organisation in connection with FR&R cases.
Swedbank's market risks are considered low. Its dominant market risks are of a structural or strategic nature and relate primarily to interest rate risk in Swedbank's lending operations and to currency risk tied to Swedbank's holdings in the Baltic countries, Russia and Ukraine. Devaluation risk decreased during the year in pace with the recovery in the Baltic countries. When the Estonian currency (EEK) was converted to EUR in January 2011, the bank's open currency position decreased, which also meant a lower capital requirement for market risks. Swedbank's trading operations generated a good result owing to successful risk assumption and solid earnings in customer-related trading.
The creditworthiness problems faced by a number of European governments in 2010 created concern in the international financial markets. In contrast, Sweden's position in credit markets improved thanks to the government's robust, well-balanced finances. Together with other Nordic market participants, Swedbank has withstood the turbulence and benefitted from operating primarily in the Nordic markets. The improved quality of its assets, the reduction in risk-weighted assets and a strong capital base significantly reduced the bank's risk level during the year. Swedbank strengthened its liquidity by continuing to expand its liquidity reserve and extending the average maturity of all capital market funding. Swedbank decided to leave the state guarantee program in April 2010, but has not issued any funding through the programme since the summer of 2009. In late 2010 the rating agency Moody's placed Swedbank AB and Swedbank Mortgage AB on review for a possible upgrade.
Swedbank issued a total of SEK 265bn in long-term debt instruments in 2010. The bank has remained active in several capital markets in order to diversify its funding. The large part of the issues was covered bonds. In total, 10 public issues were offered on international markets, including four covered bond issues in the euro market, five covered bond issues in the Swiss market and one senior unsecured bond issue in the euro market. Issues were also offered on a continuous basis in the Swedish market. In addition to the public issues, private placements in various currencies and maturities were arranged.
Total maturities in 2010 had a nominal value of SEK 137bn. Over the course of the year the bank continued to refinance maturing covered bonds in advance in the Swedish market.
The average maturity of all capital market funding, including short-term funding and interbank deposits, was extended from about 22 months as of 31 December 2009 to 27 months as of 31 December 2010. The average maturity of the covered bonds was 38 months.
In 2011 a total of SEK 180bn in nominal long-term funding expires, of which SEK 80bn relates to funding arranged
through the state guarantee programme. Maturities in the Swedish covered the bond market amount to SEK 71bn. In addition, a nominal SEK 7bn subordinated funding is maturing or will be redeemed in advance.
At year-end Swedbank had a liquidity reserve of about SEK 369bn, of which SEK 109bn consisted of AAA-rated liquid instruments and deposits in central banks. About SEK 200bn of the reserve was the unutilised portion of the collateral pool for covered bond issues. In addition to its liquidity reserve, the bank maintains significant liquidity in the interbank market. All securities in the reserve can be pledged to central banks.
When evaluating its liquidity situation, the bank analyses not only the liquidity reserve but also a survival period in a stress scenario. The survival period is defined as a period of time with positive cumulative cash flows and takes into account the Group's total contractual cash flows. As of 31 December 2010 the bank had a sufficient liquidity buffer to meet its cash flows for more than 24 months. In calculating the survival period, it is assumed that the bank does not have access to the capital markets, i.e. no long- or short-term debt can be issued or refinanced. The calculations also include cash flows from the Group's holdings of securities that are liquid on capital markets and eligible for refinancing with central banks.
The aggregated risk level in the Group remained higher than normal during 2010. The main reasons were extensive organisational changes, risks in the Swedish IT operations and external risks, primarily in Eastern Europe. Extensive measures to reduce the risk level have been successful. In 2011, the risk level is expected to normalise.
Two major incidents occurred during the year. In May Swedbank discovered a case of large-scale fraud in Estonia. The loss amounts to SEK 68m. In November an extensive computer disruption occurred which mainly affected Swedbank's Swedish systems (including branch systems, ATMs, card systems and the Internet bank). When the disruption occurred, the bank's crisis groups and backup routines were activated. Customers were indemnified. Swedbank has since made a thorough review, and improvement needs have been identified.
A number of external events during the year had a limited impact on the bank, including the ash cloud from the volcano in Iceland, increased terrorist threats against, e.g. Sweden and temporary changes in travel recommendations from the Swedish Ministry for Foreign Affairs. All these events were handled within the bank's ordinary routines.
Swedbank is working proactively with security work and continuity planning to raise the level of protection and its ability to handle extraordinary events. Swedbank's crisis groups conducted crisis management exercises in 2010.
Major macroeconomic changes have an impact on all banks. It is not possible to fully guard against such changes by means of a sound risk culture and good risk management. The financial crisis has dramatically changed how supervisory authorities, ratings agencies and debt investors view banks' capitalisation, e.g.:
To ensure that the bank functions well even under such conditions, Swedbank maintains an extra capital buffer in addition to that required by law. Capital planning and efforts to sustain satisfactory capitalisation are decisive in being able to maintain the market's confidence in the bank and consequently in retaining access to financing in the capital market. Swedbank conducts stress tests to identify the potential effects of possible, though unlikely, negative scenarios and to assess whether the capital buffer is satisfactory at any given point in time. The bank also initiates measures to manage or mitigate the negative effects.
To maintain sustainable financial stability in the balance sheet Swedbank's capital targets and capital planning is focusing on core Tier 1 capital (equity less certain deductions), while subordinated loans can be viewed more as protection for debt investors (and taxpayers) in the event of liquidation. The level of non-core capital will therefore be a function of the equity buffer that the bank feels it needs to ensure financial stability even in an adverse scenario.
In the beginning of 2011, Swedbank's board decided that tha Group's long-term risk profile shall be managed so that the core Tier 1 ratio impact from a severely stressed scenario, defined in the annual Internal Capital Adequacy Assessment Process (ICAAP), shall be no more than three percentage points.
Based on the Group's risk appetite, the Board of Directors also, in their financial targets, decided on a long-term target for the core Tier 1 ratio of 10 per cent, which is deemed sufficient to withstand a severely stressed scenario (ICAAP), while also securing the bank's access to wholesale funding.
Due to current uncertainties in the economic and regulatory environments, the bank will maintain a core Tier 1 ratio above 13 per cent until 2013.
In Swedbank's financial companies group, core Tier 1 capital increased by SEK 3.0bn to SEK 75.5bn during the year. Following the redemption of hybrid loans during the first quarter, hybrid capital decreased by SEK 2.3bn to SEK 6.9bn, and accounted for 8 per cent of Tier 1 capital at year-end 2010. Tier 2 capital decreased by SEK 5.9bn to SEK 20.2bn due to redemptions and repurchases of undated and fixed-term subordinated loans. The decrease in subordinated liabilities, i.e. hybrid capital and Tier 2 capital, is an element in the active efforts to manage Swedbank's capital structure and is consistent with the bank's focus on core Tier 1 capital to ensure the long-term stability of its balance sheet.
The core Tier 1 capital ratio according to Basel 2 increased to 13.9 per cent as of 31 December (12.0 per cent on 31 December 2009) and the Tier 1 capital ratio improved to 15,2 per cent (13.5). The capital adequacy ratio was 18.4 per cent (17.5). According to the transition rules, the core Tier 1 capital ratio was 10.1 per cent (9.2), the Tier 1 capital ratio was 11,0 per cent (10.4) and the capital adequacy ratio was 13.3 per cent (13.5).
Risk-weighted assets decreased by SEK 62bn or 10 per cent from the beginning of the year to SEK 541bn. This was mainly due to a decrease in risk-weighted assets for credit risks of 12 per cent, or SEK 63bn, of which SEK 25bn relates to corporate exposures in the Swedish operations and SEK 22bn to corporate exposures in the Baltic operations. Lower exposure volumes, migration between risk classes and new defaults contributed to the decrease. Of the total change in risk-weighted volumes, SEK -25.6bn is due to exchange rate effects.
Two main developments affect Swedish financial institutions and financial markets. The first is Basel 3, a set of regulations developed by the Basel Committee and the Financial Stability Board to avoid a new banking crisis. A stronger capital base with more capital of higher quality than currently required and explicit requirements on the bank's liquidity reserves and funding profile are the major building blocks of the framework, which will be phased in over six years starting in 2013.
The second area is the development of a single financial market within the EU. This encompasses harmonised banking, insurance and financial regulations and the development of new EU institutions for comprehensive oversight of the financial system and coordinated supervision. The integration has accelerated in recent years, as a consequence of which the implementation of Basel 3 is primarily being driven by the EU institutions.
The final proposal for Basel 3 was announced in December. Due to increased capital requirements for trading books and counterparty risks, Swedbank's RWAs are expected to increase by nearly 3 per cent under Basel 3 compared with Basel 2. Changes in the core Tier 1 capital calculation, primarily related to non-controlling interests, investments in the common shares of unconsolidated financial institutions and deferred tax assets are expected to reduce the Group's core Tier 1 capital by less than 1 per cent.
The estimated negative impact on Swedbank's core Tier 1 should not exceed 0.5 percentage points. Swedbank does not regard the proposed leverage ratio as a de facto restriction on its capital planning.
Swedbank's purpose is to promote a sound and sustainable financial situation for the many households and businesses. The inclusion of sustainability in the bank's purpose is just as much a reflection of its history as a declaration for the future. With roots in the Swedish savings bank movement and agricultural credit societies, Swedbank has a strong tradition of corporate social responsibility and ethical standards.
Swedbank's sustainability work is manifested in, among other things, its lending to private customers. As a bank for the many households and companies, we have a responsibility to clarify any risks that could affect our customers' long-term finances. In spring 2009 we therefore introduced stricter requirements on loan-to-value ratios for mortgages and took part in the debate on risk-taking by customers who borrow to buy their homes. As a result of this debate, we have seen a shift in customer behaviour towards longer fixed rate periods and a greater willingness to amortise.
For several decades the Personal Finance Institute in Sweden has analysed personal finance issues and in various ways provided information to the public in this area. In 2010 similar institutes were established in Estonia, Latvia and Lithuania. The operations have the same purpose in all four of the bank's home markets: to analyse factors that affect private finances from an individual and household perspective and educate people. The institute's vision is to help people improve their private finances by better understanding their needs and opportunities at different stages of life.
Unemployment among young people has risen in the wake of the financial crisis at the same time that the gap between young people entering the job market and older workers facing retirement is expected to grow in the 2010s. During the year Swedbank and the savings banks therefore launched an initiative called Young Jobs to utilise their extensive network of contacts to offer trainee positions to young people between the ages of 18 and 24. Through the initiative, Swedbank encourages all its branch managers to identify trainee opportunities at their own branches as well as with the bank's business customers. Since the start, the initiative has resulted in 1 500 trainee positions with outside companies and 150 within Swedbank.
Swedbank's strong local presence and tradition of social responsibility often give it a central position in local business development. One example of how the bank supports local businesses is Arena for Growth, an alliance with Sweden's municipalities and county councils as well as ICA supermarkets. Arena for Growth promotes local and regional growth through knowledge transfers and by offering process support. All projects are demand driven and are owned by the principals. Since its start ten years ago, Arena for Growth has conducted activities of various sizes in around 150 of Sweden's 290 municipalities.
Swedbank Robur is a Nordic leader in socially responsible investing. Thanks to the attention it gave to research and asset management early on, the company today is able to offer a wide range of products that emphasise responsible business and environmental technology. Swedbank Robur's socially responsible funds offer investments in companies that have clearly demonstrated that they can manage social, ethical and environmental risks.
Swedbank Robur has signed the UN's global Principles for Responsible Investments (PRI). This requires it to contribute to greater transparency on environmental and social issues as well as in terms of corporate governance in the companies in which it invests. Swedbank Robur's stance on responsible business is also expressed in its ownership policy.
Swedbank Robur decided in August 2010 that its socially responsible funds will not invest in companies that extract oil from tar sands, since it does not consider the current technology a sustainable alternative.
The financial sector plays a decisive role in mitigating climate change and designing solutions for sustainable development. The financial industry evaluates and prices risks and is an important channel for investment. Swedbank has been working actively for many years to take responsibility for the environment, which also is part of the bank's business.
Swedbank's private customers in Sweden are offered loans on beneficial terms for investments in energy savings. Corporate customers are offered loans for eco-friendly cars. During 2009 and 2010 private customers in Estonia were offered loans on beneficial terms to buy energy efficient homes. For Swedbank's corporate customers, all loans over SEK 1m must first undergo a systematic sustainability analysis. More than 250 000 analyses are conducted annually. The bank's Swedish operations present an annual sustainability award. In 2010 Inrego which recycles and resells personal computers received the award.
Through its WWF affinity card, Swedbank donates SEK 0.50 to the WWF every time a customer pays with the card, while the cardholder contributes SEK 25 of the annual fee. In total SEK 7.1m was donated to the WWF.
Since 2003, Swedbank has been the first and thus far the only listed bank in the Nordic region to receive ISO 14001 environmental certification. The bank has issued environmental or corporate responsibility reports since 1995. During the years 2000–2003 and 2009–2010 Swedbank utilised the internationally recognised Global Reporting Initiative (GRI) reporting framework. In 2009 an environmental audit of Swedbank's Baltic and international operations was begun using the Group's standard routines. The audit willl continue until 2013. The environmental goals below therefore relate strictly to the Swedish operations. For more information see, www.swedbank.com/csr.
| 2010 | 2009 | 2008 | 2007 | |
|---|---|---|---|---|
| Number of employees in environmental-certified entities | 8 203 | 9 025 | 9 408 | 9 551 |
| Purchases of paper, envelopes and forms (tons) | 557 | 912 | 1 157 | 1 146 |
| Purchases of paper, envelopes and forms (tons CO2e)** | 279 | 456 | 578 | 573 |
| Green electricity (GWh) | 66,8 | 69,3 | 71,1 | 73,6 |
| Electricity consumption as well as cooling and heating, tons CO2e** | 11 761 | 12 201 | 12 484 | 12 975 |
| Travel by air (tons CO2e)** | 8 195 | 8 257 | 7 175 | 6 219 |
| Travel by car (tons CO2e)** | 1 745 | 1 923 | 1 886 | 1 897 |
| Travel by rental car (ton CO2e) | 259 | 301 | 324 | 341 |
| Travel by taxi (ton CO2e) | 229 | 239 | 232 | 245 |
| Travel by train (tons CO2e) | 2 | 2 | 2 | 3 |
| Security transports (tons CO2e)** | 635 | 560 | 406 | 566 |
| Totalt CO2e | 23 105 | 23 939 | 23 087 | 22 819 |
* In addition to electricity consumption charges, this includes an estimation of consumption when Swedbank does not have a contract with the energy provider.
Around two thirds of the contracts Swedbank has signed use only renewable sources.
** Since 2010 the lifecycle emissions of all greenhouse gases are taken into account. Earlier figures have been revised.
*** CO2e, or carbon dioxide equivalents, measure greenhouse gases expressed as the equivalent amount of carbon dioxide.
This is a standard measure that makes it possible to compare the climate impact of various greenhouse gases.
In Sweden, Swedbank has purchased carbon offsets for its business travel in 2009 through the Gold Standard and CDM certified wind power project Yangjiayao in China. In the table, gross emissions are presented without regard to the carbon offsets.
| Product | Product description | 2010 | 2009 | 2008 |
|---|---|---|---|---|
| environmental analysis in connection with loan evaluations |
The bank conducts environmental analyses of every loan over SEK 1m |
277 150 corporate customers |
276 653 corporate customers |
287 400 corporate customers |
| environmental and socially responsible funds |
Evaluations of social, ethical and environmental aspects affect the choice of investments |
SEK 280bn*** | SEK 248bn* | SEK 50bn |
| energy loans | Energy loans offer beneficial terms for investments in energy-saving heating systems, e.g. geothermal or solar |
1 075 loan volume SEK 80m |
916 loan volume SEK 69m |
818 loans volume SEK 60.7m |
| WWf affinity card | Part of the annual fee and a contribution from the bank go to WWF |
SEK 7.1m | SEK 6.6m | SEK 5.8m |
* Total number of corporate customers in Swedish operations.
** Volume increase mainly due to good returns, the acquisition of Banco Fonder AB and discretionary asset management assignments.
*** Assets under management in funds with extensive corporate responsibility and sustainability requirements slightly exceeded SEK 26bn.
Ensuring that Swedbank has the right competencies is one of the most important issues going forward. The challenge is also to reposition the focus of the organisation from products to advisory services for customers. In this process, the ability to maintain commitment, focus and motivation in our employees is based on their understanding of the bank's purpose and strategies.
Swedbank implemented a new business model in 2010 with a clearer focus on advisory services. The purpose of the model is to place decision-making authority as close to each transaction and customer as possible. It is based on decentralisation with clearer job descriptions and delegation of authority and responsibility. This management model contains clear goals and strategies and places new demands on leadership and competence among employees. The change in management structure that began in 2009 to place decision-making authority closer to customers has now been implemented through much of the bank. Substantial work to formulate new job descriptions and clarify responsibilities for employees on other levels has also begun. The goal is an organisation that quickly and effectively responds to changes in customer needs and market conditions.
An important aspect in developing the new business model has been the strategic work on Swedbank's values initiated in 2009. Three words – simple, open and caring – are the core of the new values and come from our employees, who have shared their opinions and ideas through surveys, which then served as the basis of a new platform comprising the bank's vision, purpose and values. The Board of Directors approved the new values last summer, and implementation began in the fall with the help of ambassadors throughout the organisation.
As a bank where customer relationships and advice hold centre stage, it is important that our employees are attentive to customers' needs and wishes, and not focus solely on the bank's products. The goal is even more involved and committed employees, who take a holistic approach to the customer's situation. Employees have to understand how this role is tied to the bank's purpose and future challenges and how they personally add value in working to achieve its overarching goals. To ensure consistency and help employees in their daily work, a code of conduct has been established that contains guidelines on how we expect our employees to act with customers and with each other. Training in the code of conduct will be offered online and in dialogue between employees and their managers in 2011.
As an element in the strategic work and the shift to a more decentralised business model, we analysed current competencies in the organisation during the year and identified skills and recruitment needs going forward. Previous management
development programmes have been evaluated, and a new programme more focused on values and communicative leadership will be implemented for all managers in the bank in 2011.
Swedbank's home markets – Sweden and the Baltic countries – are in different stages of the economic cycle, which poses different HR challenges. In Sweden, one of the big challenges in the years ahead will be to replace the large generation of those born in the 1940s who are coming into retirement . This has increased competition for manpower in the market. In the Baltic countries, the competition is already significant despite widespread unemployment. In the wake of the recent recession, many well-educated, working age people have left the Baltic countries for better opportunities outside the region. At the same time the regional banking and financial sector is growing, unlike the more mature Swedish market. This adds to the difficulties in finding people with the right education.
Successful recruiting and an effective recruiting process are vital to Swedbank's continued success. It is important that we identify the competencies essential to the bank's development in our various markets and adapt our messages accordingly. To increase our attractiveness as an employer and reach out to future employees, we utilise various social media. During the year a function was established within the leadership development unit that will work actively to seek out key competencies within and outside Swedbank, in Sweden, Estonia, Latvia and Lithuania.
Successful HR work means more than just attracting the right talents but also retaining your best people. Swedbank is convinced that employees with ability, desire and conviction produce lasting results and a positive atmosphere where people flourish. We are creating a stimulating work environment where initiative, openness and taking responsibility are encouraged. At a time when financial products are becoming more generic, we will attract our customers with competence, consideration and sustainable advice.
Opportunities for employees and their managers to perform well and develop on the job are created through continuous monitoring and goal-oriented employee reviews. Every employee should feel that they have the potential to realise their goals within the bank. Swedbank offers a large internal
job market with good development opportunities. In 2010 job rotation among managers and specialists increased and more of the bank's employees gained international skills by working across borders. This benefits the bank as well as the individual employees.
To inspire young employees of Swedbank to discuss career issues and develop as individuals, they have access to a network called Young Professionals, where they can make new contacts, build a network and learn more about the bank.
For the fifth consecutive year the employee survey Voice was conducted throughout the Group (excluding Swedbank Robur in 2010). The rating of 786 (776) was the best since Swedbank began conducting the survey. The average in Europe's financial sector was 700. The survey showed that confidence in management has increased and that employees feel more motivated. The response rate among all 17 000 employees was 88 per cent, slightly better than the previous year.
Swedbank considers diversity and gender equality to be success factors and a natural part of its operations. We strive to maintain an even distribution between women and men with different experience and backgrounds. One example is the Swedish Telephone Bank, where around 30 languages are spoken. Cultivating differences among employees creates an environment where everyone has an opportunity to maximise their full potential. This is a competitive advantage that supports Swedbank's goal to be a force for good in society. In 2010 Swedbank ranked highest among Swedish banks in the insurance company Folksam's annual gender equality Index. The award confirms that the bank has a diverse staff in terms of gender, age and education as well as adequate job rotation among various positions in both the Group Executive Committee and the Board of Directors. Swedbank has also received the Anna Collert gender equality award, which is presented to a company in the financial services industry for outstanding work in supporting gender equality.
Swedbank actively participates in various networks for young people and students. This creates important contacts while also giving us the opportunity to support young people in their development and career choices. In partnership with
the Savings Banks, Swedbank launched an initiative called Young Jobs in 2009. see page 42. In the Baltic countries we support a programme for young entrepreneurs that was among the first to distribute economic textbooks in the region. In Estonia and Latvia the bank also supports students who want to teach in areas with deprived children as part of the project Teach First. In Universum's annual Corporate Barometer survey, Swedbank ranked fifth among the top choices of Swedish students, best in the industry for the year.
| Group | 2010 | 2009 |
|---|---|---|
| Average number of employees | 19 542 | 22 350 |
| Number of employees at year-end | 20 639 | 21 770 |
| Number of full-time positions | 17 224 | 19 277 |
| Absenteeism, % * | 2.8 | 3.1 |
| Long-term healthy employees, % * | 77.1 | 74.8 |
| Employee turnover Swedish Banking, % | 7.9 | 6.7 |
| Employee turnover Large Corporates & Institutions, % | 9.5 | 8.2 |
| Employee turnover Baltic Banking, % | 11.1 | 16.0 |
| Employee turnover Russia & Ukraine, % | 44.2 | 26.0 |
| Employee turnover Asset Management, % | 5.0 | 3.4 |
| Employee turnover Shared Services, % | 6.7 | 4.5 |
| Total employee turnover, % | 15.7 | 13.9 |
* Refers to the Swedish operations.
| Results of VOICE survey | 2010 | 2009 | 2008 |
|---|---|---|---|
| Swedish Banking | 783 | 785 | 781 |
| Large Corporates & Institutions | 764 | 782 | 782 |
| Baltic Banking | 831 | 796 | 737 |
| Russia & Ukraine | 718 | 694 | 694 |
| Swedbank Robur | n.a. | 744 | 722 |
| Group Business Support | 753 | 800 | n.a. |
| Group functions | 770 | 803 | n.a. |
| Internal audit | 730 | 710 | n.a. |
| Average Swedbank | 786 | 776 | 752 |
| Financial sector average (Europe) | 700 | 700 | n.a. |
| Best performers | 820 | 820 | n.a. |
Managers in Swedbank 2010
Group employees by age and gender, 31 December 2010
Following the financial crisis Swedbank's Board of Directors has focused a great deal on the question of variable remuneration and its impact on the bank's results and risk-taking. In 2010 the Board approved extensive changes to the bank's performance-based remuneration programme, which converts a portion of variable remuneration to restricted shares.
A well-functioning market-based remuneration structure is an important component for stability and sound risk-taking in the bank. A remuneration model should be unambiguous, consistent and performance-based, in addition to creating favourable conditions to recruit and retain talented employees. It should also harmonise the bank's values. The purpose is to encourage results that create value for the bank, our shareholders, employees and customers.
Swedbank realised early on that the variable remuneration systems used in the financial sector were in need of reform. In September 2009 the Board approved a new incentive policy for variable remuneration that took into consideration the bank's long-term business strategy and risk tolerance as well as the interests of shareholders. In January 2010 the Board made an unprecedented decision to revoke all variable remuneration for 2009 against the backdrop of the bank's losses and the need for state support.
On 1 January 2010 the Financial Supervisory Authority's new rules on variable remuneration (FFFS 2009:6) entered into force. During the summer the EU also presented new rules on variable remuneration, which will take effect in Sweden on 1 March 2011. Both sets of rules require, among other things, that a portion of variable remuneration be paid out in shares or other financial instruments. We share the opinion that the shareholders' and the employees' interests are connected, and that incentives that clearly illustrate this connection need to be developed. Based on these new rules, the Board in August 2010 approved a new performance and share based remuneration programme, called Programme 2010. It applies retroactively as of 1 January 2010 pending the approval of the 2011 AGM. With this new programme, which replaces older programmes, we go further than regulations require – e.g. by deferring the share based portion for those who both qualify as risk-takers and those who do not. The
goal has been to combine regulatory requirements with our values, which serve as part of the qualitative evaluation cri teria. For more information on the programme, see note G14.
Programme 2010 covers around 6 400 participants, who are evaluated based on predetermined performance targets. In Programme 2011 around 10–20 per cent of employees will be evaluated based on predetermined individual performance targets, while broader personnel categories will be covered by a collective variable remuneration programme based on general performance criteria.
The Kopparmyntet profit sharing plan for the bank's Swedish employees is one of the Swedbank's largest shareholders. No contributions will be made to Kopparmyntet for 2010.
fffs 2009:6 prescribes that companies maintain remuneration policies that promote effective risk management and avoid excessive risk-taking, while specifying which individuals in the company qualify as risk-takers. the rules require that part of the variable remuneration for these risk-takers is deferred and that the company has the option to revoke it.
the financial supervisory authority is expected to clarify and complement its existing rules by directing that corporate remuneration systems integrate risks and introduce a requirement that at least half of the variable remuneration for certain categories of personnel consist of shares or other financial instruments.
2010 was a turbulent year for the NASDAQ OMX Stockholm, where the large part of trading in Swedbank's shares takes place. The A share had a good turnover rate during the year, and interest from international investors grew significantly.
Swedbank has two classes of shares: common shares (A shares) and preference shares. Swedbank's A shares have been listed on NASDAQ OMX Stockholm's Large Cap segment since 1995. The preference shares were issued in connection with the 2008 rights issue. The A and preference shares have equal voting rights. The A shares account for 82 per cent of the total number of shares. In the US, an American Depositary Receipt (ADR) programme has been established together with the investment bank JP Morgan. This allows US investors to invest in Swedbank's A share on the US OTC market without having to register with VPC, the Swedish central securities depository, or buy Swedish kronor.
In 2010 the OMX Stockholm 30 index rose by 21 per cent and OMX Nordic Banks by 23 per cent. Swedbank's A share rose by 32 per cent and its preference share by 36 per cent during the year. At year-end 2010 Swedbank's market capitalisation had increased to SEK 109bn (82). Swedbank was one of the most heavily traded companies on NASDAQ OMX Stockholm during the year, with a turnover rate for the A share of 172 per cent (445 per cent). The turnover rate for NASDAQ OMX Stockholm as a whole was 95 per cent (119 per cent). Since Sweden's stock exchange monopoly was abolished in November 2007, a growing percentage of trading in the Swedbank share takes
place outside NASDAQ OMX Stockholm. In 2010 27.8 per cent of trading turnover in the A share and 17.3 per cent of trading in the preference share took place outside the primary market, of which Boat, Chi-X, Bats Europe and Burgundy were among the marketplaces with the highest turnover. The total turnover in Swedbank's A share was SEK 212bn, while turnover in the preference share was SEK 5.2bn in 2010.
Swedbank's share capital as of 31 December 2010 amounted to SEK 24 351m, distributed among 952 323 439 A shares and 207 266 738 preference shares.
Ethical investors focus on various aspects of a company's sustainability work, including how it handles environmental issues, human rights and risks. There are currently a number of mutual funds and stock indices for companies that meet certain sustainability criteria. Swedbank's A share is listed, for example, on FTSE4Good, an index of ethically responsible and sustainable investments. In 2010 Swedbank received 68 points out of a possible 100 from the Dow Jones Sustainability Index; the industry average was 50.
According to Swedbank's current dividend policy, the dividend shall correspond to around 40 per cent of after-tax profit,
excluding one-off items. The size of the dividend is based on the latest dividend and is determined with reference to expected profit trends, the capital considered necessary to develop operations and the market's required return. All dividends are conditional on the approval of the Annual General Meeting, which requires that distributable funds are available. The Board of Directors has proposed a dividend for the financial year 2010 of SEK 2.10 (0) per A share and SEK 4.80 (0) per preference share. In early 2011 the Board of Directors changed its dividend policy to amount to 50 per cent of profit for the year. The policy was changed against the backdrop of Swedbank's strong capitalisation, expectations of modest credit demand and a continued focus on capital efficiency.
The preference shares have preference to an annual, noncumulative dividend of up to SEK 4.80 per preference share. In the event that there remain funds to be distributed, A shares get a dividend up to the amount preference shares receive. Thereafter, any remaining dividend is divided equally between all shares irrespective of the type. Non-cumulative means that any dividend that is omitted in a particular year
cannot be added to the dividend in subsequent years. Shareholders are free to request that their preference shares be converted to A shares in February and August of each year. All outstanding preference shares will automatically be converted to A shares in 2013. In all, 12 362 751 preference shares were converted to A shares in February 2010 and 7 105 were converted in August.
For more information on conversions, visit www.swedbank. com/ir under the Swedbank share.
As of 31 December 2010 Swedbank had 333 145 shareholders (346 272), 91.5 per cent of whom had holdings of 1 000 shares or less. Just under 0.1 per cent of the shareholders owned slightly over 80 per cent of the company. Swedbank's largest shareholder as of 31 December 2010 was an ownership group consisting of Folksam Försäkring, KPA and Förenade Liv. International ownership in Swedbank increased during the year and now accounts for 34.2 per cent (23.8), of which the US and the UK represent the largest interests at 11.9 and 9.8 per cent, respectively.
| Share statistics | 2010** | 2009** | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|
| Swedbank A (ordinary) | |||||
| High price*, SEK | 99.50 | 77.10 | 148.74 | 226.69 | 202.83 |
| Low price*, SEK | 61.45 | 14.72 | 24.82 | 136.41 | 133.23 |
| Closing price, 31 Dec.*, SEK | 93.80 | 71.00 | 36.73 | 145.56 | 197.66 |
| Daily turnover, millions of shares | 10.7 | 14.5 | 6.5 | 4.1 | 2.9 |
| Daily turnover, SEKm | 838 | 751 | 773 | 949 | 627 |
| Turnover rate, % | 283 | 544 | 302 | 195 | 140 |
| Swedbank preference | |||||
| High price*, SEK | 99.60 | 76.60 | 39.04 | ||
| Low price*, SEK | 62.50 | 14.89 | 35.24 | ||
| Closing price, 31 Dec.*, SEK | 95.90 | 70.50 | 36.73 | ||
| Daily turnover, millions of shares | 0.25 | 0.50 | 0.24 | ||
| Daily turnover, SEKm | 20.4 | 22.3 | 10.7 | ||
| Turnover rate, % | 31 | 45 | 23 | ||
| Market capitalisation, 31 Dec., SEKbn | 109 | 82 | 32 | 94 | 128 |
| ISIN-code: SE0000242455 | |||||
| ISIN-kod Preferensaktien: SE0002687749 |
* Adjusted for rights issue.
** Turnover data include turnover on all marketplaces, including OTC trading.
Source of shareholder statistics: Nasdaq OMX, www.nasdaqomxnordic.com and Fidessa Fragmentation Index, http://fragmentation.fidessa.com/fragulator/
| Data per share, SEK | 2010 | 2009 | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|
| Earnings per share before and after dilution 1) 2) | 6.43 | –10.66 | 16.51 | 18.52 | 16.80 |
| Equity per share before and after dilution | 81.84 | 77.33 | 121.39 | 131.96 | 116.37 |
| Net asset value per share before and after dilution 1) | 81.55 | 79.58 | 125.78 | 129.66 | 115.29 |
| Cash flow per share 1) | 1.45 | 64.56 | –66.15 | 31.70 | –10.86 |
| Cash dividend per ordinary share | 2.10 3) | 0.00 | 0.00 | 9.00 | 8.25 |
| Cash dividend per preference share | 4.80 3) | 0.00 | 0.00 | ||
| Yield, %, ordinary share | 2.2 | 0.0 | 0.00 | 4.9 | 3.3 |
| Yield, %, preference share | 5.0 | 0.0 | 0.00 | ||
| P/E 1) 2) | 14.6 | –6.7 | 2.7 | 7.9 | 11.8 |
| Price/equity per share, % | 114.60 | 91.80 | 36.60 | 138.70 | 213.50 |
1) Since the terms to convert the preference shares to ordinary shares are mandatory, the preference shares are included in the calculation of key ratios .
2) Comparative figures have been restated due to the rights issue. 3) Board of Directors' proposal.
In its capacity as a financial services provider, Swedbank engages in securities operations, including trading in financial instruments on its own account. Here there is a need to acquire the bank's own shares to facilitate operations. Accordingly, the 2010 AGM resolved that the bank, until the 2011 AGM, may acquire its own shares such that the total holding of such shares at any given time does not exceed 1 per cent of all shares in the bank and that this is done at a price corresponding to the market price. In order to effectively manage Swedbank's capitalisation within the bank's risk appetite and capitalisation target the Board has proposed that the AGM 2011 authorise the Board to decide to acquire the Bank's own A and/or preference shares of up to 10 per cent of the total number of shares (including acquisitions of own shares through the securities operations).
During the year the Board of Directors resolved on a new performance- and share-based remuneration programme pending the approval of the 2011 AGM. If so, the programme will apply retroactively to 1 January 2010. See also page 46 and note G14.
Swedbank offers its annual report to all new shareholders and distributes it to those who chose to receive it. Interim reports are not printed, but are available at www.swedbank.se/ir together with other information released in connection with quarterly reports. The annual report can also be ordered from this site.
31 December 2010
Source: Euroclear Sweden AB
| Largest shareholders (grouped according to Euroclear*), 31 December 2010 |
|
|---|---|
| % of capital and votes | 2010 |
| Folksam - KPA - Förenade Liv | 9.3 |
| Sparbanks-Gruppen - Members | 7.4 |
| Swedbank Robur Funds | 4.4 |
| ALECTA PENSIONSFÖRSÄKRING | 3.1 |
| CEVIAN CAPITAL II MASTER FUND L P | 3.0 |
| AMF - Insurance and funds | 2.3 |
| Sparbanks-Gruppen - Foundations - Non-members | 2.3 |
| JPM CHASE NA | 2.0 |
| Nordea Investment Funds | 2.0 |
| FSPA Resultatandelsstiftelser | 1.9 |
| CBLDN-LIVFORSAKRINGSAB SKANDIA (PUBL) | 1.8 |
| Afa Försäkring | 1.8 |
| Handelsbanken funds | 1.6 |
| SEB Investment Management | 1.5 |
| JPM CHASE NA | 1.3 |
| 15 largest shareholders | 45.8 |
| Number of shareholders | 333 145 |
Source: Euroclear Sweden AB
| Number of shareholders, 31 December 2010 | ||||
|---|---|---|---|---|
| Size of holding | No. of shareholders | Share, % | No. of shares | Share, % |
| 1—100 | 151 171 | 45.4 | 7 414 590 | 0.6 |
| 101—500 | 122 548 | 36.8 | 29 113 383 | 2.5 |
| 501—1 000 | 30 951 | 9.3 | 22 650 733 | 2.0 |
| 1 001—2 000 | 15 989 | 4.8 | 22 502 257 | 1.9 |
| 2 001—5 000 | 8 268 | 2.5 | 25 635 585 | 2.2 |
| 5 001—10 000 | 2 033 | 0.6 | 14 672 603 | 1.3 |
| 10 001—100 000 | 1 629 | 0.5 | 45 087 820 | 3.9 |
| 100 001—500 000 | 266 | 0.1 | 63 274 652 | 5.5 |
| 500 001— | 290 | 0.1 | 929 238 554 | 80.1 |
| Total | 333 145 | 100 | 1 159 590 177 | 100 |
Source: Euroclear Sweden AB
| Changes in share capital | Added/ | No. of | ||||
|---|---|---|---|---|---|---|
| Year | Transaction | Quota value per share, SEK |
repurchased shares |
preference shares |
No. of A shares |
Share capital SEKm |
| 1999 | Bonus issue | 20 | 175 936 281 | 527 808 843 | 10 556 | |
| 2004 | Share repurchase | 20 | –14 937 531 | 512 871 312 | 10 556 | |
| 2005 | New share issue | 20 | 2 502 100 | 535 373 412 | 10 606 | |
| 2006 | Withdrawal of shares | 20 | 515 373 412 | 10 307 | ||
| 2006 | Bonus issue | 21 | 515 373 412 | 10 823 | ||
| 2008 | New share issue | 21 | 257 686 706* | 257 686 706 | 515 373 412 | 16 234 |
| 2009 | Conversion of preference | |||||
| shares to ordinary shares | 21 | 38 050 112 | 219 636 594 | 553 423 524 | 16 234 | |
| 2009 | New share issue | 21 | 386 530 059 | 219 636 594 | 939 953 583 | 24 351 |
| 2010 | Conversion of preference | |||||
| shares to ordinary shares | 21 | 12 369 856 | 207 266 738 | 952 323 439 | 24 351 |
* Subscribed and paid preference shares amouted to 194 985 456 at year-end 2008.
| 56 | Note 1 | Corporate information |
|---|---|---|
| 56 | Note 2 | Accounting policies |
| 64 | Note 3 | Risks |
| 64 | Credit risks | |
| 74 | Assets taken over for protection of claims and cancelled leases | |
| 75 | Liquidity risks | |
| 77 | Market risks | |
| 81 | Operational risks | |
| 81 | Other risks | |
| 82 | Note 4 | Capital |
| 82 | Internal capital assessment | |
| 83 | Capital adequacy analysis | |
| 85 | Note 5 | Operating segments |
| 87 | Note 6 | Geographical distribution |
| 89 | Note 7 | Products |
Note 8 Customers
| 91 | Note 9 | Net interest income |
|---|---|---|
| 92 | Note 10 | Net commissions |
| 92 | Note 11 | Net gains and losses on financial items at fair value |
| 93 | Note 12 | Net insurance |
| 93 | Note 13 | Other income |
| 93 | Note 14 | Staff costs |
| 97 | Note 15 | Other general administrative expenses |
| 98 | Note 16 | Depreciation/amortisation of tangible and intangible fixed assets |
| 98 | Note 17 | Impairments of tangible assets including repossessed lease assets |
| 98 | Note 18 | Credit impairments |
| 98 | Note 19 | Tax |
| 101 | Note 20 | Earnings per share |
Note 21 Tax for each component in other comprehensive income
| Balance sheet | ||
|---|---|---|
| 102 | Note 22 | Treasury bills and other bills eligible for refinancing |
| with central banks, etc. | ||
| 102 | Note 23 | Loans to credit institutions |
| 103 | Note 24 | Loans to the public |
| 104 | Note 25 | Bonds and other interest-bearing securities |
| 104 | Note 26 | Financial assets for which the customers bear the investment risk |
| 104 | Note 27 | Shares and participating interests |
| 105 | Note 28 | Investments in associates |
| 106 | Note 29 | Derivatives |
| 107 | Note 30 | Intangible fixed assets |
| 110 | Note 31 | Tangible assets |
| 111 | Note 32 | Other assets |
| 111 | Note 33 | Prepaid expenses and accrued income |
| 111 | Note 34 | Amounts owed to credit institutions |
| 111 | Note 35 | Deposits and borrowings from the public |
| 111 | Note 36 | Financial liabilities for which customers bear the investment risk |
| 111 | Note 37 | Debt securites in issue, etc. |
| 111 | Note 38 | Short positions securities |
| 112 | Note 39 | Pension provisions |
| 114 | Note 40 | Insurance provisions |
| 114 | Note 41 | Other liabilities and provisions |
| 114 | Note 42 | Accrued expenses and prepaid income |
| 114 | Note 43 | Subordinated liabilities |
| 115 | Note 44 | Equity |
| 115 | Note 45 | Fair value for financial instruments |
| 118 | Note 46 | Reclassification of financial assets |
Note 47 Specification of adjustments for non-cash items in operating activities
| 119 | Note 48 | Dividend paid and proposed |
|---|---|---|
| 119 | Note 49 | Assets pledged, contingent liabilities and commitments |
| 120 | Note 50 | Operational leasing |
| 120 | Note 51 | Business combinations |
| 120 | Note 52 | Change in ownership interest in subsidiary |
| 121 | Note 53 | Related parties and other significant relationships |
| 121 | Note 54 | Sensitivity analysis |
| 121 | Note 55 | Events after 31 December 2010 |
| SEKm | Note | 2010 | 2009 |
|---|---|---|---|
| Interest income | 45 869 | 56 399 | |
| Interest expenses | –29 540 | –35 634 | |
| Net interest income | 9 | 16 329 | 20 765 |
| Commission income | 13 099 | 11 397 | |
| Commission expenses | –3 574 | –3 572 | |
| Net commissions | 10 | 9 525 | 7 825 |
| Net gains and losses on financial items at fair value | 11 | 2 400 | 2 770 |
| Insurance premiums | 1 536 | 1 617 | |
| Insurance provisions | –924 | –970 | |
| Net insurance | 12 | 612 | 647 |
| Share of profit or loss of associates Other income |
28 13 |
624 1 554 |
866 1 909 |
| Total income | 31 044 | 34 782 | |
| Staff costs | 14 | 9 392 | 9 201 |
| Other general administrative expenses | 15 | 7 300 | 7 758 |
| Total general administrative expenses | 16 692 | 16 959 | |
| Depreciation/amortisation of tangible | |||
| and intangible fixed assets | 16 | 950 | 889 |
| Total expenses | 17 642 | 17 848 | |
| Profit before impairments | 13 402 | 16 934 | |
| Impairments of intangible assets | 30 | 37 | 1 305 |
| Impairments of tangible assets | 17 | 600 | 449 |
| Credit impairments | 18 | 2 810 | 24 641 |
| Operating profit | 9 955 | –9 461 | |
| Tax expense | 19 | 2 472 | 981 |
| Profit for the year | 7 483 | –10 442 | |
| Profit for the year attributable to: | |||
| Shareholders of Swedbank AB | 7 444 | –10 511 | |
| Non-controlling interests | 39 | 69 | |
| SEK | 2010 | 2009 | |
| Earnings per share | 20 | 6.43 | –10.66 |
| SEKm Note |
2010 | 2009 |
|---|---|---|
| Profit for the period reported via income statement | 7 483 | –10 442 |
| Exchange differences, foreign operations | –4 218 | –1 852 |
| Hedging of net investments in foreign operations: | ||
| Gains/losses arising during the period | 2 420 | 1 312 |
| Cash flow hedges: | ||
| Gains/losses arising during the period | 149 | –574 |
| Reclassification adjustments to income statement,net interest income | 806 | 817 |
| Reclassification adjustments to income statement, | ||
| net gains and losses on financial items at fair value | 37 | |
| Share of other comprehensive income of associates: | ||
| Exchange differences, foreign operations | –39 | 57 |
| Cash flow hedges | 9 | –15 |
| Income tax relating to components of other comprehensive income 21 |
–890 | –397 |
| Other comprehensive income for the period, net of tax | –1 763 | –615 |
| Total comprehensive income for the period | 5 720 | –11 057 |
| Profit for the year attributable to: | ||
| Shareholders of Swedbank AB | 5 693 | –11 138 |
| Non-controlling interests | 27 | 81 |
| SEKm | Note | 2010 | 2009 | 1/1/2009 |
|---|---|---|---|---|
| Assets | ||||
| Cash and balances with central banks | 17 109 | 37 879 | 29 060 | |
| Treasury bills and other bills eligible for refinancing with central banks, etc. | 22 | 34 924 | 88 724 | 27 978 |
| Loans to credit institutions | 23 | 166 417 | 92 131 | 128 536 |
| Loans to the public | 24 | 1 187 226 | 1 290 667 | 1 287 424 |
| Bonds and other interest-bearing securities | 25 | 96 652 | 81 891 | 105 716 |
| Financial assets for which the customers bear the investment risk | 26 | 100 628 | 78 194 | 51 638 |
| Shares and participating interests | 27 | 6 181 | 9 505 | 6 557 |
| Investments in associates | 28 | 2 710 | 2 740 | 1 987 |
| Derivatives | 29 | 65 051 | 72 969 | 128 055 |
| Intangible fixed assets | 30 | 15 794 | 17 555 | 19 577 |
| Tangible assets | 31 | 5 679 | 3 815 | 3 274 |
| Current tax assets | 1 156 | 881 | 1 718 | |
| Deferred tax assets | 19 | 1 218 | 1 209 | 62 |
| Other assets | 32 | 8 611 | 9 806 | 13 619 |
| Prepaid expenses and accrued income | 33 | 6 325 | 6 721 | 6 489 |
| Total assets | 1 715 681 | 1 794 687 | 1 811 690 | |
| Liabilities and equity | ||||
| Liabilities | ||||
| Amounts owed to credit institutions | 34 | 136 766 | 231 687 | 316 730 |
| Deposits and borrowings from the public | 35 | 534 237 | 504 424 | 508 456 |
| Financial liabilities for which the customers bear the investment risk | 36 | 100 988 | 80 132 | 52 074 |
| Debt securites in issue | 37 | 686 517 | 703 258 | 593 365 |
| Short positions securities | 38 | 34 179 | 40 411 | 53 172 |
| Derivatives | 29 | 65 935 | 72 172 | 116 720 |
| Current tax liabilities | 317 | 1 495 | 1 190 | |
| Deferred tax liabilities | 19 | 1 734 | 720 | 1 769 |
| Pension provisions | 39 | 1 342 | 1 735 | 1 853 |
| Insurance provisions | 40 | 2 100 | 4 160 | 3 734 |
| Other liabilities and provisions | 41 | 14 270 | 12 136 | 18 348 |
| Accrued expenses and prepaid income | 42 | 15 074 | 14 400 | 13 062 |
| Subordinated liabilities | 43 | 27 187 | 37 983 | 44 755 |
| Total liabilities | 1 620 646 | 1 704 713 | 1 725 228 | |
| Equity | 44 | |||
| Non-controlling interests | 138 | 304 | 232 | |
| Equity attributable to shareholders of the parent company | 94 897 | 89 670 | 86 230 | |
| Total equity | 95 035 | 89 974 | 86 462 | |
| Total liabilities and equity | 1 715 681 | 1 794 687 | 1 811 690 |
The balance sheet and income statement will be adopted at the Annual General Meeting on 25 March 2011.
| Equity attributable to shareholders of Swedbank AB | Non-control ling interests |
Total equity | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Exchange differences, |
Hedging of net |
|||||||||
| SEKm | Share capital |
Other contributed equity* |
Non registered shares |
subsidiaries and associates |
investments in foreign operations |
Cash flow hedges |
Retained earnings |
Total | ||
| Opening balance 1 January 2009 | 14 918 | 8 939 | 3 010 | 3 951 | –2 905 | –958 | 59 275 | 86 230 | 232 | 86 462 |
| Dividend | –45 | –45 | ||||||||
| Registration of shares | 1 316 | 1 694 | –3 010 | |||||||
| Rights issue | 8 117 | 6 957 | 15 074 | 39 | 15 113 | |||||
| Costs in connection with rights issue | –438 | –438 | –438 | |||||||
| Contribution | 3 | 3 | ||||||||
| Associates' acquisition of shares in Swedbank AB |
–58 | –58 | –58 | |||||||
| Business disposal | –6 | –6 | ||||||||
| Total comprehensive income for the year | –1 808 | 978 | 203 | –10 511 | –11 138 | 81 | –11 057 | |||
| of which reported through profit or loss | –10 511 | –10 511 | 69 | –10 442 | ||||||
| of which reported through other comprehensive income, before tax |
–1 808 | 1 312 | 266 | –230 | 12 | –218 | ||||
| of which tax reported through other comprehensive income |
–334 | –63 | –397 | –397 | ||||||
| Closing balance 31 December 2009 | 24 351 | 17 152 | 2 143 | –1 927 | –755 | 48 706 | 89 670 | 304 | 89 974 | |
| Opening balance 1 January 2010 | 24 351 | 17 152 | 2 143 | –1 927 | –755 | 48 706 | 89 670 | 304 | 89 974 | |
| Dividend | –75 | –75 | ||||||||
| Share based payments to employees | 31 | 31 | 31 | |||||||
| Associates' acquisition of shares in Swedbank AB |
–50 | –50 | –50 | |||||||
| Associate's disposal of shares in Swedbank AB | 50 | 50 | 50 | |||||||
| Changes in ownership interest in subsidiary | –497 | –497 | –124 | –621 | ||||||
| Contribution | 6 | 6 | ||||||||
| Total comprehensive income for the year | –4 245 | 1 783 | 711 | 7 444 | 5 693 | 27 | 5 720 | |||
| of which reported through profit or loss | 7 444 | 7 444 | 39 | 7 483 | ||||||
| of which reported through other comprehensive income, before tax |
–4 245 | 2 420 | 964 | –861 | –12 | –873 | ||||
| of which tax reported through other | ||||||||||
| comprehensive income | –637 | –253 | –890 | –890 | ||||||
| Closing balance 31 December 2010 | 24 351 | 17 152 | –2 102 | –144 | –44 | 55 684 | 94 897 | 138 | 95 035 |
* Other contributed equity consists mainly of share premiums. Expenses in connection with new share issue includes a positive tax effect of SEK 156m in 2009.
| SEKm | Note | 2010 | 2009 |
|---|---|---|---|
| Operating activities | |||
| Operating profit | 9 955 | –9 461 | |
| Adjustments for non-cash items in operating activities | 47 | 4 969 | 26 624 |
| Taxes paid | –3 368 | –2 204 | |
| Increase/decrease in loans to credit institution | –81 818 | 55 188 | |
| Increase/decrease in loans to the public | 57 969 | –20 765 | |
| Increase/decrease in holdings of securities for trading | 20 965 | –88 307 | |
| Increase/decrease in deposits and borrowings from the public including retail bonds | 68 270 | –2 846 | |
| Increase/decrease in amounts owed to credit institutions | –78 287 | –80 967 | |
| Increase/decrease in other assets | 1 726 | 47 587 | |
| Increase/decrease in other liabilities | –14 243 | –51 509 | |
| Cash flow from operating activities | –13 862 | –126 660 | |
| Investing activities | |||
| Business combinations | –52 | ||
| Business disposals | 140 | 59 | |
| Acquisition of other fixed assets and strategic financial assets | –2 411 | –751 | |
| Disposals of other fixed assets and strategic financial assets | 3 463 | 26 | |
| Cash flow from investing activities | 1 192 | –718 | |
| Financing activities | |||
| Issuance of interest-bearing securities | 261 697 | 332 568 | |
| Redemption of interest-bearing securities | –222 899 | –191 640 | |
| Issuance of certificates etc. | 284 652 | 366 267 | |
| Redemption of certificates etc. | –329 099 | –387 040 | |
| Change in ownership interest in subsidiary | –621 | ||
| New rights issue | 17 252 | ||
| Cash flow from financing activities | –6 270 | 137 407 | |
| Cash flow for the year | –18 940 | 10 029 | |
| Cash and cash equivalents at the beginning of the year | 37 879 | 29 060 | |
| Cash flow for the year | –18 940 | 10 029 | |
| Exchange rate differences on cash and cash equivalents | –1 830 | –1 210 | |
| Cash and cash equivalents at the end of the year | 17 109 | 37 879 |
The cash flow statement shows receipts and payments during the year as well as cash and cash equivalents at the beginning and end of the year. The cash flow statement is reported using the indirect method and is divided into receipts and payments from operating activities, investing activities and financing activities.
Cash flow from operating activities is based on operating profit for the year. Adjustments are made for items not included in cash flow from operating activities. Changes in assets and liabilities from operating activities consist of items which are part of normal business activities, such as loans to and deposits and borrowings from the public and credit institutions, and which are not attributable to investing and financing activities. Cash flow includes interest receipts of SEK 45 835m (55 072) and interest payments of SEK 30 817m (38 817). Capitalised interest is included.
Investing activities consist of purchase and sale of businesses and other fixed assets such as investment properties, owner-occupied properties and equipment, and strategic financial assets. Holdings of interest bearing securities held for maturity as well as share holdings in other companies than subsidiaries and associated companies are recognized as strategic financial assets. During 2010 other tangible assets were acquired to an amount of SEK 2 411m. Holdings of bonds were matured with SEK 3 463m. Also Bergslagens Sparbank AB was sold for SEK 140m. In 2009 financial fixed assets were acquired for SEK 91m. The most significant acquisition was Banco Fonder AB, which was purchased in January for SEK 87m in cash. The acquisition included SEK 35m in cash and cash equivalents, which are netted on the line business combinations. In 2009 shares were sold for SEK 59m in total proceeds. The sales included Privatgirot, SEK 7m; EADR, SEK 2m; and Aktia, SEK 50m.
Cash and cash equivalents consist of cash and balances with central banks, which corresponds to the balance sheet item Cash and balances with central banks. Cash and cash equivalents are defined according to IAS 7, and do not correspond to what the Group consider as liquidity. In previous financial statements net claim of overnight deposit receivables and overnight deposit liabilities with maturities up to five days, and treasury bills, other bills and mortgage bonds eligible for refinancing with central banks taking into account repos and short-selling also were included. Comparative figures are restated.
All amounts in the notes are in millions of swedish kronor (seKm) and represent carrying amounts unless indicated otherwise. Figures in parentheses refer to the previous year.
the consolidated financial statements and the annual report for swedbank AB (publ) for the financial year 2010 was approved by the Board of Directors and the Ceo for publication on 22 February 2011. the parent Company, swedbank AB, maintains its registered office in stockholm with adress Brunkebergstorg 8 10534 stockholm, sweden. the company's share is traded on the Nasdaq oMX Nordic exchange in stockholm in the Nordic Large Cap segment. the Group offers financial services and products in the home markets sweden, estonia, Latvia and Lithuania. the operations are described more extensively in the Board of Directors' report.
the consolidated financial statements and the annual report will ultimately be adopted by the parent Company's Annual General Meeting on 25 March 2011.
| 1 | BAsIs oF ACCouNtING | 56 |
|---|---|---|
| 2 | CHANGes IN ACCouNtING poLICIes | 56 |
| 3 | sIGNIFICANt ACCouNtING poLICIes | 57 |
| 3.1 | presentation of financial statements (IAs 1) | 57 |
| 3.2 | Consolidated financial statements (IFrs 3, IAs 27) | 57 |
| 3.3 | Assets and liabilities in foreign currency (IAs 21) | 57 |
| 3.4 | Financial instruments (IAs 32, IAs 39) | 57 |
| 3.5 | Financial instruments, recognition (IAs 39) | 58 |
| 3.6 | Leases | 59 |
| 3.7 | Associates (IAs 28) | 59 |
| 3.8 | Joint ventures (IAs 31) | 60 |
| 3.9 | Intangible assets (IAs 38) | 60 |
| 3.10 | tangible assets (IAs 2, 16, 40) | 60 |
| 3.11 | Borrowing costs (IAs 23) | 60 |
| 3.12 | provisions (IAs 37) | 60 |
| 3.13 | pensions (IAs 19) | 60 |
| 3.13 | Insurance contracts (IFrs 4) | 60 |
| 3.15 | revenues (IAs 18) | 60 |
| 3.16 | share-based payment (IFrs 2) | 60 |
| 3.17 | Impairment (IAs 36) | 61 |
| 3.18 | tax (IAs 12) | 61 |
| 3.19 | Cash and cash equivalents (IAs 7) | 61 |
| 3.20 | operating segments (IFrs 8) | 61 |
| 4 | NeW stANDArDs AND INterpretAtIoNs | 61 |
| 5 | CrItICAL ACCouNtING JuDGMeNts AND estIMAtes | 62 |
| 5.1 | Judgments | 62 |
| 5.2 | estimates | 62 |
the financial reports and the consolidated financial statements are prepared in accordance with the International Financial reporting standards (IFrs) as adopted by the eu and interpretations of them. the standards are issued by the International Accounting standards Board (IAsB) and the interpretations by the International Financial reporting Interpretations Committee (IFrIC). the standards and interpretations become mandatory for listed companies' consolidated financial statements concurrently with their approval by the eu. Complete financial reports refer to:
• notes, comprising a summary of significant accounting policies and other explanatory information.
the consolidated financial statements also apply recommendation rFr 1 Complementary accounting rules for groups, issued by the swedish Financial reporting Board, the pronouncements of the swedish Financial reporting Board, certain complementary rules in the Annual Accounts Act for Credit Institutions and securities Companies and the regulations and general advice of the swedish Financial supervisory Authority, FFFs 2008:25.
the financial statements are based on the historical cost basis. subsequent measurements of financial instruments are mainly made at fair value. the carrying amounts of financial assets and liabilities subject to hedge accounting at fair value have been adjusted for changes in fair value attributable to the hedged risk. the financial statements are presented in swedish kronor and all figures are rounded to millions of kronor (seK m) unless indicated otherwise.
In 2008 IAsB issued a revised IFrs 3 Business Combinations and an amended IAs 27 Consolidated and separate Financial statements, IAs 28 Investments in Associates and IAs 31 Interests in Joint Ventures. the amendments were adopted by the eu 2009 and will be applied at the latest to acquisitions of ownership interests in financial years beginning on or after 1 July 2009.
the revised standard IFrs 3 continues to require application of the purchase method to business combinations, but with several significant changes. For example, all the costs associated with acquiring a business are recognised at fair value on the acquisition date, including any contingent consideration initially recognised as a liability and subsequently revalued with its effect on profit or loss. Holdings that do not affect control in the acquired business can be valued for each acquisition at either fair value or the proportionate share of the acquired business's net assets. According to the revised standard, all acquisition-related costs will be expensed, whereas in the previous policies such costs increased the cost of the acquired business. the amendments to IAs 27 continue to require that changes in ownership interests in subsidiaries where the majority owner does not lose control are recognised as equity transactions with owners, i.e., in equity. the standard also states that when a parent company loses control, its remaining ownership interest must be re-measured at fair value and any gain or loss recognised through profit or loss. the amendments to the standards are not applied retroactively, because of which restatements were been permitted.
swedbank did not make any acquisitions in 2010, due to which the revised IFrs 3 did not have any effect on the Group's financial reports for 2010. However, the Group did apply the amendments to IAs 27 in 2010 in connection with swedbank AB's acquisition of interests without control in the subsidiary First securities As. the acquisition, amounting to seK 621m, has been recognised in accordance with the new rules in IAs 27 as an equity transaction with owners. this reduced retained earnings in equity attributable to the parent Company's shareholders, with seK 497m. According to the previous accounting policies, a corresponding item would have instead been recognised as an increase in goodwill. the effects of the acquisition are shown in note G52. other new, revised or amended standards from IAsB or interpretations from IFrIC
have not had any effect on the Group's financial reports.
swedbank has previously presented the financial reports for the Group and the parent Company beside each other. Beginning with the 2010 annual report, the financial reports for the Group and the parent Company are instead presented in separate sections, first the Group and then the parent Company. the new presentation is intended to increase clarity and the opportunity to use relevant headings based on the presentation of the Group and the parent Company. As a result, a number of new lines have been added to the consolidated balance sheet for liabilities at the amounts
reclassified from previously presented balance sheet items. Notes to current lines have been adapted. Due to these changes, the balance sheet is also presented at the beginning of the most recent comparative period, i.e., as per 1 January 2009.
the order in which the notes are listed has also been changed in the 2010 annual report. Notes relating to risk and capital disclosures have generally been moved to the beginning, while those that are not directly related to individual balance sheet or income statement items have been shifted to the end. the notes have also been revised and complemented to some extent in order to improve information disclosures.
In the financial statements from December 2008 certain debt issuances subject to hedging instruments were incorrectly presented in the notes as held-for-trading. these should have been disclosed as designated as hedged items in fair value hedge relationships. Despite the presentation in the notes to the financial statements, these transactions were properly accounted for and therefore this reclassification did not have any effect on profit or loss, balance sheet or equity. Accordingly, the comparative information has been reclassified as necessary.
| 2009-01-01 |
|---|
| 71 335 |
| 5 772 |
| 77 107 |
Financial statements provide a structured representation of a company's financial position and financial results. the purpose is to provide information on the company's financial position, financial results and cash flows useful in connection with financial decisions. the financial statements also indicate the results of management's administration of the resources entrusted to them. Complete financial statements consist of a balance sheet, statement of comprehensive income, statement of changes in equity, cash flow statement and notes. Swedbank presents the statement of comprehensive income in the form of two statements. A separate income statement contains all revenue and expense items in profit provided that a special IFrs does not require or allow otherwise. such other revenue and expense items are recognised in other total comprehensive income. the statement of comprehensive income contains the profit recognised in the income statement as well as the components included in other total comprehensive income.
the consolidated financial statements comprise the parent Company and those entities (including special purpose vehicles) in which the parent Company has control, i.e., the power to govern a company's financial and operating strategies to obtain economic benefits. these entities, subsidiaries, are included in the consolidated financial statements in accordance with the purchase method from the day that control is obtained and are excluded from the day that control ceases. According to the purchase method, the acquired unit's identifiable assets, liabilities and contingent liabilities that satisfy the recognition criteria are recognised and valued at fair value upon acquisition. the surplus between the cost of the business combination, transferred consideration measured at fair value on the acquisition date, and the fair value of the acquired share of identifiable assets, liabilities and reported contingent liabilities is recognised as goodwill. If the amount is less than the fair value of the acquired company's net assets, the difference is recognised directly through profit or loss. the transferred consideration (purchase price) includes the fair value of transferred assets, liabilities and shares which, in applicable cases, have been issued by the Group as well as the fair value of all assets or liabilities that are the result of an agreement on contingent consideration. Acquisition-related costs are recognised when they arise. For each acquisition, the Group determines whether all non-controlling holdings in the acquired company should be recognised at fair value or at the holding's proportionate share of the acquired subsidiary's net assets. A subsidiary's contribution to equity includes only the equity that arises between acquisition and disposal. All intra-Group transactions and intra-Group gains are eliminated.
transactions with non-controlling owners are recognised as equity transactions with the Group's owners. In the case of acquisitions of interests from non-controlling owners, the difference between the price paid for the interests and the acquired share of the carrying amount of the subsidiary's net assets is recognised in equity attributable to the parent Company's shareholders as retained earnings. the carrying amounts of holdings with and without control are adjusted to reflect the changes in their relative holdings. Gains and losses on the sale of interests to non-controlling owners are also recognised in equity. If, following a sale of its interests, the Group no longer has control, its remaining holding is revalued at fair value and the change is recognised in its entirety through profit or loss. this fair value subsequently serves as the cost of the remaining holding in the former subsidiary for reporting purposes. All amounts related to the divested unit that were previously recognised in other comprehensive income are
recognised as if the Group directly divested the related assets or liabilities, due to which amounts previously recognised in other comprehensive income may be reclassified as profit or loss. If the interest in an associate is reduced but control is retained, only a proportionate share of the amount previously recognised in other comprehensive income is reclassified as profit or loss.
the consolidated financial statements are presented in seK, which is also the parent Company's functional currency and presentation currency. Functional currency refers to the main currency used in an entity's cash flows. Each entity within the Group determines its own functional currency. transactions in a currency other than the functional currency (foreign currency) are initially recorded at the exchange rate prevailing at the transaction day. Monetary assets and liabilities in foreign currency and non-monetary assets in foreign currency measured at fair value are translated at the rates prevailing at the closing day. outstanding forward exchange contracts are translated at closing day forward rates. Holdings of foreign bank notes are translated at the buying rates for the notes as of the closing day. All gains and losses on the translation of monetary items, including the currency component in forward exchange contracts, and non-monetary items measured at fair value are recognised through profit or loss as changes in exchange rates in net gains and losses on financial items at fair value.
Assets and liabilities in subsidiaries and associates with a functional currency other than seK are translated to the presentation currency at the closing day exchange rate. the income statement is translated at the exchange rate for each transaction. For practical purposes, the average rate for the financial year is generally used. exchange rate differences that arise are recognised in other total comprehensive income. As a result, exchange rate differences attributable to currency hedges of investments in foreign operations are also taken to other total comprehensive income, taking into account deferred tax. this is applied when the requirements for hedge accounting are met. Ineffectiveness in hedges is recognised directly through profit or loss in net gains and losses on financial items at fair value. When subsidiaries and associates are divested, cumulative translation differences and exchange rate differences are recognised through profit or loss.
the large part of the Group's balance sheet items refers to financial instruments. A financial instrument is any form of agreement which gives rise to a financial asset in one company and a financial liability or equity instrument in another.
Cash is an example of a financial asset, while financial liabilities might include an agreement to pay or receive cash or other financial assets. Financial instruments are classified on various lines of the balance sheet such as loans to the public or credit institutions depending on the counterparty. If the financial instrument does not have a specific counterparty when it is listed on the market, it is classified on the balance sheet among various types of securities. Financial liabilities where the creditor has a lower priority than others are classified on the balance sheet as subordinated liabilities. A derivative is a financial instrument that is distinguished by the fact that its value changes, for example, due to exchange rates, interest rates or share prices, at the same time that little or no initial net investment is required. the agreement is settled on a future date. Derivatives are reported on separate lines of the balance sheet, either as assets or liabilities depending on whether the contract has a positive or negative fair value. Contractually accrued interest is recognised on separate lines on the balance sheet. Financial assets are recognised on the balance sheet on the trade day when an
acquisition agreement has been entered into, with the exception of loans and receivables, which are recognised on the settlement day. Financial assets are derecognised when the right to obtain the cash flows from a financial instrument has expired or essentially been transferred to another party. Financial liabilities are removed from the balance sheet when the obligation in the agreement has been discharged, cancelled or expired.
An embedded derivative is a component of a hybrid instrument that includes a non-derivative host contract, with the effect that some of the cash flows varies in a way similar to a stand-alone derivative. An embedded derivative is separate from the host contract and is recognised separately among Derivatives on the balance sheet when its financial features are not closely related to the host contract's, provided that the combined financial instrument is not recognised at fair value through profit or loss.
A genuine repurchase transaction (repo) is defined as a contract where the parties have agreed on the sale of securities and the subsequent repurchase of corresponding assets at a predetermined price. In a repo, the sold security remains on the balance sheet, since the Group is exposed to the risk that the security will fluctuate in value before the repo expires. the payment received is recognised as a financial liability on the balance sheet based on who the counterparty is. sold securities are also recognised as a pledged asset. the proceeds received for acquired securities, so-called reverse repos, are recognised on the balance sheet as a loan to the selling party.
securities that have been lent out remain on the balance sheet, since the Group remains exposed to the risk that they will fluctuate in value. Securities that have been lent out are recognised on the trade day as assets pledged, while borrowed securities are not reported as assets. securities that are lent out are carried in the same way as other security holdings of the same type. In cases where the borrowed securities are sold, i.e., short-selling, an amount corresponding to the fair value of the security is recognised in other liabilities on the balance sheet.
the Group's financial instruments are divided into the following valuation categories: financial instruments at fair value through profit or loss,
A few individual holdings of insignificant value have been categorised as available-forsale financial assets in the valuation category available-for-sale. All financial instruments are initially recognised at fair value. the best evidence for fair value at initial recognition is the transaction price. For financial instruments that subsequently are not measured at fair value through profit or loss, supplementary entries are also made for additions or deductions of direct transaction expenses to acquire or issue the financial instrument. subsequent measurements depend on the valuation category to which the financial instrument is attributed. Notes to items in the balance sheet with financial instruments indicate how the carrying amount is divided between valuation categories.
Financial instruments at fair value through profit or loss comprise instruments held for trading and all derivatives, excluding those designated for hedge accounting. Financial instruments held for trading have been acquired for the purpose of selling or repurchasing in the near term or are part of a portfolio for which there is evidence of a pattern of short-term profit-taking. In the notes to the balance sheet, these financial instruments are classified at fair value through profit or loss, trading. this category also includes other financial instruments that upon initial recognition have irrevocably been designated as at fair value, the so-called fair value option. the option to irrevocably measure financial instruments at fair value is used in the Group for individual portfolios of loans, securities in issue and deposits, when they together with derivatives essentially eliminate the portfolio's aggregate interest rate risk. typical of these financial instruments is that they have a fixed contractual interest rate. the option is used to eliminate the accounting volatility that would otherwise arise because different measurement principles are normally used for derivatives and other financial instruments. Financial liabilities in insurance operations, where the customer bears the investment risk, are categorised in the same way when corresponding assets are also measured at fair value. the Group has chosen to categorise holdings of shares and
| Financial assets Valuation categories 2010 |
Hedging instruments |
Fair value through profit or loss | Loans and receivables |
Held to maturity | total | |
|---|---|---|---|---|---|---|
| seKbn | Derivatives | trading | other | |||
| Cash and balances with central banks | 17 | 17 | ||||
| treasury bills and other bills eligible for refinancing with | ||||||
| central banks | 34 | 1 | 35 | |||
| Loans to credit institutions | 40 | 126 | 166 | |||
| Loans to the public | 41 | 505 | 641 | 1 187 | ||
| Bonds and other interest-bearing securities | 92 | 5 | 97 | |||
| Fund shares for which customers bear the investment risk | 101 | 101 | ||||
| shares and participating interests | 6 | 0 | 6 | |||
| Derivatives | 5 | 60 | 65 | |||
| other financial assets | 14 | 14 | ||||
| total | 5 | 273 | 606 | 798 | 6 | 1 688 |
| Valuation categories 2010 | Hedging instruments |
Fair value through profit or loss | other financial liabilities |
total | |
|---|---|---|---|---|---|
| seKbn | Derivatives | trading | other | ||
| Amounts owed to credit institutions | 20 | 117 | 137 | ||
| Deposits and borrowings from the public | 17 | 11 | 506 | 534 | |
| Financial liabilities for which customers bear the investment risk | 101 | 101 | |||
| Debt securites in issue, etc. | 72 | 108 | 507 | 687 | |
| short positions securities | 34 | 34 | |||
| Derivatives | 4 | 62 | 66 | ||
| subordinated liabilities | 27 | 27 | |||
| other financial liabilities | 25 | 25 | |||
| total | 4 | 205 | 220 | 1 182 | 1 611 |
participating interests that are not associates or intended for trading at fair value through profit or loss since they are managed and evaluated based on fair value. In the notes to the balance sheet, these financial instruments are classified at fair value through profit or loss, other. the fair value of financial instruments is determined based on quoted prices on active markets. When such market prices are not available, generally accepted valuation models such as discounting of future cash flows are used. The valuation models are based on observable market data, such as quoted prices on active markets for similar instruments or quoted prices for identical instruments on inactive markets. Differences that arise at initial recognition between transaction price and fair value according to a valutation model, so called day 1-profits or losses, are recognised in the income statement only when the valuation model entirely has been based on observable market data. In all other cases the differnce is amortised during the financial instrument's remaining maturity. For loans measured at fair value where observable market data on the credit margin are not available at the time of measurement, the credit margin for the most recent transaction with the same counterparty is used. Changes in value are recognised through profit or loss in net gains and losses on financial items at fair value. For financial instruments in trading operations, the Group's profit or loss item also includes share dividends. Changes in value owing to changes in exchange rates are recognised as changes in exchange rates in the same profit or loss item. Changes in the value of financial liabilities owing to changes in the Group's credit worthiness are also recognised separately when they arise. Decreases in value attributable to debtor insolvency are attributed to credit impairments.
Loans to credit institutions and the public, categorised as loans and receivables, are recognised on the balance sheet on the settlement day. these loans are measured at amortised cost as long as there is no objective evidence indicating that a loan or Group of loans is impaired.
Loans are initially recognised at cost, which consists of the loan amount paid out less fees received and any costs that constitute an integral part of the return. the interest rate that produces the loan's cost as a result of the calculation of the present value of future payments is considered the effective interest rate. the loan's amortised cost is calculated by discounting the remaining future payments by the effective interest rate. Interest income includes interest payments received and the change in the loan's amortised cost during the period, which produces a consistent return.
on the closing day, it is determined whether there is objective evidence to indicate an impairment need for a loan or Group of loans. If, after the loan is initially recognised, one or more events have occurred that negatively impact estimated future cash flows, and the impact can be estimated reliably, impairment is made. the impairment is calculated as the difference between the loan's carrying amount and the present value of estimated future cash flows discounted by the loan's original effective interest rate. The Group determines first whether there is objective evidence for impairment of each individual loan. Loans for which such evidence is lacking are included in portfolios with similar credit risk characteristics. these portfolios are subsequently measured collectively in the event objective evidence of impairment exists. Any impairment is then calculated for the portfolio as a whole. Homogenous groups of loans with limited value and similar credit risk that have been individually identified as having objective evidence of impairment are measured individually based on the loss risk in the portfolio as a whole. If the impairment decreases in subsequent periods, previously recognised impairment losses are reversed. Loans are never recognised at a value higher than what the amortised cost would have been if the write-down had not occurred, however.
Loan impairments are recognised through profit or loss as credit impairments, which is done either as provisions for individually impaired loans, portfolio provisions or write-offs of impaired loans. repayments of write-offs and recovery of provisions are recognised within credit impairments. the carrying amount of loans is amortised cost less write-offs and provisions. provisions for assumed losses on guarantees and other contingent liabilities are recognised on the liability side.
Impaired loans are those for which it is likely that payment will not be received in accordance with the contract terms. A loan is not impaired if there is collateral that covers the principal, unpaid interest and any late fees by a satisfactory margin.
Certain financial assets acquired to hold to maturity have been categorised as held-to-maturity investments. they have fixed maturities, are not derivatives and are quoted on an active market. these investments are initially recognised on their trade day at cost and subsequently at amortised cost less any impairment. Measurements are made in the same way as for loans and receivables.
Financial assets, excluding derivatives, which no longer meet the criteria for trading, may be reclassified as of 1 July 2008 from the valuation category Financial instruments at fair value, provided extraordinary circumstances exist. A reclassification to the valuation category Held-to-maturity investments also requires an intention and ability to hold the investment until maturity. the fair value of the assets at the time of reclassification is still considered to be their acquisition cost.
Financial liabilities that are not recognised as financial instruments at fair value through profit or loss are initially recognised on the trade day at cost and subsequently at amortised cost. Amortised cost is calculated in the same way as for loans and receivables.
Hedge accounting at fair value is applied in certain cases when the interest rate exposure in a recognised financial asset or financial liability is hedged with derivatives. With hedge accounting, the hedged risk in the hedged instrument is also measured at fair value. Both the change in the value of the hedging instrument, the derivative, and the change in the value of the hedged risk are recognised through profit or loss in net gains and losses on financial items at fair value.
one requirement to apply hedge accounting is that the hedge has been formally identified and documented. the hedge's efficiency must be measurable in a reliable way and must be expected to be and during reported periods have been very effective in offsetting changes in value.
Derivative transactions are sometimes entered into to hedge the exposure to variations in future cash flows resulting from changes in interest rates. These hedges can be recognised as cash flow hedges, whereby the effective portion of the change in the value of the derivative, the hedging instrument, is recognised directly in other total comprehensive income.
Any ineffective portion is recognised through profit or loss in net gains and losses on financial items at fair value. When a projected cash flow leads to the recognition of a non-financial item, any gains or losses on the hedging instrument are eliminated from other total comprehensive income and recognised through profit or loss in the same periods that the hedged item affects profit or loss. one of the prerequisites of hedge accounting is that the hedge is formally identified and documented. Its effectiveness must be measurable in a reliable way and be expected to remain, and during reported periods have been, very effective in offsetting changes in value.
Hedges of net investments in foreign operations are applied to protect the Group from translation differences that arise when operations in a functional currency other than the presentation currency are translated. Financial liabilities reported in the foreign operation's functional currency are valued at the closing-day exchange rate. the portion of the exchange rate result from hedging instruments that are determined to be effective is recognised in other total comprehensive income. Any ineffective portion is recognised in profit or loss in net gains and losses on financial items at fair value. one requirement to apply hedge accounting is that the hedge has been formally identified and documented. the effectiveness of the hedge must be measurable in a reliable way and must be expected to be and during reported periods have been very effective in offsetting changes in value.
the Group's leasing operations consist of finance leases and are therefore recognised as loans and receivables. the carrying amount corresponds to the present value of future leasing payments. the difference between all future leasing payments, the gross receivable, and the present value of future leasing payments constitutes unearned income. this means that lease payments received are recognised in part through profit or loss as interest income and in part in the balance sheet as instalments, so that the financial income corresponds to an even return on the net investment. In a finance lease, the economic risks and benefits associated with ownership of an asset are essentially transferred from the lessor to the lessee. When the lessor bears the economic risks and benefits, the lease is classified as operating. the Group is the lessee in operating leases. Lease payments for these agreements are expensed linearly over the lease term. the Group is also the lessor in a few operating leases of insignificant amount.
Investments in associates, entities where the owner has significant influence but not control, are consolidated according to the equity method. the equity method means that the participating interests in an entity are recognised at cost at the time of acquisition and subsequently adjusted for the owned share of the change in the associate's net assets.
Goodwill attributable to the associate is included in the carrying amount of the participating interests and is not amortised. the carrying amount of the participating interests is subsequently compared with the recoverable amount of the net investment in the associate to determine whether an impairment need exists. the owned share of the associate's profit according to the associate's income statement, together with any impairment, is recognised on a separate line. the share of the associate's tax is recognised in the income statement as tax. the associates' reporting dates and accounting policies conform to the Group's.
Investments in joint ventures are recognised in the balance sheet as Investments in associates according to the equity method; see Investment in associates above. A joint venture is a contractually based relationship where the Group, together with another party, jointly manages an economic activity and where the parties jointly control that activity.
Goodwill acquired through a business combination is initially measured at cost and subsequently at cost less accumulated impairment. Goodwill is tested annually for impairment or if events or circumstances indicate a decrease in value.
In order to test goodwill from business combinations for impairment, it is allocated upon acquisition to the cash-generating unit or units that are expected to benefit from the acquisition. Identified cash-generating units correspond to the lowest level in the entity for which the goodwill is monitored in the internal control of the entity. A cash-generating unit is not larger than a business segment in the segment reporting.
Impairment needs are determined by estimating the recoverable amount of the cash-generating unit to which the goodwill is allocated. When the recoverable amount is lower than carrying amount, impairment is recognised. recognised impairment is not reversed.
Intangible assets are initially measured at cost. the cost of intangible assets in a business combination corresponds to fair value upon acquisition. they are subsequently measured at cost less accumulated amortisation and accumulated impairment. the useful life of an intangible asset is considered either finite or indefinite. Intangible assets with a finite useful life are amortised over their useful life and tested for impairment when impairment needs are indicated. useful life and amortisation methods are reassessed and adapted when needed in connection with each closing day. Development expenses whose cost can be calculated in a reliable way and for which it is likely that future economic benefits attributable to the assets will accrue to the Group are recognised in the balance sheet. In other cases, development is expensed when it arises.
tangible fixed assets such as equipment and owner-occupied properties are initially recognised at cost. they are subsequently measured at cost less accumulated depreciation and impairments. Depreciation begins when an asset is ready for use and is reported systematically over each component's useful life down to its estimated residual value. The depreciation method reflects how the asset's value is gradually consumed. the useful life, residual value and depreciation method are periodically reassessed and changed when needed in connection with each closing day. the carrying amount is tested for impairment when events or circumstances indicate a lower recoverable amount. owner-occupied properties are reclassified as investment properties when no longer used by the Group.
tangible assets acquired or recovered to protect claims are recognised as inventory, provided they do not refer to investment properties. Investment properties are properties held for the purpose of generating rental income or appreciation in value, or a combination of both, rather than for own use or for sale in the normal course of operations. Inventories are measured at the lower of cost and net realisable value. Cost includes all expenses for purchasing and/or manufacturing and other costs to bring the goods to their current location and condition. Net realisable value refers to the amount that is expected to be realised from a sale. Investment properties are initially recognised at cost. Cost consists of the purchase price or fair value if a purchase price is unavailable, as well as costs directly attributable to the purchase. the asset is subsequently measured at cost less accumulated depreciations and impairments as for owneroccupied properties.
Borrowing costs are capitalised when directly attributable to the purchase, construction or production of a qualified asset. Borrowing costs refer to interest and other costs that arise in obtaining a loan. A qualified asset is one that takes considerable time to finish and is intended for use or sale. Qualified assets can be intangible assets or investment properties. other borrowing costs are expensed in the period in which they arise.
A provision is recognised in the balance sheet when the Group has a legal or constructive obligation arising from past events and it is likely that an outflow of resources will be required to settle the obligation. In addition, a reliable estimation of the amount must be
made. Estimated outflows are calculated at present value. Provisions are tested on each closing day and adjusted when needed, so that they correspond to the current estimate of the value of the obligations.
the Group's post-employment benefits, which consist of pension obligations, are classified as either defined contribution plans or defined benefit plans. In defined contribution plans, the Group pays contributions to separate legal entities, and the risk of a change in value until the funds are paid out rests with the employee. thus, the Group has no further obligations once the fees are paid. other pension obligations are classified as defined benefit plans. premiums for defined contribution plans are expensed when an employee has rendered his/her services. In defined benefit plans, the present value of pension obligations is calculated and recognised as a provision. Both legal and constructive obligations that arise as a result of informal practices are taken into account. the calculation is made according to the projected unit Credit Method. As such, future benefits are attributed to periods of service. the fair value of the assets (plan assets) that are allocated to cover obligations and the unrecognised actuarial net loss are deducted from the provision. profit or loss (staff costs) is charged with the net of service costs, interest on obligations and the anticipated return on plan assets. the calculations are based on the Group's actuarial assumptions, i.e., the Group's best estimate of future developments. If the actual outcome deviates or the assumptions change, so-called actuarial gains and losses arise. the net of actuarial gains and losses is not recognised through profit or loss until it exceeds ten per cent of the higher of the present value of the obligations or the value of plan assets. the excess is recognised through profit or loss over the employees' remaining working lives. provisions for payroll tax are allocated on a nominal basis based on the difference between the Group's pension cost and the pension cost that serves as the basis for actual payroll tax.
In the financial statements, insurance policies refer to policies where significant insurance risk is transferred from insured to insurer. the majority of the Group's insurance policies do not transfer significant insurance risk, due to which they are instead recognised as financial instruments. For insurance policies with significant insurance risk, actuarial provisions are allocated corresponding to pledged obligations. In the income statement, premiums received and provisions are reported on separate lines.
the principles of revenue recognition for financial instruments are described in a separate section, Financial instruments, recognition (IAs 39). Interest income and interest expenses for financial instruments calculated according to the effective interest method are recognised as Net interest income. Changes in value and dividends on shares in the valuation category Financial instruments at fair value through profit or loss as well as all changes in exchange rates between functional and other currencies are recognised in Net gains and losses on financial items at fair value. Fees for various services provided to customers are recognised as income when the services rendered. such income is recognised in both Commission income and other income. Commission income includes payment processing, asset management and brokerage commissions. Commission expenses are transaction-dependent and are directly related to income in Commission income. other income includes capital gains and losses on the sale of ownership interests in subsidiaries and associates to the extent they do not represent an independent service line or a significant business conducted within a geographical area. other income also includes capital gains and losses on the sale of tangible assets.
since the Group receives services from its employees and assumes an obligation to settle the transactions with equity instruments, this is recognised as share-based payment. this means that the fair value of the services that entitle the employees to an allotment of equity instruments is expensed at the time the services are rendered. At the same time a corresponding increase in equity is recognised as retained earnings. For share-based payment to employees settled with equity instruments, the services rendered are valued with reference to the fair value of the allotted equity instruments. the fair value of the equity instruments is calculated as per the allotment date, i.e., the date when a contract was entered into and the parties agreed on the terms of the share-based payment. on the allotment date, the employees are allotted rights to sharebased payment. since the allotted equity instruments are not vested until the employees have fulfilled a period of service, it is assumed that the services are rendered during the vesting period. this means that the cost and corresponding increase in equity are recognised over the entire vesting period. Non market based vesting terms, such as a requirement that a person remain employed, are taken into account in the assumption of how many equity instruments are expected to be vested. At the end of each report period the Group reassesses its judgments of how many shares it expects to be vested based on the non market based vesting terms. Any deviation from the original judgment is recognised through profit or loss and a corresponding adjustment is recognised in
retained earnings within equity. related social insurance charges are recognised as cash-settled share-based payment, i.e., as a cost during the corresponding period, but based on the fair value that at any given time serves as the basis for a payment of social insurance charges.
For assets that are not tested for impairment according to other standards, the Group periodically determines whether there are indications of diminished value. If such indications exist, the asset is tested for impairment by estimating its recoverable amount. Assets with indefinite useful life are periodically assessed for impairment regardless of whether or not there are indications that they have decreased in value. An asset's recoverable amount is the higher of its selling price less costs to sell and its value in use. If the carrying amount exceeds the recoverable amount, the asset is reduced to its recoverable amount. When estimating value in use, estimated future cash flows are discounted using a discount rate before tax that includes the market's estimate of the time value of money and other risks associated with the specific asset. An assessment is also made on each reporting date whether there are indications that the need for previous impairments has decreased or no longer exists. If such indications exist, the recoverable amount is determined. previous impairment losses are reversed only if there were changes in the estimates made when the impairment was recognised. Goodwill impairment is not reversed. Impairments are recognised separately through profit or loss for tangible or intangible assets.
Current tax assets and tax liabilities for current and previous periods are measured at the amount expected to be obtained from or paid to tax authorities. Deferred taxes refer to tax on differences between the carrying amount and the tax base, which in the future serves as the basis for current tax. Deferred tax liabilities are tax attributable to taxable temporary differences and must be paid in the future. Deferred tax liabilities are recognised on all taxable temporary differences with the exception of the portion of tax liabilities attributable to the initial recognition of goodwill or to certain taxable differences owing to holdings in subsidiaries. Deferred tax assets represent a reduction in future tax attributable to deductible temporary differences, tax loss carry-forwards or other future taxable deductions. Deferred tax assets are tested on each closing day and recognised to the extent it is likely on each closing day that they can be utilised. As a result, a previously unrecognised deferred tax asset is recognised when it is considered likely that a sufficient surplus will be available in the future. Confirmed tax rates on the closing day are used in the calculations. the Group's deferred tax assets and tax liabilities are estimated at nominal value using each country's tax rate in effect in subsequent years. Deferred tax assets are netted against deferred tax liabilities for Group entities that have offsetting rights. All current and deferred taxes are recognised through profit or loss as tax with the exception of tax attributable to items recognised directly in other total comprehensive income or equity.
Cash and cash equivalents consist of cash and balances with central banks, when the central bank is domiciled in a country where swedbank has a valid banking licence and the balance is readily available at any time.
segment reporting is presented on the basis of management's perspective and relates to the parts of the Group that are defined as operating segments. operating segments are identified on the basis of internal reports to the company's chief operating decision maker. the Group has identified the Chief executive officer as its chief operating decision maker, while the internal reports used by the Ceo to oversee operations and make decisions on allocating resources serve as the basis of the information presented. the accounting policies for an operating segment consist of the above accounting policies and policies that specifically refer to segment reporting. Market-based compensation is applied between operating segments, while all costs for It, other shared services and Group staffs are transferred at full cost-based internal prices to the operating segments. Group executive Management expenses are not distributed. Cross-border services are invoiced according to the oCeD's guidelines on internal pricing. the Group's equity attributable to the shareholders is allocated to each operating segment based on the capital adequacy rules according to Basel 2 and estimated utilised capital. the return on equity for the business segments is based on operating profit less estimated tax and non-controlling interests in relation to average allocated equity.
the International Accounting standard Board (IAsB) and International Financial reporting Interpretations Committee (IFrIC) have issued the following standards, amendments to standards and interpretations that apply in or after 2011. the IAsB permits earlier application. For swedbank to apply them also requires that they be approved by the eu if
the amendments are not consistent with previous IFrs rules. Consequently, swedbank has not applied the following amendments in the 2010 annual report.
the amendment will apply to financial years beginning on or after 1 July 2011. the eu has not yet approved the amendment, which establishes additional requirements on quantitative and qualitative disclosures of the derecognition of financial assets from the balance sheet when the company retains a continued involvement in the derecognised financial assets. If a transfer of financial assets does not result in a derecognition in its entirety, an additional disclosure is required.
the new standard on the recognition and measurement of financial instruments has not been adopted by the eu, nor is there a timetable when an approval can be expected.
the standard is a complete revision and will replace the current standard IAs 39, Financial Instruments: recognition and Measurement. the standard reduces the number of valuation categories for financial assets. the main reporting categories are now amortised cost and fair value through profit or loss. the rules for financial liabilities correspond to the existing rules in IAs 39 plus a supplement on how credit risk is presented when financial liabilities are measured at fair value. the change in the credit risk for financial liabilities designated at fair value according to the so-called fair value option is normally presented in other comprehensive income and not in the traditional income statement. this is provided that further inconsistencies do not arise in presentation of any eliminated changes in value.
the standard will be complemented by new rules for impairment of financial assets that are categorized as financial assets at amortised cost, new rules for hedge accounting and new rules on derecognition from the balance sheet.
IFrs 9 will probably be applied to financial years beginning on or after 1 January 2013.
the amendment will apply to financial years beginning on or after 1 January 2012. the eu has not yet approved the amendment, which describes how deferred taxes are measured when management properties are measured at fair value.
the amendment was approved by the eu in 2010 and applies to financial years beginning on or after 1 January 2011. the amendment clarifies the definition of related parties to facilitate the identification of such relationships and eliminate inconsistencies in its application.
the amendment was approved by the eu in 2009 and will apply to financial years beginning on or after 1 January 2011. the amendment relates to the classification of rights issues and has changed the definition of liabilities. rights issues that are denominated in a currency other than a company's functional currency would be an equity instrument if issued pro rata to existing shareholders.
Amendment to Prepayments of a Minimum Funding Requirement (IFRIc 14) the amendment was approved by the eu in 2010 and will apply to financial years beginning on or after 1 January 2011. the amendment provides guidance in determining the recoverable amount of a net pension asset.
extinguishing Financial Liabilities with equity Instruments (IFRIc 19) the interpretation was approved by the eu in 2010 and will apply to financial years beginning on or after 1 July 2010. the interpretation explains how a company recognises renegotiated terms for a financial liability that results when the company issues equity instruments to a creditor to extinguish the financial liability wholly or in part.
the improvements will be applied at various points in time, though no earlier than financial years beginning on or after 1 July 2010. the amendments have (not) been approved by the eu. the improvements comprise additions to current standards, primarily to remove inconsistencies and clarify formulations.
the new IFrs 9 Financial Instruments will affect swedbank's financial reporting. the scope of the effect cannot be determined at present, since the valuation of swedbank's financial assets is largely dependent on how the rules on hedge accounting and on the impairment of financial assets in the valuation category amortised cost are eventually worded. A judgment cannot be made until the remaining sections are issued. the other changes that have been issued and which apply to financial years beginning on or after 1 July 2010 are not expected to have a significant effect on swedbank's financial reports.
presentation of consolidated financial statements in conformity with IFrs requires management to make judgments and estimates that affect the recognised amounts for assets, liabilities and disclosures of contingent assets and liabilities as of the closing day as well as recognised income and expenses during the report period. Management continuously evaluates these judgments and estimates, including those that affect the fair value of financial instruments, provisions for impaired loans, impairments of intangible and tangible assets, deferred taxes, pension provisions and shared-based payment. Management bases its judgments and assumptions on previous experience and several other factors that are considered reasonable under the circumstances. Actual results may deviate from judgments and estimates.
entities in the Group have established investment funds for their customers' savings needs. the Group manages the assets of these funds on behalf of customers in accordance with predetermined provisions approved by the swedish Financial supervisory Authority. the return generated by these assets, as well as the risk of a change in value, accrues to customers. Within the framework of the approved fund provisions, the Group receives management fees as well as in certain cases application and withdrawal fees for the management duties it performs. Because decisions regarding the management of an investment fund are governed by the fund's provisions, the Group is not considered to have the opportunity to control or dominate decision-making in the investment funds in order to obtain economic benefits. the Group's compensation and risk are limited to fee charges. In certain cases, Group entities also invest in investment funds to fulfil their obligations to customers. shares in the investment funds do not represent any influence in the Group's judgment, regardless of whether the holding exceeds 50 per cent or not. taken together, the above-mentioned conditions are the basis for not consolidating the investment funds. Assets in funds where the Group's interest exceeded 50 per cent amounted to seK 34bn as of year-end. on the same date the Group recognised an asset for these funds corresponding to the Group's interest, seK 22bn, in the balance sheet as Fund shares for which the customers bear the investment risk. If the Group instead had determined that it had control, assets corresponding to seK 34bn would have been consolidated and recognised in the Group's balance sheet based on the type of asset.
When financial instruments are valued at fair value, quoted prices on active markets are primarily used. When financial assets and financial liabilities on active markets have offsetting market risks, the average of bid and sell prices is used as a basis for determining the fair value of the offsetting risk positions.
For any open net positions, bid and sell prices are applied as appropriate, i.e., bid prices for long positions and sell prices for short positions. Management has determined the method for which market risks offset each other and how the net positions are calculated. When quoted prices on active markets are not available, various valuation models are used instead. Management determines when the markets are considered inactive and when quoted prices no longer correspond to fair value, requiring valuation models to be used. Management determines which valuation model and which pricing parameters are most appropriate for the individual instrument. All the valuation models swedbank uses are generally accepted and are subject to independent risk control.
Management has determined that the option to measure financial instruments at fair value provides the fairest account for certain portions of the Group's loan portfolios with fixed interest rates, since the interest rate risk is hedged with the help of securities in issue and derivatives. A determination is also made for which financial instruments hedge accounting will be used. In both cases the determination is made to avoid accounting volatility as far as possible. Accounting volatility lacks economic relevance and arises when financial instruments are measured with different measurement principles despite that they financially hedge each other.
For the parent Company's estonian subsidiary, swedbank As, income taxation is triggered only if dividends are paid.
Because the parent Company controls when dividends are paid and it has determined that no dividends will be paid for the foreseeable future, no provisions have been allocated for deferred tax. When it is determined that a dividend will be paid, deferred tax will be allocated on the anticipated dividend. If the largest possible dividend is approved for the subsidiary, the Group would face an estimated tax charge of seK 1 676m.
the Group uses various estimates and assumptions about the future to determine the value of certain assets and liabilities.
receivables measured at amortised cost are tested if loss events have occurred. Individual loans are tested initially, followed by groups of loans with similar credit terms and which are not identified individually. A loss event refers to an event that occurred after the loan was paid out and which has a negative effect on projected future cash flows. Determining loss events for groups of loans carries greater uncertainty, since a number of different events, such as macroeconomic factors, may have had an impact. Loss events include late or non-payments, concessions granted due to the borrower's financial difficulties, bankruptcy or other financial reconstructions, and local economic developments tied to non-payments, such as an increase in unemployment or decreases in real estate or commodity prices. Where a loss event has occurred, individual loans are classified as impaired loans. Management feels that loans whose terms have been significantly changed due to the borrower's economic difficulties and loans that have been non-performing for more than 60-90 days should automatically be treated as impaired. the number of days varies in the Group based on the customer's payment habits and the collection processes used in various markets.
such a loan is not considered impaired if there is collateral which covers the capital, accrued and future interest and fees by a satisfactory margin. When a loss event has occurred, a determination is made when in the future the loan's cash flow will be received and its probable size. For impaired loans, interest is not considered to be received, only capital or portions thereof. For groups of loans, estimates are based on historical values and experience-based adjustments to the current situation.
provisions for impaired loans are made on the difference between estimated value, i.e., estimated future cash flows discounted by the loan's original effective interest rate, and carrying amounts according to contractual cash flows.
Assumptions about when in time a cash flow will be received as well as its size determine the size of the provisions. Decisions on provisions are therefore based on various calculations and management's assumptions of current market conditions.
Management is of the opinion that provision estimates are important because of their significant size as well as the complexity of making these estimates.
In 2010 economic condition stabilised in the Baltic countries and ukraine. the Group's provisions in the Baltic operations decreased during the year from seK 15 276m to seK 13 082m and in the ukrainian operations during the year from seK 6 390m to seK 5 196m. the changes in provisions are based on the losses that management assumed were likely against the current economic outlook within the interval for reasonable assumptions. Impaired loans, gross, decreased during the year in the Baltic operations from seK 26 571m to seK 22 510m and in the ukrainian operations during the year from seK 8 180m to seK 7 957m. Due to more stable economic conditions, the subjectivity in the determination of the value of the collateral for these loans was significantly higher than usual determining the value of collateral was slightly lower than in 2009. An overall decrease in customers' payment ability of an additional 10 per cent would have increased provisions by seK 2 179m, of which seK 293m in estonia, seK 632m in Latvia, seK 383m in Lithuania, seK 520m in ukraine and seK 111m in russia. the Group's portfolio provision for loans that are not classified as impaired amounted to seK 3 297m (5 135) at year-end.
Goodwill is tested annually for impairment. testing is conducted by calculating the recoverable amount, i.e., the higher of value in use or the realisable value. If the recoverable amount is lower than the carrying amount, the asset is reduced to its recoverable amount. Management's tests are done by calculating value in use.
The calculation is based on estimated future cash flows from the cash-generating unit that the goodwill relates to and has been allocated to as well as when the cash flows are received. The first three years' cash flows are determined on the basis of the financial plans management has established. subsequent determinations of the size of future cash flows require more subjective estimates of future growth, margins and profitability levels. In addition, a discount rate is determined that in addition to reflecting the time value of money also reflects the risk that the asset is associated with. Different discounting factors are used for different time periods. As far as possible, the discount rate and assumptions, or portions of the assumptions, are based on external sources. Nevertheless, the calculation is dependent in large part on management's own assumptions.
the Group's goodwill amounted to seK 13 733m (15 368) at year-end, of which seK 11 005m (12 624) relates to the investment in the Baltic operations.
Due to the stabilisation of the Baltic economy in 2010, the calculation for this part is based on more stable future forecasts than was the case in 2009. Management feels that the estimates it has made are significant to the Group's results and financial position. However, goodwill impairment does not affect either cash flow or the capital adequacy ratio, since goodwill is a deduction in the calculation of the capital base. through 2001, 60 per cent of the Baltic operations had been acquired. In 2005 the remaining 40 per cent was acquired. the majority, or seK 9 771m (11 186) of the goodwill rose through the acquisition of the remaining non-controlling interest and at the time and corresponded to 40 per cent of the operation's total value. Management's assumptions in the calculation of value in use as of year-end 2010 did not lead to any impairment losses. If the discount rate had been increased by one percentage point or the growth assumption had been reduced by one percentage point, it would not have created any impairment, except for the investment in Latvia. If the discount rate is changed as above an impairment arise for the investment in Latvia amounting to seK 725m.
Impairment testing of investment properties and owner-occupied properties Investment properties and owner-occupied properties are measured at cost less depreciation. When there is an indication of diminished value, impairment is tested. the test is done by calculating the recoverable amount, i.e., the higher of value in use and fair value less costs to sale. the value in use of investment properties and owneroccupied properties has been determined by independent external appraisers. properties valued based on external appraisals amounted to seK 2 165m (842) at year-end.
properties recognised as inventory are measured at the lower of cost and net realisable value. Net realisable value has been determined by independent appraisers. the carrying amount for properties recognised as inventory amounted to seK 1 172m (220) at year-end.
Deferred tax assets represent a reduction in future tax attributable to temporary deductible differences, tax loss carry-forwards or other unused tax deductions. Deferred tax assets can be recognised only to the extent they can be offset against future taxable income. Management therefore makes assumptions of the size of this future taxable income.
the assumptions affect the Group's results and financial position. on the other hand, carrying amounts do not affect the capital adequacy ratio, since deferred tax assets are a deduction in the calculation of the capital base. Due to the economic, and to some extent tax law uncertainty, in ukraine, management has felt that the most realistic assumption is to only recognise deferred tax assets to the extent they offset deferred tax liabilities in the ukrainian operations. unrecognised deferred tax assets amounted to seK 890m (1 264) at year-end, of which seK 806m (1 104) relates to deductible temporary differences. unrecognised deferred tax assets in other parts of the Group amounted to seK 248m (373), of which seK 124m (275) related to Lithuania. Deferred tax assets for deductible temporary differences have been recognised in the amount of seK 1 026m (1 030). recognized deferred tax assets are motivated by management's judgment that current operations will create sufficient taxable surpluses within the not too distant future. After the management's measures, such as cost reductions, to improve the profitability the current operations report profits already for the second half of 2010. Based on the current operation the main part of unused tax losses are expected to be utilised within the Group's financial three year plans.
When financial instruments are measured at fair value according to valuation models, a determination is made which observable market data should be used in those models. the assumption is that quoted prices for financial instruments with similar turnover will be used. When such prices or components of prices cannot be identified, management must make its own assumptions. Note G45 shows financial instruments at fair value divided into three valuation levels: quoted prices, valuation models with observable market inputs and valuation models with significant assumptions. As of year-end the value of financial instruments valued with significant assumptions amounted to seK 700m (711). A change in an own assumption with 10 bp the value has changed with seK 1m.
For pension provisions for defined benefit obligations, management uses a number of actuarial assumptions to estimate future cash flows. The assumptions are revised each year or when a significant change has occurred. Important estimates are made with regard to the final salary the employee has at the time of retirement, the size of the benefit when it relates to the income base amount and the payment period and economic life. Estimated future cash flows are projected at present value using an assumed discount rate. When actual outcomes deviate from the assumptions made, an experience-based actuarial gain or loss arises. Cumulative net experience-based actuarial gains and losses amounted to a gain of seK 765m (346) at year-end. When the assumptions change, actuarial gains or losses arise. In total, the Group's actuarial gains and losses amounted to a loss of seK 2 265m (2 006). the increase in the actuarial loss arose mainly because the discount rate was cut by 25 bp to 3.50 per cent at the same time that an actuarial gain arose when the actual return exceeded the assumed return on assets under management. A 25 bp reduction in the discount rate would increase the pension provision by approximately seK 715m. since it applies the so-called corridor rule, the Group recognises only the portion of the net exceeding 10 per cent of the higher of assets under management or pension liabilities. the excess is recognised over the employees' remaining years of service. A further cut in the discount rate therefore had only a marginal impact on profit in 2011.
In calculating the cost which is recognised as employee benefits ultimately settled in the form of common shares in swedbank AB, management estimates how many common shares will be settled. employees are allotted contingent rights to receive common shares, which require, for example, that they remain employed on the settlement date; otherwise the rights expire. Management also estimates the fair value of the rights allotted to employees and which gives them the conditional right to receive common shares in swedbank AB at no cost. the estimation is based on the quoted price of the common share, since the right essentially has the same terms as a common share. the estimated costs associated with program 2010 total seK 109m, of which seK 31m was recognised in 2010. this is in addition to social insurance charges, which will finally be calculated on the fair value of the settled shares.
risk is defined as a potentially negative impact on a company that can arise due to current internal processes or future internal or external events. the concept of risk comprises the probability that an event will occur and the impact it would have on the company.
the Board of Directors has adopted an enterprise risk Management (erM) policy detailing the risk framework, as well as roles and responsibilities in risk management. swedbank continuously identifies the risks its operations generate and has designed a process to manage them. the process is described in the bank's erM policy. the risk process includes eight steps: prevent risks, identify risks, quantify risks, analyse risks, suggest measures, control and monitor, report risks, and, lastly, follow up. the process is general, encompassing all of the risk areas, at the same time that concrete activities are adapted to each risk area to protect the bank against unwanted risk-taking. the risk process also provides a description of swedbank's risk profile, which then serves as the basis of the internal capital adequacy assessment process. this process entails an evaluation of capital needs based on swedbank's overall risk level and business strategy. the aim is to ensure efficient use of capital and that swedbank at the same time meets the minimum legal capital requirement and maintains access to domestic and international capital markets even under adverse market conditions.
| Risk | Description |
|---|---|
| credit risks | the risk that a counterparty, or obligor, fails to meet contractual obligations to swedbank and the risk that collate ral will not cover the claim. |
| Liquidity risks | the risk that swedbank cannot fulfil its payment commit ments on any given due date without significantly raising the cost of obtaining means of payment. |
| Market risks | the risk that changes in interest rates, exchange rates and equity prices will lead to a decline in the value of swedbank's net assets, including derivatives. |
| operational risks | the risk of losses resulting from inadequate or failed internal processes or routines, human error, incorrect systems or external events. |
| other risks | Includes earnings volatility risk, insurance risk, pension risk, strategic risk, reputational risk and security risk. |
Credit risks refer to the risk that a counterparty will not fulfil its contractual obligations to the Group and that the assets pledged do not cover claims. Counterparty risk arises if a business counterparty in a financial transaction cannot fulfil its commitment. the risk is often expressed as the present market value of the contract in addition to a premium for potential future fluctuations in the underlying risk factors. Credit risk also includes concentration risk, which comprises large exposures or concentrations in the credit portfolio to certain regions or industries, among other things. Concentration risk is managed in swedbank's internal capital adequacy assessment process (ICAAp), see further note G4 Capital. the Group analyses and monitors credit risks on the basis of an internal risk classification system to ensure that they do not exceed desired levels.
the risk classification system is a key part of the credit process and comprises work and decision-making processes for lending, credit monitoring and quantification of credit risk. the risk classification system thus serves as a business-support tool to facilitate effective decision-making. the Group analyses and monitors credit risks on the basis of an internal risk classification system to ensure that they do not exceed desired levels.
swedbank's internal risk classification system is the basis for:
risk class is tested and determined in connection with credit decisions. It also affects the requirements on depth of analysis and documentation and governs the way in which customers are monitored. As a result, low-risk transactions can be approved through a simpler and faster credit process. risk classification is also a key element in monitoring individual credit exposures. the system governs the monitoring processes in various ways, ensuring, for example, that a weak risk class is tested separately, followed by a decision on possible measures. the risk classification is a key element in the monitoring of credit exposures. swedbank has received approval from the Financial supervisory Authority to apply the so-called IrB approach, which is used to calculate the majority of the capital requirement for credit risks. the IrB approach is applied to the large part of lending to the public, with the exception of lending to national governments and the credit portfolios in ukraine and russia. For exposures that do not apply the IrB approach, an external classification is used instead, primarily the Financial supervisory Authority's standard method, or they are none-rated. the goal of the risk classification is to predict defaults within 12 months. the classification is expressed on a scale of 23 classes, where 0 represents the greatest risk and 21 represents the lowest risk of default, with one class for defaulted loans. the subsequent table describes the Group's risk classification and how it relates to the probability of default within 12 months (pD) as well as an indicative rating from standard & poor's. of the total IrB-assessed exposures, 74 per cent falls into the risk classes 13–21, so-called investment grade, where the risk of default is considered low. of the exposures 40 per cent have been assigned a risk class of 18 or higher, which corresponds to a rating of A from the major ratings agencies. the exposures relate to financial companies group, why the total amount also differs against the Group's carrying amounts.
| Internal rating | PD (%) | Indicative rating standard & Poor's |
|
|---|---|---|---|
| Default | Default | 100 | D |
| High risk | 0–5 | >5.7 | C to B |
| Augmented risk | 6–8 | 2.0–5.7 | B+ |
| Normal risk | 9–12 | 0.5–2.0 | BB– to BB+ |
| Low risk | 13–21 | <0.5 | BBB– to AAA |
to achieve as much precision in the measurement as possible, a number of different models have been developed for risk classification of counterparties/borrowers or contracts. the tests that have been conducted have shown that the models offer high reliability. there are also methods and routines to design and maintain the models as well as routines for risk classification in credit operations needed to provide an overview. the three elements, the design methods, models and routines for assigning risk classes are held together by a number of governing documents issued by the Board of Directors, the Ceo, the Chief Credit officer and the head of Group risk Control. risk classification models refer to rules on how a customer/counterparty is assigned a risk class. there are primarily two types of models. one is based on a statistical method, which presumes access to a large amount of information on counterparties and a sufficiently large share of information on counterparties that have defaulted. In cases where the statistical method is not applied, models are created where evaluation criteria are based on expert opinions. the models are validated in connection with new constructions on an ongoing basis. the validation ensures that each model measures risk in a satisfactory manner. Moreover, the models are validated in day-to-day credit operations. the models normally indicate the likelihood of default in one year's time. Considering that credit commitments usually involve longer periods of time, the models are also evaluated in the longer term. In summary, the validations made to date have shown that the models are highly reliable. A risk class that has deteriorated can also mean that an impairment has occurred and been accounted for.
| Maximum credit risk exposure distributed by rating 2010 | Low risk PD <0,5 |
normal risk PD 0.5–2.0 |
Augmented risk PD 2.0–5.7 |
High risk PD >5.7 |
Default PD 100.0 |
non-rated exposures |
standardised methodology |
|
|---|---|---|---|---|---|---|---|---|
| total exposure | 1 026 465 | 198 927 | 92 351 | 39 403 | 23 624 | 28 957 | 163 413 | 1 573 140 |
| Retail | % | Large corporates & Institutions |
% | Baltic Banking |
% | Russia & Ukraine |
% | other | % | total | % | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| eAD | ||||||||||||
| Low risk | 734 693 | 46.6 | 247 822 | 15.7 | 43 693 | 2.8 | 257 | 0.0 | 1 026 465 | 65.1 | ||
| Normal risk | 133 645 | 8.5 | 42 555 | 2.7 | 22 724 | 1.4 | 3 | 0.0 | 198 927 | 12.6 | ||
| Augmented risk | 52 027 | 3.3 | 10 196 | 0.6 | 30 127 | 1.9 | 1 | 0.0 | 92 351 | 5.9 | ||
| High risk | 18 591 | 1.2 | 579 | 0.0 | 20 233 | 1.3 | 39 403 | 2.5 | ||||
| Defaults | 3 319 | 0.2 | 3 198 | 0.2 | 17 107 | 1.1 | 23 624 | 1.5 | ||||
| Non-rated exposures | 5 154 | 0.3 | 8 554 | 0.5 | 10 086 | 0.6 | 5 163 | 28 957 | 1.8 | |||
| standardised method | 41 354 | 2.6 | 80 636 | 5.1 | 22 400 | 1.4 | 16 624 | 1.1 | 2 399 | 0.2 | 163 413 | 10.4 |
| total | 983 629 | 62.4 | 384 986 | 24.4 | 156 284 | 9.9 | 16 624 | 1.1 | 2 660 | 0.2 1 573 140 | 100.0 | |
| Public | % | corporates | % | Institutions | % | states | % | other | % | total | % | |
| eAD | ||||||||||||
| Low risk | 704 062 | 44.7 | 177 447 | 11.3 | 144 956 | 9.2 | 1 026 465 | 65.1 | ||||
| Normal risk | 82 997 | 5.3 | 115 262 | 7.3 | 668 | 0.0 | 198 927 | 12.6 | ||||
| Augmented risk | 31 400 | 2.0 | 60 434 | 3.8 | 517 | 0.0 | 92 351 | 5.9 | ||||
| High risk | 18 122 | 1.1 | 21 201 | 1.3 | 80 | 0.0 | 39 403 | 2.5 | ||||
| Defaults | 9 241 | 0.6 | 14 084 | 0.9 | 299 | 0.0 | 23 624 | 1.5 | ||||
| Non-rated exposures | 28 957 | 1.8 | 28 957 | 1.8 | ||||||||
| standardised method | 10 776 | 0.7 | 5 595 | 0.4 | 3 124 | 0.2 | 61 151 | 3.9 | 82 767 | 5.2 | 163 413 | 10.4 |
| total | 856 598 | 54.3 | 394 023 | 25.0 | 149 644 | 9.5 | 61 151 | 3.9 | 115 370 | 7.3 1 573 140 | 100.0 |
| Risk grade according to the IRB methodology | |
|---|---|
| --------------------------------------------- | -- |
| Maximum credit risk exposure distributed by rating 2009 | Low risk PD <0.5 |
Normal risk PD 0.5–2.0 |
Augmented risk PD 2.0–5.7 |
High risk PD >5.7 |
Default PD 100.0 |
Non-rated exposures |
Standardi sed metho dology |
EAD |
|---|---|---|---|---|---|---|---|---|
| Total exposure | 943 855 | 216 590 | 112 470 | 49 447 | 22 725 | 36 288 | 236 371 | 1 617 746 |
| Retail | % | Large corporates & Institutions |
% | Baltic Banking |
% | Russia & Ukraine |
% | Other | % | Total | % | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EAD | ||||||||||||
| Low risk | 697 249 | 43.1 | 184 514 | 11.4 | 61 730 | 3.8 | 362 | 0.0 | 943 855 | 58.3 | ||
| Normal risk | 141 805 | 8.8 | 45 631 | 2.8 | 29 154 | 1.8 | 216 590 | 13.4 | ||||
| Augmented risk | 58 638 | 3.6 | 14 559 | 0.9 | 39 271 | 2.4 | 2 | 0.0 | 112 470 | 7.0 | ||
| High risk | 21 643 | 1.3 | 2 512 | 0.2 | 25 292 | 1.6 | 49 447 | 3.1 | ||||
| Defaults | 3 212 | 0.2 | 2 408 | 0.1 | 17 105 | 1.1 | 22 725 | 1.4 | ||||
| Non-rated exposures | 36 288 | 2.2 | ||||||||||
| standardised method | 130 572 | 8.1 | 49 111 | 3.0 | 28 826 | 1.8 | 22 196 | 1.4 | 5 666 | 0.4 | 236 371 | 14.6 |
| Total | 1 053 119 | 65.1 | 298 735 | 18.5 | 201 378 | 12.4 | 22 196 | 1.4 | 6 030 | 0.4 1 617 746 | 100.0 | |
| Public | % | Corporates | % | Institutions | % | States | % | Other | % | Total | % | |
| EAD | ||||||||||||
| Low risk | 678 097 | 41.9 | 192 279 | 11.9 | 73 479 | 4.5 | 943 855 | 58.3 | ||||
| Normal risk | 89 886 | 5.6 | 124 430 | 7.7 | 2 274 | 0.1 | 216 590 | 13.4 | ||||
| Augmented risk | 35 250 | 2.2 | 75 178 | 4.6 | 2 042 | 0.1 | 112 470 | 7.0 | ||||
| High risk | 21 683 | 1.3 | 26 984 | 1.7 | 780 | 0.0 | 49 447 | 3.1 | ||||
| Defaults | 8 306 | 0.5 | 13 983 | 0.9 | 436 | 0.0 | 22 725 | 1.4 | ||||
| Non-rated exposures | 36 288 | 2.2 | ||||||||||
| standardised method | 10 789 | 0.7 | 8 180 | 0.5 | 4 559 | 0.3 | 187 022 | 11.6 | 25 821 | 1.6 | 236 371 | 14.6 |
| Total | 844 011 | 52.2 | 441 034 | 27.3 | 83 570 | 5.2 | 187 022 | 11.6 | 62 109 | 3.8 1 617 746 | 100.0 |
| Sweden | Estonia | Latvia Lithuania | Russia | Ukraine | Norway | Denmark | Finland | USA | Other | Total | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||||||
| Cash and balances with central banks | 2 614 | 2 948 | 4 982 | 3 381 | 611 | 398 | 1 745 | 275 | 90 | 25 | 39 | 17 109 |
| treasury bills and other bills eligible for refinancing with central banks |
24 243 | 117 | 893 | 380 | 1 280 | 8 011 | 34 924 | |||||
| Loans to credit institutions | 99 320 | 10 | 62 | 231 | 1 350 | 352 | 4 962 | 10 351 | 14 402 | 17 567 | 17 810 | 166 416 |
| Loans to the public | 1 015 013 | 57 919 | 37 023 | 35 477 | 6 220 | 6 337 | 16 968 | 5 845 | 5 363 | 1 005 | 56 | 1 187 226 |
| Bonds and other interest-bearing securities |
72 310 | 288 | 20 | 7 | 2 | 8 907 | 92 | 409 | 3 702 | 10 915 | 96 652 | |
| Derivatives* | 27 320 | 75 | 221 | 85 | 13 | 3 569 | 3 909 | 379 | 6 147 | 23 335 | 65 051 | |
| other financial assets | 7 032 | 948 | 734 | 499 | 86 | 75 | 4 269 | 1 | 27 | 11 | 4 | 13 687 |
| Contingent liabilities and commit ments |
||||||||||||
| Guarantees | 17 829 | 2 106 | 768 | 633 | 569 | 153 | 1 140 | 14 | 249 | 60 | 1 799 | 25 321 |
| Commitments | 142 451 | 6 180 | 3 018 | 3 259 | 480 | 485 | 8 608 | 126 | 5 483 | 466 | 4 825 | 175 382 |
| Total | 1 408 131 | 70 475 | 46 945 | 44 466 | 9 329 | 8 182 | 51 449 | 20 612 | 26 402 | 28 983 66 794 | 1 781 768 | |
| % of total | 79 | 4 | 3 | 2 | 1 | 0 | 3 | 1 | 1 | 2 | 4 | 100 |
* By swedbank AB, open netting agreements reduce the credit exposure to seK 16 368m.
| Sweden | Estonia | Latvia Lithuania | Russia | Ukraine | Norway | Denmark | Finland | USA | Other | Total | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||||||
| Cash and balances with central banks | 17 912 | 7 275 | 5 083 | 3 414 | 2 343 | 437 | 1 033 | 219 | 105 | 10 | 49 | 37 879 |
| treasury bills and other bills eligible for refinancing with central banks |
72 920 | 180 | 2 271 | 208 | 3 949 | 411 | 8 785 | 88 724 | ||||
| Loans to credit institutions | 19 815 | 971 | 19 | 2 246 | 545 | 9 612 | 12 573 | 542 | 12 692 | 33 116 | 92 131 | |
| Loans to the public | 1 065 790 | 72 156 | 51 391 | 45 551 | 9 793 | 8 676 | 17 006 | 3 274 | 6 094 | 2 032 | 8 904 | 1 290 667 |
| Bonds and other interest-bearing securities |
62 654 | 271 | 12 | 31 | 12 | 3 691 | 355 | 3 832 | 11 033 | 81 891 | ||
| Derivatives* | 36 647 | 377 | 2 193 | 168 | 2 825 | 1 116 | 1 042 | 7 320 | 21 282 | 72 970 | ||
| other financial assets | 10 620 | 774 | 648 | 1 218 | 174 | 377 | 1 191 | 1 | 15 | 9 | 11 | 15 038 |
| ments |
|---|
| ------- |
| Guarantees | 19 754 | 2 352 | 1 148 | 628 | 1 017 | 1 625 | 21 | 241 | 19 | 2 383 | 29 188 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Commitments | 138 473 | 7 628 | 4 659 | 5 240 | 1 174 | 1 232 | 9 577 | 816 | 5 960 | 1 746 | 5 617 | 182 122 |
| Total | 1 444 585 | 90 833 | 66 285 | 58 540 | 16 747 | 11 487 | 50 509 | 18 019 | 14 764 | 27 660 91 180 | 1 890 610 | |
| % of total | 76 | 5 | 4 | 3 | 1 | 1 | 3 | 1 | 1 | 1 | 5 | 100 |
* By swedbank AB, open netting agreements reduce the credit exposure to seK 15 417m.
| Sweden | Estonia | Latvia Lithuania | Ukraine | Norway | Denmark | Finland | USA | Other | Total | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| treasury bills and other bills eligible for refinancing with | |||||||||||
| central banks | 24 243 | 117 | 893 | 380 | 1 280 | 8 011 | 34 924 | ||||
| states | 23 452 | 117 | 893 | 1 252 | 7 747 | 33 461 | |||||
| Municipalities | 791 | 28 | 819 | ||||||||
| other | 380 | 264 | 644 | ||||||||
| Bonds and other interest-bearing securities | 72 310 | 288 | 20 | 7 | 2 | 8 907 | 92 | 409 | 3 702 | 10 915 | 96 652 |
| Housing finance institution | 60 904 | 3 335 | 64 239 | ||||||||
| Banks | 2 940 | 7 | 2 | 6 500 | 92 | 211 | 951 | 6 568 | 17 271 | ||
| other financial companies | 3 463 | 2 335 | 516 | 6 314 | |||||||
| Non-financial companies | 5 003 | 288 | 13 | 5 | 2 | 2 407 | 198 | 416 | 496 | 8 828 | |
| Total | 96 553 | 288 | 137 | 900 | 382 | 10 187 | 92 | 409 | 3 702 18 926 | 131 576 | |
| % of total | 74 | 0 | 0 | 1 | 0 | 8 | 0 | 0 | 3 | 14 | 100 |
| Sweden | Estonia | Latvia Lithuania | Ukraine | Norway | Denmark | Finland | USA | Other | Total | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| treasury bills and other bills eligible for refinancing with | |||||||||||
| central banks | 72 920 | 180 | 2 271 | 208 | 3 949 | 411 | 8 785 | 88 724 | |||
| states | 72 909 | 180 | 2 271 | 3 922 | 411 | 8 785 | 88 478 | ||||
| Municipalities | 11 | 27 | 38 | ||||||||
| other | 208 | 0 | 208 | ||||||||
| Bonds and other interest-bearing securities | 62 654 | 271 | 12 | 31 | 12 | 3 691 | 355 | 3 832 | 11 033 | 81 891 | |
| Housing finance institution | 48 315 | 6 371 | 54 686 | ||||||||
| Banks | 6 405 | 17 | 12 | 31 | 1 873 | 242 | 1 280 | 3 458 | 13 318 | ||
| other financial companies | 2 060 | 91 | 12 | 128 | 1 452 | 1 029 | 4 772 | ||||
| Non-financial companies | 5 874 | 163 | 1 690 | 113 | 1 100 | 175 | 9 115 | ||||
| Total | 135 574 | 271 | 192 | 2 302 | 220 | 7 640 | 766 | 3 832 19 818 | 170 615 | ||
| % of total | 80 | 0 | 0 | 1 | 0 | 5 | 0 | 2 | 12 | 100 |
| Loans which are not impaired | Impaired loans | |||||||
|---|---|---|---|---|---|---|---|---|
| Before portfolio provisions | Portfolio provisions |
After portfo lio provisions |
Before provisions |
Provisions | After provisions |
|||
| Performing | Past due | |||||||
| Geographical distribution | ||||||||
| sweden | 975 878 | 1 708 | 992 | 976 594 | 1 882 | 1 100 | 782 | 977 376 |
| estonia | 54 300 | 1 827 | 633 | 55 494 | 4 722 | 2 297 | 2 425 | 57 919 |
| Latvia | 30 876 | 1 209 | 724 | 31 361 | 11 259 | 5 597 | 5 662 | 37 023 |
| Lithuania | 30 638 | 2 120 | 337 | 32 421 | 6 529 | 3 494 | 3 035 | 35 456 |
| russia | 5 356 | 30 | 121 | 5 265 | 1 939 | 984 | 955 | 6 220 |
| ukraine | 3 468 | 108 | 490 | 3 086 | 7 957 | 4 706 | 3 251 | 6 337 |
| Norway | 16 798 | 5 | 16 803 | 403 | 238 | 165 | 16 968 | |
| Denmark | 2 253 | 10 | 2 263 | 12 | 3 | 10 | 2 273 | |
| Finland | 5 363 | 5 363 | 5 363 | |||||
| usA | 1 005 | 1 005 | 1 005 | |||||
| other | 56 | 56 | 56 | |||||
| Loans to the public excluding the Swedish National Debt | ||||||||
| Office and repurchase agreements | 1 125 992 | 7 017 | 3 297 | 1 129 712 | 34 703 | 18 418 | 16 285 | 1 145 996 |
| Sector/industry | ||||||||
| private customers | 646 945 | 3 885 | 534 | 650 296 | 9 799 | 3 744 | 6 055 | 656 351 |
| Mortgage loans, private | 609 263 | 3 219 | 264 | 612 218 | 6 834 | 2 612 | 4 222 | 616 440 |
| other, private | 37 682 | 666 | 270 | 38 078 | 2 965 | 1 132 | 1 833 | 39 911 |
| Corporate customers | 479 047 | 3 132 | 2 763 | 479 416 | 24 904 | 14 674 | 10 230 | 489 646 |
| Agriculture, forestry, fishing | 58 706 | 96 | 86 | 58 716 | 710 | 335 | 375 | 59 091 |
| Manufacturing | 27 591 | 214 | 519 | 27 286 | 5 138 | 3 095 | 2 043 | 29 329 |
| public sector and utilities | 15 805 | 318 | 46 | 16 077 | 133 | 39 | 94 | 16 171 |
| Construction | 11 971 | 114 | 159 | 11 926 | 2 325 | 1 502 | 823 | 12 749 |
| retail | 22 083 | 170 | 307 | 21 946 | 2 862 | 1 818 | 1 044 | 22 990 |
| transportation | 12 013 | 554 | 137 | 12 430 | 1 182 | 551 | 631 | 13 061 |
| shipping | 15 719 | 120 | 15 599 | 40 | 34 | 6 | 15 605 | |
| Hotels och restaurants | 6 700 | 57 | 87 | 6 670 | 530 | 290 | 240 | 6 910 |
| Information and communications | 2 209 | 5 | 33 | 2 181 | 66 | 31 | 35 | 2 216 |
| Finance and insurance | 10 681 | 5 | 31 | 10 655 | 148 | 109 | 39 | 10 694 |
| property management | 144 818 | 534 | 829 | 144 523 | 8 766 | 5 093 | 3 673 | 148 196 |
| Housing cooperatives | 71 880 | 64 | 71 816 | 32 | 19 | 13 | 71 829 | |
| professional services | 27 860 | 92 | 158 | 27 794 | 747 | 528 | 219 | 28 013 |
| other corporate lending | 51 010 | 974 | 187 | 51 797 | 2 225 | 1 230 | 995 | 52 792 |
| Loans to the public excluding the Swedish National Debt | ||||||||
| Office and repurchase agreements | 1 125 992 | 7 017 | 3 297 | 1 129 712 | 34 703 | 18 418 | 16 285 | 1 145 996 |
| Collateral held as security | ||||||||
| residential properties incl. Condominiums | 727 847 | 3 247 | 327 | 730 767 | 10 370 | 4 349 | 6 021 | 736 788 |
| other real estate | 154 019 | 1 464 | 1 174 | 154 309 | 14 117 | 7 666 | 6 451 | 160 760 |
| Municipalities etc. | 23 427 | 40 | 4 | 23 463 | 41 | 6 | 35 | 23 498 |
| Chattel mortgages | 11 976 | 14 | 54 | 11 936 | 1 226 | 659 | 566 | 12 502 |
| Guarantees | 22 703 | 31 | 48 | 22 686 | 989 | 678 | 311 | 22 997 |
| unsecured | 97 849 | 346 | 108 | 98 087 | 2 533 | 1 942 | 591 | 98 678 |
| other collateral | 88 172 | 1 875 | 1 583 | 88 464 | 5 428 | 3 119 | 2 309 | 90 773 |
| Loans to the public excluding the Swedish National Debt Office and repurchase agreements |
1 125 992 | 7 017 | 3 297 | 1 129 712 | 34 703 | 18 418 | 16 285 | 1 145 996 |
| swedish National Debt office | 1 | 1 | 1 | |||||
| Loans to swedish credit institutions | 51 285 | 51 285 | 51 285 | |||||
| Loans to foreign credit institutions Loans to swedish National Debt office, repurchase agree |
75 136 | 75 136 | 75 | 76 | –1 | 75 135 | ||
| ments | 19 778 | 19 778 | 19 778 | |||||
| Loans to swedish credit institutions, repurchase agreements | 14 705 | 14 705 | 14 705 | |||||
| Loans to Foreign credit institutions, repurchase agreements | 25 291 | 25 291 | 25 291 | |||||
| Loans to swedish public, repurchase agreements | 15 666 | 15 666 | 15 666 | |||||
| Loans to Foreign public, repurchase agreements | 5 785 | 5 785 | 5 785 | |||||
| Loans to the public and credit institutions | 1 333 639 | 7 017 | 3 297 | 1 337 359 | 34 778 | 18 494 | 16 284 | 1 353 643 |
| Loans which are not impaired | Impaired loans | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Before portfolio provisions | Portfolio | After portfo | Before | After | |||||
| provisions | lio provisions | provisions | Provisions | provisions | |||||
| Performing | Past due | ||||||||
| Geographical distribution | |||||||||
| sweden | 973 852 | 2 017 | 1 144 | 974 726 | 2 444 | 1 208 | 1 237 | 975 960 | |
| estonia | 66 977 | 2 967 | 740 | 69 204 | 5 465 | 2 513 | 2 952 | 72 156 | |
| Latvia | 42 898 | 2 438 | 1 157 | 44 179 | 13 401 | 6 189 | 7 212 | 51 391 | |
| Lithuania | 39 806 | 2 717 | 668 | 41 855 | 7 705 | 4 009 | 3 696 | 45 551 | |
| russia | 8 940 | 99 | 257 | 8 782 | 2 238 | 1 227 | 1 011 | 9 793 | |
| ukraine | 6 698 | 188 | 1 162 | 5 724 | 8 180 | 5 228 | 2 952 | 8 676 | |
| Norway | 16 834 | 16 834 | 498 | 326 | 172 | 17 006 | |||
| Denmark | 3 258 | 2 | 3 256 | 20 | 2 | 18 | 3 274 | ||
| Finland | 6 094 | 6 094 | 6 094 | ||||||
| usA | 2 032 | 2 032 | 2 032 | ||||||
| other | 264 | 264 | 264 | ||||||
| Loans to the public excluding the Swedish National Debt | |||||||||
| Office and repurchase agreements | 1 167 653 | 10 426 | 5 129 | 1 172 950 | 39 951 | 20 702 | 19 250 | 1 192 198 | |
| Sector/industry | |||||||||
| private customers | 633 805 | 5 925 | 780 | 638 950 | 9 585 | 3 689 | 5 896 | 644 845 | |
| Mortgage loans, private | 585 534 | 4 248 | 447 | 589 335 | 5 867 | 1 925 | 3 942 | 593 277 | |
| other, private | 48 270 | 1 677 | 333 | 49 614 | 3 718 | 1 764 | 1 954 | 51 568 | |
| Corporate customers | 533 848 | 4 501 | 4 349 | 534 000 | 30 366 | 17 013 | 13 353 | 547 353 | |
| Agriculture, forestry, fishing | 57 183 | 300 | 111 | 57 372 | 790 | 338 | 452 | 57 825 | |
| Manufacturing | 32 675 | 445 | 1 152 | 31 968 | 4 911 | 2 817 | 2 094 | 34 062 | |
| public sector and utilities | 15 710 | 90 | 28 | 15 772 | 72 | 52 | 20 | 15 792 | |
| Construction | 12 585 | 220 | 232 | 12 573 | 2 972 | 1 903 | 1 069 | 13 642 | |
| retail | 27 217 | 381 | 621 | 26 977 | 3 345 | 2 057 | 1 288 | 28 265 | |
| transportation | 14 895 | 580 | 253 | 15 222 | 1 478 | 713 | 765 | 15 988 | |
| shipping | 13 417 | 0 | 11 | 13 406 | 37 | 36 | 1 | 13 407 | |
| Hotels och restaurants | 7 240 | 77 | 126 | 7 191 | 679 | 318 | 361 | 7 552 | |
| Information and communications | 1 805 | 16 | 9 | 1 812 | 60 | 26 | 34 | 1 845 | |
| Finance and insurance | 9 931 | 8 | 39 | 9 900 | 108 | 72 | 36 | 9 936 | |
| property management | 160 773 | 776 | 895 | 160 654 | 12 207 | 6 481 | 5 726 | 166 380 | |
| Housing cooperatives | 70 872 | 70 872 | 41 | 23 | 18 | 70 890 | |||
| professional services | 37 577 | 426 | 196 | 37 807 | 808 | 638 | 170 | 37 977 | |
| other corporate lending | 71 967 | 1 182 | 676 | 72 473 | 2 858 | 1 539 | 1 319 | 73 792 | |
| Loans to the public excluding the Swedish National Debt | |||||||||
| Office and repurchase agreements | 1 167 653 | 10 426 | 5 129 | 1 172 950 | 39 951 | 20 702 | 19 250 | 1 192 198 | |
| Collateral held as security | |||||||||
| residential properties incl. Condominiums | 706 866 | 4 385 | 1 870 | 709 381 | 11 147 | 4 476 | 6 671 | 716 052 | |
| other real estate | 160 906 | 2 433 | 163 339 | 16 937 | 7 776 | 9 161 | 172 501 | ||
| Municipalities etc. | 27 704 | 60 | 7 | 27 757 | 29 | 1 | 28 | 27 785 | |
| Chattel mortgages | 14 784 | 18 | 352 | 14 450 | 1 294 | 601 | 693 | 15 143 | |
| Guarantees | 26 787 | 78 | 26 865 | 1 344 | 612 | 732 | 27 597 | ||
| unsecured | 124 646 | 611 | 1 386 | 123 871 | 2 665 | 2 119 | 546 | 124 417 | |
| other collateral | 105 961 | 2 841 | 1 514 | 107 287 | 6 534 | 5 117 | 1 418 | 108 703 | |
| Loans to the public excluding the Swedish National Debt | |||||||||
| Office and repurchase agreements | 1 167 653 | 10 426 | 5 129 | 1 172 950 | 39 951 | 20 702 | 19 250 | 1 192 198 | |
| swedish National Debt office | 60 001 | 60 001 | 60 001 | ||||||
| Loans to swedish credit institutions | 40 924 | 40 924 | 40 924 | ||||||
| Loans to foreign credit institutions | 30 745 | 30 745 | 181 | 181 | 30 745 | ||||
| Loans to swedish National Debt office, repurchase agree | |||||||||
| ments | 19 235 | 19 235 | 19 235 | ||||||
| Loans to swedish credit institutions, repurchase agreements | 9 041 | 4 | 9 037 | 9 037 | |||||
| Loans to Foreign credit institutions, repurchase agreements | 11 421 | 11 421 | 11 421 | ||||||
| Loans to swedish public, repurchase agreements | 10 594 | 10 594 | 10 594 | ||||||
| Loans to Foreign public, repurchase agreements | 8 643 | 8 643 | 8 643 | ||||||
| Loans to the public and credit institutions | 1 358 257 | 10 426 | 5 133 | 1 363 550 | 40 132 | 20 883 | 19 250 | 1 382 798 |
| Sweden | Estonia | Latvia Lithuania | Russia | Ukraine | Norway | Denmark | Total | ||
|---|---|---|---|---|---|---|---|---|---|
| Impaired loans | |||||||||
| Carrying amount before provisions | 1 956 | 4 722 | 11 259 | 6 529 | 1 939 | 7 958 | 403 | 12 | 34 778 |
| provisions | 1 176 | 2 297 | 5 596 | 3 494 | 984 | 4 706 | 238 | 3 | 18 494 |
| Carrying amount after provisions | 781 | 2 425 | 5 662 | 3 035 | 955 | 3 251 | 165 | 10 | 16 284 |
| share of impaired loans, net % | 0.08 | 4.15 | 15.20 | 8.51 | 12.68 | 42.87 | 0.97 | 1.20 | |
| share of impaired loans, gross % | 0.20 | 7.69 | 25.85 | 16.52 | 22.44 | 62.26 | 2.34 | 2.53 | |
| Carrying amount of impaired loans that returned to a status as normal during the period |
2 | 433 | 252 | 485 | 120 | 1 292 | |||
| Past due loans that are not impaired | |||||||||
| Valuation category, loans and receivables | |||||||||
| Loans with past due amount, | 752 | 1 827 | 1 209 | 2 120 | 30 | 108 | 5 | 10 | 6 061 |
| 5–30 days | 249 | 779 | 856 | 1 681 | 18 | 67 | 5 | 10 | 3 665 |
| 31–60 days | 306 | 734 | 317 | 384 | 6 | 41 | 1 787 | ||
| more than 60 days | 197 | 314 | 37 | 55 | 6 | 609 | |||
| Valuation category, fair value through profit or loss | |||||||||
| Loans with past due amount, | 956 | 956 | |||||||
| 5–30 days | 466 | 466 | |||||||
| 31–60 days | 248 | 248 | |||||||
| more than 60 days | 242 | 242 | |||||||
| Total | 1 708 | 1 827 | 1 209 | 2 120 | 30 | 108 | 5 | 10 | 7 017 |
| Loans which were restructured during the period and which are not impaired or past due |
|||||||||
| Carrying amount before restructuring | 452 | 1 776 | 2 841 | 1 122 | 176 | 6 367 | |||
| Carrying amount after restructuring | 409 | 1 776 | 2 840 | 1 122 | 176 | 6 323 |
Impaired loans are those for which it is likely that payment will not be received in accordance with the contract terms. A loan is not impaired if there is collateral that covers the principal, unpaid interest and any late fees by a satisfactory margin. specified above are the reserves allocated for impaired loans as well as for other lending where loss events have occurred but where individual loans have not yet been identified. Loss events include late or non-payments, situations where the borrower is likely to go bankrupt and domestic or local economic developments tied to non-payments, such as diminished asset values. the carrying amount for impaired loans generally corresponds to the value of the collateral. restructured loans refer to loans whose contractual terms have been amended due to the customer's reduced ability to pay. Common changes of contractual terms are different forms of respite for payments. the changes of contractual terms can be so significant that the loans also are considered as impaired loans, which is the case if the restructuring results in a decrease of the loan's carrying amount, one-off concessions excluded.
| Sweden | Estonia | Latvia Lithuania | Russia | Ukraine | Norway | Denmark | Total | ||
|---|---|---|---|---|---|---|---|---|---|
| Impaired loans | |||||||||
| Carrying amount before provisions | 2 625 | 5 465 | 13 401 | 7 705 | 2 238 | 8 180 | 498 | 20 | 40 132 |
| provisions | 1 389 | 2 513 | 6 189 | 4 009 | 1 227 | 5 228 | 326 | 2 | 20 883 |
| Carrying amount after provisions | 1 236 | 2 952 | 7 212 | 3 696 | 1 011 | 2 952 | 172 | 18 | 19 249 |
| share of impaired loans, net % | 0.13 | 4.01 | 13.97 | 8.10 | 9.31 | 33.13 | 1.01 | 0.56 | 1.39 |
| share of impaired loans, gross % | 0.27 | 7.11 | 22.72 | 15.32 | 18.13 | 53.46 | 2.87 | 0.62 | 2.85 |
| Carrying amount of impaired loans that returned to a status as normal during the period |
174 | 99 | 54 | 20 | 347 | ||||
| Past due loans that are not impaired | |||||||||
| Valuation category, loans and receivables | |||||||||
| Loans with past due amount, | 995 | 2 968 | 2 438 | 2 717 | 99 | 188 | 9 404 | ||
| 5–30 days | 239 | 1 924 | 1 121 | 1 872 | 57 | 118 | 5 332 | ||
| 31–60 days | 673 | 919 | 1 065 | 711 | 31 | 70 | 3 469 | ||
| more than 60 days | 83 | 126 | 252 | 133 | 10 | 603 | |||
| Valuation category, fair value through profit or loss | |||||||||
| Loans with past due amount, | 1 022 | 1 022 | |||||||
| 5–30 days | 542 | 542 | |||||||
| 31–60 days | 222 | 222 | |||||||
| more than 60 days | 258 | 258 | |||||||
| Total | 2 017 | 2 968 | 2 438 | 2 717 | 99 | 188 | 10 426 | ||
| Loans which were restructured during the period and which are not impaired or past due |
|||||||||
| Carrying amount before restructuring | 2 131 | 2 725 | 4 415 | 4 106 | 865 | 2 120 | 16 362 | ||
| Carrying amount after restructuring | 2 131 | 2 725 | 4 415 | 4 106 | 865 | 2 120 | 16 362 |
| Sweden | Estonia | Latvia | Lithuania | Russia | Ukraine | Norway | Denmark | Total | |
|---|---|---|---|---|---|---|---|---|---|
| Opening balance | 2 538 | 3 253 | 7 346 | 4 677 | 1 484 | 6 390 | 326 | 4 | 26 017 |
| New provisions | 1 025 | 415 | 1 373 | 1 253 | 56 | 627 | 4 749 | ||
| utilisation of previous provisions | –356 | –124 | –1 099 | –702 | –128 | –2 410 | |||
| reversal of previous provisions | –80 | –239 | –96 | –574 | –536 | –80 | –1 | –1 606 | |
| portfolio provisions for loans that are not impaired | –59 | –107 | –433 | –331 | –136 | –672 | –1 738 | ||
| Change in exchange rates | –899 | –269 | –769 | –491 | –299 | –486 | –8 | –3 220 | |
| Closing balance | 2 167 | 2 930 | 6 321 | 3 831 | 1 105 | 5 196 | 238 | 3 | 21 791 |
| total provision ratio for impaired loans, % (Including portfolio provi | |||||||||
| sion in relation to loans that individually are assessed as impaired) | 115 | 62 | 56 | 59 | 57 | 65 | 59 | 21 | 63 |
| provision ratio for individually assessed impaired loans, % | 58 | 49 | 50 | 54 | 51 | 59 | 59 | 21 | 53 |
| Sweden | Estonia | Latvia | Lithuania | Russia | Ukraine | Norway | Denmark | Total | |
|---|---|---|---|---|---|---|---|---|---|
| Opening balance | 1 856 | 1 299 | 1 566 | 710 | 218 | 572 | 132 | 1 | 6 354 |
| New provisions | 1 678 | 1 381 | 5 939 | 2 909 | 567 | 4 484 | 202 | 1 | 17 159 |
| utilisation of previous provisions | –172 | –63 | –116 | –113 | –3 | –468 | |||
| reversal of previous provisions | –119 | –53 | –65 | –5 | –51 | –10 | –303 | ||
| portfolio provisions for loans that are not impaired | 48 | 893 | 621 | 1 421 | 136 | 1 633 | 1 | 4 752 | |
| Change in exchange rates | –752 | –204 | –598 | –245 | 564 | –247 | 5 | 1 | –1 477 |
| Closing balance | 2 538 | 3 253 | 7 346 | 4 677 | 1 484 | 6 390 | 326 | 4 | 26 017 |
| total provision ratio for impaired loans, % (Including portfolio provi sion in relation to loans that individually are assessed as impaired) |
96 | 60 | 55 | 61 | 66 | 78 | 65 | 18 | 65 |
| provision ratio for individually assessed impaired loans, % | 49 | 46 | 46 | 52 | 55 | 64 | 65 | 10 | 52 |
| 2010 | 2009 | |
|---|---|---|
| Number | 1 | |
| exposures > 20 % of the capital base | ||
| exposures between 10 % and 20 % of the capital base | 10 124 | |
| Total | 10 124 | |
| usage of the 800 % limit, % | 10 |
When it grants repos, the Group receives securities that can be sold or pledged. the fair value of these securities corresponds to the carrying amount of the repos. the Group also receives collateral in the form of securities that can be sold or pledged for derivatives and other exposures. the fair value of such collateral as of year-end amounted to seK 0m (1 300). None of this collateral has been sold or pledged.
the Group takes over property to minimise credit impairments. repossessed properties are either divested immediately or held long-term to generate rental income and appreciate in value.
| 2010 | Operating income | Operating expenses |
Depreciation | Impairment | Gains/losses at disposal |
Net profit |
|---|---|---|---|---|---|---|
| properties recognised as inventory | 47 | 107 | 60 | |||
| Investment properties | 100 | 81 | 21 | 204 | –206 | |
| Vehicles | 41 | 219 | –1 | –261 | ||
| Total | 100 | 122 | 21 | 470 | 106 | –407 |
| 2010 | 2009 | |||||||
|---|---|---|---|---|---|---|---|---|
| Number | Carrying amount | Fair value | Number | Carrying amount | Fair value | |||
| Estonia | ||||||||
| properties recognised as inventory | 495 | 256 | 259 | |||||
| Investment properties | 55 | 214 | 215 | 106 | 152 | 152 | ||
| Vehicles | 318 | 41 | 41 | 278 | 37 | 37 | ||
| Total | 868 | 511 | 515 | 384 | 189 | 189 | ||
| Latvia | ||||||||
| properties recognised as inventory | 1 173 | 646 | 648 | 1 | 50 | 50 | ||
| Investment properties | 53 | 283 | 288 | 73 | 64 | 64 | ||
| Vehicles | 456 | 82 | 82 | 1 168 | 132 | 132 | ||
| other | 13 | 25 | 25 | |||||
| Total | 1 695 | 1 035 | 1 043 | 1 242 | 246 | 246 | ||
| Lithuania | ||||||||
| properties recognised as inventory | 194 | 92 | 92 | |||||
| Investment properties | 83 | 114 | 114 | |||||
| Vehicles | 723 | 203 | 285 | 275 | 679 | 679 | ||
| Total | 1 000 | 410 | 491 | 275 | 679 | 679 | ||
| Russia | ||||||||
| properties recognised as inventory | 2 | 1 | 1 | |||||
| Vehicles | 4 | 3 | 3 | 96 | 22 | 22 | ||
| Total | 6 | 4 | 4 | 96 | 22 | 22 | ||
| Ukraine | ||||||||
| Investment properties | 888 | 419 | 419 | 710 | 11 | 11 | ||
| Total | 888 | 419 | 419 | 710 | 11 | 11 | ||
| Sweden | ||||||||
| properties recognised as inventory | 18 | 55 | 55 | 2 | 84 | 84 | ||
| Investment properties | 1 | 216 | 216 | |||||
| shares and other participating interests | 1 | 2 | 2 | 207 | 207 | |||
| Vehicles | 20 | 4 | 4 | |||||
| other | 24 | 6 | 6 | |||||
| Total | 64 | 282 | 282 | 2 | 291 | 291 | ||
| Other countries | ||||||||
| properties recognised as inventory | 43 | 122 | 122 | 2 | 64 | 64 | ||
| Investment properties | 8 | 880 | 948 | 79 | 239 | 239 | ||
| shares and other participating interests | 1 | 183 | 183 | |||||
| Total | 52 | 1 185 | 1 252 | 81 | 303 | 303 | ||
| Total | 4 573 | 3 846 | 4 007 | 2 790 | 1 741 | 1 741 |
Liquidity risks arise because the maturity structures of the Group's assets and liabilities, including derivatives, do not coincide. the Group defines liquidity risk as the risk of payment commitments remaining unfulfilled on each maturity date without a significant increase in the cost of obtaining payment. the Group actively manages its liquidity in order to avoid these risks.
Managing liquidity risks is a significant aspect of swedbank's operations. these risks are therefore measured, controlled and forecasted continuously. Liquidity risks are managed centrally at swedbank. Group treasury has overarching responsibility for managing the Group's liquidity within the limits established by the Board of Directors. this management includes maintaining a liquidity reserve, which was expanded during the year, in order to prepare for payment commitments on such days and over the longer term. the liquidity reserve consists of liquid means and high-quality liquid securities eligible for refinancing with central banks as well as other liquid assets. Furthermore, the Group's liquidity situation is continuously monitored and its funding is planned in such a way as to avoid excessive short-term financing needs.
An improved internal pricing method reflecting liquidity risk was developed in 2010. In addition, a project designed to improve swedbank's liquidity management was started during the year.
Monitoring and limiting of liquidity risks is done at a Group level and by individual unit and currency. At the Group level swedbank uses limits based on survival periods, i.e., the period during which the cumulative cash flow is positive, including the liquidity reserve, without access to the capital market. Individual currencies are limited in terms of how large negative cash flows are allowed to be during a single day or other predetermined
period of time. swedbank regularly stress tests its liquidity to better prepare for and ensure that the bank can handle situations where various financing sources are unavailable.
Good relations with lenders and active marketing of the Group as a borrower in the world's most important capital markets are also strategically important to the Group's liquidity situation. swedbank therefore works actively to maintain and further develop a well-diversified funding base with regard to the number of markets and the number of investors. By actively using different funding programmes in different currencies and different maturities in large parts of the world, swedbank can offer debt investors many alternative investments, and thus maintain the funding base. During the year, swedbank has significantly strengthened its liquidity and extended the maturity structure of its liabilities through active efforts in various funding markets.
In the summary of maturities, undiscounted contractual cash flows are distributed on the basis of remaining maturities until the agreed time of maturity. For lending to the public amortising loans are distributed based on the amortisation schedule. Liabilities whose repayment date may depend on various options are distributed based on the earliest date on which repayment could be demanded. Differences between nominal amount and carrying amount, the discount effect, are reported together with items without an agreed maturity date where the anticipated realisation date has not been determined in the column, Without maturity date/change in value.
| Payable on | No maturity discount |
|||||||
|---|---|---|---|---|---|---|---|---|
| Remaining maturity 2010 | demand | < 3 mths. | 3 mths.—1 yr | 1—5 yrs | 5—10 yrs | > 10 yrs | effect | Total |
| Assets | ||||||||
| Cash and balances with central banks | 17 109 | 17 109 | ||||||
| treasury bills and other bills eligible for refinan cing with central banks |
14 312 | 5 665 | 4 485 | 5 622 | 1 551 | 3 289 | 34 924 | |
| Loans to credit institutions | 40 857 | 115 288 | 2 167 | 6 459 | 114 | 603 | 929 | 166 417 |
| Loans to the public | 33 540 | 121 708 | 65 538 | 170 432 | 90 347 | 707 114 | –1 453 | 1 187 226 |
| Bonds and other interest-bearing securities | 7 666 | 24 259 | 58 784 | 4 240 | 34 | 1 669 | 96 652 | |
| Financial assets for which the customers bear the investment risk |
436 | 1 111 | 5 943 | 6 101 | 26 648 | 60 389 | 100 628 | |
| shares and participating interests | 8 891 | 8 891 | ||||||
| Derivatives | 8 | 21 740 | 13 806 | 17 244 | 1 661 | 73 | 10 519 | 65 051 |
| Intangible fixed assets | 15 794 | 15 794 | ||||||
| tangible assets | 5 679 | 5 679 | ||||||
| other assets | 17 280 | 30 | 17 310 | |||||
| Total | 91 514 | 298 430 | 112 576 | 263 347 | 108 085 | 736 023 | 105 706 | 1 715 681 |
| Liabilities | ||||||||
| Amounts owed to credit institutions | 55 208 | 69 864 | 8 971 | 2 880 | 391 | 13 | –561 | 136 766 |
| Deposits and borrowings from the public | 441 015 | 63 165 | 23 492 | 6 219 | 256 | 90 | 534 237 | |
| Debt securities in issue, etc. | 93 774 | 150 389 | 388 992 | 45 557 | 13 207 | –5 402 | 686 517 | |
| Financial liabilities where customers bear the investment risk |
483 | 1 325 | 6 973 | 7 358 | 31 818 | 53 031 | 100 988 | |
| Derivatives | 8 | 19 653 | 14 471 | 26 256 | 7 310 | 1 922 | –3 685 | 65 935 |
| other liabilities | 63 571 | 2 467 | 1 310 | 1 668 | 69 016 | |||
| subordinated liabilities | 17 364 | 8 942 | 881 | 27 187 | ||||
| equity | 95 035 | 95 035 | ||||||
| Total | 496 231 | 310 510 | 201 115 | 432 630 | 79 904 | 55 992 | 139 299 | 1 715 681 |
the large part of deposits from the public is contractually payable on demand. Despite the contractual terms, the deposits are essentialy a stable and a long-term source of funding.
| Undiscounted contractual cash flows | ||||||||
|---|---|---|---|---|---|---|---|---|
| Remaining maturity 2009 | Payable on demand |
< 3 mths. | 3 mths.—1 yr | 1—5 yrs | 5—10 yrs | > 10 yrs | No maturity/ discount effect |
Total |
| Assets | ||||||||
| Cash and balances with central banks | 37 879 | 37 879 | ||||||
| treasury bills and other bills eligible for refinan | ||||||||
| cing with central banks | 68 807 | 5 769 | 1 116 | 4 145 | 5 902 | 2 985 | 88 724 | |
| Loans to credit institutions | 18 017 | 61 726 | 6 989 | 3 274 | 117 | 690 | 1 318 | 92 131 |
| Loans to the public | 33 797 | 188 270 | 61 090 | 199 735 | 106 511 | 692 364 | 8 900 | 1 290 667 |
| Bonds and other interest-bearing securities | 10 405 | 25 594 | 41 537 | 2 119 | 98 | 2 138 | 81 891 | |
| Financial assets for which the customers bear the investment risk |
178 | 987 | 4 862 | 4 776 | 21 914 | 45 477 | 78 194 | |
| shares and participating interests | 12 245 | 12 245 | ||||||
| Derivatives | 4 116 | 29 419 | 27 778 | 24 783 | 2 997 | 832 | –16 956 | 72 969 |
| Intangible fixed assets | 17 555 | 17 555 | ||||||
| tangible assets | 3 815 | 3 815 | ||||||
| other assets | 15 480 | 3 136 | 1 | 18 617 | ||||
| Total | 93 809 | 374 285 | 131 343 | 275 308 | 120 665 | 721 800 | 77 477 | 1 794 687 |
| Liabilities | ||||||||
| Amounts owed to credit institutions | 105 592 | 20 648 | 102 123 | 1 979 | 497 | 80 | 768 | 231 687 |
| Deposits and borrowings from the public | 413 940 | 49 472 | 33 300 | 7 260 | 225 | 227 | 504 424 | |
| Debt securities in issue, etc. | 80 758 | 169 542 | 399 930 | 27 347 | 14 785 | 10 896 | 703 258 | |
| Financial liabilities where customers bear the investment risk |
186 | 1 073 | 5 276 | 5 287 | 23 489 | 44 821 | 80 132 | |
| Derivatives | –180 | 34 761 | 26 454 | 28 496 | 3 709 | –117 | –20 951 | 72 172 |
| other liabilities | 58 342 | 10 152 | 1 979 | 2 351 | 2 233 | 75 057 | ||
| subordinated liabilities | 1 259 | 22 403 | 12 992 | 1 329 | 37 983 | |||
| equity | 89 974 | 89 974 | ||||||
| Total | 519 352 | 244 167 | 343 903 | 444 920 | 61 819 | 53 689 | 126 837 | 1 794 687 |
the large part of deposits from the public is contractually payable on demand. Despite the contractual terms, the deposits are essentialy a stable and a long-term source of funding.
| Turnover during the year | 2010 | 2009 |
|---|---|---|
| Commercial papers with state guarantee | ||
| Opening balance | 60 689 | 79 472 |
| Issued | 140 406 | |
| repaid | –60 689 | –160 574 |
| Change in market values | 156 | |
| Change in exchange rates | 1 229 | |
| Closing balance | 60 689 | |
| Other commercial papers | ||
| Opening balance | 49 884 | 60 458 |
| Issued | 284 652 | 215 133 |
| repaid | –268 179 | –226 466 |
| Change in market values | –1 519 | 23 |
| Change in exchange rates | –463 | 736 |
| Closing balance | 64 375 | 49 884 |
| Covered bond loans | ||
| Opening balance | 341 372 | 271 236 |
| Issued | 237 958 | 169 962 |
| repurchased | –57 635 | –80 348 |
| repaid | –103 351 | –19 275 |
| Change in market values | –7 975 | –203 |
| Closing balance | 410 369 | 341 372 |
| Turnover during the year | 2010 | 2009 |
|---|---|---|
| Bond loans with state guarantee | ||
| Opening balance | 181 587 | 60 295 |
| Issued | 131 301 | |
| repaid | –14 035 | –921 |
| Change in market values | 342 | 1 004 |
| Change in exchange rates | –11 849 | –10 092 |
| Closing balance | 156 045 | 181 587 |
| Other interest-bearing bond loans | ||
| Opening balance | 32 721 | 86 530 |
| Issued | 23 524 | 3 622 |
| repurchased | –33 | |
| repaid | –18 128 | –56 169 |
| Change in market values | 264 | –580 |
| Change in exchange rates | –3 152 | –682 |
| Closing balance | 35 196 | 32 721 |
| Structured products | ||
| Opening balance | 37 004 | 35 374 |
| Issued | 3 768 | 14 637 |
| repurchased | –4 901 | –10 522 |
| repaid | –16 552 | –2 431 |
| Change in market values | 1 217 | –4 |
| Change in exchange rates | –4 | –50 |
| Closing balance | 20 532 | 37 004 |
| Total debt securities in issue | 686 517 | 703 258 |
Market risks refer to interest rate, currency and share price risks. the risks are measured by means of model-based risk measurement and traditional sensitivity measures.
the primary objective of swedbank's activity in various financial markets is the desire to satisfy customers' long-term needs and facilitate swedbank's own financing. the secondary objective is to create additional income by taking positions. risk taking is always weighed against expected return. Market risks arise in swedbank's trading operations (in conjunction with trading on financial markets) as well as structurally in its other operations. Consequently, the management of market risks can be divided into these two main areas. swedbank's total risk-taking is governed by limits set by the Board on the nature and size of financial risk-taking. only so-called risk-taking units, i.e., units assigned a risk mandate by the Ceo, are permitted to take financial risks. risks in these units are measured, monitored and reported daily to the Ceo and senior executives in swedbank. every risk-taking unit has limits for various types of risks, which are monitored systematically using a daily routine. the dominant market risks within swedbank are of a structural or strategic nature and are managed centrally by Group treasury, which is responsible for minimising possible negative impacts on swedbank's net income and equity. one example of structural risks include interest rate risks, which arise when the interest fixing periods in swedbank's lending operations do not precisely correspond with the interest fixing periods in its financing. Another example is currency risks which arise when deposits and lending are conducted in different currencies. strategic risks mainly comprise currency risks associated with holdings in foreign operations where it is not possible to hedge these risks. swedbank's international expansion in recent years has resulted in an increase in currency risk, including strategic currency risk. However, the currency exposure has decreased during the year as the devaluation risk in the Baltic currencies has decreased in line with an economic recovery, and became even lower after the estonian Kroon was converted to euro in January 2011. Market risks in swedbank's trading operations are low in relation to swedbank's total risks as illustrated by the fact that their share of the total risk-weighted amount in the calculation of capital adequacy is about 5.4 per cent as of 31 December 2010.
swedbank measures market risks – those that arise in trading operations but also some of the risks of more structural nature, such as interest rate risk in the mortgage portfolio – with a Value-at-risk (Var) model. Var expresses a possible loss level for the current portfolio which is so high there is little likelihood it can be exceeded during a specific time horizon. swedbank uses a 99-percent probability and a time horizon of one day. this means that the potential loss for the portfolio statistically will exceed the Var amount one day out of 100.
swedbank's Var model complies with regulatory requirements. Var involves using a model for movements in interest rates, stock prices and exchange rates to estimate a probability distribution for the change in value of swedbank's total portfolio. Volatilities are also risk factors in the model:for exemple, interest rate Var includes both the impacts of interest rate level changes and changes in the interest rate implied volatilities. Var is based on the hypothetical assumption that the portfolio will remain unchanged over a specific time horizon. In swedbank's Var model the probability distribution is estimated daily with a Monte Carlo simulation, where the scenarios are based on historical market price changes over the last year. the horizon is one trading day. Var is then calculated using the probability distribution as a basis. scenarios are based on historical market data, including historical risk factor correlation. thus, the model provides a richer and more balanced risk measure than single sensitivities. Also, different types of market risk figures can be compared as well aggregated into one reflecting the overall risk.
swedbank's Var model is continuously evaluated through "hypothetical backtesting", a systematic method of assessing the accuracy of the probability distribution of the possible portfolio results generated by the model. In trading operations, daily results are also used to assess Var through so-called "actual backtesting". the hypothetical backtesting result is calculated as the change in the value of the portfolio over one day, during which positions are kept constant while market prices are updated. the results of the backtesting are then compared with Var and, by carrying out this calculation for a large number of days, it is possible to assess the reliability of the model. Hypothetical backtesting is carried out daily for swedbank as a whole and for individual risk-taking units. the backtesting results are analyzed, commented and reported to the Ceo on a monthly basis. All breaches of Var for positions in the trading book are reported to the swedish Financial supervisory Authority.
occasionally, the historical correlations on which the Var calculation is based do not apply, e.g. in stressful situations in the financial markets. For the individual types of risk, interest rate, equity price and currency risks, complementary risk measures and limits are therefore used based on sensitivity to changes in various market prices. In addition, stress tests are carried out to estimate potential losses in case of extraordinary market conditions, based on a number of scenarios where interest rates, equity prices, exchange rates and corresponding volatilities are shifted. this is done both regularly as well as ad-hoc based on identified risk scenarios, whenever needed.
Here, Var excludes market risks in swedbank ukraine and strategic currency risks. In the case of swedbank ukraine, Var is misleading due to the illiquid and undeveloped financial markets in ukraine. For strategic currency risks, a Var measure that is based on a one-day horizon is not a relevant measure. the extension of the wholesale funding maturity profile reduced interest rate risk (and thus Var) during the first half of 2010. During the latter part of the year, the building up of a liquidity reserve, and an extended duration in the mortgage portfolio, brought the risk level in terms of Var back to approximately the same level as during the beginning of the year. Due to poorer liquidity in the swedish equity derivatives market, the position taking has been slightly more conservative in equity derivatives 2010, which is also reflected in the adjacent table. Furthermore it is evident that swedbank's Var during 2010 was slightly lower than it was for the corresponding period in 2009.
| Jan.–Dec. 2010 (2009) | 31 Dec. | 31 Dec. | |||
|---|---|---|---|---|---|
| SEKm | Max | Min | Average | 2010 | 2009 |
| Interest-rate risk | 127 (129) | 50 (83) | 81 (108) | 110 | 120 |
| Currency risk | 19 (14) | 2 (1) | 7 (7) | 7 | 7 |
| share price risk | 12 (25) | 2 (7) | 6 (14) | 6 | 8 |
| Diversification | –32 (–33) | –2 (–8) | –12 (–19) | –14 | –14 |
| Total | 126 (135) | 52 (83) | 82 (110) | 109 | 121 |
the reported risks include positions that are not marked-to-market and consequently have no direct impact on the Group's results.
trading operations are conducted mainly by swedbank Markets for the primary purpose of satisfying customer demand for transactions in the financial market. position-taking is limited in scope and the risk level in these operations is low.
swedbank's trading operations had a good year. Despite relatively difficult market conditions, trading operations have managed to keep risks at a stable level with few large scale losses combined with good earnings. this is typical for trading operations conducted with a low level of risk based on customer demand for financial solutions and investments. over the year, Var in trading operations was at most seK 50m, at least seK 19m and averaged seK 32m. the number of days on which losses were reported amounted to 48.
Derivatives are financial instruments whose value is mainly dependent on an underlying asset, and in the Group are used by swedbank Markets, Group treasury and certain subsidiaries, particularly swedbank Mortgage. In swedbank Markets, derivatives are used to meet customer needs and in market-maker activities to cover and take market risk positions. equity-related derivatives are used to, among other things, cover risks associated with warrants and index-linked bonds that have been issued. In other units, derivatives are used primarily to reduce interest-rate and currency risks associated with the services the Group offers customers or with funding its operations. Derivatives impact the Group's financial risks because the value of the instruments is affected by movements in interest rates and the price of currencies and equities. Financial risks associated with derivatives are limited and monitored as part of the overall management of financial risks. the cash flows that arise from the Group's derivative transactions are monitored and followed up in the same way as other cash flows within the Group. In note G29 Derivatives, the Group's total derivative positions as of 31 December 2010 are divided into interest, currency and equity derivatives, etc. Contracts with positive and negative market values are summarised separately. the table also indicates how large a share of the Group's derivatives is settled via clearing organisations. In contracts with positive market values, the Group has a receivable from the counterparty. to the extent a contract is settled via a clearing organisation, the bank has a receivable from it. the clearing organisation manages and reduces counterparty risks through the use of margin security and continuous settlements. As a result, the counterparty risk in these contracts is negligible and is not considered a credit risk for the Group. Nor are these contracts included in the risk-weighted amount when calculating the bank's capital requirements for counterparty risks. With other contracts, so-called otC derivatives, a positive market value can be said to entail a credit risk. to reduce the credit risk in otC derivatives, the Group generally signs agreements with counterparties that contain a clause on netting, i.e., in the event of the counterparty's insolvency, any transactions by the Group with negative market values can be netted against transactions with positive market values and in that way reduce the credit exposure to the total net value of the derivatives.
Interest-rate risk refers to the risk that the value of the Group's assets, liabilities and interest-related derivatives are negatively affected by changes in interest rates or other relevant risk factors.
the Group's interest rate risks arise when interest fixing periods on assets and liabilities, including derivatives, do not coincide. the Group's fixed-rate assets consist primarily of loans. the interest rate risk in these assets is largely eliminated either because they are financed with fixed-term funding or because the Group has arranged swap contracts where it pays a fixed interest rate. the vast majority of swedbank's fixed interest rate loans have credit agreements that do not permit prepayment without compensating swedbank for any losses that may arise due to changes in the interest rates since the loan was paid out, so-called prepayment fee. Demand deposits can also be seen as partially interest linked as there are large volumes of deposits with a floating interest rate so low it is unlikely it can be further reduced even if swedish repo rates are cut. this may affect net interest negatively, but the parent Company has chosen to position itself to reduce these negative effects.
the interest-rate related risk is measured in the Group for all positions, both those recorded at fair value in the accounts and those recorded at amortised cost. the Group has also decided to assign part of the lending a duration of between two and three years in its risk measurement.
An increase in market interest rates (including real interest rates) of one percentage point as of 31 December 2010 would have reduced the value of the Group's interestbearing assets and liabilities, including derivatives, by seK 777m (seK 226m). the decrease in the value of positions in seK would have been seK 499m (seK –167m), while positions in foreign currency would have decreased in value by seK 278 (seK 393m). Changes in the interest-rate risk are attributable to an extended duration in swedbank Mortgage and the built up liquidity reserve.
An interest rate increase of one percentage point would have reduced the Group's net gains and losses on financial transactions by seK 213m (seK 173m) as of 31 December 2010. there are also derivatives that are reported as hedging instruments according to cash flow hedges. An increase in interest rates of one percentage point would increase the value of these derivatives recognised in other comprehensive income by seK 188m (341).
Changes in interest rates also affect net interest income. the extent of this impact depends in part on the remaining interest fixing period for the Group's fixed-rate assets, liabilities and derivatives and in part on the extent to which the bank is able to adapt the interest rates on variable-rate lending and deposits. A review of net interest risk (measured as the sensitivity to a lasting change in all interest rates by one percentage point) is shown in note G54.
| 2010 | < 3 mths. | 3—6 mths. | 6—12 mths. | 1—2 yrs | 2—3 yrs | 3—4 yrs | 4—5 yrs | 5—10 yrs | > 10 yrs | Total |
|---|---|---|---|---|---|---|---|---|---|---|
| seK | –104 | –120 | –672 | –422 | 995 | –128 | –11 | –91 | 54 | –499 |
| Foreign currency | –165 | 89 | 61 | –2 | 29 | 3 | 27 | –196 | –124 | –278 |
| Total | –269 | –31 | –611 | –424 | 1 024 | –125 | 16 | –287 | –70 | –777 |
In the table above, part of deposits frm the public that are payable on demand have been assigned a fixed interest period of between 2 and 3 years.
| seK | 63 | –102 | –287 | –9 | –37 | –99 | 2 | –65 | 54 | –480 |
|---|---|---|---|---|---|---|---|---|---|---|
| Foreign currency | –188 | 85 | 72 | 98 | 116 | 16 | 77 | –29 | 20 | 267 |
| Total | –125 | –17 | –215 | 89 | 79 | –83 | 79 | –94 | 74 | –213 |
| 2009 | < 3 mths. | 3—6 mths. | 6—12 mths. | 1—2 yrs | 2—3 yrs | 3—4 yrs | 4—5 yrs | 5—10 yrs | > 10 yrs | Total |
| seK | –347 | 66 | 101 | –255 | 883 | –262 | 6 | –66 | 41 | 167 |
Foreign currency –54 –100 77 29 –44 –16 66 –201 –150 –393 Total –401 –34 178 –226 839 –278 72 –267 –109 –226
In the table above, part of deposits frm the public that are payable on demand have been assigned a fixed interest period of between 2 and 3 years.
| Total | –219 | –159 | –66 | 50 | 15 | –110 | 203 | 62 | 51 | –173 |
|---|---|---|---|---|---|---|---|---|---|---|
| Foreign currency | –77 | –94 | 16 | 36 | 8 | 6 | 74 | –10 | 12 | –29 |
| seK | –142 | –65 | –82 | 14 | 7 | –116 | 129 | 72 | 39 | –144 |
Currency risk refers to the risk that the Group's assets and liabilities, including derivatives, may fluctuate due to changes in exchange rates or other relevant risk factors. the Group's currency risks are managed by adapting the total value of assets and liabilities, including derivatives, in the same currency to the desired level. this is mainly done using derivatives, such as cross currency interest rate swaps and forward exchange agreements.
A large part of swedbank As's lending is denominated in euro, while deposits (approx. 2/3 before the estonian kroon conversion) are mainly denominated in the local currency (the estonian kroon, the Latvian lat and the Lithuanian litas). In addition, a large part of swedbank As's liquidity reserves are placed in euro-denominated securities, which produces an asset position in euro and an approximately equally large liability position in the local currencies. on 31 December this position amounted to seK 48bn. the currencies in the Baltic countries are pegged against the euro (the Latvian lat is allowed to fluctuate by two per cent against the euro). the value of the estonian currency was based on a currency board with the euro, and the exchange rate against the euro was fixed according to estonian law, while awaiting the planned entry to the euro zone at year-end. similar arrangements exist in Latvia and Lithuania. the parent company of swedbank As also holds strategic positions in Latvian lats and Lithuanian litas due to investments in subsidiaries in Latvia and Lithuania.
swedbank ukraine has currency exposures owing to the fact that its deposits and lending are distributed differently between currencies. A large part of lending is in u.s. dollar, a smaller share in ukrainian hryvnia and a small percentage in euro. the bank's deposits are mainly denominated in hryvnia, but with a significant share in u.s. dollar. swedbank russia's lending is also largely denominated in us dollar, while deposits are mainly denominated in russian rouble. swedbank Mortgage's funding in foreign currency is swapped to swedish kronor in its entirety.
to reduce the currency risk, the Group's strategic foreign holdings are generally financed in each country's currency or a currency that is linked to the country's currency. the exceptions are the holdings in swedbank ukraine, which is denominated in the ukrainian hryvnia and is financed in swedish kronor, and swedbank russia, which is denominated in russian roubles but partly financed with swedish kronor. to some degree the currency risk in these strategic holdings is limited by the debt positions in local currency in each foreign unit. the Group's exposure to profit-impacting currency risks, i.e., excluding exposures related to investments in foreign operations and associated hedging instruments, is limited. A change in exchange rates between the swedish krona and foreign currencies of +/–5 per cent would, have a direct effect on the Group's reported profit of seK 60m (seK –5m) at year-end. A change in exchange rates between the swedish krona and foreign currencies of +/–5 per cent regarding net investments in foreign operations as well as related hedging instruments would have a direct effect in other comprehensive income of –/+ seK 877m after-tax.
| Currency distribution | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2010 | SEK | EUR | USD | GBP | EEK | LVL | LTL | RUB | UAH | Other | Total |
| Assets | |||||||||||
| Cash and balances with central | |||||||||||
| banks | 2 522 | 666 | 192 | 32 | 2 695 | 4 719 | 3 254 | 614 | 331 | 2 084 | 17 109 |
| Loans to credit institutions | 87 649 | 61 247 | 12 727 | 127 | 104 | 207 | 166 | 1 112 | 1 259 | 1 819 | 166 417 |
| Loans to the public | 978 616 | 128 344 | 40 418 | 716 | 5 620 | 2 948 | 7 063 | 1 379 | 901 | 21 221 | 1 187 226 |
| Interest-bearing securities | 104 247 | 13 709 | 2 918 | 29 | 45 | 365 | 381 | 9 882 | 131 576 | ||
| other assets, not distributed | 213 353 | 213 353 | |||||||||
| Total | 1 386 387 | 203 966 | 56 255 | 875 | 8 448 | 7 919 | 10 848 | 3 105 | 2 872 | 35 006 1 715 681 | |
| Liabilities | |||||||||||
| Amounts owed to credit | |||||||||||
| institutions | 78 898 | 24 560 | 26 399 | 341 | 355 | 189 | 11 | 4 | 6 009 | 136 766 | |
| Deposits and borrowings from | |||||||||||
| the public | 412 340 | 36 939 | 14 893 | 848 | 24 410 | 10 571 | 25 588 | 968 | 968 | 6 712 | 534 237 |
| Debt securities in issue, etc. | 380 204 | 189 883 | 103 857 | 5 477 | 420 | 33 863 | 713 704 | ||||
| other liabilities, not distributed | 235 939 | 235 939 | |||||||||
| equity | 95 035 | 95 035 | |||||||||
| Total | 1 202 416 | 251 382 | 145 149 | 6 666 | 24 410 | 10 926 | 26 197 | 979 | 972 | 46 584 1 715 681 | |
| other assets and liabilities, | |||||||||||
| including positions in derivatives | 79 701 | 89 045 | 5 876 | 10 164 | 2 736 | 895 | –1 958 | –982 | 11 761 | ||
| Net position in currency | 32 285 | 151 | 85 | –5 798 | –271 | –14 454 | 168 | 918 | 183 | 13 267 |
Net funding in foreign currency with a corresponding fair value of seK 18 431m (19 862) is used as a hedging instrument to hedge the net investment in foreign operations. the above net position in currencies pertains mainly to parts of net investments in foreign operations that are not hedged. exchange rate changes on this position are recognised directly in equity as translation differences.
| 2009 | SEK | EUR | USD | GBP | EEK | LVL | LTL | RUB | UAH | Other | Total |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | |||||||||||
| Cash and balances with central banks |
|||||||||||
| Loans to credit institutions | 54 261 | 21 737 | 8 337 | 217 | 1 920 | 185 | 85 | 156 | 28 | 5 205 | 92 131 |
| Loans to the public | 1 025 282 | 169 162 | 49 912 | 914 | 9 202 | 3 991 | 8 091 | 201 | 265 | 23 647 | 1 290 667 |
| Interest-bearing securities | 135 525 | 24 583 | 2 080 | 201 | 163 | 298 | 220 | 7 545 | 170 615 | ||
| other assets, not distributed | 241 274 | 241 274 | |||||||||
| Total | 1 456 342 | 215 482 | 60 329 | 1 131 | 11 323 | 4 339 | 8 474 | 357 | 513 | 36 397 1 794 687 | |
| Liabilities | |||||||||||
| Amounts owed to credit | |||||||||||
| institutions | 184 742 | 5 989 | 28 523 | 882 | 955 | 112 | 24 | 2 | 10 458 | 231 687 | |
| Deposits and borrowings from the public |
373 855 | 35 824 | 15 027 | 1 555 | 33 173 | 9 797 | 26 505 | 2 183 | 1 243 | 5 262 | 504 424 |
| Debt securities in issue, etc. | 386 601 | 183 258 | 135 547 | 7 569 | 834 | 326 | 27 106 | 741 241 | |||
| other liabilities, not distributed | 227 361 | 227 361 | |||||||||
| equity | 89 974 | 89 974 | |||||||||
| Total | 1 262 533 | 225 071 | 179 097 | 10 006 | 34 962 | 9 909 | 26 831 | 2 207 | 1 245 | 42 826 1 794 687 | |
| other assets and liabilities, including positions in derivatives |
40 881 | 118 613 | 8 913 | 18 532 | 5 651 | 4 077 | 2 899 | 2 184 | 6 429 | ||
| Net position in currency | 31 292 | –155 | 38 | –5 107 | 81 | –14 280 | 1 049 | 1 452 | 14 370 |
Net funding in foreign currency with a corresponding fair value of seK 19 862m (20 711) is used as a hedging instrument to hedge the net investment in foreign operations. the above net position in currencies pertains mainly to parts of net investments in foreign operations that are not hedged. exchange rate changes on this position are recognised directly in equity as translation differences.
share price risk refers to the risk that the value of the Group's holdings of shares and share-related derivatives may be affected negatively by changes in share prices or other relevant risk factors. exposure to share price risks arises in the Group due to holdings in equities and equity-related derivatives. the Group's equity trading is primarily customer-related. positions in the Group's trading operations are in swedbank Markets and are normally such that only limited losses can arise from large share price movements. the purpose of these positions is, among other things, to create liquidity for the bank's customers. share price risk is measured and limited in the Group with respect to the worst possible outcomes in 63 different scenarios where share prices and implicit volatilities change. In these scenarios, the share prices change by a maximum of +/– 20 per cent and the implicit volatilities by a maximum of +/– 30 per cent. the outcomes for the various combinations form a risk matrix for the share price risk, and the worst-case scenario is limited. As of year-end the worst-case scenario would conceivably have reduced the value of the trading operations' positions by seK –13m (–21).
operational risk refers to the risk of losses resulting from inadequate or failed internal processes or routines, human errors, incorrect systems or external events.
Group risk Control is responsible for a uniform Group-wide operational risk reporting to the Board of Directors, the Ceo and the Group risk and Compliance Committee (GrCC). An analysis of the risk level in all large business units is performed quarterly and reported to each local management as well as to the Board of Directors and the Ceo. the Board's operational risk policy requires that a low operational risk level is maintained. risk-taking should be limited within the framework of what is economically feasible. operational risks that can damage swedbank's reputation and brands should be limited and given special consideration. Measures are implemented to reduce all risks not considered acceptable. the central components of these regulations consist of the Board's enterprise risk management policy, its operational risk policy and the Ceo's instructions for operational risk management. since operational risk is an extensive discipline, operational risks are also addressed in other disciplines' instructions such as security management, continuity management, incidents management, crisis management and compliance.
Among other things, the operational risk regulations include:
Compliance risk concerns the risk that the Group due to breach of laws, regulations and policies (internal or external) fails to meet the standards and behavior expected by clients and financial regulators.
swedbanks internal regulation comprises principles for managing compliance risk. the central component of the internal regulation is the compliance instruction issued by the Ceo. the aim of the Group's internal regulation is to ensure that the Group always meets the standards and behavior expected (whether prescribed or otherwise) by customers and financial regulators.
security and Continuity Management comprises the analyses, planning and mitigating actions that are made throughout the organisation to control and manage risk. swedbank works proactively with security management to protect all types of assets, i.e. personnel, tangible and intangible assets, by utilizing measures both of technical and organizational and administrative nature. swedbank's security management model is derived from the international standard Iso/IeC 27002:2005 Code of practice for Information security Management. the swedbank Group also coordinates efforts to prevent and/or strengthen our ability to manage serious events, i.e. resilience, such as It disruptions, natural disasters, financial disturbances and pandemics - that may affect the bank's ability to maintain services and offerings. the principles for security, continuity, incident and crisis management are defined in a Group level framework. A Group level crisis management team is available for high level coordination and communication internally and externally. In addition, continuity plans are in place for business-critical operations and services that are critical for society. the plans describe how the bank operates in the event of a serious disruption. the Group also has insurance protection, with an emphasis on catastrophe protection, for significant parts of its operations. the goal of continuous risk reduction work within the Group is to maintain and reinforce the Group's trust and reputation by, among other things, protecting life, health, values and information.
swedbank applies the standardised approach to calculate the capital requirement for operational risk. swedbank's capital requirement for operational risk was seK 4 565m (4 244).
swedbank has well established processes for monitoring, managing and preventing other risks for which the bank is exposed. For some of the risks that have been identified swedbank has calculated the risks and allocated capital, see further note G4 Capital, Internal capital assessment.
the aim of the internal capital adequacy assessment process is to ensure that the Group is adequately capitalised to cover its risks and to carry on and develop its operations.
swedbank prepares and document its own methods and processes to evaluate its capital requirements. Internal capital adequacy assessment therefore takes into account all relevant risks that arise within the Group.
risks that have been identified and for which swedbank has allocated capital are:
other risks are also taken into account. to ensure efficient use of capital, meet minimum legal capital requirements and maintain access to capital markets even under adverse market conditions, the Group regularly conducts scenario-based simulations and stress tests. the analyses provide an overview of the most important risks that the Group is exposed to by quantifying the impact on the statement of total comprehensive income and balance sheet as well as the capital base and risk-weighted assets calculated according to the capital adequacy rules. the business units are engaged in the estimation of risks and in incorporating the results into business strategies.
Given the major uncertainties in the global economy, the 2010 evaluation was based on exceptionally negative scenarios . the method serves as a basis for proactive risk and capital management.
the internal capital adequacy assessment process is based on two different methods: the Building Block model and the scenario model. the former is a static model with an evaluation horizon of one year, while the scenario model is a dynamic model with a multi-year horizon. the two models represent swedbank's estimation of its requirement and may therefore deviate from legal capital adequacy requirements.
the ultimate requirement according to the internal capital adequacy assessment is given through a combination of both models and qualitative aspects.
As of year-end 2009 the total capital requirement according to these models was seK 87.6bn. total capital amounted to seK 105.8bn on the corresponding date. the conclusion of the evaluation in 2010 was that the Group's capital buffer was sufficient to maintain a tier 1 capital ratio above the minimum capital requirements even in the unlikely but possible event of macroeconomic developments unfavourable to the Group. economic conditions remain highly uncertain and market players are increasingly focusing attention on banks' capital needs.
the capital adequacy regulations express the legislator's perception of how much capital, designated as the capital base, a bank must have in relation to the size of the risks it faces. the new rules strengthen the connection between risk exposure and capital requirements in the bank's operations. In accordance with the Capital Adequacy and Large exposures Act (2006:1371), the capital base must at a minimum correspond to the sum of the capital requirement for credit risks, market risks and operating risks. Accordingly, the capital quotient, i.e., the capital base divided by the capital requirement, must be greater than 1.0. the rules apply for banks on a individual basis and, in appropriate cases, financial companies groups. More detailed information (pillar 3) on swedbank's capital adequacy in 2010 is provided at www.swedbank.com.
on 31 December 2010 the financial companies group swedbank comprised the swedbank Group with the following exceptions. In the consolidated accounts, the associated companies enterCard (group), sparbanken rekarne AB, Färs och Frosta sparbank AB, swedbank sjuhärad AB, Vimmerby sparbank AB, Bankernas Depå AB and Bankernas automatbolag AB are consolidated in accordance with the equity method. In the financial companies group, these companies are consolidated fully in accordance with the purchase method, apart from enterCard, which is consolidated in accordance with the proportional method. the insurance companies that are included in the consolidated accounts, swedbank Försäkrings AB, sparia Försäkrings AB, swedbank Life Insurance se and swedbank Varakindlustus As, are not included in the financial companies group. these companies are subject to solvency rules rather than capital adequacy rules.
| Financial companies Group | |||||
|---|---|---|---|---|---|
| Capital adequacy | 2010 | 2009 | |||
| Capital base | 99 687 | 105 785 | |||
| Capital requirement | 60 035 | 62 757 | |||
| Capital surplus or deficit | 39 652 | 43 028 | |||
| Capital quotient | 1.66 | 1.69 | |||
| risk-weighted amount | 750 440 | 784 469 | |||
| Core tier 1 capital ratio, % | 10.1 | 9.2 | |||
| tier 1 capital ratio, % | 11.0 | 10.4 | |||
| Capital adequacy ratio, % | 13.3 | 13.5 |
| Financial companies Group | ||||
|---|---|---|---|---|
| Capital base | 2010 | 2009 | ||
| tier 1 capital | 82 385 | 81 689 | ||
| tier 2 capital | 20 203 | 26 062 | ||
| of which, undated subordinated loans | 2 458 | 4 273 | ||
| total tier 1 and tier 2 captial | 102 588 | 107 751 | ||
| shareholdings deducted* | –2 901 | –1 966 | ||
| Total | 99 687 | 105 785 |
* specification of companies that provide deductions from the capital base. sparia Försäkrings AB, swedbank Försäkrings AB, swedbank Life Insurance se and swedbank Varakindlustus As.
| Financial companies Group | |||||
|---|---|---|---|---|---|
| Tier 1 capital | 2010 | 2009 | |||
| equity attributable to the shareholders according to | |||||
| balance sheet in annual report | 94 897 | 89 670 | |||
| Non-controlling interests | 138 | 304 | |||
| proposed dividend | –2 995 | ||||
| Adjustment for the financial companies Group | |||||
| Deconsolidation of insurance companies | –1 395 | –1 130 | |||
| Associated companies consolidated according | |||||
| to the purchase method | 1 332 | 1 659 | |||
| Change in the value of own credit rating | |||||
| Goodwill | –12 966 | –14 594 | |||
| other deductions | |||||
| Deferred tax assets | –1 213 | –1 206 | |||
| Intangible assets | –1 794 | –2 352 | |||
| Deduction internal risk classification, provisions surplus/ | |||||
| deficit | –534 | –309 | |||
| Cash flow hedges | 44 | 769 | |||
| shareholdings deducted** | –34 | –340 | |||
| total core tier 1 capital | 75 470 | 72 471 | |||
| tier 1 capital contribution* | 6 915 | 9 218 | |||
| Total Tier 1 capital | 82 385 | 81 689 |
* tier 1 capital contributions are perpetual debenture loans whose terms are such that they may be included after approval from the swedish Financial supervisory Authority. the contributions' preferential rights are subordinate to all other deposits and lending. Interest payment is set in accordance with the agreement, but may only occur if there are distributable funds. the contribution is reported in the balance sheet as a liability. All tier 1 capital contributions are based on transition rules according to FFFs 2010:10
** Companies that provide deductions from tier 1 Capital are BGC Holding AB and International Credit Bureau.
| Financial companies Group | ||||
|---|---|---|---|---|
| Capital requirement | 2010 | 2009 | ||
| Credit risks | 36 401 | 41 451 | ||
| Market risks | 897 | 1 111 | ||
| settlement risks | 0 | 0 | ||
| Currency risks | 1 443 | 1 468 | ||
| operational risks | 4 565 | 4 244 | ||
| supplement, transition rules | 16 729 | 14 483 | ||
| Total | 60 035 | 62 757 | ||
| Financial companies Group | ||
|---|---|---|
| Capital requirement for market risks | 2010 | 2009 |
| Interest-rate risks | 611 | 711 |
| of which for specific risk | 611 | 711 |
| of which for general risk | ||
| share price risk | 25 | 73 |
| of which for specific risk | 2 | 19 |
| of which for general risk | 16 | 54 |
| of which positions in CIus | 6 | |
| of which options for which the capitalrequirementis | ||
| equal to the option's market value | 1 | |
| Commodity risk | 2 | |
| Capital requirement according to Var calculation* | 259 | 327 |
| Total | 897 | 1 111 |
* the parent company's capital requirement for general interest-rate risk, share price risk and currency risk in the trading-book as well as swedbank As' capital requirement for general interest-rate risk and currency risk in the trading-book are calculated in accordance with the Var model.
| Financial companies Group | ||||
|---|---|---|---|---|
| Capital requirement for operational risks | 2010 | 2009 | ||
| Corporate finance | 1 | |||
| trading and sales | 60 | 285 | ||
| retail banking | 2 987 | 2 660 | ||
| Commercial banking | 987 | 860 | ||
| payment and settlement | 263 | 247 | ||
| Agency services | 28 | 38 | ||
| Asset management | 239 | 149 | ||
| retail brokerage | 5 | |||
| Total | 4 565 | 4 244 |
the standard approach is used for calculating capital requirments for operational risk.
| 2010 | ||||
|---|---|---|---|---|
| Credit risks acording to IRB Financial companies Group |
Exposure after credit risk mitigation |
Average risk weight | Capital requirement | |
| Institutional exposures | 146 519 | 14% | 1 630 | |
| Corporate exposures | 397 770 | 75% | 23 800 | |
| retail exposures | 845 823 | 10% | 7 059 | |
| securitisations | 3 535 | 12% | 33 | |
| exposures without counterparties | 16 080 | 90% | 1 156 | |
| Total | 1 409 727 | 30% | 33 678 |
| 2009 | ||||||
|---|---|---|---|---|---|---|
| Credit risks acording to IRB Financial companies Group |
Exposure after credit risk mitigation |
Average risk weight | Capital requirement | |||
| Institutional exposures | 79 011 | 29% | 1 834 | |||
| Corporate exposures | 447 223 | 77% | 27 581 | |||
| retail exposures | 833 222 | 11% | 7 407 | |||
| securitisations | 6 753 | 12% | 64 | |||
| exposures without counterparties | 48 381 | 29% | 1 111 | |||
| Total | 1 414 590 | 34% | 37 997 |
| Financial companies Group | ||
|---|---|---|
| Capital requirement for credit risks | 2010 | 2009 |
| Credit risks according to the standardised approach | 2 723 | 3 454 |
| Credit risks according to IrB | 33 678 | 37 997 |
| of which institutional exposures | 1 630 | 1 834 |
| of which corporate exposures | 23 800 | 27 581 |
| of which retail exposures | 7 059 | 7 407 |
| of which securitisation | 33 | 64 |
| of which non-credit-obligation asset exposures | 1 156 | 1 111 |
| Total | 36 401 | 41 451 |
swedbank Annual report 2010
| 2010 | Retail | Large corporates & Institutions |
Baltic Banking |
Russia & Ukraine |
Asset Management |
Ektornet | Group | Functions Eliminations | Total |
|---|---|---|---|---|---|---|---|---|---|
| Net interest income | 10 100 | 2 817 | 3 771 | 638 | –17 | –21 | –942 | –17 | 16 329 |
| Net commissions | 4 292 | 1 955 | 1 533 | 81 | 1 592 | 31 | 41 | 9 525 | |
| Net gains and losses on financial items at fair value | 184 | 1 446 | 341 | –71 | 9 | 31 | 460 | 2 400 | |
| share of the profit or loss of associates | 624 | 624 | |||||||
| other income | 1 003 | 88 | 542 | 32 | 24 | 4 333 | –3 964 | 2 166 | |
| Total income | 16 203 | 6 306 | 6 187 | 680 | 1 608 | 118 | 3 882 | –3 940 | 31 044 |
| of which internal income | 1 491 | 408 | 1 047 | –1 711 | 1 663 | –2 898 | |||
| staff costs | 3 964 | 1 489 | 1 019 | 368 | 440 | 74 | 2 046 | –8 | 9 392 |
| other expenses | 4 421 | 1 658 | 1 546 | 425 | 366 | 172 | 2 644 | –3 932 | 7 300 |
| Depreciation/amortisation | 285 | 55 | 164 | 78 | 50 | 24 | 294 | 950 | |
| Total expenses | 8 670 | 3 202 | 2 729 | 871 | 856 | 270 | 4 984 | –3 940 | 17 642 |
| Profit before impairments | 7 533 | 3 104 | 3 458 | –191 | 752 | –152 | –1 102 | 13 402 | |
| Impairment of intangible assets | 23 | 14 | 37 | ||||||
| Impairment of tangible assets | 261 | 254 | 85 | 600 | |||||
| Credit impairments | 272 | –1 | 3 363 | –859 | 35 | 2 810 | |||
| Operating profit | 7 261 | 3 105 | –189 | 400 | 752 | –237 | –1 137 | 9 955 | |
| tax expense | 1 951 | 768 | –182 | –19 | 177 | –25 | –198 | 2 472 | |
| Non-controlling interests | 9 | 30 | 39 | ||||||
| Profit for the year attributable to the shareholders of Swedbank AB |
5 301 | 2 307 | –7 | 419 | 575 | –212 | –939 | 7 444 | |
| Loans* | 896 876 | 309 854 | 131 794 | 15 119 | 1 353 643 | ||||
| Investments in associates* | 1 350 | 61 | 4 | 1 295 | 2 710 | ||||
| other assets* | 107 567 | 120 105 | 40 663 | 2 341 | 1 873 | 3 410 | 83 369 | 359 328 | |
| Total assets* | 1 005 793 | 430 020 | 172 461 | 17 460 | 1 873 | 3 410 | 84 664 | 1 715 681 | |
| Deposits, from the public* | 347 027 | 91 127 | 92 783 | 3 300 | 534 237 | ||||
| other liabilities* | 636 170 | 322 334 | 45 264 | 10 658 | –300 | 1 776 | 70 645 | 1 086 547 | |
| Total liabilities* | 983 197 | 413 461 | 138 047 | 13 958 | –300 | 1 776 | 70 645 | 1 620 784 | |
| Allocated equity | 22 596 | 16 559 | 34 414 | 3 502 | 2 173 | 1 634 | 14 019 | 94 897 | |
| Total liabilities and equity | 1 005 793 | 430 020 | 172 461 | 17 460 | 1 873 | 3 410 | 84 664 | 1 715 681 | |
| Impaired loans, gross | 1 602 | 770 | 22 510 | 9 896 | 34 778 | ||||
| Risk-weighted assets | 221 974 | 156 315 | 135 642 | 17 966 | 3 358 | 3 634 | 2 438 | 541 327 | |
| return on allocated equity, % | 24.0 | 13.8 | –0,0 | 11.0 | 35.4 | –25.2 | –9.5 | 8.1 | |
| Loans/deposits | 251 | 176 | 141 | 378 | 222 | ||||
| Credit impairment ratio, % | 0.03 | 0.00 | 2.05 | –4.35 | 0.20 | ||||
| total provision ratio for impaired loans, % | 99 | 106 | 58 | 64 | 63 | ||||
| share of impaired loans, % | 0.18 | 0.25 | 15.54 | 46.20 | 2.53 | ||||
| Cost/income ratio | 0.54 | 0.51 | 0.44 | 1.28 | 0.53 | 2.29 | 1.28 | 0.57 | |
| Full-time employees | 5 571 | 1 229 | 5 416 | 1 847 | 313 | 150 | 2 698 | 17 224 |
* excluding intra-Group transactions
the operating segment report is based on swedbank's accounting policies, organisation and management accounts. Market-based transfer prices are applied between operating segments, while all expenses for It, other shared services and Group staffs are transfer priced at full cost. executive management expenses are not distributed. Cross-border transfer pricing is applied according to oeCD transfer pricing guidelines.
the Group's equity attributable to shareholders is allocated to each operating segment based on capital adequacy rules and estimated capital requirements.
return on equity for the operating segments is based on operating profit less estimated tax and non-controlling interests in relation to average allocated equity. retail, swedbank's dominant business area, is responsible for all swedish customers except for large corporates and financial institutions. the bank's services are sold through swedbank's own branch network, the telephone Bank, Internet Bank and through the savings banks' distribution network. the business area also includes a number of subsidiaries.
Large Corporates & Institutions is responsible for large corporates, financial institutions and banks as well as for trading and capital market products. operations are carried out by the parent bank in sweden, branches in Norway, Denmark, Finland, the us and China, and the subsidiaries First securities in Norway and swedbank First securities LLC in New York, in addition to the trading and capital market operations in subsidiary banks in estonia, Latvia and Lithuania.
Baltic Banking consists of Baltic Banking operations and Investment. Baltic Banking has business operations in estonia, Latvia and Lithuania. the bank's services are sold through swedbank's own branch network, the telephone Bank and the Internet Bank. In Baltic Banking Investment, the effects of swedbank's ownership in swedbank As are reported, inter alia, as financing costs, Group goodwill and Group amortisation on surplus values in the lending and deposit portfolios identified at the time of acquisition in 2005.
the russia & ukraine business area comprises the banking operations of swedbank Group in russia and ukraine. A management unit with staff functions is also included in the business area.
Asset Management comprises the swedbank robur Group and its operations in fund management, institutional and discretionary asset management. Asset Management is represented in swedbank's four home markets.
ektornet is an independent subsidiary of swedbank AB. Its aim is to manage and develop the Group's repossessed assets in order to minimise losses and if possible
recover value in the long term. the majority of the collateral consists of real estate, mainly in the Baltic countries but also in the Nordic region, the us and ukraine.
Group Functions includes It, support functions, Group executive Committee and Group staffs, including Group treasury, and the Group's own insurance company, sparia.
the operating segments have been changed in 2010 to coincide with the organisational changes implemented in swedbank's business area organisation. Comparative figures have been restated. the largest corporate customers have been moved from retail to the new business area Large Corporates & Institutions. At the same time the finance department within swedbank Mortgage has been moved to Group treasury within Group Functions. swedbank Babs' card processing business has been divided between Large Corporates & Institutions and retail instead of being reported in its entirety within retail. supporting card and payment operations have been transferred from retail and Baltic Banking to Group Functions. In addition to the large corporate customers from retail, Large Corporates & Institutions includes the international branch offices from the old business areas International Banking and swedbank Markets. the new business area russia & ukraine includes the operations in those countries.
| 2009 | Retail | Large corporates & Institutions |
Baltic Banking |
Russia & Ukraine |
Asset Management |
Ektornet | Group Functions |
Eliminations | Total |
|---|---|---|---|---|---|---|---|---|---|
| Net interest income | 11 166 | 3 712 | 4 235 | 1 766 | –23 | –1 | –80 | –10 | 20 765 |
| Net commissions | 3 672 | 1 609 | 1 655 | 101 | 655 | 86 | 47 | 7 825 | |
| Net gains and losses on financial items at fair value | 150 | 2 583 | 719 | –44 | 42 | 2 | –683 | 1 | 2 770 |
| share of the profit or loss of associates | 864 | 1 | 1 | 866 | |||||
| other income | 1 345 | 108 | 762 | 14 | 16 | 4 456 | –4 145 | 2 556 | |
| Total income | 17 197 | 8 012 | 7 372 | 1 837 | 690 | 1 | 3 780 | –4 107 | 34 782 |
| of which internal income | 1 318 | 462 | 1 207 | –1 676 | 1 882 | –3 193 | |||
| staff costs | 3 972 | 1 316 | 1 158 | 511 | 340 | 2 | 1 912 | –10 | 9 201 |
| other expenses | 4 505 | 1 550 | 1 978 | 618 | 368 | 25 | 2 811 | –4 097 | 7 758 |
| Depreciation/amortisation | 181 | 36 | 198 | 83 | 48 | 343 | 889 | ||
| Total expenses | 8 658 | 2 902 | 3 334 | 1 212 | 756 | 27 | 5 066 | –4 107 | 17 848 |
| Profit before impairments | 8 539 | 5 110 | 4 038 | 625 | –66 | –26 | –1 286 | 16 934 | |
| Impairment of intangible assets | 5 | 1 300 | 1 305 | ||||||
| Impairment of tangible assets | 7 | 223 | 219 | 449 | |||||
| Credit impairments | 833 | 1 093 | 14 888 | 7 782 | 45 | 24 641 | |||
| Operating profit | 7 706 | 4 005 | –11 073 | –8 676 | –66 | –26 | –1 331 | –9 461 | |
| tax expense | 1 988 | 996 | –1 315 | –251 | –16 | –6 | –415 | 981 | |
| Non-controlling interests | 8 | 63 | –2 | 69 | |||||
| Profit for the year attributable to the | |||||||||
| shareholders of Swedbank AB | 5 710 | 2 946 | –9 758 | –8 423 | –50 | –20 | –916 | –10 511 | |
| 876 418 | 315 181 | 171 432 | 19 767 | 1 382 798 | |||||
| Loans* | |||||||||
| Investments in associates* | 1 425 | 5 | 1 | 1 309 | 2 740 | ||||
| other assets* | 78 528 | 122 418 | 52 895 | 4 459 | 1 883 | 713 | 148 253 | 409 149 | |
| Total assets* | 956 371 | 437 599 | 224 332 | 24 227 | 1 883 | 713 | 149 562 | 1 794 687 | |
| Deposits, from the public* | 317 811 | 76 813 | 103 100 | 6 700 | 504 424 | ||||
| other liabilities* | 618 083 | 347 294 | 91 866 | 14 702 | 358 | 421 | 127 869 | 1 200 593 | |
| Total liabilities* | 935 894 | 424 107 | 194 966 | 21 402 | 358 | 421 | 127 869 | 1 705 017 | |
| Allocated equity | 20 477 | 13 492 | 29 366 | 2 825 | 1 525 | 292 | 21 693 | 89 670 | |
| Total liabilities and equity | 956 371 | 437 599 | 224 332 | 24 227 | 1 883 | 713 | 149 562 | 1 794 687 | |
| Impaired loans, gross | 2 062 | 1 081 | 26 571 | 10 418 | 40 132 | ||||
| Risk-weighted assets | 243 742 | 164 178 | 165 417 | 23 600 | 2 465 | 526 | 3 503 | 603 431 | |
| return on allocated equity, % | 27.8 | 19.7 | –31.6 | –230.5 | –3.3 | –117.6 | –7.3 | –12.5 | |
| Loans/deposits | 269 | 217 | 164 | 276 | 240 | ||||
| Credit impairment ratio, % | 0.10 | 0.39 | 6.67 | 21.72 | 1.74 | ||||
| total provision ratio for impaired loans, % | 98 | 78 | 57 | 76 | 65 | ||||
| share of impaired loans, % | 0.23 | 0.34 | 14.23 | 37.69 | 2.85 | ||||
| Cost/income ratio | 0.50 | 0.36 | 0.45 | 0.66 | 1.10 | 27.00 | 1.34 | 0.51 | |
| Full-time employees | 5 738 | 1 137 | 5 924 | 3 472 | 291 | 39 | 2 676 | 19 277 |
* excluding intra-Group transactions
| Net interest income 10 840 1 609 1 121 1 077 210 428 1 044 Net commissions 7 202 706 495 505 32 48 537 Net gains and losses on financial items at fair value 1 761 210 233 114 –95 26 151 |
16 329 9 525 2 400 624 2 166 |
|---|---|
| share of the profit or loss of associates 355 269 |
|
| other income 1 499 1 242 326 3 30 65 |
|
| Total income 21 657 2 526 2 091 2 022 150 532 2 066 |
31 044 |
| staff costs 7 114 566 329 406 166 182 629 |
9 392 |
| other expenses 5 525 157 605 585 164 184 80 |
7 300 |
| Depreciation/amortisation 536 169 61 54 26 52 52 |
950 |
| Total expenses 13 175 892 995 1 045 356 418 761 |
17 642 |
| profit before impairments 8 482 1 634 1 096 977 –206 114 1 305 |
13 402 |
| Impairment of intangible assets 23 14 |
37 |
| Impairment of tangible assets 2 31 61 207 –3 256 46 |
600 |
| Credit impairments 275 968 1 720 676 –271 –588 30 |
2 810 |
| Operating profit 8 205 612 –685 94 54 446 1 229 |
9 955 |
| tax expense 2 339 –3 –89 –64 8 4 277 |
2 472 |
| Non-controlling interests 37 2 |
39 |
| Profit for the year attributable to the | |
| shareholders of Swedbank AB 5 829 615 –596 158 46 442 950 |
7 444 |
| Loans* 1 164 424 58 636 37 504 35 807 7 536 7 589 42 147 |
1 353 643 |
| Investments in associates* 1 896 4 810 |
2 710 |
| other assets* 291 671 23 222 9 210 11 288 806 1 610 21 521 |
359 328 |
| Total assets* 1 457 991 81 862 46 714 47 095 8 342 9 199 64 478 |
1 715 681 |
| Deposits from the public* 423 370 42 447 20 397 32 383 1 072 2 022 12 546 |
534 237 |
| other liabilities* 979 534 27 656 12 696 4 739 5 896 5 022 51 004 |
1 086 547 |
| Total liabilities* 1 402 904 70 103 33 093 37 122 6 968 7 044 63 550 |
1 620 784 |
| Allocated equity 55 087 11 759 13 621 9 973 1 374 2 155 928 |
94 897 |
| Total liabilities and equity 1 457 991 81 862 46 714 47 095 8 342 9 199 64 478 |
1 715 681 |
| Impaired loans, gross 1 957 4 722 11 259 6 529 1 939 7 957 415 |
34 778 |
| Risk-weighted assets 357 377 61 099 43 655 34 556 7 918 10 139 26 583 |
541 327 |
| return on allocated equity, % 12.1 5.0 –4.2 1.5 2.8 19.9 36.0 |
8.1 |
| Cost/income ratio 0.61 0.35 0.48 0.52 2.37 0.78 0.37 |
0.57 |
| Full-time employees 8 401 2 514 1 724 2 228 287 1 565 505 |
17 224 |
the geographical distribution have been allocated to the country where the business was carried out and it is not comparable to the business segment reporting.
* excluding intra-Group transactions.
| 2009 | Sweden | Estonia | Latvia | Lithuania | Russia | Ukraine | Other | Total |
|---|---|---|---|---|---|---|---|---|
| Net interest income | 13 429 | 1 339 | 1 533 | 1 382 | 743 | 1 030 | 1 309 | 20 765 |
| Net commissions | 5 414 | 672 | 550 | 533 | 27 | 70 | 559 | 7 825 |
| Net gains and losses on financial items at fair value | 1 497 | 293 | 463 | 265 | 97 | –133 | 288 | 2 770 |
| share of the profit or loss of associates | 650 | 1 | 215 | 866 | ||||
| other income | 1 799 | 66 | 255 | 442 | 9 | 10 | –25 | 2 556 |
| Total income | 22 789 | 2 371 | 2 801 | 2 622 | 876 | 977 | 2 346 | 34 782 |
| staff costs | 6 564 | 527 | 418 | 509 | 220 | 254 | 709 | 9 201 |
| other expenses | 5 578 | 155 | 791 | 748 | 223 | 233 | 30 | 7 758 |
| Depreciation/amortisation | 423 | 211 | 75 | 65 | 20 | 63 | 32 | 889 |
| Total expenses | 12 565 | 893 | 1 284 | 1 322 | 463 | 550 | 771 | 17 848 |
| profit before impairments | 10 224 | 1 478 | 1 517 | 1 300 | 413 | 427 | 1 575 | 16 934 |
| Impairment of intangible assets | 5 | 1 300 | 1 305 | |||||
| Impairment of tangible assets | 6 | 5 | 63 | 154 | 221 | 449 | ||
| Credit impairments | 1 602 | 2 646 | 6 891 | 5 355 | 1 326 | 6 455 | 366 | 24 641 |
| Operating profit | 8 616 | –1 173 | –5 437 | –4 209 | –918 | –7 549 | 1 209 | –9 461 |
| tax expense | 2 206 | 6 | –836 | –454 | –11 | –178 | 248 | 981 |
| Non-controlling interests | 5 | 64 | 69 | |||||
| Profit for the year attributable to the | ||||||||
| shareholders of Swedbank AB | 6 405 | –1 179 | –4 601 | –3 755 | –907 | –7 371 | 897 | –10 511 |
| Loans* | 1 145 998 | 74 071 | 51 672 | 45 692 | 11 438 | 8 910 | 45 017 | 1 382 798 |
| Investments in associates* | 2 087 | 5 | 1 | 647 | 2 740 | |||
| other assets* | 333 954 | 29 007 | 9 630 | 15 534 | 2 671 | 1 800 | 16 553 | 409 149 |
| Total assets* | 1 482 039 | 103 083 | 61 302 | 61 226 | 14 109 | 10 711 | 62 217 | 1 794 687 |
| Deposits from the public* | 384 597 | 47 902 | 20 785 | 34 191 | 3 555 | 2 830 | 10 564 | 504 424 |
| other liabilities* | 1 040 401 | 43 553 | 31 593 | 18 094 | 9 264 | 6 405 | 51 283 | 1 200 593 |
| Total liabilities* | 1 424 998 | 91 455 | 52 378 | 52 285 | 12 819 | 9 235 | 61 847 | 1 705 017 |
| Allocated equity | 57 041 | 11 628 | 8 924 | 8 941 | 1 290 | 1 476 | 370 | 89 670 |
| Total liabilities and equity | 1 482 039 | 103 083 | 61 302 | 61 226 | 14 109 | 10 711 | 62 217 | 1 794 687 |
| Impaired loans, gross | 2 627 | 5 465 | 13 401 | 7 705 | 2 238 | 8 180 | 516 | 40 132 |
| Risk-weighted assets | 383 902 | 67 821 | 53 801 | 45 480 | 11 396 | 12 215 | 28 816 | 603 431 |
| return on allocated equity, % | 13.7 | –10.4 | –45.9 | –38.9 | –55.7 | –362.3 | 32.5 | –12.5 |
| Cost/income ratio | 0.55 | 0.38 | 0.46 | 0.50 | 0.53 | 0.56 | 0.33 | 0.51 |
| Full-time employees | 8 461 | 2 613 | 1 857 | 2 490 | 570 | 2 880 | 406 | 19 277 |
the geographical distribution have been allocated to the country where the business was carried out and it is not comparable to the business segment reporting.
* excluding intra-Group transactions.
| Savings & | Payments & | Trading & | ||||
|---|---|---|---|---|---|---|
| 2010 | Financing | Investments | Cards | Capital market | Other | Total |
| Net interest income | 11 671 | 1 966 | 3 652 | 1 268 | –2 228 | 16 329 |
| Net commissions | 182 | 4 279 | 3 347 | 1 154 | 563 | 9 525 |
| Net gains and losses on financial items at fair value | –1 | 23 | 60 | 2 128 | 190 | 2 400 |
| share of the profit or loss of associates | 428 | 30 | 166 | 624 | ||
| other income | 304 | 663 | 634 | 36 | 529 | 2 166 |
| Total income | 12 584 | 6 931 | 7 723 | 4 586 | –780 | 31 044 |
| Total expenses | 5 076 | 4 171 | 4 704 | 2 892 | 799 | 17 642 |
| profit before impairments | 7 508 | 2 760 | 3 019 | 1 694 | –1 579 | 13 402 |
| Impairment of intangible assets | 37 | 37 | ||||
| Impairment of tangible assets | 471 | 129 | 600 | |||
| Credit impairments | 2 823 | –7 | –1 | –5 | 2 810 | |
| Operating profit | 4 214 | 2 760 | 3 026 | 1 695 | –1 740 | 9 955 |
| tax expense | 1 167 | 665 | 617 | 309 | –286 | 2 472 |
| Non-controlling interests | 3 | –11 | 41 | 6 | 39 | |
| Profit for the year attributable to the | ||||||
| shareholders of Swedbank AB | 3 044 | 2 106 | 2 409 | 1 345 | –1 460 | 7 444 |
| Loans | 1 145 891 | 548 | 207 204 | 1 353 643 | ||
| Deposits | 285 592 | 231 493 | 153 918 | 671 003 | ||
| Mutual funds | 503 713 | 503 713 |
| Discretionary asset management | 251 580 | 251 580 | ||||
|---|---|---|---|---|---|---|
| Allocated equity | 50 084 | 3 798 | 6 710 | 5 555 | 28 750 | 94 897 |
| return on allocated equity, % | 6.6 | 63.6 | 41.6 | 25.6 | –4.8 | 8.1 |
| Cost/income ratio | 0.40 | 0.60 | 0.61 | 0.63 | –1.02 | 0.57 |
retail bonds and index-linked bonds 23 925 23 925
| 2009 | Financing | Savings & Investments |
Payments & Cards |
Trading & Capital market |
Other | Total |
|---|---|---|---|---|---|---|
| Net interest income | 13 176 | 1 503 | 4 949 | 2 095 | –958 | 20 765 |
| Net commissions | 9 | 3 586 | 3 488 | 629 | 113 | 7 825 |
| Net gains and losses on financial items at fair value | 42 | 13 | 3 007 | –292 | 2 770 | |
| share of the profit or loss of associates | 328 | 25 | 513 | 866 | ||
| other income | 507 | 620 | 630 | –5 | 804 | 2 556 |
| Total income | 14 020 | 5 751 | 9 105 | 5 726 | 180 | 34 782 |
| Total expenses | 5 611 | 4 264 | 4 967 | 2 565 | 441 | 17 848 |
| profit before impairments | 8 409 | 1 487 | 4 138 | 3 161 | –261 | 16 934 |
| Impairment of intangible assets | 1 305 | 1 305 | ||||
| Impairment of tangible assets | 197 | 252 | 449 | |||
| Credit impairments | 24 383 | 191 | 67 | 24 641 | ||
| Operating profit | –16 171 | 1 487 | 3 947 | 3 094 | –1 818 | –9 461 |
| tax expense | –592 | 317 | 816 | 551 | –111 | 981 |
| Non-controlling interests | –7 | –9 | 82 | 3 | 69 | |
| Profit for the year attributable to the | ||||||
| shareholders of Swedbank AB | –15 572 | 1 179 | 3 131 | 2 461 | –1 710 | –10 511 |
| Loans | 1 192 198 | 376 | 190 224 | 1 382 798 | ||
| Deposits | 256 211 | 240 525 | 239 375 | 736 111 | ||
| Mutual funds | 458 318 | 458 318 | ||||
| retail bonds and index-linked bonds | 30 371 | 30 371 | ||||
| Discretionary asset management | 222 222 | 222 222 | ||||
| Allocated equity | 40 362 | 2 228 | 4 957 | 2 476 | 39 647 | 89 670 |
| return on allocated equity, % | –36.7 | 52.9 | 63.2 | 99.4 | –5.3 | –12.5 |
| Cost/income ratio | 0.40 | 0.74 | 0.55 | 0.45 | 2.45 | 0.51 |
In the geographical distribution, intangible assets, primarily goodwill, attributable to business combinations have been allocated to the country in which the operations were acquired.
In the product area report, profit and volumes have been distributed among five principal product areas.
• other capital market products
(5) Other
Non-recurring items are generally included in other despite the fact that these items could be distributed to the product areas.
Impairment of tangible assets is reported within Financing when the impairment refers to repossessed collateral. Impairment of the Group's own properties is included in other.
| 2010 | Private | Corporate | Credit institutions | Other | Total |
|---|---|---|---|---|---|
| Net interest income | 7 177 | 8 751 | 2 213 | –1 812 | 16 329 |
| Net commissions | 5 123 | 3 265 | 453 | 684 | 9 525 |
| Net gains and losses on financial items at fair value | 247 | 682 | 1 479 | –8 | 2 400 |
| share of the profit or loss of associates | 135 | 489 | 624 | ||
| other income | 469 | 350 | 868 | 479 | 2 166 |
| Total income | 13 016 | 13 048 | 5 148 | –168 | 31 044 |
| Total expenses | 8 660 | 5 336 | 2 860 | 786 | 17 642 |
| profit before impairments | 4 356 | 7 712 | 2 288 | –954 | 13 402 |
| Impairment of intangible assets | 37 | 37 | |||
| Impairment of tangible assets | 11 | 395 | 93 | 101 | 600 |
| Credit impairments | 965 | 1 878 | –33 | 0 | 2 810 |
| Operating profit | 3 380 | 5 439 | 2 228 | –1 092 | 9 955 |
| tax expense | 692 | 1 236 | 609 | –65 | 2 472 |
| Non-controlling interests | 0 | 29 | 6 | 4 | 39 |
| Profit for the year attributable to the shareholders of Swedbank AB | 2 688 | 4 174 | 1 613 | –1 031 | 7 444 |
| Loans | 523 651 | 488 196 | 341 796 | 1 353 643 | |
| Deposits | 302 851 | 223 615 | 144 537 | 671 003 | |
| Mutual funds | 220 680 | 201 122 | 81 911 | 503 713 | |
| retail bonds and index-linked bonds | 15 104 | 8 821 | 23 925 | ||
| Discretionary asset management | 158 916 | 91 411 | 1 253 | 251 580 | |
| Allocated equity | 10 332 | 38 299 | 13 617 | 32 649 | 94 897 |
| return on allocated equity, % | 22.4 | 11.9 | 12.1 | –3.2 | 8.1 |
| Cost/income ratio | 0.67 | 0.41 | 0.56 | –4.68 | 0.57 |
In the breakdown by customer category, results and business volumes have been divided into four categories:
(2) Corporate customers
(3) Credit institutions
| 2010 | 2009 | |||||
|---|---|---|---|---|---|---|
| Average balance | Interest rate | Average annual interest rate, % |
Average balance | Interest rate | Average annual interest rate, % |
|
| Loans to credit institutions | 182 678 | 785 | 0.43 | 139 081 | 684 | 0.49 |
| Loans to the public* | 1 222 955 | 37 518 | 3.07 | 1 270 736 | 46 943 | 3.69 |
| Interest-bearing securities | 129 977 | 1 295 | 1.00 | 126 290 | 2 447 | 1.94 |
| Total interest-bearing assets | 1 535 610 | 39 598 | 2.58 | 1 536 107 | 50 074 | 3.26 |
| Derivatives | 81 333 | 6 066 | 103 385 | 6 167 | ||
| other assets | 161 855 | 205 | 141 874 | 158 | ||
| Total assets | 1 778 798 | 45 869 | 2.58 | 1 781 366 | 56 399 | 3.17 |
| Amounts owed to credit institutions | 212 367 | 1 244 | 0.59 | 307 713 | 3 207 | 1.04 |
| Deposits and borrowings from the public | 520 004 | 4 272 | 0.82 | 484 842 | 6 341 | 1.31 |
| of which deposit guarantee fees | 431 | 417 | ||||
| Debt securities in issue | 711 066 | 21 576 | 3.03 | 653 456 | 21 756 | 3.33 |
| of which commissions for funding with state guarantee | 1 584 | 1 802 | ||||
| subordinated liabilities | 32 374 | 1 408 | 4.35 | 42 749 | 1 970 | 4.61 |
| Interest-bearing liabilities | 1 475 811 | 28 500 | 1.93 | 1 488 760 | 33 274 | 2.24 |
| Derivatives | 76 921 | 755 | 97 543 | 2 094 | ||
| other liabilities | 134 586 | 285 | 110 891 | 266 | ||
| of which stability fee | 223 | 224 | ||||
| Total liabilities | 1 687 318 | 29 540 | 1.75 | 1 697 194 | 35 634 | 2.10 |
| Equity | 91 480 | 84 172 | ||||
| Total liabilities and equity | 1 778 798 | 29 540 | 1.66 | 1 781 366 | 35 634 | 2.00 |
| Net interest income | 16 329 | 20 765 | ||||
| Net interest margin | 0.92 | 1.17 | ||||
| Interest income impaired loans | 535 | 505 | ||||
| Interest income on financial assets at amortised cost | 14 504 | 11 519 | ||||
| Interest expenses on financial liabilities at amortised cost | 23 645 | 22 978 |
Interest-bearing securities are reported net in this note less short positions in securities. Contractual accrued interest on impaired loans is not accrued.
* In 2010, penalities related income in the Baltic countries amounting to SEK 191m were reclassified from other income to net interest income, in line with Group accounting principles.
| Commission income | ||
|---|---|---|
| payment processing | 2 530 | 2 710 |
| Cards | 3 011 | 2 764 |
| Asset management | 4 076 | 2 714 |
| Life insurance | 479 | 390 |
| Brokerage | 587 | 652 |
| other securities | 191 | 143 |
| Corporate finance | 314 | 221 |
| Lending | 670 | 563 |
| Guarantee | 216 | 278 |
| Deposits | 65 | 70 |
| real estate brokerage | 164 | 146 |
| Non-life insurance | 54 | 32 |
| other commission income | 742 | 714 |
| Total | 13 099 | 11 397 |
| 2010 | 2009 | |
|---|---|---|
| Commission expenses | ||
| payment processing | –783 | –801 |
| Cards | –1 412 | –1 285 |
| Asset management | –110 | –77 |
| Life insurance | –209 | –160 |
| Brokerage | –10 | –24 |
| other securities | –227 | –271 |
| Lending and guarantees | –77 | –93 |
| other commission expenses | –746 | –861 |
| Total | –3 574 | –3 572 |
| 2010 | 2009 | |
|---|---|---|
| Net commissions | ||
| payment processing | 1 747 | 1 909 |
| Cards | 1 599 | 1 479 |
| Asset management | 3 966 | 2 637 |
| Life insurance | 270 | 230 |
| Brokerage | 577 | 628 |
| other securities | –36 | –128 |
| Corporate finance | 314 | 221 |
| Lending | 593 | 470 |
| Guarantee | 216 | 278 |
| Deposits | 65 | 70 |
| real estate brokerage | 164 | 146 |
| Non-life insurance | 54 | 32 |
| other commission income | –4 | –147 |
| Total | 9 525 | 7 825 |
Commission income from asset management was charged with SEK 540m in 2009 for compensation to swedish customers because the fund management fees charged since 2004 were not in compliance with the terms of two of swedbank robur's funds (Russia Fund and Blend Fund). Moreover, commission income from asset management was charged with SEK 88m in the fourth quarter 2009 for compensation to Estonian customers of the private Debt Fund due to unclear rules on resolving conflicts of interest.
| 2010 | 2009 | |
|---|---|---|
| Valuation category, fair value through profit or loss | ||
| trading and derivatives | ||
| shares and related derivatives | 792 | 1 195 |
| of which dividend | 201 | 197 |
| Interest-bearing instruments and related derivatives* | –11 609 | –9 523 |
| other financial instruments | –16 | 14 |
| Total | –10 833 | –8 314 |
| Other financial instruments | ||
| shares and related derivatives | 61 | 16 |
| of which dividend | 6 | 5 |
| Loans | –5 417 | 45 |
| Financial liabilities | 16 744 | 10 046 |
| Total | 11 388 | 10 107 |
| Hedge accounting at fair value* | ||
| Hedging instruments* | –1 348 | 908 |
| Hedged item* | 1 579 | –1 112 |
| Total | 231 | –204 |
| Ineffective part in hedging of net investments in foreign operations |
3 | |
| Ineffective part in cash flow hedge | –37 | |
| Financial liabilities valued at amortised cost | 9 | 71 |
| Loan receivables at amortised cost | 106 | 161 |
| Change in exchange rates | 1 499 | 983 |
| Total | 2 400 | 2 770 |
| Distribution by business purpose | ||
| Financial instruments for trading related business | 2 307 | 3 087 |
| Financial instruments intended to be held until contrac tual maturity |
93 | –317 |
| of which change in the value of open interest position, swedbank Mortgage |
–312 | –293 |
| Total | 2 400 | 2 770 |
* According to description within changes in accounting policies, note G2, there has been a transfer between these rows regarding historical figures. the table below express the amounts that has been transferred for these rows.
| 2009 | |||
|---|---|---|---|
| Adjustments according to description in ac counting princples |
Before adjustment |
Adjustment | After adjust ment |
| Valuation category, fair value through profit or loss |
|||
| Trading and derivatives | |||
| Interest-bearing instruments and related derivatives |
–9 722 | 199 | –9 523 |
| Total | –9 722 | 199 | –9 523 |
| Hedge accounting at fair value | |||
| Hedging instruments | –340 | 1 248 | 908 |
| Hedged item | 335 | –1 447 | –1 112 |
| Total | –5 | –199 | –204 |
| 2010 | 2009 | |
|---|---|---|
| Insurance premiums | ||
| Life insurance | 1 150 | 1 184 |
| of which loan protection | 221 | 247 |
| of which other | 929 | 937 |
| Non-life insurance | 386 | 433 |
| Total | 1 536 | 1 617 |
| 2010 | 2009 | |
|---|---|---|
| Insurance provisions | ||
| Life insurance | –739 | –733 |
| of which loan protection | –150 | –144 |
| of which other | –589 | –589 |
| Non-life insurance | –185 | –237 |
| Total | –924 | –970 |
| 2010 | 2009 | |
|---|---|---|
| Net insurance | ||
| Life insurance | 411 | 451 |
| of which loan protection | 71 | 103 |
| of which other | 340 | 348 |
| Non-life insurance | 201 | 196 |
| Total | 612 | 647 |
| 2010 | 2009 | |
|---|---|---|
| profit from sale of subsidiaries and associates | 3 | |
| Branch sales | 397 | |
| Income from real estate operations | 124 | 13 |
| sold inventories | 105 | 54 |
| of which revenues | 1 391 | 743 |
| of which carrying amount | –1 286 | –689 |
| It services | 818 | 821 |
| other operating income | 507 | 621 |
| Total | 1 554 | 1 909 |
In 2009 Swedbank AB sold the European Agency for Debt Recovery in Ukraine to TAS Group. The sale generated a capital loss of SEK 6m.
In 2009 Swedbank AB, together with other Swedish banks, sold its shareholding in Privatgirot AB to Banc Tec. The capital gain amounted to SEK 2m.
In 2009 Swedbank AB sold four branches to Sparbanken Nord, three branches to sparbanken Dalsland, two branches to sparbanken rekarne, one branch to tidaholms sparbank and one branch to sparbanken 1826. the sales generated capital gains of SEK 397m.
| 2010 | 2009 | |
|---|---|---|
| salaries and remuneration | 6 182 | 6 062 |
| Compensation through shares in Swedbank AB | 31 | |
| social insurance charges | 1 839 | 1 827 |
| pension costs* | 1 019 | 980 |
| Allocation to profit-sharing funds | 2 | |
| training costs | 88 | 99 |
| other staff costs | 233 | 231 |
| Total | 9 392 | 9 201 |
| of which variable staff costs | 340 | 17 |
| of which personnel redundancy costs | 173 | 106 |
* the Group's pension cost for the year is specified in note G39.
| 2010 | 2009 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Salaries and remuneration | Board, President, EVPs and other senior executives |
Number of persons |
Bonuses | Other employees |
Total | Board, President, EVPs and other senior executives |
Number of persons |
Bonuses | Other employees |
Total |
| sweden | 88 | 76 | 4 420 | 4 508 | 76 | 73 | 1 | 3 928 | 4 005 | |
| Denmark | 20 | 20 | 24 | 24 | ||||||
| estonia | 4 | 7 | 412 | 416 | 3 | 8 | 417 | 420 | ||
| Finland | 31 | 31 | 9 | 9 | ||||||
| Latvia | 4 | 6 | 253 | 257 | 5 | 4 | 316 | 321 | ||
| Lithuania | 5 | 8 | 285 | 290 | 4 | 5 | 342 | 346 | ||
| Luxembourg | 2 | 1 | 48 | 50 | 1 | 1 | 53 | 54 | ||
| Norway | 7 | 3 | 6 | 273 | 286 | 6 | 1 | 2 | 437 | 445 |
| russia | 20 | 12 | 117 | 137 | 24 | 16 | 166 | 190 | ||
| ukraine | 14 | 13 | 130 | 144 | 33 | 23 | 167 | 200 | ||
| usA | 2 | 1 | 30 | 32 | 6 | 2 | 29 | 35 | ||
| other countries | 11 | 11 | 13 | 13 | ||||||
| Total | 146 | 127 | 6 | 6 030 | 6 182 | 158 | 133 | 3 | 5 901 | 6 062 |
| previous | 2010 | 2009 |
|---|---|---|
| Cost for the year related to pensions and similar remu | ||
| nerations | 18 | 30 |
| No. of persons | 19 | 27 |
| Granted loans | 181 | 240 |
| No. of persons | 75 | 88 |
pension costs exclude payroll tax. pension obligations for current and former presidents and executive Vice president have been secured through insurance and pension funds. The obligations secured by pension funds amounted to SEK 456m (456). The Group has not pledged any assets or other collateral or committed to contingent liabilities on behalf of any of the above-mentioned group of senior executives.
Senior executives refer to members of the Board Directors, the President and CEO, and members of the Group executive Management. other senior executives refer here to members of the Group executive Management who are reporting directly to the president and Ceo.
The Board's Remuneration Committee, consisting of at least two and not more than five Board members, annually reviews the remuneration guidelines for senior executives and prepares a proposal for the Board. Using this proposal as a basis, the Board proposes annual remuneration guidelines for senior executives for approval by the AGM. Based on the guidelines resolved by the AGM, the Board decides each year on the remuneration terms for the Ceo, other senior executives and the head of Internal Audit.
When determining the individual remuneration, each top executive shall be evaluated in accordance with an acknowledged structured benchmark procedure for establishing and comparing salaries and benefit data. the remuneration package for the top executives may include the following main compensation components, base salary, stI programme, LtI programme, benefits and pension.
Variable remuneration in the form of short-term and long-term incentive (STI and LTI) programmes must be tied to relevant, predetermined and measurable criteria designed to promote the Group's long-term value creation. For variable remuneration paid in cash, the limits on the maximum outcome are determined for each senior executive. The Board will also consider conditions that will allow it to reclaim such remuneration to the extent it was paid based on information that later proved to be blatantly incorrect. At least 60 per cent of variable remuneration will be deferred for at least three years and will be contingent on whether the criteria on which the remuneration is based have proven to be sustainable long-term and that the Group's position has not deteriorated significantly. If the terms for payment have not been met, the deferred remuneration will be revoked wholly or in part. At the time of the 2010 AGM no STI programmes had been adopted. The Board has the right, however, to decide on stI programmes for each senior executive. At present the Group has not adopted any LtI programmes. every LtI programme must be approved by the AGM. All fixed remuneration is paid out by the parent Company in accordance with sound contracts. Fees paid to the CEO and other senior executives for Board assignments are deducted against salaries, unless otherwise agreed. payment of variable remuneration in accordance with each STI or LTI programme must be approved by the Board.
| Total compensation to senior executives (key management) | 2010 | 2009 |
|---|---|---|
| short-term employee benefits | 57 | 49 |
| post-employment benefits | 20 | 20 |
| termination benefits | 4 | |
| Total | 81 | 69 |
| Related party transactions with senior executives (key management) |
||
| Granted loans | 67 | 47 |
| 2010 | 2009 | |||
|---|---|---|---|---|
| Board of Directors, SEK thousands | Board fees | of which committee |
work Board fees | of which committee work |
| Board fees and compensation | ||||
| Annual Board fee set by the Annual General Meeting |
||||
| Carl Erik Stålberg, Chair 2010-01-01–2010-03-26 |
1 700 | 350 | ||
| Lars Idermark, Chair as from 2010-03-26 |
1 700 | 350 | ||
| Anders Sundström, Deputy Chair | 1 025 | 350 | 1 025 | 350 |
| ulrika Francke, Director | 825 | 425 | 825 | 425 |
| Göran Hedman, Director (elected 2010) |
650 | 250 | ||
| Berith Hägglund-Marcus, Director | 525 | 125 | 525 | 125 |
| Anders Igel, Director | 500 | 100 | 500 | 100 |
| Helle Kruse Nielsen, Director | 500 | 100 | 500 | 100 |
| pia rudengren, Director | 650 | 250 | 650 | 250 |
| Karl-Henrik Sundström, Director | 525 | 125 | 525 | 125 |
| Siv Svensson, Director (elected 2010) | 525 | 125 | ||
| Total | 7 425 | 2 200 | 6 250 | 1 825 |
No expenses were recognised during the year for previous Board members other than what is stated below. The Group does not have any pension obligations for Board members other than Carl Erik Stålberg.
| thousands | 2010 | 2009 |
|---|---|---|
| To Carl Eric Stålberg | ||
| Fixed compensation, salary | 769 | 3 075 |
| Within framework of Board fees set by the Board | 464 | 1 700 |
| other compensation/benefits | 15 | 60 |
| Total | 1 248 | 4 835 |
| of which pension-based compensation | 769 | 3 075 |
| pension cost, excluding payroll tax | 638 | 2 556 |
Carl Eric Stålberg is entitled to a defined benefit pension from the age of 60. His pension entitlement is the vested portion of 75 per cent of his previous salary. the vested portion is based on the length of his employment in months divided by 360. the Parent Company also pays a pension premium of SEK 360 000 per year. Previously vested pension benefits remain unaffected. When Carl Eric Stålberg stepped down as Chair of the Board, he received severance of SEK 4 256 000.
| Compensation to the Chair, as from 2010-03-26, SEK | ||
|---|---|---|
| thousands | 2010 | 2009 |
| to Lars Idermark | ||
| Within framework of Board fees set by the Board | 1 275 | |
| other compensation/benefits | ||
| Total | 1 275 | |
| of which pension-based compensation | ||
| pension cost, excluding payroll tax |
Compensation to the President, 2009-01-01–2009-04-30
| SEK thousands | 2010 | 2009 |
|---|---|---|
| to Jan Lidén | ||
| Fixed compensation, salary | 2 667 | |
| other compensation/benefits | 79 | |
| Total | 2 746 | |
| pension cost, excluding payroll tax | 1 277 |
Jan Lidén stepped down as president on 28 February 2009. After his retirement on 30 April 2009 the bank has no further obligations to Jan Lidén.
| 2009-03-01 SEK, thousands | 2010 | 2009 |
|---|---|---|
| to Michael Wolf | ||
| Fixed compensation, salary | 8 000 | 8 000 |
| other compensation/benefits | 160 | 188 |
| Total | 8 160 | 8 188 |
| pension cost, excluding payroll tax | 3 200 | 3 200 |
Michael Wolf took over as president on 1 March 2009. His compensation consists of an annual base salary of SEK 8m with no variable compensation in the form of bonuses, etc. His ordinary retirement age is 60 and he receives an annual premium of SEK 3 200 thousands for defined-contribution pension purposes. If terminated by the parent Company, Michael Wolf will receive a salary during a 12-month term of notice. to this is added severance pay for 12 months. A deduction is made for income earned from new employment. If Michael Wolf resigns, the term of notice is six months and there is no severance.
| Remuneration to the other senior executives, SEKm | 2010 | 2009 |
|---|---|---|
| Fixed compensation, salary | 39 | 28 |
| Variable compensation, bonuses | ||
| other compensation/benefits | 1 | 1 |
| Total | 40 | 29 |
| pension cost, excluding payroll tax | 16 | 13 |
| No. of persons as of 31 December | 11 | 8 |
the table includes compensation paid by all Group companies, swedish as well as foreign, and refers to compensation for the time these individuals were members of Group Executive Management, excluding the CEO. For 2010 Thomas Backteman, Håkan Berg, Göran Bronner, Marie Hallander Larsson, Cecilia Hernqvist, Erkki Raasuke and Annika Wijkström were members of Group Executive Management for the entire year. Mikael Björknert, Stefan Carlsson, Kjell Hedman, Catrin Fransson and Magnus Geeber were members of Group executive Management for parts of the year. on 31 December 2010 Group Executive Management was comprised of Thomas Backteman, Håkan Berg, Mikael Björknert, Göran Bronner, Stefan Carlsson, Catrin Fransson, Magnus Geeber, Marie Hallander Larsson, Cecilia Hernqvist, Erkki Raasuke and Annika Wijkström. Variable remuneration for other senior executives of SEK 0 (–955) was charged against income.
Among the other eleven senior executives as of year-end, two are entitled to a lifetime defined-benefit pension from age 60, six others are entitled to a lifetime defined-benefit pension from age 62. one person has a retirement age of 62 and a premium of 35% of the salary up to a maximum of 80 income base amounts to a defined contribution insurance. For one senior executive, the Group pays a predetermined amount of SEK 945 000 per year to a defined contribution insurance. For one senior executive, there is no pension commitment. For eight persons, a deduction is made for previously vested pension entitlements. Benefits are accrued continuously until retirement and are vested after they have been accrued.
For two of the eight individuals with defined-benefit pension entitlements, the pensionable salary for 2004 in the defined-benefit pension plan has been locked in terms of income base amounts, in addition to which they receive a supplementary defined-contribution pension where the parent Company has committed to pay the premiums for a company-owned endowment insurance for the equivalent of 35 per cent of salary segments not secured by the defined-benefit entitlement.
six of the eight individuals with defined-benefit pension entitlements receive a supplementary defined-contribution pension where the parent Company has committed to pay the premiums for company-owned endowment insurance for the equivalent of 35 per cent of salary segments between 30 and 80 income base amounts.
If terminated by the company, salary is payable during the term of notice of 6–12 months. In addition to severance pay for 12 months. A deduction is made for any income earned from new employment. For two senior executives, the severance is pensionable. If a senior executive resigns, the term of notice is not more than 12 months and severance cannot be paid unless they are terminated due to a serious breach of contract on the part of the bank.
According to its agreement with the National Debt Office, Swedbank AB has pledged, among other things, to ensure that the following applies to the five highest paid senior executives:
* the base salary or other fixed compensation paid to any executive may not exceed the compensation level determined prior to 20 october 2008.
* Variable compensation, including options, may not be determined during the time period during which the bank's contract with the National Debt Office applies ("the contractual period''), and circumstances related to the contractual period may not be considered when variable compensation is calculated due to previous contracts and no variable compensation determined before the contractual period may be executed or paid during the contractual period.
* With regard to severance, the terms may not be more favourable than stipulated in the employment terms for senior executives of state-owned companies.
Information according to the Financial supervisory Authority's regulations and general guidelines (FFFS 2009:6), will be published on Swedbank's website under corporate governance.
Swedbank's Board of Directors resolved in 2010 on a performance-based remuneration programme for 2010 ("Programme 2010"), where the remuneration is divided into cash and shares. the programme includes broad-based personnel categories and is a result of the Group's efforts to adapt its remuneration structure to a new view of variable compensation that has taken shape following the financial crisis. the programme does not include senior executives. the employees included in programme 2010 can qualify, to the extent certain predetermined performance targets are reached in 2010, for additional remuneration in early 2011. the equivalent of 40-60 per cent of the remuneration will be issued in the form of cash, which will be paid out in early 2011. the remaining remuneration is intended to be allotted in the form of contingent rights, performance rights, which give participants the opportunity to receive ordinary shares in Swedbank AB without cost in February 2014. Programme 2010 distinguishes risk-takers from non-risk-takers, where risk-takers are proposed to receive 60 per cent of their remuneration in the form of performance rights, while for non-risk-takers this portion is 40 per cent.
each performance right entitles the holder to receive one ordinary share in swedbank AB without cost on the delivery date, in February 2014, provided that the participant remains an employee. since the performance rights are entitled to dividends, holders will be compensated with additional performance rights corresponding to dividends that the ordinary shares qualify for until the delivery date. Deferring the remuneration to 2014 facilitates a later evaluation of whether the outcome that the remuneration was based on was sustainable long-term. If not, the Board has the right, at its discretion, to amend the terms and reduce the number of ordinary shares that the performance rights entitle their holders to. the value of the estimated remuneration for programme 2010, cash as well as performance rights, amounted to SEK 388m social charges included, of
which recognised expense in 2010 amounted to SEK 255m. The allotment of the share-based is estimated to result in a dilution of approximately 0,1 %. The Board's resolution that part of the remuneration will be deferred and eventually paid in the form of shares was made contingent on the approval of the 2011 AGM. If the AGM does not approve the share-based payment, remuneration may be paid in cash.
swedbank intends to fulfil its obligation to ensure that ordinary shares are transferred without cost to those who qualify according to programme 2010 by introducing a special class of shares, C shares. the C shares will be issued with the approval of the 2011 AGM through a directed issue to a financial institution engaged specifically for this purpose, after which Swedbank AB will repurchase the shares and convert them to ordinary shares followed by delivery to qualified holders of performance rights.
Since the delivery of ordinary shares in Swedbank AB is contingent on the holder of the performance rights remaining an employee on the delivery date, the share-based payment is accrued for approximately 50 months, from 2010 through February 2014.
each performance right has been valued based on the anticipated price of the common share on the allotment date 2011, since each performance right entitles its holder to one ordinary share in addition to compensation for dividends that the performance rights do not qualify for. the reported cost of program 2010 may change during period extending until February 2014, since the performance rights' value are finally determined at the AGM 2011 and since the number of perfomance rights are continuously reassessed. social insurance charges are calculated and recognised continuously based on market value and ultimately determined at the time of settlement.
| Compensation Program 2010 | 2010 |
|---|---|
| recognised expense for compensation that is | |
| settled with shares in Swedbank AB | 31 |
| recognised expense for social charges | 10 |
| recognised expense for cash settled compensation | 140 |
| recognised expense for payroll overhead costs | |
| related to the cash settled compensation | 74 |
| Total recognised expense | 255 |
| total estimated number of performance | |
| rights to grant, millions | 1.3 |
| estimated number of performance rights | |
| that are forfeited due to employee turnover, millions | 0.0 |
| Number of performance rights that | |
| establish the recognised expense, millions | 1.3 |
| estimated fair value of the performance | |
| right at measurement date, SEK | 102 |
the fair value of one performance right corresponds to estimated stock-exchange rate for one ordinary share at grant date, since one performance right entitles to one ordinary share with additional ordinary shares that compensate the value of the dividends the ordinary shares have been entitled to during the vesting period.
| Average number of employees based on 1 585 hours per employee |
2010 | 2009 |
|---|---|---|
| Swedbank AB | 8 352 | 8 454 |
| Swedbank Hypotek AB | 173 | 165 |
| Swedbank Finans AB | 301 | 276 |
| Swedbank Robur AB | 117 | 123 |
| Swedbank Juristbyrå AB | 6 | 5 |
| Swedbank Fastighetsbyrå AB | 39 | 28 |
| Swedbank Företagsförmedling AB | 3 | 4 |
| Swedbank Card Services AB | 82 | 79 |
| Ölands Bank AB | 59 | 59 |
| Ektornet AB | 160 | 15 |
| swedbank Luxembourg s.A. | 70 | 71 |
| Swedbank Baltikum | 7 441 | 8 250 |
| swedbank russia | 327 | 573 |
| JsC swedbank ukraine | 2 135 | 3 915 |
| eADr ukraine | 69 | |
| First securities AsA | 267 | 251 |
| swedbank First LLC | 10 | 13 |
| Total | 19 542 | 22 350 |
| of which in | ||
| sweden | 8 960 | 9 025 |
| Denmark | 34 | 37 |
| estonia | 2 827 | 3 015 |
| Finland | 31 | 9 |
| Japan | 1 | 2 |
| China | 19 | 20 |
| Latvia | 1 893 | 2 312 |
| Lithuania | 2 811 | 2 965 |
| Luxembourg | 70 | 71 |
| Norway | 403 | 300 |
| russia | 330 | 576 |
| ukraine | 2 137 | 3 988 |
| usA | 26 | 30 |
| Total | 19 542 | 22 350 |
| Number of hours worked (thousands) | 30 971 | 35 417 |
| Distribution by gender | 2010 | 2009 | ||
|---|---|---|---|---|
| Per cent | Female | Male | Female | Male |
| sweden | 55 | 45 | 55 | 45 |
| Denmark | 53 | 47 | 51 | 49 |
| estonia | 75 | 25 | 75 | 25 |
| Finland | 39 | 61 | 53 | 47 |
| Japan | 50 | 50 | ||
| China | 53 | 47 | 63 | 37 |
| Latvia | 75 | 25 | 75 | 25 |
| Lithuania | 76 | 24 | 78 | 22 |
| Luxembourg | 33 | 67 | 35 | 65 |
| Norway | 27 | 73 | 20 | 80 |
| russia | 63 | 37 | 65 | 35 |
| ukraine | 69 | 31 | 66 | 34 |
| usA | 29 | 71 | 37 | 63 |
| 2010 | 2009 | |
|---|---|---|
| expenses for premises | 55 | 50 |
| rents, etc. | 1 324 | 1 522 |
| It expenses | 1 634 | 1 818 |
| telecommunications, postage | 271 | 321 |
| Consulting and outside services | 1 698 | 1 654 |
| travel | 229 | 217 |
| entertainment | 98 | 104 |
| office supplies | 248 | 258 |
| Advertising, public relations, marketing | 360 | 433 |
| security transports, alarm systems | 440 | 480 |
| Maintenance | 200 | 186 |
| other administrative expenses | 400 | 445 |
| other operating expenses | 343 | 270 |
| Total | 7 300 | 7 758 |
Consulting and other services related to the management of problem loans and repossessed collateral amounted to SEK 261m in 2010 and SEK 240m in 2009. Expenses for properties taken over are included in other expenses amounted to SEK 122m in 2010 and SEK 67m in 2009. other operating expenses in 2010 include a capital loss of SEK 3m on the sale of shares in the associate Bergslagen Sparbank AB.
| Remuneration to auditors | 2010 | 2009 |
|---|---|---|
| Remuneration to auditors elected by Annual General Meeting, Deloitte |
||
| statutory audit | 33 | 32 |
| other audit | 7 | 10 |
| tax advisory | 1 | 1 |
| other | 1 | 2 |
| Remuneration to other | ||
| statutory audit | 2 | 3 |
| other audit | 1 | 1 |
| tax advisory | 0 | 0 |
| other | 1 | 4 |
| Total | 46 | 53 |
| Internal Audit | 67 | 69 |
Number of Group employees at year-end excluding longterm absentees in relation to hours worked expressed as full-time positions 17 224 19 277
| Employee turnover, % | 2010 | 2009 |
|---|---|---|
| retail | 7,9 | 6,7 |
| Large Corporates & Institutions | 9,5 | 8,2 |
| Baltic Banking | 11,1 | 16,0 |
| russia & ukraine | 44,2 | 26,0 |
| Asset Management | 5,0 | 3,4 |
| ektornet | 84,6 | 0,0 |
| shared services & Group staffs | 6,7 | 4,5 |
| Total employee turnover | 15,7 | 13,9 |
| Distribution by gender | 2010 | 2009 | |||
|---|---|---|---|---|---|
| Per cent | Female | Male | Female | Male | |
| All employees | 67 | 33 | 64 | 36 | |
| Directors | 32 | 68 | 28 | 72 | |
| other senior executives, incl. president |
19 | 81 | 30 | 70 |
| Depreciation/amortisation | 2010 | 2009 |
|---|---|---|
| equipment | 511 | 510 |
| owner-occupied properties | 51 | 62 |
| Investment properties | 21 | 2 |
| Intangible fixed assets | 367 | 315 |
| Total | 950 | 889 |
| Impairments | 2010 | 2009 |
|---|---|---|
| owner-occupied properties | 130 | 221 |
| Investment properties | 204 | 64 |
| properties measured as inventory | 47 | 24 |
| repossessed leasing assets | 219 | 140 |
| Total | 600 | 449 |
repossessed lease assets are recognised in the balance sheet as other assets. Impairments of operating properties were primarily in ukraine in connection with operating cutbacks.
| 2010 | 2009 | |
|---|---|---|
| Provisions for loans that individually are assessed | ||
| as impaired | ||
| provisions | 3 507 | 14 505 |
| reversal of previous provisions | –1 605 | –303 |
| provision for homogenous groups of impaired loans, net | 1 235 | 2 654 |
| Total | 3 137 | 16 856 |
| Portfolio provisions for loans that individually are | ||
| not assessed as impaired | –1 738 | 4 752 |
| Write-offs | ||
| established losses | 4 373 | 3 531 |
| utilisation of previous provisions | –2 410 | –468 |
| recoveries | –558 | –216 |
| Total | 1 405 | 2 847 |
| Credit impairments for contingent liabilities and | ||
| other credit risk exposures | 6 | 186 |
| Credit impairments | 2 810 | 24 641 |
| Credit impairments by valuation category | ||
| Loans and receivables | 2 709 | 24 599 |
| Fair value through profit or loss | 101 | 42 |
| Total | 2 810 | 24 641 |
| Credit impairments by borrower category | ||
| Credit institutions | –32 | 181 |
| General public | 2 842 | 24 460 |
| Total | 2 810 | 24 641 |
Credit impairments decreased by SEK 21 831m (increase of 21 485), of which SEK 11 526m (13 088) was in Baltic Banking, SEK 1 597m (1 201) in Russian Banking and SEK 7 044m (6 107) in Ukrainian Banking.
| G19 tax | ||
|---|---|---|
| Tax expense | 2010 | 2009 |
| tax related to previous years | 106 | –13 |
| Current tax | 2 455 | 4 001 |
| Deferred tax | –89 | –3 007 |
| Total | 2 472 | 981 |
Positive current tax recognised directly in equity amounted to SEK 156m 2009.
the difference between the Group's tax expense and the tax expense based on current tax rates is explained below:
| 2010 | 2009 | |||
|---|---|---|---|---|
| SEKm | per cent | SEKm | per cent | |
| results | 2 472 | 24.8 | 981 | –10.4 |
| 26.3% of pre-tax profit | 2 618 | 26.3 | –2 488 | –26.3 |
| Difference | 146 | 1.5 | –3 469 | –36.7 |
| The difference consists of the following items: |
||||
| tax previous years | –106 | –1.1 | 13 | 0.1 |
| tax -exempt income/non-deductible expenses |
–61 | –0.6 | –230 | –2.4 |
| unrecognised portion of deferred tax assets |
168 | 1.7 | –1 566 | –16.6 |
| Non-deductible goodwill impairment | –3 | –315 | –3.3 | |
| tax-exempt capital gains and appreciation in value of shares and participating interests |
–1 | –1 | ||
| Not previously recognised unused tax losses |
3 | |||
| other tax basis in insurance operations |
22 | 0.2 | 25 | 0.3 |
| Deviating tax rates in other countries | 109 | 1.1 | –1 268 | –13.4 |
| standard income tax allocation reserve |
–4 | –31 | –0.3 | |
| Credit impairements in russia and ukraine |
3 | |||
| revaluation of deferred taxes due to changed tax rate in Lithuania |
–157 | –1.7 | ||
| other, net | 19 | 0.2 | 58 | 0.6 |
| Total | 146 | 1.5 | –3 469 | –36.7 |
2010
| Deferred tax assets | Opening balance | Income statement | Other comprehen sive income |
Exchange rate differences |
Closing balance |
|---|---|---|---|---|---|
| Deductible temporary differences | |||||
| provision for credit impairments | 433 | –221 | 212 | ||
| other | 115 | –73 | 42 | ||
| unused tax losses | 2 253 | –24 | –169 | 2 060 | |
| unused tax credits | 45 | –3 | 42 | ||
| unrecognised deferred tax assets | –1 637 | 499 | –1 138 | ||
| Total | 1 209 | 178 | –169 | 1 218 |
taxable temporary differences
| untaxed reserves | 1 613 | –4 | –29 | 1 580 | |
|---|---|---|---|---|---|
| Hedge of net investment in foreign operations | –421 | 672 | 251 | ||
| provision for pensions | –451 | 27 | –424 | ||
| Cash flow hedges | –265 | 118 | 251 | 104 | |
| Intangible fixed assets | 296 | 7 | 303 | ||
| tax loss carry-forwards | –8 | 8 | |||
| other | –44 | –67 | 31 | –80 | |
| Total | 720 | 89 | 923 | 2 | 1 734 |
Deferred tax related to hedging of net investments in foreign operations and cash flow hedging is recognised in other comprehensive income only, as the change in value of the hedging instrument is recognised directly in other comprehensive income. Deferred tax related to untaxed reserves in associates is included in the balance sheet line Investments in associates.
swedbank As pays income tax in estonia only upon distribution of its earnings as dividends. the tax rate for 2010 is 21 per cent. retained earnings in swedbank As, if distributed, would result in a tax expense of SEK 1 676m. No related deferred tax
liability has however been recognised in the accounts as the parent Company can control the timing when dividends are to be paid out and no distribution is expected to be made during the foreseeable future. Future dividends, if any, are expected to be paid from future earnings.
The major part of Unrecognised portion of deferred tax assets refers to Ukraine SEK 890m (1 264), Lithuania SEK 124m (275) and Russia SEK 77m (89). The assets are not recognised due to uncertainty when sufficient taxable earnings will be generated and uncertainty about the fiscal system in ukraine . see also note G2, Accounting policies.
| Total deduction | Parts of deduction for which deferred tax is recognised |
Parts of deduction for which deferred tax is not recognised |
||
|---|---|---|---|---|
| Maturity | Latvia | Lithuania | ||
| 2013 | 3 199 | 3 199 | ||
| 2017 | 4 213 | 4 213 | ||
| 2018 | 688 | 688 | ||
| 2019 | 126 | 126 | ||
| 2020 | 229 | 229 | ||
| Without maturity | 2 647 | 1 937 | 710 | |
| Total | 11 102 | 4 901 | 1 937 | 4 264 |
In order to determine how much of the deferred tax assets that are to be recognised in accounting, the group regularly forecasts expected future taxable profits. Deferred tax assets are recognised only to the extent such profits can be forecasted with a reasonable level of comfort. out of the currently recognised deferred tax assets almost 70 per cent are expected to be utilised against taxable profits before the end of 2013, i.e. within the group's three-year Midterm plan. All of the losses for which deferred tax assets are recognised derive from the Group's home markets. each business unit reports a gain during the second half of 2010.
2009
| Deferred tax assets | Opening balance | Income statement | Other comprehen sive income |
Exchange rate differences |
Closing balance |
|---|---|---|---|---|---|
| Deductible temporary differences | |||||
| provision for credit impairments | 433 | 433 | |||
| other | 62 | 57 | –4 | 115 | |
| unused tax losses | 2 253 | 2 253 | |||
| unused tax credits | 45 | 45 | |||
| unrecognised deferred tax assets | –1 637 | –1 637 | |||
| Total | 62 | 1 151 | –4 | 1 209 | |
| Deferred tax liabilities | |||||
| taxable temporary differences | |||||
| untaxed reserves | 3 167 | –1 554 | 1 613 | ||
| Hedge of net investment in foreign operations | –1 044 | 623 | –421 | ||
| provision for pensions | –483 | 32 | –451 | ||
| Cash flow hedges | –332 | 67 | –265 | ||
| Intangible fixed assets | 250 | 46 | 296 |
tax loss carry-forwards –8 –8 other 211 –372 117 –44 Total 1 769 –1 856 690 117 720
| Unused tax losses and unused tax credits according to tax calculation |
|---|
| Total deduction | Parts of deduction for which deferred tax is recognised | Parts of deduction for which deferred tax is not recognised |
|||
|---|---|---|---|---|---|
| Maturity | Latvia | Lithuania | Russia | ||
| 2013 | 3 689 | 3 689 | |||
| 2017 | 4 824 | 4 824 | |||
| 2018 | 39 | 39 | |||
| 2019 | 135 | 135 | |||
| Without maturity | 2 128 | 1 989 | 139 | ||
| Total | 10 815 | 4 824 | 1 989 | 39 | 3 963 |
earnings per share are calculated by dividing the profit for the year attributable to the shareholders of the parent Company by a weighted average number of ordinary sharesoutstanding. earnings per share after dilution is calculated by dividing the profit for the year attributable to the shareholders of the parent Company by the average of the number of ordinary shares outstanding over the year, adjusted for the dilution effect of potential shares.
| 2010 | 2009 | |
|---|---|---|
| profit for the period attributable to the shareholders of swedbank |
7 444 | -10 511 |
| Weighted average number of shares before adjust ments for rights issue, bonus element and holdings of treasury shares, before and after dilution |
1 159 590 177 | 773 060 118 |
| Effect of bonus selement 2009 (1.21) | 161 056 891 | |
| effect of rights issue 2009 | 53 125 185 | |
| effect of associates' holdings of swedbank's shares | –1 116 000 | –771 608 |
| Weighted average number of shares used for calcula tion of earnings per share, before and after dilution |
1 158 474 177 | 986 470 586 |
| Earnings per share before and after dilution, SEK | 6.43 | –10.66 |
During 2009 the parent Company issued ordinary shares. the issue was fully subscribed and a total of 386 530 059 shares were issued with a quota value of SEK 21 each. A bonus issue factor was identified in connection with the rights issue, due to which the weighted average number of shares used in the calculation of earnings per share has been adjusted. In 2008 the parent Company issued preference shares. A total of 257 686 706 preference shares were issued with a quota value of SEK 21 each. 62 701 250 were registered on 19 January 2009. other preference shares were registered as of year-end 2008. since the preference shares call for a mandatory conversion to ordinary shares, the preference shares are included in the calculation of earnings per share before dilution for ordinary shares outstanding at the time the contract is entered into. Hence, the conversion has no effect on the calculation of earnings per share. swedbank's share-related compensation programme, programme 2010, gives rise to potential ordinary shares from the grant date. Because the compensation programme is contingent an approval from the AGM 2011the performance rigths that entitle to ordinariy shares are considered to be granted first after the AGM's decision. When calculating earnings per share after dilution these potential ordinary shares will be included first during 2011, hence they have not affected earnings per share after dilution at end of 2010. estimated number of potential ordinary shares as a result of programme 2010 will affect the key ratio insignificant.
| 2010 | 2009 | |||||||
|---|---|---|---|---|---|---|---|---|
| Pre-tax amount |
Deferred tax | Current tax |
Net-of-tax amount |
Pre-tax amount |
Deferred tax | Current tax |
Net-of-tax amount |
|
| exchange differences, foreign operations | –4 218 | –4 218 | –1 852 | –1 852 | ||||
| Hedging of net investments in foreign operations | 2 420 | –679 | 42 | 1 783 | 1 312 | –623 | 289 | 978 |
| Cash flow hedges | 955 | –251 | 704 | 280 | –67 | 213 | ||
| share of other comprehensive income of associates | –30 | –2 | –32 | 42 | 4 | 46 | ||
| Other comprehensive income | –873 | –932 | 42 | –1 763 | –218 | –686 | 289 | –615 |
| Carrying amount | Amortised cost | Nominal amount | |||||||
|---|---|---|---|---|---|---|---|---|---|
| 2010 | 2009 | 1/1/2009 | 2010 | 2009 | 1/1/2009 | 2010 | 2009 | 1/1/2009 | |
| Valuation category, fair value through profit or loss |
|||||||||
| Trading | |||||||||
| swedish government | 23 454 | 72 909 | 19 995 | 23 227 | 72 681 | 19 748 | 20 182 | 69 957 | 16 790 |
| swedish municipalities | 792 | 11 | 643 | 794 | 11 | 630 | 842 | 11 | 635 |
| Foreign governments | 8 741 | 14 408 | 5 385 | 8 749 | 14 403 | 5 298 | 8 697 | 14 241 | 5 217 |
| other non-swedish issuers | 671 | 235 | 662 | 672 | 235 | 670 | 666 | 250 | 672 |
| Total | 33 658 | 87 563 | 26 685 | 33 442 | 87 330 | 26 346 | 30 387 | 84 459 | 23 314 |
| Valuation category, held to maturity* | |||||||||
| Foreign governments | 1 266 | 1 161 | 1 293 | 1 266 | 1 161 | 1 293 | 1 233 | 1 113 | 1 241 |
| Total | 1 266 | 1 161 | 1 293 | 1 266 | 1 161 | 1 293 | 1 233 | 1 113 | 1 241 |
| Total | 34 924 | 88 724 | 27 978 | 34 708 | 88 491 | 27 639 | 31 620 | 85 572 | 24 555 |
* The fair value of held-to-maturity investments amounted to SEK 1 242m (1 160).
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Valuation category, loans and receivables |
|||
| swedish banks | 50 849 | 39 458 | 55 575 |
| swedish credit institutions | 435 | 1 142 | |
| swedish credit institutions, repurchase agreements |
5 746 | ||
| Foreign banks | 74 582 | 30 626 | 33 344 |
| Foreign banks, repurchase agreements | 5 032 | ||
| Foreign credit institutions | 19 | 298 | |
| Foreign credit institutions, repurchase agreements |
1 544 | ||
| Total | 125 866 | 71 245 | 101 539 |
| Valuation category, fair value through profit or loss |
|||
| Trading | |||
| swedish banks | 2 | 18 | 3 378 |
| swedish banks, repurchase agreements | 1 942 | 8 564 | 204 |
| swedish credit institutions | 305 | ||
| swedish credit institutions, repurchase agreements |
12 763 | 477 | 1 373 |
| Foreign banks | 553 | 101 | |
| Foreign banks, repurchase agreements | 25 291 | 11 421 | 22 042 |
| Total | 40 551 | 20 886 | 26 997 |
| Total | 166 417 | 92 131 | 128 536 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Subordinated loans | |||
| Associates | 120 | 320 | 200 |
| other companies | 57 | 62 | 56 |
| Total | 177 | 382 | 256 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Valuation category, loans and receivables |
|||
| swedish public | 448 142 | 412 274 | 439 980 |
| swedish public, repurchase agreements | 7 082 | ||
| Foreign public | 193 353 | 241 837 | 317 836 |
| Foreign public, repurchase agreements | 1 295 | 3 730 | |
| Total | 641 495 | 655 406 | 768 628 |
| Valuation category, fair value through profit or loss | |||
| Trading | |||
| swedish public | 4 | 7 069 | |
| swedish public, repurchase agreements | 35 444 | 29 829 | 23 126 |
| Foreign public | 2 | 3 882 | |
| Foreign public, repurchase agreements | 5 785 | 7 347 | 2 953 |
| Other | |||
| swedish public | 504 496 | 594 203 | 485 648 |
| Total | 545 731 | 635 261 | 518 796 |
| Total | 1 187 226 | 1 290 667 | 1 287 424 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Subordinated loans | |||
| other | 308 | 348 | |
| Total | 308 | 348 |
the maximum credit risk exposure for lending measured at fair value corresponds to the carrying amount
| 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |
|---|---|---|---|---|---|---|---|---|
| < 1 yr. | < 1 yr. | 1—5 yrs. | 1—5 yrs. | > 5 yrs. | > 5 yrs. | Total | Total | |
| Gross investment | 10 544 | 14 177 | 14 862 | 22 088 | 2 926 | 3 585 | 28 332 | 39 850 |
| unearned finance income | 826 | 1 489 | 759 | 1 151 | 423 | 1 710 | 2 008 | 4 350 |
| Net investment | 9 718 | 12 688 | 14 103 | 20 937 | 2 503 | 1 874 | 26 324 | 35 499 |
| provisions for impaired claims related to minimum lease payments | 952 | 2 087 |
the residual value of the leases in all cases are guaranteed by the lessees. Finance leasing are included in Loans to the public and relates to vehicles, machinery, boats etc.
| Carrying amount | Amortised cost | Nominal amount | |||||||
|---|---|---|---|---|---|---|---|---|---|
| 2010 | 2009 | 1/1/2009 | 2010 | 2009 | 1/1/2009 | 2010 | 2009 | 1/1/2009 | |
| Valuation category, fair value through profit or loss | |||||||||
| Trading | |||||||||
| swedish mortgage institutions | 60 904 | 48 315 | 50 531 | 61 566 | 47 976 | 49 137 | 61 780 | 46 187 | 48 396 |
| swedish financial entities | 6 402 | 7 494 | 3 373 | 6 413 | 7 249 | 3 443 | 6 402 | 6 997 | 3 280 |
| swedish non-financial entities | 5 005 | 6 823 | 22 007 | 4 992 | 6 777 | 22 029 | 5 002 | 6 813 | 22 203 |
| Foreign financial entities | 16 291 | 9 372 | 19 791 | 16 103 | 9 386 | 19 991 | 16 204 | 9 350 | 20 191 |
| Foreign non-financial entities | 3 539 | 2 239 | 1 545 | 3 441 | 2 234 | 1 662 | 3 590 | 2 253 | 1 757 |
| Total | 92 141 | 74 243 | 97 247 | 92 515 | 73 622 | 96 262 | 92 978 | 71 600 | 95 827 |
| Valuation category, held to maturity* | |||||||||
| Foreign mortgage institutions | 3 335 | 6 371 | 7 579 | 3 335 | 6 371 | 7 579 | 3 335 | 6 446 | 7 730 |
| Foreign financial entities | 892 | 1 224 | 867 | 891 | 1 224 | 867 | 892 | 1 250 | 917 |
| Foreign non-financial entities | 284 | 53 | 23 | 284 | 53 | 23 | 285 | 53 | 23 |
| Total | 4 511 | 7 648 | 8 469 | 4 510 | 7 648 | 8 469 | 4 512 | 7 749 | 8 670 |
| Total | 96 652 | 81 891 | 105 716 | 97 025 | 81 270 | 104 731 | 97 490 | 79 349 | 104 497 |
| of which subordinated | 200 | 200 | |||||||
| of which listed | 114 328 | 40 942 | 98 023 |
* The fair value of held-to-maturity investments amounted to SEK 4 456m (7 321). Carrying amount is below nominal amount for all securities.
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Valuation category, fair value through profit or loss |
|||
| Other | |||
| Fund units | 91 218 | 72 507 | 50 176 |
| Interest-bearing securities | 1 315 | 919 | 373 |
| shares | 8 095 | 4 768 | 1 089 |
| Total | 100 628 | 78 194 | 51 638 |
| Carrying amount | Cost | |||||
|---|---|---|---|---|---|---|
| 2010 | 2009 | 1/1/2009 | 2010 | 2009 | 1/1/2009 | |
| Valuation category, fair value through profit or loss | ||||||
| Trading | ||||||
| trading stock | 5 333 | 5 511 | 3 936 | 5 200 | 5 623 | 4 126 |
| Fund shares | 164 | 3 811 | 2 300 | 160 | 3 698 | 2 591 |
| For protection of claims | 570 | 108 | 190 | 575 | 108 | 191 |
| Other | ||||||
| Credit institutions | 24 | 25 | 79 | 25 | 27 | 35 |
| other shares | 34 | 1 | 2 | 36 | 4 | |
| Total | 6 125 | 9 456 | 6 507 | 5 996 | 9 456 | 6 947 |
| Valuation category, available for sale | ||||||
| Condominiums | 29 | 30 | 31 | 29 | 30 | 30 |
| other | 27 | 19 | 19 | 27 | 16 | 15 |
| Total | 56 | 49 | 50 | 56 | 46 | 45 |
| Total | 6 181 | 9 505 | 6 557 | 6 052 | 9 502 | 6 992 |
| of which unlisted | 295 | 441 | 282 |
unlisted holdings are valued at their last transaction price. Holdings in the valuation category available for sale have been estimated at acquisition cost, since a more reliable fair value is not considered to be available.
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Fixed assets | |||
| Credit institutions | 2 384 | 2 195 | 1 867 |
| other associates | 326 | 545 | 120 |
| Total | 2 710 | 2 740 | 1 987 |
| Opening balance | 2 740 | 1 987 | |
| Additions during the year | 34 | 100 | |
| Change in accumulated profit shares | 218 | 603 | |
| Impairment losses during the year | |||
| Disposals during the year | –243 | –7 | |
| translation difference equity in associates | –39 | 57 | |
| Closing balance | 2 710 | 2 740 |
| 2010 Corporate identity, domicile |
Corporate identity number |
Number Carrying amount | Cost | Share of capital, % |
Year's share of associate's pre-tax profit |
|
|---|---|---|---|---|---|---|
| Credit institutions | ||||||
| EnterCard Holding AB, Stockholm | 556673-0585 | 3 000 | 1210 | 420 | 50.00 | 409 |
| Färs & Frosta Sparbank AB, Lund | 516401-0091 | 1 478 700 | 408 | 257 | 30.00 | 59 |
| Sparbanken Rekarne AB, Eskilstuna | 516401-9928 | 865 000 | 176 | 125 | 50.00 | 24 |
| Swedbank Sjuhärad AB, Borås | 516401-9852 | 950 000 | 523 | 287 | 47.50 | 86 |
| Vimmerby Sparbank AB, Vimmerby | 516401-0174 | 340 000 | 67 | 41 | 40.00 | 6 |
| other | 4 | |||||
| Total | 2 384 | 1 130 | 588 | |||
| Other associates | ||||||
| BDB Bankernas Depå AB, Stockholm | 556695-3567 | 13 000 | 7 | 3 | 20.00 | |
| BGC Holding AB, Stockholm | 556607-0933 | 29 177 | 56 | 10 | 29.18 | 6 |
| Finansiell ID-Teknik BID AB, Stockholm | 556630-4928 | 12 735 | 16 | 4 | 28.30 | 4 |
| Rosengård Invest AB, Malmö | 556756-0528 | 2 500 | 4 | 5 | 25.00 | –1 |
| VIsA sweden, stockholm | 801020-5097 | 143 | 39.10 | –1 | ||
| BAB Bankernas Automatbolag AB, Stockholm | 556817-9716 | 750 | 14 | 15 | 20.00 | |
| UC AB, Stockholm | 556137-5113 | 2 000 | 19 | 20.00 | 20 | |
| owned by subsidiaries | ||||||
| As sertifitseerimiskeskus, tallin | 10747013 | 5 918 | 4 | 25.00 | ||
| Babs Paylink AB, Stockholm | 556567-2200 | 4 900 | 62 | 49.00 | 25 | |
| Hemnet Sverige AB, Stockholm | 556536-0202 | 25 | 1 | 25.00 | ||
| Övriga | –17 | |||||
| Total | 326 | 37 | 36 | |||
| Total | 2 710 | 1 167 | 624 |
The share of the voting rights in each entity corresponds to the share of its equity. All shares are unlisted. The holding in EnterCard Holding AB is a joint venture. As of 31 december 2010 the assoicates' total assets and liabilities amounted to SEK 59 072m (48 019) and SEK 51 595m (43 418), respectively, while income and profit for 2010 amounted to SEK 5 088m (4 656) and SEK 1 386m (917), respectively.
the Group trades in derivatives in the normal course of business and for the purpose of hedging certain positions that are exposed to share, interest rate and currency risks. Interest rate swaps that safeguard the interest rate risk associated with certain loans and subordinated liabilities are sometimes recognised as hedging instruments in hedge accounting at fair value. the derivatives are recognised at fair value with changes in value through profit or loss in the same manner as for other derivatives. In note G11 Net gains and losses on financial items at fair value, any ineffectiveness of the hedges is recognised as the change in value of the derivative together with the change in value of the hedged risk component. Interest rate- and currency swaps sometimes also hedge projected future interest payments, so-called cash flow hedges. Future estimated cash flows that are hedged by the swaps are disclosed below. since the derivatives are recognised as hedging instruments, their fair value is recognised in the statement of other comprehensive income. Value changes of derivatives that are used as hedging instruments for investments in foreign operations are also recognised in the statement of other comprehensive income. Any ineffectiveness is recognised in Net gains and losses on financial items at fair value. the carrying amount of derivatives included in hedge accounting is reported separately below. the carrying amounts of all derivatives refer to fair value including accrued interest.
| Nominal amount 2010 Remaining contractual maturity Nominal amount |
Positive fair value | Negative fair value | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| < 1 yr. | 1–5 yrs. | > 5 yrs. | 2010 | 2009 | 2010 | 2009 | 1/1/2009 | 2010 | 2009 | 1/1/2009 | |
| Derivatives in hedge accounting | |||||||||||
| Fair value hedges | |||||||||||
| Interest-rate-related | |||||||||||
| swaps* | 58 408 | 66 188 | 5 072 | 129 667 | 226 065 | 2 938 | 4 963 | 2 798 | 185 | ||
| Currency-related | |||||||||||
| swaps* | 4 746 | 17 619 | 1 340 | 23 704 | 24 385 | 2 048 | 351 | 440 | 790 | ||
| Total | 63 154 | 83 807 | 6 412 | 153 371 | 250 450 | 4 986 | 5 314 | 3 238 | 975 | ||
| Cash flow hedges | |||||||||||
| Interest-rate-related | |||||||||||
| swaps | 2 849 | 6 527 | 9 376 | 18 801 | 328 | 798 | 902 | ||||
| Currency-related | |||||||||||
| swaps | 10 453 | 22 220 | 32 673 | 3 611 | |||||||
| Total | 2 849 | 16 980 | 22 220 | 42 049 | 18 801 | 3 939 | 798 | 902 | |||
| Hedges of net investment in foreign operations |
|||||||||||
| Currency-related | |||||||||||
| swaps | 915 | 915 | 6 | 186 | |||||||
| Total | 915 | 915 | 6 | 186 | |||||||
| Other derivatives | |||||||||||
| Interest-rate-related contracts | |||||||||||
| options held | 974 037 | 300 315 | 48 882 | 1 323 233 | 834 907 | 1 279 | 1 039 | 871 | 1 264 | 776 | 464 |
| Forward contracts | 4 324 091 | 1 314 541 | 5 638 632 | 5 330 042 | 4 067 | 6 261 | 20 507 | 3 854 | 5 946 | 21 245 | |
| swaps* | 638 051 | 1 238 798 | 397 503 | 2 274 353 | 2 153 949 | 33 274 | 46 599 | 59 830 | 35 150 | 47 336 | 56 415 |
| other | 10 | 10 | 93 | ||||||||
| Currency-related contracts | |||||||||||
| options held | 37 806 | 44 | 37 852 | 33 463 | 396 | 275 | 264 | 355 | 398 | 220 | |
| Forward contracts | 922 506 | 7 336 | 7 | 929 849 | 739 708 | 10 250 | 9 108 | 37 891 | 12 052 | 13 240 | 38 343 |
| swaps* | 7 437 | 200 928 | 57 474 | 265 839 | 250 502 | 10 193 | 4 458 | 10 577 | 9 765 | 4 458 | 7 585 |
| other | 773 | 92 | 865 | 26 | 14 | 3 | 4 | 10 | 3 | 4 | |
| equity-related contracts | |||||||||||
| options held | 41 862 | 10 144 | 45 605 | 97 611 | 170 556 | 2 312 | 3 274 | 4 112 | 1 683 | 1 597 | 1 019 |
| Forward contracts | 482 | 3 | 484 | 296 | 3 | 4 | 66 | 10 | 12 | 4 | |
| swaps | 259 | 13 | 7 478 | 7 750 | 1 005 | 679 | |||||
| other | 999 | 999 | 303 | 69 | 12 | 36 | 70 | 11 | 35 | ||
| Total | 6 948 313 3 072 214 | 556 949 | 10 577 477 | 9 513 752 | 62 955 | 71 033 | 134 158 | 64 892 | 73 777 | 125 334 | |
| Netting agreements | –2 896 | –3 378 | –9 516 | –2 896 | –3 378 | –9 516 | |||||
| Total | 10 773 811 | 9 783 003 | 65 051 | 72 969 | 128 066 | 65 935 | 72 172 | 116 720 | |||
| of which cleared | 236 119 | 2 133 210 | 2 979 | 3 804 | 10 470 | 3 589 | 4 108 | 9 650 |
* According to description within changes in accounting policies, note G2, there has been a transfer between these rows regarding historical figures. the below table express the amounts that has been transferred for these rows.
| Adjustment according to description under accounting policies |
Nominal amount 2009 | Positive fair value 2009 | Negative fair value 2009 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Interest-rate-related contracts within Fair value hedges | Before | adjustment Adjustment | After adjustment |
Before | adjustment Adjustment | After adjustment |
Before adjustment Adjustment |
After adjustment |
|
| swaps | 136 175 | 89 890 | 226 065 | 2 455 | 2 508 | 4 963 | |||
| Currency-related contracts within Fair value hedges | |||||||||
| swaps | 1 053 | 23 332 | 24 385 | 62 | 289 | 351 | 790 | 790 | |
| Interest-rate-related contracts within other derivatives | |||||||||
| swaps | 2 243 839 | –89 890 | 2 153 949 | 49 107 | –2 508 | 46 599 | |||
| Currency-related contracts within other derivatives | |||||||||
| swaps | 273 834 | –23 332 | 250 502 | 4 747 | –289 | 4 458 | 5 248 | –790 | 4 458 |
| Maturity distribution regarding future hedged cash flows in cash flow hedge accounting | |||||||||
| < 1 yrs. | 1–3 yrs. | 3–5 yrs. | 5–10 yrs. | > 10 yrs. | |||||
| Negative cash flows (liabilities) | 507 | 10 566 | 1 611 | 14 442 | 9 496 |
Future cash flows above, expressed in seK, are exposured to variablity attibutable to changed interest rates and/or changed currency rates. these future cash flows are hedged with derivatives, recognised as cash flow hedges, with opposite cash flows that eliminate the variability.
| Internally developed |
|||||
|---|---|---|---|---|---|
| 2010 | Goodwill | Customer base | software | Other | Total |
| Cost, opening balance | 17 765 | 2 048 | 617 | 765 | 21 195 |
| Additions through business combinations | |||||
| Additions through internal development | 131 | 131 | |||
| Additions through separate acquisitions | 211 | 211 | |||
| sales and disposals | –77 | –77 | |||
| exchange rate differences | –1 739 | –128 | –20 | –1 887 | |
| Cost, closing balance | 16 026 | 1 920 | 748 | 879 | 19 573 |
| Amortisation, opening balance | –658 | –191 | –280 | –1 129 | |
| Amortisation for the year | –122 | –87 | –158 | –367 | |
| sales and disposals | 9 | 30 | 39 | ||
| exchange rate differences | 79 | 6 | 85 | ||
| Amortisation, closing balance | –701 | –269 | –402 | –1 372 | |
| Impairments, opening balance | –2 397 | –114 | –2 511 | ||
| Impairments for the year | –37 | –37 | |||
| sales and disposals | |||||
| exchange rate differences | 141 | 141 | |||
| Impairments, closing balance | –2 293 | –114 | –2 407 | ||
| Carrying amount | 13 733 | 1 105 | 479 | 477 | 15 794 |
| Internally | |||||
|---|---|---|---|---|---|
| 2009 | Goodwill | Customer base | developed software |
Other | Total |
| Cost, opening balance | 18 711 | 1 843 | 529 | 863 | 21 946 |
| Additions through business combinations | 87 | 87 | |||
| Additions through internal development | 92 | 92 | |||
| Additions through separate acquisitions | 181 | 181 | |||
| sales and disposals | –2 | –63 | –65 | ||
| exchange rate differences | –944 | –63 | –35 | –1 046 | |
| Cost, closing balance | 17 765 | 2 048 | 617 | 765 | 21 195 |
| Amortisation, opening balance | –554 | –111 | –301 | –966 | |
| Amortisation for the year | –144 | –80 | –91 | –315 | |
| sales and disposals | 63 | 63 | |||
| exchange rate differences | 40 | 49 | 89 | ||
| Amortisation, closing balance | –658 | –191 | –280 | –1 129 | |
| Impairments, opening balance | –1 403 | –1 403 | |||
| Impairments for the year | –1 191 | –114 | –1 305 | ||
| sales and disposals | |||||
| exchange rate differences | 197 | 197 | |||
| Impairments, closing balance | –2 397 | –114 | –2 511 | ||
| Carrying amount | 15 368 | 1 276 | 426 | 485 | 17 555 |
For intangible assets with a finite useful life, the amortisable amount is allocated systematically over the useful life. systematic amortisation relates to both straight line and increasing or decreasing amortisation. the original useful life is between 3 and 15 years. the useful life and amortisation schedule of certain assets were changed during
the year, which resulted in an additional expense at seK 49m. there was no need for impairment. A portion of the cost of the 2007 acquisition of JsC swedbank was considered the value of the acquired company's customer base. the value was written down in 2009 by seK 114m to seK 0m.
| Carrying amount | ||||
|---|---|---|---|---|
| Specification of intangible assets with indefinite useful life | Acquisition year | 2010 | 2009 | 1/1/2009 |
| Goodwill | ||||
| swedbank robur AB | 1995 | 328 | 328 | 328 |
| Föreningsbanken AB | 1997 | 1 342 | 1 342 | 1 342 |
| swedbank Försäkring AB | 1998 | 651 | 651 | 651 |
| Kontoret i Bergsjö | 1998 | 13 | 13 | 13 |
| Ölands Bank AB | 1998 | 9 | 9 | 9 |
| FsB Bolåndirekt Bank AB | 2002 | 159 | 159 | 159 |
| svenska kyrkans fondaktiebolag | 2005 | 3 | 3 | 3 |
| söderhamns sparbank AB | 2007 | 24 | 24 | 24 |
| Sweden | 2 529 | 2 529 | 2 529 | |
| of which banking operations | 2 198 | 2 198 | 2 198 | |
| of which other | 331 | 331 | 331 | |
| swedbank As | 1999 | 1 088 | 1 245 | 1 324 |
| swedbank As | 2000 | 11 | 13 | 13 |
| swedbank AB | 2001 | 135 | 147 | 156 |
| swedbank Liising As | 2004 | 14 | 15 | |
| swedbank As | 2005 | 9 771 | 11 186 | 11 897 |
| As Hansa Leasing russia | 2005 | 19 | 21 | |
| Baltic countries | 11 005 | 12 624 | 13 426 | |
| of which allocated to: | ||||
| banking operations in estonia | 3 814 | 4 399 | 4 680 | |
| banking operations in Latvia | 3 849 | 4 407 | 4 686 | |
| banking operations in Lithuania | 3 342 | 3 818 | 4 060 | |
| JsC swedbank | 2007 | 1 150 | ||
| european Agency for Debts recovery | 2008 | 2 | ||
| Ukraine | 1 152 | |||
| oAo swedbank | 2005 | 13 | 15 | |
| ZAo swedbank Markets | 2008 | 5 | ||
| Russia | 13 | 20 | ||
| First securities AsA | 2005 | 199 | 202 | 181 |
| Norway | 199 | 202 | 181 | |
| Total | 13 733 | 15 368 | 17 308 |
Goodwill acquired in business combinations has been allocated to the lowest possible cash-generating unit. the recoverable amount has been determined based on value in use. this means that the asset's estimated future cash flows are calculated at present value using a discount rate. estimated future cash flows are based on the Group's established three-year financial plans. the most important assumptions in the three-year plan are management's estimate of net profit, including credit impairments, growth in each economy, both GDp and industry growth, and the trend in risk-weighted assets. Financial planning is done at a lower level than the cash-generating unit with a complete balance sheet, income statement, statement of cash flow and relevant financial ratios. the necessary assumptions in the planning are based as far as possible and appropriate on external information. Future cash flows are subsequently estimated with the help of long-term assumptions on growth in risk-weighted assets as well as on net profit in relation to risk-weighted assets. Due to the long-term nature of the investments, cash flow is expected to continue indefinitely. Net cash flow refers to the amount that theoretically could be received as dividends or must be contributed as capital to comply with capital adequacy or solvency rules. the Group believes that a Core tier 1 capital ratio of 10% is reasonably the lowest level for the cash-generating unit, because of which any surpluses or deficits calculated in relation to this level are
theoretically considered to be payable as dividends or will have to be contributed as capital and therefore constitute net cash flow. the discount rate is determined based on the market's risk-free rate of interest and the market's yield requirements, the unit's performance in the stock market in relation to the entire market, and the asset's specifik risks. the discount rate is adapted to various periods if needed. Assumed growth in risk-weighted assets corresponds to estimated inflation and real GDp growth and any further expected growth in the banking sector. In accordance with IAs 36, the long-term growth estimate does not include any expected increase in market share. Long-term growth estimates are based on external projections as well as the Group's experience and assessment of growth in the banking sector in relation to GDp growth and inflation. estimated net profit in relation to risk-weighted assets is based on historical earnings levelsand adjusted based on the economic stage that the cash-generating unit is in. the adjustment is also based on how the composition of the cash-generating unit's balance sheet is expected to change. the parameters are based as far as possible on external sources. the most important assumptions and their sensitivity are described in the following table. the model for calculating value in use has been modified compared with the model used last year, which also means that the assumptions used in the model have consequently been adjusted. the assumptions have also been adjusted based on conditions at year end 2010.
| Cash-generating unit | Goodwill carrying amount, SEKm |
RWA growth 2011–2013, % |
RWA growth 2014–2048, % |
Average RWA growth 2014–2048, % |
RWA growth 2049–, % |
|---|---|---|---|---|---|
| Banking operations | |||||
| estonia | 3 814 | 5.4 | 7.0–3.1 | 4.9 | 3.0 |
| Latvia | 3 849 | 0.2 | 7.0–3.1 | 4.1 | 3.0 |
| Lithuania | 3 342 | 11.1 | 7.0–3.1 | 4.9 | 3.0 |
| sweden | 2 198 | 1.4 | 3.0–3.0 | 3.0 | 3.0 |
| Discount rate 2011–2013. % |
Discount rate 2014–2048. % |
Average discount rate 2014–2048. % |
Discount rate 2049–. % |
||
| Banking operations | |||||
| estonia | 10.3 | 10.3–9.0 | 9.4 | 9.0 | |
| Latvia | 12.0 | 12.0–9.0 | 10.0 | 9.0 | |
| Lithuania | 11.3 | 11.3–9.0 | 9.8 | 9.0 | |
| sweden | 9.0 | 9.0–9.0 | 9.0 | 9.0 |
| Cash-generating unit | Net asset including goodwill, carrying amount, SEKm |
Recoverable amount, SEKm |
Decrease in assump tion of yearly growth by 1 percentage point |
Increase in discount rate by 1 percentage point |
|---|---|---|---|---|
| Banking operations | ||||
| estonia | 9 229 | 15 244 | –1 136 | –2 110 |
| Latvia | 10 078 | 10 391 | –429 | –1 038 |
| Lithuania | 8 639 | 13 046 | –894 | –1 715 |
| sweden* | 23 763 | 31 289 | 132 | –2 757 |
* the cash-generating unit is part of the segment retail.
Given a reasonable change in the above assumptions in accordance with the above information, there would be no impairment loss, except for Latvia. Given a reasonable change in the discount rate (+1 percentage point) an impairment at seK 725m would arise for Latvia. With regard to the other cash-generating units, there is still room left even if such a reasonable change in assumptions were to occur as indicated in the table, i.e. both an increase in discount rate (+1 percentage point) and a decrease in growth assumption (–1 % percentage point). A reasonable change in the expected net profit margin in Latvia would give rise to an impairment loss. With regard to the other cash-generating units, the Group is confident that there is room for a reasonable change in this assumption without giving rise to any impairment loss.
recognised goodwill totalled at seK 11 005m. Goodwill is tested for impairment separately for each country. No impairments were identified on the closing day. the countries' economies have stabilised and recovered in 2010. the countries' economies are expected to continue to recover in 2011–2013. this means that the units' profits are planned to follow the development from 2010 and to continue to be normalised during the financial three year plans, inclusive a normalization of margins and credit impairment ratio. risk weighted assets in the Latvian business are assessed to be unchanged during the planning period. Initial assumed growth after the Group's three
years financial plans is based on the management's best estimate of inflation, real GDp growth and growth in the banking industry for each market. the assessments are based on external sources. After the planning period a linear reduction of annual growth are assumed during the period between year 2014 to year 2048 from 7 per cent down to 3 per cent, that is considered as being a sustainable growth for a mature market. Initial discount rate for each period reflects country specific risk premium that will converge linear to 5 per cent that is considered as relevant for a mature market. risk premiums are derived from external sources. the discount rate before taxe was approximately 12 per cent.
recognised goodwill from JsC swedbank amounted to seK 0m after impairment of seK 1 191m in 2009. the impairment was explained of a significant deterioration in profitability, because of the financial turbulence in the country during 2009. the holding in the european Agency for Debts recovery was sold in 2009.
other recognised goodwill totalled seK 530m. No impairments were needed as of the closing day. Average annual growth has been assumed to be 3 per cent and the average discount rate was 9 per cent, or 12 per cent before tax.
| Current assets | Fixed assets | ||||
|---|---|---|---|---|---|
| 2010 | Properties | Equipment | Owner-occupied properties |
Investment properties |
Total |
| Cost, opening balance | 220 | 4 367 | 1 913 | 935 | 7 435 |
| Additions | 1 141 | 494 | 47 | 1 337 | 3 019 |
| sales and disposals | –181 | –368 | –204 | –1 | –754 |
| exchange rate differences | –8 | –164 | –238 | 33 | –377 |
| Cost, closing balance | 1 172 | 4 329 | 1 518 | 2 304 | 9 323 |
| Amortisation, opening balance | –3 047 | –259 | –2 | –3 308 | |
| Amortisation for the year | –511 | –51 | –21 | –583 | |
| sales and disposals | 238 | 9 | 247 | ||
| exchange rate differences | 107 | 9 | –3 | 113 | |
| Amortisation, closing balance | –3 213 | –292 | –26 | –3 531 | |
| Impairments, opening balance | –221 | –91 | –312 | ||
| Impairments for the year | –47 | –130 | –204 | –381 | |
| sales and disposals | 47 | 351 | 182 | 580 | |
| Impairments, closing balance | –113 | –113 | |||
| Carrying amount | 1 172 | 1 116 | 1 226 | 2 165 | 5 679 |
the useful life of the equipment is deemed to be five years on average and its residual value is deemed to be zero as in previous years. the depreciable amount is recognized on a straight-line basis in profit or loss during the useful life. No indications of impairment were identified on the balance sheet date. equipment includes operating leases, mainly motor vehicles, with an accumulated cost of seK 271m (213) and accumulated depreciation of seK 131m (73). Future minimum lease payments amount to seK 102m (89), of which seK 91m (84) will be received after more than one year but within five years. Individual structural components are deemed to have useful lives of between 12
and 25 years. the residual value is deemed to be zero. the depreciable amount is recognized linearly in profit or loss during the useful life. Land is deemed to have an indefinite useful life and therefore is not depreciated. estimated useful lives have been changed in individual cases. Impairments for the year were mainly for owner-occupied properties in ukraine in connection with operating cutbacks. Investment properties managed by ektornet amounted to seK 1 779m (517).
| Current assets | Fixed assets | ||||||
|---|---|---|---|---|---|---|---|
| 2009 | Properties | Equipment | Owner-occupied properties |
Investment properties |
Total | ||
| Cost, opening balance | 2 | 4 679 | 2 041 | 59 | 6 781 | ||
| Additions | 218 | 566 | 232 | 876 | 1 892 | ||
| sales and disposals | –768 | –188 | –956 | ||||
| exchange rate differences | –110 | –172 | –282 | ||||
| Cost, closing balance | 220 | 4 367 | 1 913 | 935 | 7 435 | ||
| Amortisation, opening balance | –3 128 | –352 | –3 480 | ||||
| Amortisation for the year | –510 | –62 | –2 | –574 | |||
| sales and disposals | 531 | 107 | 638 | ||||
| exchange rate differences | 60 | 48 | 108 | ||||
| Amortisation, closing balance | –3 047 | –259 | –2 | –3 308 | |||
| Impairments, opening balance | –27 | –27 | |||||
| Impairments for the year | –24 | –221 | –64 | –309 | |||
| sales and disposals | 24 | 24 | |||||
| Impairments, closing balance | –221 | –91 | –312 | ||||
| Carrying amount | 220 | 1 320 | 1 433 | 842 | 3 815 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| security settlement claims* | 1 361 | 4 884 | 7 720 |
| other** | 7 250 | 4 922 | 5 899 |
| Total | 8 611 | 9 806 | 13 619 |
| Gross, security settlement claims | 9 856 | 6 951 | 9 563 |
* recognised on the balance sheet according to current netting rules.
** Includes credit impairment reserve of seK 108m (93) in the Group related primarily to accounts receivable. property taken over to protect claims amounted to seK 30m (1) in the Group.
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Accrued interest income | 5 076 | 5 232 | 3 984 |
| other | 1 249 | 1 489 | 2 505 |
| Total | 6 325 | 6 721 | 6 489 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Valuation category, loans and receivables |
|||
| swedish banks | 100 886 | 132 443 | 191 673 |
| swedish credit institutions | 2 061 | 3 422 | 7 361 |
| Foreign banks | 12 479 | 76 768 | 89 323 |
| Foreign credit institutions | 1 577 | 770 | 2 444 |
| Total | 117 003 | 213 403 | 290 801 |
| Valuation category, fair value through profit or loss |
|||
| Trading | |||
| swedish banks | 39 | 41 | |
| swedish banks, repurchase agreements | 2 677 | 5 730 | 8 624 |
| swedish credit institutions, repurchased agreements |
5 630 | 1 335 | |
| Foreign banks, repurchase agreements | 11 456 | 11 180 | 17 264 |
| Total | 19 763 | 18 284 | 25 929 |
| Total | 136 766 | 231 687 | 316 730 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Valuation category, other financial liabilities |
|||
| Deposits from swedish public | 392 301 | 356 145 | 324 035 |
| Deposits from foreign public | 112 830 | 121 819 | 125 298 |
| other | 732 | 187 | 17 |
| Total | 505 863 | 478 151 | 449 350 |
| Valuation category, fair value through profit or loss |
|||
| Trading | |||
| Deposits from swedish public, repurchase agreements |
17 146 | 7 689 | 30 940 |
| Other* | |||
| Deposits from swedish public | 11 228 | 18 584 | 28 166 |
| Total | 28 374 | 26 273 | 59 106 |
| Total | 534 237 | 504 424 | 508 456 |
| *nominal amount amounts to | 11 269 | 18 332 | 27 794 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Valuation category, fair value through profit or loss |
|||
| Other | |||
| Investment contracts, unit-link | 94 153 | 78 300 | 51 653 |
| Investment contracts, life | 6 835 | 1 832 | 421 |
| Total | 100 988 | 80 132 | 52 074 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Valuation category, other financial liabilities |
|||
| Commercial papers | 11 532 | 62 780 | 16 170 |
| Covered bonds | 304 617 | 143 991 | 10 |
| Change in value due to hedge accounting at fair value |
153 | ||
| other interest-bearing bond loans* | 190 842 | 211 786 | 145 743 |
| Change in value due to hedge accounting at fair value* |
224 | 1 990 | 561 |
| other | 41 | 542 | 807 |
| Total | 507 256 | 421 242 | 163 291 |
| Valuation category, fair value through profit or loss |
|||
| Trading | |||
| Commercial papers | 51 423 | 28 001 | 87 691 |
| other | 20 491 | 36 424 | 34 523 |
| Other ** | |||
| Commercial papers | 1 420 | 19 792 | 36 069 |
| Covered bonds | 105 752 | 197 229 | 271 226 |
| other interest-bearing bond loans* | 175 | 532 | 523 |
| other | 38 | 43 | |
| Total | 179 261 | 282 016 | 430 075 |
| Total | 686 517 | 703 258 | 593 366 |
| of which state-guaranteed | 156 045 | 242 275 | 139 767 |
| ** nominal amount amounts to | 111 490 | 209 705 | 265 848 |
turnover of debt securities in issue is reported in note G3, risks.
* According to description in accounting principles, note G2, seK 172 473m has been moved from the comparative figures for other interest-bearing bond loans within the trading category. seK 170 467m has been moved to other interest-bearing bond loans and seK 2 007m has been moved to Change in value due to hedge accounting at fair value within the other financial liabilities category.
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Valuation category, fair value through profit or loss |
|||
| Trading | |||
| shares | 183 | 192 | 112 |
| Interest-bearing securities | 33 996 | 40 219 | 53 060 |
| Total | 34 179 | 40 411 | 53 172 |
| of which own issued shares | 62 | 48 | 30 |
| of which own issued interest-bearing | |||
| securities | 1 106 | 4 292 | 10 372 |
Defined benefit pension plans are recognised in the consolidated balance sheet as a provision and in the income statment as staff costs. the Group calculates provisions and costs for defined benefit pension obligations based on the obligations' significance and assumptions related to future development. the fair value of plan assets is deducted from provisions. If the actual outcome deviates from the assumptions in the calculation or if assumptions change, actuarial gains or losses arise. Actuarial gains and losses are not recognised until the opening value exceeds 10 per cent of the greater value of either pension obligations or plan assets. the Group also reports a provision for payroll tax on the difference between the Group's pension cost and the pension cost that serves as the basis for the year's payroll tax calculation.
Due to the difficulty in determining when the difference is subject to an actual payroll tax payment, the provision is measured at nominal value. Nearly all employees in the swedish part of the Group are covered by the Btp defined benefit pension plan (a multi-employer occupational pension for swedish banks). the pension plan means that employees are guaranteed a certain lifetime pension corresponding to a specific percentage of their salary and comprising primarily retirement pension, disability pension and survivor's pension. the pension plan also contains a supplementary retirement pension that is defined contribution rather than defined benefit. For individuals in executive positions, there are individual defined benefit pension obligations. the Group's pension obligations are funded mainly through the purchase of occupational pension insurance from insurance entities, though also through pension funds. In addition, there is a smaller defined benefit pension plan for employees in the Norwegian subsidiary, First securities AsA. the plan's closing pension liability at the end of the year was seK 69m (64). plan assets amounted to seK 44m (50). the amount is reported below together with the swedish pension plan. the Group has no other defined benefit plans.
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| provisions for pensions | 1 341 | 1 400 | 1 495 |
| Deferred payroll tax for pension provisions | 321 | 335 | 358 |
| Total | 1 662 | 1 735 | 1 853 |
| Amount reported in balance sheet for defined benefit pension plans |
2010 | 2009 | 1/1/2009 |
| Funded pension obligations | 16 286 | 15 146 | 15 243 |
| Fair value of plan assets | –12 680 | –11 740 | –10 798 |
| Total | 3 606 | 3 406 | 4 445 |
unrecognised actuarial net loss –2 265 –2 006 –2 950 Provisions for pensions 1 341 1 400 1 495
| Pension cost reported in income statement | 2010 | 2009 |
|---|---|---|
| Current service cost | 513 | 491 |
| Interest on pension obligations | 569 | 572 |
| expected return on plan assets | -475 | -546 |
| recognised actuarial gains and losses | 33 | 93 |
| Pension cost defined benefit pension | ||
| plans | 640 | 610 |
| premiums paid for defined contribution | ||
| pension plans | 210 | 202 |
| payroll tax and tax on return on pension | ||
| assets | 192 | 167 |
| Total pension cost | 1 042 | 979 |
| Changes in funded defined benefit pension plans |
2010 | 2009 |
| Opening obligations | 15 146 | 15 243 |
| Current service cost | 513 | 491 |
| Interest on pension obligations | 569 | 572 |
| Actuarial gains and losses, net | 551 | –696 |
| pension payments | –488 | –472 |
| exchange rate differences | –5 | 8 |
| Closing obligations | 16 286 | 15 146 |
| Changes in plan assets | 2010 | 2009 |
| Opening fair value | 11 740 | 10 798 |
| Current service cost | 475 | 546 |
| Interest on pension obligations | 258 | 155 |
| Actuarial gains and losses, net | 698 | 708 |
| pension payments | –488 | –472 |
| exchange rate differences | –3 | 5 |
| Closing fair value | 12 680 | 11 740 |
the actual return on plan assets amounted to seK 733m (701). the Group expects to contribute approximately seK 700m (720) in 2011 to fund defined benefit pension plans. Closing plan assets include shares in swedbank AB of seK 0m (179), bank balances of seK 996m (577) and interest-bearing securities issued by the Group of seK 43m (37).
| Unrecognised actuarial net loss | 2010 | 2009 |
|---|---|---|
| Opening actuarial net loss | 2 006 | 2 950 |
| Pension obligations | ||
| Actuarial net loss for the year due to changed assumptions |
715 | |
| Actuarial net gain for the year based on experience |
–164 | –696 |
| Actuarial net loss recognised in the income statement |
–33 | –93 |
| Plan assets | ||
| Actuarial net gain for the year based on experience |
–258 | –155 |
| exchange rate differences | –1 | |
| Closing actuarial net loss | 2 265 | 2 006 |
the Group applies the so-called corridor rule. this means that actuarial net losses are recognised when the opening actuarial net loss exceeds 10 per cent of the highest value of obligations or plan assets. surplus amounts are reported under the employees' projected remaining working lives. As the Group's actuarial net loss at the end of 2010 exceeded the limit, the consolidated income statement for 2011 will be charged with 1/14 of the surplus amount or seK 46m.
| Corridor rule | 2011 | 2010 | 2009 |
|---|---|---|---|
| opening actuarial loss, net | 2 265 | 2 006 | 2 950 |
| Limits on coridor | 1 629 | 1 515 | 1 524 |
| surplus | 636 | 492 | 1 426 |
| expected average remaining working lives of employees |
14 yrs. | 15 yrs. | 15 yrs. |
| Actuarial gains and losses recognised in profit or loss |
46 | 33 | 95 |
| Actuarial assumptions, per cent | 2010 | 2009 | |
| Discount rate, 1 January | 3.75 | 3.75 | |
| Discount rate, 31 December | 3.50 | 3.75 | |
| projected return on plan assets | 4.00 | 5.00 | |
| Future annual salary increases, 1 January | 4.00 | 4.00 | |
| Future annual salary increases, 31 December |
4.00 | 4.00 | |
| Future annual pension indexation/inflation | 2.00 | 2.00 | |
| Future annual changes in income base amount, 1 January |
3.00 | 3.00 | |
| Future annual changes in income base amount, 31 December |
3.00 | 3.00 | |
| employees who choose early retirement option |
20.00 | 20.00 | |
| employee turnover | 3.50 | 3.50 |
When the cost of defined benefit pension plans is calculated, future assumptions are required for factors that affect the size of future pension payments. the discount rate is the interest rate used to discount the value of future payments. the interest rate is based on a market rate of interest with remaining maturities and currencies matched to those of the pension obligations. the Group bases its interest rate assumption for the swedish defined benefit obligations on the inflation-linked bond 3104 as the security is traded actively and has a maturity close to that of the pension obligations. An increase in the discount rate of 0.25 percentage points would increase the pension provision by seK 715m and the pension cost by seK 24m. IIf the increase results in an actuarial loss above the corridor limit, an actuarial loss of seK 51m is recognised. Assets allocated to fund pension obligations are invested in various financial instruments. the expected return on plan assets reflects the projected average annual return these financial instruments are expected to have through maturity.
the assumption is based on the combination of financial instruments that should be available and is calculated after deductions for expenses and tax on returns. the assumption was reduced for 2010 from 5 per cent to 4 per cent because the planned investment strategy includes a smaller share of equity investments. In 2010, 28 per cent (41) of the assets were invested in equities, 72 per cent (59) in fixed income securities. the calculation of the projected return, which is recognised through profit or loss, also takes into account changes in the assets due to contributions and pension payments during the year. Future annual salary increases reflect projected future salary increases as an aggregate effect of both contractual wage increases and wage drift. the final benefits under Btp are determined on the basis of different income base amounts.
therefore, the future change in the income base amount has to be taken into account. Annual pension indexation also has to be determined, since indexation historically has always been necessary. Btp gives employees the option to choose a slightly earlier retirement age than normal in exchange for a slightly lower level of benefit. since this option is totally voluntary on the part of the employee, an assumption is made for the actual outcome.
early retirements jointly agreed to by the employer and employee are recognised as they arise rather than estimated among actuarial assumptions. the assumption of the remaining lifetime of beneficiaries is updated annually.
| History | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Funded pension obligations | 16 286 | 15 146 | 15 243 | 15 018 | 13 691 | 12 939 |
| Fair value of plan assets | –12 680 | –11 740 | –10 798 | –10 380 | –10 213 | –9 670 |
| Total | 3 606 | 3 406 | 4 445 | 4 638 | 3 478 | 3 269 |
| Actuarial net gain (+)/ net loss (–) for the year based on experience | ||||||
| pension obligations | 164 | 696 | 396 | –6 | 175 | 70 |
| plan assets | 258 | 155 | –324 | –581 | –124 | 153 |
| Life insurance | Non-life insurance | Total | ||||
|---|---|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |
| Opening balance | 4 029 | 3 627 | 131 | 107 | 4 160 | 3 734 |
| provisions | 739 | 733 | 185 | 237 | 924 | 970 |
| payments | –2 514 | –309 | –191 | –212 | –2 732 | –521 |
| exchange rate differences | –237 | –22 | –15 | –1 | –252 | –23 |
| Closing balance | 1 990 | 4 029 | 110 | 131 | 2 100 | 4 160 |
the Group makes provisions for the insurance contracts or parts of contracts where significant insurance risks are transferred from the policyholder to the Group. Insurance risks are different than financial risks and mean that the Group compensates the policyholder if a specified uncertain future event has a negative impact on the policyholder. the Group is compensated through premiums received from policyholders.
provisions are made for established claims and correspond to the amount that will be paid out. provisions are also made for claims that have not yet been reported. A statistical assessment of anticipated claims based on previous years' experience with each type of insurance contract is used as a basis for the amount of the provision. Assumptions are made with regard to interest rates, sickness, mortality and expenses.
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| security settlement liabilities* | 5 007 | 763 | 5 364 |
| unregistered shares | 34 179 | 40 411 | 53 172 |
| other liabilities | 8 618 | 11 056 | 12 799 |
| provisions for guarantees | 311 | 204 | 74 |
| other provisions | 14 | 113 | 111 |
| Total | 48 129 | 52 547 | 71 520 |
| Gross, security settlement liabilities | 7 613 | 2 830 | 7 208 |
* recognised on the balance sheet according to current netting rules.
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Accrued interest expenses | 11 773 | 11 069 | 8 107 |
| other | 3 301 | 3 331 | 4 955 |
| Total | 15 074 | 14 400 | 13 062 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Valuation category, other financial liabilities |
|||
| subordinated loans | 17 273 | 23 551 | 29 326 |
| Change in the value due to hedge accoun ting at fair value |
567 | 885 | 904 |
| Total subordinated loans | 17 840 | 24 436 | 30 230 |
| undated subordinated loans | 8 940 | 12 961 | 13 471 |
| of which tier 1 capital contribution | 6 915 | 9 218 | 9 709 |
| Change in the value due to hedge accoun ting at fair value |
407 | 586 | 1 054 |
| Total undated subordinated loans | 9 347 | 13 547 | 14 525 |
| Total | 27 187 | 37 983 | 44 755 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Restricted equity | |||
| share capital, common shares | 19 999 | 19 739 | 10 823 |
| share capital, preference shares | 4 352 | 4 612 | 4 095 |
| statutory reserve | 9 848 | 9 749 | 9 362 |
| other reserve | 9 439 | 10 108 | 9 854 |
| unregistered shares | 3 010 | ||
| Total | 43 638 | 44 208 | 37 144 |
| Non-restricted equity | |||
| Currency translation from foreign | |||
| operations | –2 246 | 216 | 1 046 |
| Cash flow hedges | –44 | –755 | –958 |
| share premium reserve | 13 083 | 13 083 | 4 871 |
| retained earnings | 40 466 | 32 918 | 44 127 |
| Total | 51 259 | 45 462 | 49 086 |
| Non-controlling interest | 138 | 304 | 232 |
| Total equity | 95 035 | 89 974 | 86 462 |
Changes in equity for the period and the distribution according to IFrs are indicated in the statement of changes in equity. In the parent Company, unregistered shares are recognised as a liability according to FFFs 2008:25. In connection with the issuance of preference shares in 2008, seK 3 101m was debited through settlement notices. these funds were paid in cash on 7 January, three business days after the settlement date, an registered on 19 January 2009.
| Number of shares | 2010 | 2009 | 1/1/2009 |
|---|---|---|---|
| Number of shares approved and | |||
| issued | 952 323 439 | 939 953 583 | 515 373 412 |
| Associate's holdings in shares | –600 000 | –300 000 | |
| Number of outstanding shares | 951 723 439 939 653 583 515 373 412 | ||
| Opening balance | 939 653 583 515 373 412 | ||
| Conversion from preference shares | 12 369 856 | 38 050 112 | |
| rights issue | 386 530 059 | ||
| Associate's acquisition of shares | –300 000 | –300 000 | |
| Closing balance | 951 723 439 939 653 583 |
the quote value per share is seK 21.
A comparison between the carrying amount and fair value of the Group's financial assets and financial liabilities according to the definition in IAs 39 is presented below.
When the Group determines fair value for financial instruments different methods are used depending on the grade of observable market data. the methods are divided in three different levels. Fair value for financial instruments that are classified to level 1 is determined based on quoted market prices on an active market. Fair value for financial instruments that are classified as level 2 is determined based on observable market data. When interest-related and currency-related derivatives, lending and deposits are measured at fair value future cash flows from the financial instruments are discounted.
| Preference shares | |||
|---|---|---|---|
| Number of shares | 2010 | 2009 | 1/1/2009 |
| Approved | 207 266 738 | 219 636 594 | 257 686 706 |
| of which issued and fully paid | 207 266 738 | 219 636 594 | 194 985 456 |
| of which issued, unregistered and debited through settlement notice |
62 701 250 | ||
| Associate's holdings in shares | –516 000 | –816 000 | |
| Number of outstanding shares | 206 750 738 218 820 594 257 686 706 | ||
| Opening balance | 218 820 594 257 686 706 | ||
| Conversion to A shares | –12 369 856 | –38 050 112 | |
| Associate's acquisition of shares | –816 000 | ||
| Associate's disposal of shares | 300 000 | ||
| Closing balance | 206 750 738 218 820 594 |
the quote value per share is seK 21.
Holders of shares in swedbank AB as of 18 september 2009 were offered the opportunity to subscribe for 386 530 059 ordinary shares at a price of seK 39 per share during the period 22 september to 6 october 2009. the issue was fully subscribed and concluded on 26 November 2009.
During 2008 holders of ordinary shares in swedbank AB were offered the opportunity to subscribe for 257 686 706 preference shares at a price of seK 48 per share. Holders of preference shares have preference to an annual, non-cumulative dividend of up to seK 4.80 per preference share, provided that the AGM resolves to pay a dividend. If a higher dividend is declared on the ordinary shares, the equivalent dividend will also be paid on preference shares. In February and August of each year, starting in August 2009, holders of preference shares may request to convert their preference shares to ordinary shares. the request must pertain to the shareholder's entire holding. If the shareholder previously has not requested a conversion, all their preference shares outstanding will be converted to ordinary shares in the month immediately after the month in which the AGM is held in 2013. preference shares carry the same voting rights as ordinary shares.
used interest yield in the discounting is based on observable market data, i.e. derived from quoted market rates for each maturity in which the cash flows will be received or paid. the measurement of options is done according to generally accepted valuation models, such as Black & scholes. the models are updated with for the measurement observable market data for, among other things, interest rates, currency rates, credit risks, volatilities, correlations and market liquidity. Fair value for financial instruments that are classified as level 3 is also determined mainly based on observable market data, but there are inputs from own assumptions that are viewed as significant for the measurement.
For variable-rate lending and deposits, the carrying amount is assessed to coincide with the fair value. the carrying amounts and fair values coincide for the most part because of the large share of financial instruments recognised at fair value.
| 2010 | 2009 | 1/1/2009 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Fair value | Carrying amount |
Difference | Fair value | Carrying amount |
Difference | Fair value | Carrying amount |
Difference | |
| Assets | |||||||||
| Financial assets covered by IAS 39 | |||||||||
| Cash and balances with central banks | 17 109 | 17 109 | 37 879 | 37 879 | 29 060 | 29 060 | |||
| treasury bills etc. | 34 900 | 34 924 | –24 | 88 724 | 88 724 | 27 849 | 27 978 | –129 | |
| of which fair value through profit or loss | 33 658 | 33 658 | 87 563 | 87 563 | 26 686 | 26 686 | |||
| of which held to maturity | 1 242 | 1 266 | –24 | 1 161 | 1 161 | 1 164 | 1 293 | –129 | |
| Loans to credit institutions | 166 417 | 166 417 | 92 131 | 92 131 | 128 536 | 128 536 | |||
| of which loans receivables | 125 866 | 125 866 | 71 245 | 71 245 | 101 539 | 101 539 | |||
| of which fair value through profit or loss | 40 551 | 40 551 | 20 886 | 20 886 | 26 997 | 26 997 | |||
| Loans to the public | 1 185 826 | 1 187 226 | –1 400 | 1 292 807 | 1 290 667 | 2 140 | 1 289 675 | 1 287 424 | 2 251 |
| of which loan receivables | 640 095 | 641 495 | –1 400 | 657 546 | 655 406 | 2 140 | 770 879 | 768 628 | 2 251 |
| of which fair value through profit or loss | 545 731 | 545 731 | 635 261 | 635 261 | 518 796 | 518 796 | |||
| Bonds and interest-bearing securities | 96 597 | 96 652 | –55 | 82 214 | 81 891 | 323 | 105 716 | 105 716 | |
| of which fair value through profit or loss | 92 141 | 92 141 | 74 243 | 74 243 | 97 247 | 97 247 | |||
| of which investments held to maturity | 4 456 | 4 511 | –55 | 7 971 | 7 648 | 323 | 8 469 | 8 469 | |
| Financial assets for which the customers bear the investment risk |
100 628 | 100 628 | 78 194 | 78 194 | 51 638 | 51 638 | |||
| shares and participating interest | 6 181 | 6 181 | 9 505 | 9 505 | 6 576 | 6 557 | 19 | ||
| of which fair value through profit or loss | 6 124 | 6 124 | 9 456 | 9 456 | 6 527 | 6 508 | 19 | ||
| of which available for sale | 57 | 57 | 49 | 49 | 49 | 49 | |||
| Derivatives | 65 051 | 65 051 | 72 969 | 72 969 | 128 055 | 128 055 | |||
| other financial assets | 13 687 | 13 687 | 15 038 | 15 038 | 17 604 | 17 604 | |||
| Total | 1 686 396 | 1 687 875 | –1 479 | 1 769 461 | 1 766 998 | 2 463 | 1 784 709 | 1 782 568 | 2 141 |
| Investment in associates | 2 710 | 2 710 | 2 740 | 2 740 | 1 987 | 1 987 | |||
| Non-financial assets | 25 096 | 25 096 | 24 949 | 24 949 | 27 135 | 27 135 | |||
| Total | 1 714 202 | 1 715 681 | –1 479 | 1 797 150 | 1 794 687 | 2 463 | 1 813 831 | 1 811 690 | 2 141 |
| 2010 2009 |
1/1/2009 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Fair value | Carrying amount |
Difference | Fair value | Carrying amount |
Difference | Fair value | Carrying amount |
Difference | ||
| Liabilities | ||||||||||
| Financial liabilities covered by IAS 39 | ||||||||||
| Amounts owed to credit institutions | 136 770 | 136 766 | 4 | 231 687 | 231 687 | 316 721 | 316 730 | –9 | ||
| of which other financial liabilities | 117 007 | 117 003 | 4 | 213 403 | 213 403 | 290 792 | 290 801 | –9 | ||
| of which fair value through profit or loss | 19 763 | 19 763 | 18 284 | 18 284 | 25 929 | 25 929 | ||||
| Deposits and borrowings from the public | 534 237 | 534 237 | 504 424 | 504 424 | 508 456 | 508 456 | ||||
| of which other financial liabilities | 505 863 | 505 863 | 478 151 | 478 151 | 449 350 | 449 350 | ||||
| of which fair value through profit or loss | 28 374 | 28 374 | 26 273 | 26 273 | 59 106 | 59 106 | ||||
| Debt securities in issue | 687 451 | 686 517 | 934 | 704 336 | 703 258 | 1 078 | 593 286 | 593 365 | –79 | |
| of which other financial liabilities | 508 190 | 507 256 | 934 | 422 320 | 421 242 | 1 078 | 163 212 | 163 291 | –79 | |
| of which fair value through profit or loss | 179 261 | 179 261 | 282 016 | 282 016 | 430 074 | 430 074 | ||||
| Financial liabilities for which the customers bear the investment risk |
100 988 | 100 988 | 80 132 | 80 132 | 52 074 | 52 074 | ||||
| subordinated liabilities | 25 845 | 27 187 | –1 342 | 37 983 | 37 983 | 47 001 | 44 755 | 2 246 | ||
| of which other financial liabilities | 25 845 | 27 187 | –1 342 | 37 983 | 37 983 | 47 001 | 44 755 | 2 246 | ||
| Derivatives | 65 935 | 65 935 | 72 172 | 72 172 | 116 720 | 116 720 | ||||
| short positions securities | 34 179 | 34 179 | 40 411 | 40 411 | 53 172 | 53 172 | ||||
| of which fair value through profit or loss | 34 179 | 34 179 | 40 411 | 40 411 | 53 172 | 53 172 | ||||
| Non-financial liabilities | 25 397 | 25 397 | 22 888 | 22 888 | 26 269 | 26 269 | ||||
| Total | 1 610 802 | 1 611 206 | –404 | 1 694 033 | 1 692 955 | 1 078 | 1 660 527 | 1 658 369 | 2 158 | |
| Non-financial liabilities | 9 440 | 9 440 | 11 758 | 11 758 | 13 687 | 13 687 | ||||
| Total | 1 620 242 | 1 620 646 | –404 | 1 705 791 | 1 704 713 | 1 078 | 1 674 214 | 1 672 056 | 2 158 |
Following tables describe fair values divided on the three different valuation levels for financial instruments that are recognised at fair value.
Level 1 contains primarily stocks, fund shares, bonds, treasury bills, commercial paper and standardised derivatives, where the quoted price is used in the valuation. securities in issue that are traded on an active market are included in this category as well.
Level 2 contains primarily less liquid bonds, loans to the public, deposits, investment contracts which are directly linked to certain assets and derivatives measured on the basis of observable prices. For less liquid bond holdings, an adjustment is made for the credit spread based on observable market inputs such as the market for credit derivatives. For loans to the public where there are no observable market inputs for credit margins at the time of measurement, the credit margin of the last transaction executed with the same counterparty is used. this includes the majority of mortgage lending and certain other fixed-rate lending in retail at fair value. securities in issue that are not quoted but measured according to quoted prices for similar quoted bonds are also included in Level 2.
Level 3 contains primarily corporate bonds and securities in issue. For corporate bonds where there is no observable quote for the credit spread in question, a reasonable assumption is used, such as a comparison with similar counterparties where there is an observable quote for the credit spread. An increase in the assumed credit spread with 10 bp would lead to a negative impact with seK 1m.
When valuation models are used to determine fair value for financial instrument in level 3 the consideration that has been paid or received is assessed to be the best evidence of
fair value at initial recognition. Because it is possible that a difference could arise between this consideration and the fair value calculated at that time in the valuation model, so called day 1– profit or loss, the Group adjusts the valuation models to avoid such differences. As of year-end there were no cumulative differences not recognised through profit or loss.
the change in the value of loans to the public, measured according the fair value option, attributable to changes in credit risk amounted to seK –101m (-8) during the period and is recognised as a credit impairment. Accumulated value changes of that kind amounted to seK –125m (–16). the amount is determined as the difference between current estimated creditworthiness and estimated creditworthiness of the borrower at lending date. other changes in fair value are considered to be attributable to changes in market risks.
the change in the value of securities in issue in level 2 that are measured according to fair value option attributable to changes in own credit worthiness amounted to seK –81m (71) during the period. the value change is recognised in net gains and losses on financial items at fair value. Accumulated changes amounted to seK –13 (71). the value change in own credit worthiness has been determined by calculating the difference between the value based on current prices from external dealers for own credit worthiness and the value based on own credit worthiness in own not quoted issues at the origination date.
the table shows financial instruments measured at fair value as per 31 December 2009 distributed by valuation method.
| 2010 | ||||||
|---|---|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Total | |||
| Assets | ||||||
| treasury bills and other bills eligible for refinancing with central banks, etc | 33 658 | 33 658 | ||||
| Loans to credit institutions | 6 | 40 545 | 40 551 | |||
| Loans to the public | 24 | 545 707 | 545 731 | |||
| Bonds and interest-bearing securities | 69 126 | 22 324 | 691 | 92 141 | ||
| shares and participating interest | 5 801 | 323 | 6 124 | |||
| Financial assets for which the customers bear the investment risk | 100 628 | 100 628 | ||||
| Derivatives | 2 997 | 62 054 | 65 051 | |||
| Total | 212 240 | 670 953 | 691 | 883 884 | ||
| Liabilities | ||||||
| Amounts owed to credit institutions | 19 763 | 19 763 | ||||
| Deposits and borrowings from the public | 28 374 | 28 374 | ||||
| Debt securities in issue, etc | 72 880 | 106 381 | 179 261 | |||
| Financial liabilities for which the customers bear the investment risk | 100 988 | 100 988 | ||||
| Derivatives | 3 615 | 62 311 | 9 | 65 935 | ||
| short positions securities | 34 162 | 17 | 34 179 | |||
| Total | 110 657 | 317 834 | 9 | 428 500 |
| 2009 | ||||
|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Total | |
| Assets | ||||
| treasury bills and other bills eligible for refinancing with central banks, etc | 87 563 | 87 563 | ||
| Loans to credit institutions | 20 886 | 20 886 | ||
| Loans to the public | 635 261 | 635 261 | ||
| Bonds and interest-bearing securities | 68 649 | 4 933 | 661 | 74 243 |
| shares and participating interest | 9 323 | 133 | 9 456 | |
| Financial assets for which the customers bear the investment risk | 78 194 | 78 194 | ||
| Derivatives | 3 850 | 69 110 | 72 969 | |
| Total | 247 579 | 730 323 | 670 | 978 572 |
Liabilities
| Amounts owed to credit institutions | 18 284 | 18 284 | ||
|---|---|---|---|---|
| Deposits and borrowings from the public | 26 273 | 26 273 | ||
| Debt securities in issue, etc* | 111 468 | 170 548 | 282 016 | |
| Financial liabilities for which the customers bear the investment risk | 80 132 | 80 132 | ||
| Derivatives | 4 118 | 68 013 | 41 | 72 172 |
| short positions securities | 40 411 | 40 411 | ||
| Total | 155 997 | 363 250 | 41 | 519 288 |
*According to the description in change in accounting policies, note K2, the comparative figures for the row Debt securities in issue have been adjusted with seK 142 332m in level 3 above and seK 30 143m in level 2 above.
| 2010 | ||
|---|---|---|
| Level 3 | Assets | Liabilities |
| Opening balance | 670 | 41 |
| purchase for the year | 37 | |
| sales/maturities during the year | –14 | |
| transferred from Level 3 | –48 | –75 |
| Gains or loss | 46 | 43 |
| of which in profit or loss | 46 | 43 |
| Closing balance | 691 | 9 |
| total recognised result in Net gains and losses on financial items at fair value | 46 | 43 |
| of which financial instruments held on closing day | 15 | 7 |
| 2009 | |||
|---|---|---|---|
| Level 3 | Liabilities | ||
| Opening balance | 664 | 2 | |
| purchase for the year | 6 | ||
| Issued | 32 | ||
| Gains or loss | 7 | ||
| of which in profit or loss | 7 | ||
| Closing balance | 670 | 41 | |
| total recognised result in Net gains and losses on financial items at fair value | 7 | ||
| of which financial instruments held on closing day | 7 | ||
| 2009 | |||
|---|---|---|---|
| Adjustments according to description in accounting policies | Before adjustment | Adjustment | After adjustment |
| Opening balance | 60 743 | –60 741 | 2 |
| Issued | 82 836 | –82 804 | 32 |
| Gains or loss | –1 247 | 1 254 | 7 |
| of which in profit or loss | –1 247 | 1 254 | 7 |
| Closing balance | 142 332 | –142 291 | 41 |
| total recognised result in Net gains and losses on financial items at fair value | –1 247 | 1 254 | 7 |
| of which financial instruments held on closing day | –1 247 | 1 254 | 7 |
swedbank chose as of 1 July 2008 to reclassify certain interest-bearing securities which, owing to extraordinary market conditions, had become illiquid. Market conditions at the time were distinguished by extreme turbulence, a shortage of liquidity and a lack of quoted prices on active markets. the holdings listed in the table below were reclassified from trading to the category Held to Maturity since the instruments are no longer held for trading purposes. Instead, management intends and is able to hold them to maturity. Financial instruments in the category trading are recognised at fair value
with changes in value recognised through profit or loss. Financial instruments in the category Held to Maturity are recognised at amortised cost less impairments. No impairments were needed as of 31 December 2009, which means that all contractual cash flows are expected to be received. of the holdings listed below, residential Mortgage Backed securities (rMBs) and Commercial Mortgage Backed securities (CMBs) account for 90 per cent of the exposure, while the remaining 10 per cent consists of a bond issued by companies controlled by the u.s. government.
| 2010 | 2009 | 2008 | 30/6/2008 | 2007 | |
|---|---|---|---|---|---|
| Carrying amount | 4 287 | 7 203 | 8 138 | 7 376 | 7 563 |
| Nominal amount | 4 332 | 7 306 | 8 328 | 7 558 | 7 618 |
| Fair value | 4 140 | 6 872 | 7 988 | 7 376 | 7 563 |
| Gains/loss recognised through profit or loss | –187 | –56 | |||
| Gains/loss that would be recognised through profit or loss if the asses were not reclassified | –147 | –332 | –150 | –187 | –56 |
| effective interest rate on day of reclassification, % | 5.62 | ||||
| recognised interest income after reclassification | 70 | 185 | 160 |
the decrease in the value of the first half year of 2008 amounted to seK 187m. the decrease in the value of the second half year of 2008 amounted to seK 150m. Nominal amounts and carrying amounts are affected by changes in exchange rates. Carrying amounts are also affected by the allocations of discounts in accordance with the effective interest method.
| 2010 | 2009 | |
|---|---|---|
| Amortised origination fees | 498 | 497 |
| unrealised changes in value/currency changes | 630 | –1 302 |
| Capital gains on sales of subsidiaries and associates | 3 | –3 |
| Capital gains/losses on property and equipment | –2 | –397 |
| undistributed share of equity in associates | –441 | –822 |
| Depreciation and impairment of tangible fixed assets including repossessed leased assets |
1 183 | 572 |
| Amortisation and impairment of goodwill and other | ||
| intangible fixed assets | 404 | 1 620 |
| Credit impairment | 3 370 | 24 857 |
| Changes to provisions for insurance contracts | –1 994 | 453 |
| prepaid expenses and accrued income | 288 | –377 |
| Accrued expenses and prepaid income | 1 039 | 1 566 |
| other | –9 | –40 |
| Total | 4 969 | 26 624 |
| Assets pledged | |||
|---|---|---|---|
| Assets pledged for own liabilities | 2010 | 2009 | 1/1/2009 |
| Government securities and bonds pledged with the riksbank |
27 926 | 23 678 | |
| Government securities and bonds pledged with foreign central banks |
3 611 | 7 185 | |
| Government securities and bonds pledged for liabilities credit institutions |
17 759 | 12 126 | 22 902 |
| Government securities and bonds pledged for deposits from the public |
17 146 | 6 635 | 11 214 |
| Government securities and bonds pledged for derivatives |
425 | ||
| Loans pledged for securities in issue * | 640 207 | 610 456 | 567 363 |
| Financial assets pledged for investment | |||
| contracts | 99 475 | 80 647 | 52 904 |
| Cash | 12 038 | 9 065 | 7 847 |
| Total | 790 236 | 746 856 | 693 518 |
the carrying amount of liabilities for which assets are pledged amounted to seK 563 284m (477 210) for the Group in 2010.
* the pledge is defined as the borrower's nominal debt including accrued interest.
| Other assets pledged | 2010 | 2009 | 1/1/2009 |
|---|---|---|---|
| security loans | 521 | 593 | 347 |
| Government securities and bonds pledged | |||
| for other commitments | 1 079 | 1 742 | 2 908 |
| Cash | 274 | 265 | 164 |
| Total | 1 874 | 2 600 | 3 420 |
Collateral is pledged in the form of government securities or bonds to central banks in order to execute transactions with the central banks. In so-called genuine repurchase transactions, where the Group sells a security and at the same time agrees to repurchase it, the sold security remains on the balance sheet. the carrying amount of the security is also recognised as a pledged asset. Collateral in the form of loans and receivables consists of loans granted against property mortgages. the loans serve as collateral for covered bonds in issue. the Group buys fund units to secure identical obligations to customers. the fund units are pledged on behalf of customers. In principle, the Group cannot dispose of pledged collateral. Generally, the assets are also separated on behalf of the beneficiaries in the event of the Group's insolvency.
| Nominal amount | 2010 | 2009 | 1/1/2009 |
|---|---|---|---|
| Loan guarantees | 7 742 | 12 457 | 16 825 |
| other guarantees | 15 415 | 16 504 | 22 864 |
| Accepted and endorsed notes | 171 | 227 | 235 |
| Letters of credit granted but not utilised | 1 672 | 1 878 | 3 138 |
| other contingent liabilities | 321 | 349 | 799 |
| Total | 25 321 | 31 415 | 43 860 |
| provision for anticipated credit impairments | –311 | –224 | –74 |
| Nominal amount | 2010 | 2009 | 1/1/2009 |
|---|---|---|---|
| Loans granted but not paid | 114 920 | 126 190 | 131 361 |
| overdraft facilities granted but not utilised | 60 462 | 55 932 | 68 282 |
| Total | 175 382 | 182 122 | 199 643 |
the nominal amount of interest.-, equity- and currency-related contracts is shown in note G29 Derivatives.
| 2010 | 2009 | |||
|---|---|---|---|---|
| Ordinary shares | SEK per share |
Total | SEK per share |
Total |
| Dividend paid | ||||
| proposed dividend | 2.10 | 2 000 | ||
| 2010 | 2009 | |||
| Preference shares | SEK per share |
total | SEK per share |
Total |
| proposed dividend | 4.80 | 995 |
preference shares have a preferential right to the dividend for 2010 corresponding to seK 4,80 per share .the Board of Directors recommends that shareholders receive a dividend of seK 2.10 per common share and seK 4.80 per preference share for the financial year 2010, corresponding to seK 2 995m.
the agreements relate mainly to premises in which the Group is the lessee. the terms of the agreements comply with customary practices and include clauses on inflation and property tax. the combined amount of future minimum lease payments that relate to non-cancellable agreements is allocated on the due dates as follows.
| 2010 | Expenses | Income subleasing | Total |
|---|---|---|---|
| 2011 | 765 | 22 | 743 |
| 2012 | 566 | 36 | 530 |
| 2013 | 461 | 48 | 413 |
| 2014 | 275 | 24 | 251 |
| 2015 | 229 | 5 | 224 |
| 2016 | 114 | 114 | |
| 2017 | 77 | 77 | |
| 2018 | 75 | 75 | |
| 2019 or later | 70 | 70 | |
| Total | 2 632 | 135 | 2 497 |
| 2009 | Expenses | Income subleasing | Total |
|---|---|---|---|
| 2010 | 767 | 19 | 748 |
| 2011 | 562 | 10 | 552 |
| 2012 | 460 | 92 | 368 |
| 2013 | 268 | 5 | 263 |
| 2014 | 226 | 4 | 222 |
| 2015 | 114 | 114 | |
| 2016 | 109 | 109 | |
| 2017 | 76 | 76 | |
| 2018 | 71 | 71 | |
| 2019 or later | 68 | 68 | |
| Total | 2 721 | 130 | 2 591 |
Business combinations refer to acquisitions of businesses in which the parent Company directly or indirectly obtains control of the acquired business.
on 20 January 2009 swedbank robur AB acquired all the shares in Banco Fonder AB. the acquisition was settled in cash.
| Carried in the Group on acquisition date |
Carried in the acquired entity on acquisition date |
|
|---|---|---|
| Assets | 52 | 52 |
| Liabilities | 22 | 22 |
| Subsidiary's net assets | 30 | 30 |
| Intangible fixed assets, fund management | ||
| assignments | 78 | |
| Deferred taxes | –21 | |
| Total | 87 | |
| Purchase price paid in cash | 87 | |
| Cash flow | ||
| Acquired cash and cash equivalents in | ||
| subsidiary | 35 | |
| Cash paid | –87 | |
| Net | –52 |
From the acquisition date the acquired company contributed seK 16m to profit for the year and seK 89m to revenues in 2009.
| affected as follow: | 2010 |
|---|---|
| Non-controlling interest, carrying amount, 49 %, before the acquisition |
124 |
| Non-controlling interest, carrying amount, 0 %, after acquisition |
0 |
| Change in retained earnings attributable to shareholders of swedbank AB |
–497 |
| Cost, cash | 621 |
| Cashflow | 621 |
| Associates | ||
|---|---|---|
| Assets | 2010 | 2009 |
| Loans to credit institutions | 8 497 | 7 778 |
| Loans to the public | 1 466 | 1 357 |
| Bonds and other interest-bearing securities | 200 | 200 |
| other assets | 9 | 26 |
| prepaid expenses and accrued income | 9 | |
| Total assets | 10 172 | 9 370 |
| Liabilities | ||
| Amount owed to credit institutions | 3 054 | 3 951 |
| Deposits and borrowing from the public | 36 | 13 |
| Debt securities in issue, etc. | 3 600 | |
| Accrued expenses and prepaid income | 127 | 160 |
| Total liabilities | 6 817 | 4 124 |
| Contingent liabilities | ||
| Guarantees | 123 500 | 93 500 |
| Income and expenses | ||
| Interest income | 151 | 35 |
| Interest expenses | 105 | 25 |
| Dividends received | 42 | 44 |
| Commission income | 20 | 1 |
| Commission expenses | 300 | 448 |
| other income | 129 | -26 |
| other general administrative expenses | 29 |
each note to the balance sheet specifies assets and liabilities between the Group and its associates. Investments in associates are specified in note G28. During the year the Group has provided capital injections of seK 4.8m (50) to associates and issued guarantees and pledged assets of seK 115m (538) on behalf of associates.
the Group has sold services to associates primarily in the form of the development of products and systems and some marketing. the Group's expenses to other associates mainly consist of payment services. the partly owned banks sell products that are provided by the Group and receive commissions for servicing the products. the cooperation between the partly owned banks and swedbank is based on the agreements described in the section on savings banks and partly owned banks.
Information is provided in note G14 staff costs.
swedbank's pension funds and sparinstitutens pensionskassa secure employees' post-employment benefits. these related parties rely on swedbank for traditional banking services.
the co-operation between swedbank and the 64 savings banks, including six of swedbank's partly owned banks, in sweden is governed by a master agreement to which a number of other agreements are attached regarding specific activities. In 2006 the agreement was updated and adapted. the new agreement extends through March 2012 and presumes that the savings banks have a certain basic offering of services and products as well as access to competency in certain areas. A few small savings banks currently do not fulfill the requirements. these savings banks have instead signed clearing agreements with swedbank.
through the co-operation, swedbank's swedish customers gain access to a nationwide network. At the same time the savings banks and partly owned banks have the possibility to offer the products and services of swedbank and its subsidiaries to their customers. together, the savings banks and partly owned banks account for about 30 per cent of the Group's product sales in the swedish market. In addition to marketing and product issues, a close co-operation exists in a number of administrative areas. swedbank is the clearing bank for the savings banks and partly owned banks and provides a wide range of It services. the co-operation also offers the possibility to distribute development costs over a larger business volume.
savings banks, the savings banks foundations and partly owned banks together represent one of the largest shareholder groups in swedbank, with a total of 9.7 per cent of the voting rights.
the associated company Färs & Frosta sparbank AB holds 3 720 000 shares in swedbank AB, including in connection with the two rights issues. the Group's share of these shares has reduced equity by seK 58m in the consolidated statements.
swedbank has 17.5 per cent of the voting rights in the non-profit association, the swedish savings Banks Academy. the Group has no loans to the association, nor has it issued any guarantees or pledged assets for the benefit of the association.
| Change | 2010 | 2009 | |
|---|---|---|---|
| Net interest income, 12 months 1) | |||
| Increased interest rates | + 1 % point | 1 413 | 1 720 |
| Decreased interest rates | – 1 % point | –1 730 | –584 |
| Change in value 2) | |||
| Market interest rate | + 1 % point | –213 | –173 |
| – 1 % point | –49 | 195 | |
| stock prices | +10% | 16 | 12 |
| –10% | 5 | –6 | |
| exchange rates | +5% | 60 | –5 |
| –5% | 91 | 29 | |
| Other | |||
| stock market performance 3) | +/– 10 % | +/–287 | +/–259 |
| staff changes | +/– 100 persons | +/–51 | +/–45 |
| payroll changes | +/– 1 % point | +/–85 | +/–88 |
| Impaired loans 4) | +/– 1 seK bn | +/–40 | +/–35 |
| Credit impairment ratio | +/– 0.1 % point | +/–1 354 | +/–1 383 |
1) the calculation is based on the assumption that market interest rates rise (fall) by one percentage point and thereafter remain at this level for one year and that the consolidated balance sheet remains essentially unchanged during the period. the calculation also presumes that deposit rates are slow moving in connection with changes in market rates, which better reflects actual conditions.
2) the calculation refers to the immediate effect on profit of each scenario for the Group's interest rate positions at fair value and its equity and currency positions.
3) refers to the effect on net commission income from a change in value of swedbank robur's equity funds.
4) the interest rate for the calculation in 2010 is 4.00 per cent (3,50).
swedbank's Board of Directors decided in early 2011 to introduce a profitability goal and a capitalisation goal and to amend swedbank's dividend policy.
In order to effectively manage swedbank's capitalisation within capitalisation target the Board has proposed the Annual General Meeting to authorise the Board to decide on acquisition of own ordinary- and/or preference shares of up to 10 per cent of the total number of shares (including acquisition of own shares through the securities operations).
| 128 | Note 1 | Accounting policies |
|---|---|---|
| 129 | Note 2 | Risks |
| 129 | Credit risks | |
| 130 | Liquidity risks | |
| 131 | Market risks | |
| 133 | Note 3 | Capital adequacy analysis |
| 134 | Note 4 | Geographical distribution of revenues |
| 134 | Note 5 | Net interest income |
|---|---|---|
| 135 | Note 6 | Dividends received |
| 135 | Note 7 | Net commissions |
| 135 | Note 8 | Net gains and losses on financial items at fair value |
| 135 | Note 9 | Other income |
| 136 | Note 10 | Staff costs |
| 136 | Note 11 | Other general administrative expenses |
| 137 | Note 12 | Depreciation/amortisation of tangible assets and intangible fixed assets |
| 137 | Note 13 | Credit impairments |
| 137 | Note 14 | Impairments of financial fixed assets |
| 137 | Note 15 | Appropriations |
| 137 | Note 16 | Tax |
Note 17 Tax for each component in other comprehensive income
| 138 | Note 18 | Treasury bills and other bills eligible for refinancing with central banks, etc. |
|---|---|---|
| 138 | Note 19 | Loans to credit institutions |
| 138 | Note 20 | Loans to the public |
| 139 | Note 21 | Bonds and other interest-bearing securities |
| 139 | Note 22 | Shares and participating interests |
| 140 | Note 23 | Investments in associates |
| 141 | Note 24 | Investment in Group entities |
| 142 | Note 25 | Derivatives |
| 143 | Note 26 | Intangible fixed assets |
| 143 | Note 27 | Tangible assets |
| 143 | Note 28 | Other assets |
| 143 | Note 29 | Prepaid expenses and accrued income |
| 144 | Note 30 | Amounts owned to credit institutions |
| 144 | Note 31 | Deposits and borrowings from the public |
| 144 | Note 32 | Debt securities in issue |
| 144 | Note 33 | Other liabilities |
| 145 | Note 34 | Accrued expenses and prepaid income |
| 145 | Note 35 | Provisions |
| 145 | Note 36 | Subordinated liabilities |
| 146 | Note 37 | Untaxed reserves |
| 146 | Note 38 | Equity |
| 147 | Note 39 | Fair value of financial instruments |
Note 40 Reclassification of financial assets
Note 41 Specification of adjustments for non-cash items in operating activities
| SEKm | Note | 2010 | 2009 |
|---|---|---|---|
| Interest income | 24 428 | 31 498 | |
| Interest expenses | –17 094 | –21 936 | |
| Net interest income | 5 | 7 334 | 9 562 |
| Dividends received | 6 | 6 230 | 1 493 |
| Commission income | 6 149 | 5 522 | |
| Commission expenses | –1 314 | –1 562 | |
| Net commissions | 7 | 4 835 | 3 960 |
| Net gains and losses on financial items at fair value | 8 | 1 182 | 587 |
| Other income | 9 | 1 333 | 1 709 |
| Total income | 20 914 | 17 311 | |
| Staff costs | 10 | 6 540 | 6 136 |
| Other general administrative expenses | 11 | 4 785 | 4 880 |
| Total general administrative expenses | 11 325 | 11 016 | |
| Depreciation/amortisation of tangible asseets and intangible fixed assets | 12 | 350 | 359 |
| Total expenses | 11 675 | 11 375 | |
| Profit before impairments | 9 239 | 5 936 | |
| Impairments of tangible assets | 27 | 2 | |
| Credit impairments | 13 | –11 | 2 536 |
| Impairments of financial fixed assets | 14 | 394 | 7 114 |
| Operating profit | 8 856 | –3 716 | |
| Appropriations | 15 | –10 | –5 039 |
| Tax expense | 16 | 1 794 | 2 155 |
| Profit for the year | 7 072 | –832 |
| SEKm | Note | 2010 | 2009 |
|---|---|---|---|
| Profit for the year reported via income statement | 7 072 | –832 | |
| Cash flow hedges | |||
| Gains/losses arising during the year | –214 | –573 | |
| Reclassification adjustments to income statement, net interest income | 806 | 790 | |
| Reclassification adjustments to income statement, net gains and losses on financial items at fair value | 37 | ||
| Group contributions paid | –9 | ||
| Income tax relating to components of other comprehensive income | 17 | –155 | –64 |
| Other comprehensive income for the year, net of tax | 437 | 181 | |
| Total comprehensive income for the year | 7 509 | –651 |
| SEKm | Note | 2010 | 2009 | 1/1/2009 |
|---|---|---|---|---|
| Assets | ||||
| Cash and balances with central banks | 4 702 | 19 238 | 8 561 | |
| Treasury bills and other bills eligible for refinancing with central banks, etc. | 18 | 25 539 | 76 866 | 24 056 |
| Loans to credit institutions | 19 | 478 941 | 464 458 | 522 327 |
| Loans to the public | 20 | 324 662 | 413 350 | 397 515 |
| Bonds and other interest-bearing securities | 21 | 130 657 | 185 985 | 237 610 |
| Shares and participating interests | 22 | 5 306 | 5 227 | 4 132 |
| Investments in associates | 23 | 1 168 | 1 271 | 1 266 |
| Investments in Group entities | 24 | 48 833 | 44 492 | 43 379 |
| Derivatives | 25 | 80 325 | 80 438 | 133 982 |
| Intangible fixed assets | 26 | 882 | 1 034 | 1 186 |
| Tangible assets | 27 | 450 | 528 | 558 |
| Current tax assets | 1 075 | 665 | 1 693 | |
| Deferred tax assets | 16 | 196 | 349 | 365 |
| Other assets | 28 | 7 563 | 5 918 | 9 993 |
| Prepaid expenses and accrued income | 29 | 8 205 | 11 038 | 15 197 |
| Total assets | 1 118 504 | 1 310 857 | 1 401 820 | |
| Liabilities and equity Liabilities |
||||
| Amounts owed to credit institutions | 30 | 190 710 | 339 875 | 425 284 |
| Deposits and borrowings from the public | 31 | 437 870 | 394 054 | 393 079 |
| Debt securites in issue | 32 | 273 819 | 340 929 | 278 051 |
| Derivatives | 25 | 72 639 | 82 460 | 136 639 |
| Current tax liabilities | 758 | 1 091 | 195 | |
| Other liabilities | 33 | 43 630 | 50 431 | 71 447 |
| Accrued expenses and prepaid income | 34 | 4 647 | 5 060 | 7 234 |
| Provisions | 35 | 206 | 772 | 135 |
| Subordinated liabilities | 36 | 27 661 | 37 151 | 42 677 |
| Total liabilities | 1 051 940 | 1 251 823 | 1 354 741 | |
| Untaxed reserves | 37 | 805 | 816 | 5 855 |
| Equity | 38 | |||
| Share capital | 24 351 | 24 351 | 14 918 | |
| Other funds | 6 489 | 6 489 | 6 489 | |
| Retained earnings | 34 919 | 27 378 | 19 817 | |
| Total equity | 65 759 | 58 218 | 41 224 | |
| Total liabilities and equity | 1 118 504 | 1 310 857 | 1 401 820 | |
| Pledged asstes, contingent liablilities and commitments | 42 |
The balance sheet and income statement will be adopted at the Annual General Meeting on 25 March 2011.
| Share | |||||
|---|---|---|---|---|---|
| Share capital | reserve | reserve | hedges | earnings | Total |
| 14 918 | 4 871 | 6 489 | –930 | 15 876 | 41 224 |
| 9 433 | 8 650 | 18 083 | |||
| –438 | –438 | ||||
| 187 | –838 | –651 | |||
| –832 | –832 | ||||
| 254 | –9 | 245 | |||
| –67 | 3 | –64 | |||
| 24 351 | 13 083 | 6 489 | –743 | 15 038 | 58 218 |
| 24 351 | 13 083 | 6 489 | –743 | 15 038 | 58 218 |
| 32 | 32 | ||||
| 437 | 7 072 | 7 509 | |||
| 7 072 | 7 072 | ||||
| 592 | 592 | ||||
| –155 | –155 | ||||
| 24 351 | 13 083 | 6 489 | –306 | 22 142 | 65 759 |
| premium | Statutory | Cash flow | Retained |
Expenses in connection with rights issue 2009 includes a positive tax effect of SEK 156m.
| SEKm Note 2010 2009 Operating activities Operating profit 8 856 –3 716 Adjustments for non-cash items in operating activities 41 1 358 10 728 Taxes paid –2 383 –214 Increase/decrease in loans to credit institution –44 961 –8 684 Increase/decrease in loans to the public 75 081 5 250 Increase/decrease in holdings of securities for trading 100 464 –7 564 Increase/decrease in deposits and borrowings from the public including retail bonds 26 516 30 102 Increase/decrease in amounts owed to credit institutions –142 875 –90 963 Increase/decrease in other assets –984 59 265 Increase/decrease in other liabilities –10 365 –63 578 Cash flow from operating activities 10 707 –69 374 Investing activities Acquisiton of/contribution to Group entities and associates –5 097 –7 015 Disposal of Group entities and associates 140 135 Acquisition of other fixed assets and strategic financial assets –121 –34 901 Disposals of other fixed assets and strategic financial assets 52 828 42 408 Dividends and Group contributions received 1 261 194 Cash flow from investing activities 49 011 821 Financing activities Issuance of interest-bearing securities 27 025 147 986 Redemption of interest-bearing securities –72 180 –71 928 Issuance of certificates etc. 252 177 265 276 Redemption of certificates etc. –281 276 –279 356 New rights issue 17 252 Cash flow from financing activities –74 254 79 230 Cash flow for the year –14 536 10 677 19 238 8 561 Cash and cash equivalents at the beginning of the year Cash flow for the year –14 536 10 677 Cash and cash equivalents at end of the year 4 702 19 238 |
||
|---|---|---|
The cash flow statement shows receipts and payments during the year as well as cash and cash equivalents at the beginning and end of the year. The cash flow statement is reported using the indirect method and is divided into receipts and payments from operating activities, investing activities and financing activities.
Cash flow from operating activities is based on operating profit for the year. Adjustments are made for items not included in cash flow from operating activities. Changes in assets and liabilities from operating activities consist of items which are part of normal business activities, such as loans to and deposits and borrowings from the public and credit institutions, and which are not attributable to investing and financing activities. Cash flow includes interest receipts of SEK 27 154m (35 056) and interest payments of SEK 16 524m (21 147). Capitalised interest is included.
Investing activities consist of acquisitions and disposals of strategic financial assets, contributions to subsidiaries and associates, and other fixed assets. In 2010 Swedbank Försäkring AB was acquired for SEK 1 996m. Remaining non-controlling interest in First Securities AS was acquired for SEK 621m and remaining non-controlling interest in OAO Swedbank was acquired for SEK 137m. Contributions given to subsidiaries totalled SEK 2 320m. Shareholdings in the associate Bergslagens Sparbank AB was sold for SEK 140m.
Cash and cash equivalents consist of cash and balances with central banks, which corresponds to the balance sheet item Cash and balances with central banks. Cash and cash equivalents are defined according to IAS 7, and do not correspond to what the Group consider as liquidity. In previous financial statements net claim of overnight deposit receivables and overnight deposit liabilities with maturities up to five days, and treasury bills, other bills and mortgage bonds eligible for refinancing with central banks taking into account repos and short-selling also were included. Comparative figures are restated.
all amounts in the notes are in millions of swedish kronor (seKm) and represent carrying amounts unless indicated otherwise. Figures in parentheses refer to the previous year.
as a rule, the Parent Company follows IFrs and the accounting principles applied in the consolidated financial statements, as reported on pages 56-63. In addition, the Parent Company is required to consider and prepare its annual report in accordance with the annual accounts act for Credit Institutions and securities Companies, the regulations and general advice of the swedish Financial supervisory authority and recommendation rFr 2 reporting for Legal entities issued by the swedish Financial reporting Board. the Parent Company's annual report is therefore prepared in accordance with IFrs to the extent the standards are compatible with the annual accounts act for Credit Institutions and securities Companies, rFr 2 and the swedish Financial supervisory authority regulations. the most significant differences in principle between the Parent Company's accounting and the Group's accounting policies relate to the recognition of:
the headings in the financial statements follow the annual accounts act for Credit Institutions and securities Companies and the swedish Financial supervisory authority regulations, due to which they differ in certain cases from the headings in the Group's accounts.
the currency component of liabilities that constitute currency hedges of net investments in foreign subsidiaries and associates is valued in the Parent Company at cost.
Investments in associates are recognised in the Parent Company at cost less any impairment. all dividends received are recognised through profit and loss in Dividends received.
Investments in subsidiaries are recognised according to the acquisition cost method. In case of an indication of value decrease the investment's value is tested for impairment. When the Group value is lower than carrying amount, impairment is recognised. all dividends received are recognised through profit and loss in Dividends received.
the Parent Company amortises goodwill systematically based on estimated useful life. all expenditures, including for development, which are attributable to internally generated intangible assets are expensed through profit and loss.
the Parent Company recognises pension expenses in accordance with the act on safeguarding Pension Benefits, which means that defined benefit pension plans are also recognised as defined contribution plans. Premiums paid to defined contribution plans are expensed when an employee has rendered his/her services.
Due to the connection between reporting and taxation, the deferred tax liability attributable to untaxed reserves is not recognised separately in the Parent Company. the reserves are therefore recognised in their gross amounts in the balance sheet and income statement. Group contributions received are recognised through profit and loss in Dividends received.
the Parent Company does not provide segment information, since the information is provided for the Group. a geographical distribution of revenue is provided, however.
P2 risks
swedbank's risk management is described in note G3. specific information on the Parent Company's risks is presented in the following tables.
| 2010 | 2009 | |
|---|---|---|
| Impaired loans | ||
| Carrying amount before provisions | 2 054 | 3 619 |
| Provisions | 1 288 | 2 533 |
| Carrying amount after provisions | 766 | 1 086 |
| share of impaired loans, net % | 0.16 | 0.22 |
| share of impaired loans, gross % | 0.43 | 0.28 |
| Carrying amount of impaired loans that returned | ||
| to a status as normal during the period | 146 | 133 |
| Past due loans that are not impaired | ||
| Valuation category, loans and receivables | ||
| Loans with past due amount, | ||
| 5-30 days | 117 | 65 |
| 31-60 days | 199 | 618 |
| more than 60 days | 24 | 25 |
| Total | 340 | 708 |
| and which are not impaired or past due | ||
|---|---|---|
| Carrying amount before restructuring | 316 | 2 131 |
Carrying amount after restructuring 314 2 131
Impaired loans are those for which it is likely that payments will not be fulfilled in accordance with the terms of the contract. a loan is not impaired if there is collateral which covers capital, interest and payment for any delays by a satisfactory margin. Provisions for impaired loans as well as other elements of lending where losses have occurred but individual claims have not yet been identified are specified below. Loss events include non-payments or delayed payments where it is likely the borrower will go into bankruptcy and domestic or local economic conditions that are tied to non-payments, such as declines in asset values. the carrying amount of impaired loans largely corresponds to the value of collateral in cases where collateral exists. restructured loans refer to loans where a change has been made to the terms of the contract as a result of the client's reduced ability to pay.
| 2010 | 2009 | |
|---|---|---|
| Opening balance | 2 533 | 1 671 |
| New provisions | 301 | 848 |
| Utilisation of previous provisions | –344 | –163 |
| recoveries of previous provisions | –156 | –88 |
| Portfolio provisions for loans that are not impaired | –323 | 272 |
| Change in exchange rates | –35 | –7 |
| Closing balance | 1 976 | 2 533 |
| total provision ratio for impaired loans, % (Including portfolio provision in relation to loans that individually are assessed as impaired) |
96 | 103 |
| Provision ratio for individually assessed impaired loans, % | 63 | 57 |
| 2010 | 2009 | |
|---|---|---|
| Number | 1 | 1 |
| exposures > 20 % of the capital base | ||
| exposures between 10 % and 20 % of the capital base | 10 045 | 9 302 |
| Total | 10 045 | 9 302 |
| Usage of the 800 % limit, % | 12 | 10 |
When it grants repos, the parent company receives securities that can be sold or pledged. the fair value of these securities corresponds to the carrying amount of the repos. the parent company also receives collateral in the form of securities that can be sold or pledged for derivatives and other exposures. the fair value of such collateral as of yearend amounted to seK 0m (1 300). None of this collateral has been sold or pledged.
In the summary of maturities, undiscounted contractual cash flows are distributed on the basis of remaining maturities until the agreed time of maturity. For lending to the public amortising loans are distributed based on the amortisation schedule. Liabilities whose repayment date may depend on various options,have been distributed based on the earliest date on which repayment could be demanded. Differences between nominal amount and carrying amount, undiscounted cash flows, are reported together with items without an agreed maturity date where the anticipated realisation date has not been determined in the column, No maturity/discount effect.
| Remaining maturity 2010 |
Payable on demand |
< 3 mths. | 3 mths.—1 yr | 1—5 yrs | 5—10 yrs | > 10 yrs | No maturity/ discount effect |
Total |
|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||
| Cash and balances with central banks | 4 702 | 4 702 | ||||||
| treasury bills and other bills eligible for refinan cing with central banks |
7 869 | 4 223 | 3 527 | 5 365 | 1 266 | 3 289 | 25 539 | |
| Loans to credit institutions | 41 050 | 254 283 | 68 002 | 113 142 | 1 861 | 603 | 478 941 | |
| Loans to the public | 30 873 | 86 053 | 28 076 | 95 908 | 30 413 | 53 339 | 324 662 | |
| Bonds and other interest-bearing securities | 9 247 | 29 346 | 84 923 | 4 514 | 2 627 | 130 657 | ||
| shares and participating interests | 55 307 | 55 307 | ||||||
| Derivatives | 22 253 | 17 412 | 25 343 | 3 563 | 753 | 11 001 | 80 325 | |
| Intangible fixed assets | 882 | 882 | ||||||
| tangible assets | 450 | 450 | ||||||
| other assets | 10 929 | 2 684 | 3 426 | 17 039 | ||||
| Total | 76 625 | 390 634 | 149 743 | 322 843 | 45 716 | 55 961 | 76 982 | 1 118 504 |
| Liabilities | ||||||||
| amounts owed to credit institutions | 55 116 | 108 458 | 19 324 | 7 812 | 190 710 | |||
| Deposits and borrowings from the public | 380 066 | 44 373 | 8 603 | 4 789 | 16 | 23 | 437 870 | |
| Debt securities in issue | 81 794 | 74 143 | 114 650 | 160 | 3 072 | 273 819 | ||
| Derivatives | 19 711 | 17 189 | 29 366 | 7 492 | 1 759 | –2 878 | 72 639 | |
| other liabilities | 44 703 | 3 300 | 144 | 1 899 | 50 046 | |||
| subordinated liabilities | 17 364 | 8 942 | 1 355 | 27 661 | ||||
| equity | 65 759 | 65 759 | ||||||
| Total | 435 182 | 299 039 | 122 559 | 156 761 | 25 032 | 10 724 | 69 207 | 1 118 504 |
the large part of deposits from the public is contractually payable on demand. Despite the contractual terms, the deposits are essentialy a stable and a long-term source of funding.
| Remaining maturity 2009 |
Payable on demand |
< 3 mths. | 3 mths.—1 yr | 1—5 yrs | 5—10 yrs | > 10 yrs | No maturity/ discount effect |
Total |
|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||
| Cash and balances with central banks | 19 238 | 19 238 | ||||||
| treasury bills and other bills eligible for refinan cing with central banks |
62 584 | 1 439 | 432 | 3 982 | 5 444 | 2 985 | 76 866 | |
| Loans to credit institutions | 17 144 | 215 237 | 178 513 | 52 176 | 698 | 690 | 464 458 | |
| Loans to the public | 32 775 | 174 215 | 29 745 | 83 114 | 37 242 | 56 259 | 413 350 | |
| Bonds and other interest-bearing securities | 19 145 | 76 203 | 83 788 | 3 915 | 444 | 2 490 | 185 985 | |
| shares and participating interests | 50 990 | 50 990 | ||||||
| Derivatives | 295 | 30 969 | 30 361 | 30 141 | 4 163 | 1 408 | –16 899 | 80 438 |
| Intangible fixed assets | 1 034 | 1 034 | ||||||
| tangible assets | 528 | 528 | ||||||
| other assets | 13 733 | 2 972 | 1 265 | 17 970 | ||||
| Total | 69 452 | 515 883 | 319 233 | 249 651 | 50 000 | 64 245 | 42 393 | 1 310 857 |
| Liabilities | ||||||||
| amounts owed to credit institutions | 104 710 | 93 113 | 119 109 | 22 943 | 339 875 | |||
| Deposits and borrowings from the public | 357 567 | 14 851 | 16 579 | 5 039 | 10 | 8 | 394 054 | |
| Debt securities in issue | 64 776 | 76 644 | 197 855 | 879 | 775 | 340 929 | ||
| Derivatives | –180 | 34 880 | 32 362 | 32 501 | 3 969 | –125 | –20 947 | 82 460 |
| other liabilities | 51 485 | 4 770 | 2 | 1 913 | 58 170 | |||
| subordinated liabilities | 1 259 | 22 403 | 12 992 | 497 | 37 151 | |||
| equity | 58 218 | 58 218 | ||||||
| Total | 462 097 | 259 105 | 250 723 | 258 340 | 27 261 | 12 875 | 40 456 | 1 310 857 |
the large part of deposits from the public is contractually payable on demand. Despite the contractual terms, the deposits are essentialy a stable and a long-term source of funding.
| Turnover during the year | 2010 | 2009 |
|---|---|---|
| Commercial papers with state guarantee | ||
| Opening balance | 52 642 | 64 701 |
| Issued | 93 134 | |
| repaid | –52 642 | –106 353 |
| Change in market values | –69 | |
| Change in exchange rates | 1 229 | |
| Closing balance | 52 642 | |
| Other commercial papers | ||
| Opening balance | 38 139 | 39 160 |
| Issued | 252 177 | 171 221 |
| repaid | –226 901 | –173 003 |
| Change in market values | 3 | 26 |
| Change in exchange rates | –463 | 735 |
| Closing balance | 62 955 | 38 139 |
| Bond loans with state guarantee | ||
| Opening balance | 181 588 | 61 522 |
| Issued | 130 074 | |
| repaid | –14 035 | –921 |
| Change in market values | 341 | 1 004 |
| Change in exchange rates | –11 849 | –10 091 |
| Closing balance | 156 045 | 181 588 |
| Turnover during the year | 2010 | 2009 |
|---|---|---|
| Other interest-bearing bond loans | ||
| Opening balance | 32 137 | 78 145 |
| Issued | 23 281 | 4 849 |
| repaid | –18 378 | –50 103 |
| Change in market values | 706 | –590 |
| Change in exchange rates | –3 418 | –164 |
| Closing balance | 34 328 | 32 137 |
| Structured products | ||
| Opening balance | 36 424 | 34 522 |
| Issued | 3 745 | 13 063 |
| repurchased | –4 896 | –10 262 |
| repaid | –15 999 | –899 |
| Change in market values | 1 217 | |
| Closing balance | 20 491 | 36 424 |
| Total debt securities in issue | 273 819 | 340 929 |
the impact on the value of assets and liabilities, including derivatives, when market interest rates rise by one percentage point.
| 2010 | < 3 mths. | 3—6 mths. | 6—12 mths. | 1—2 yrs | 2—3 yrs | 3—4 yrs | 4—5 yrs | 5—10 yrs | > 10 yrs | Total |
|---|---|---|---|---|---|---|---|---|---|---|
| seK | –227 | –92 | –221 | –254 | 1 242 | –15 | –161 | –90 | 23 | 205 |
| Foreign currency | –105 | 120 | 28 | –4 | 59 | 12 | 64 | –64 | 20 | 130 |
| Total | –332 | 28 | –193 | –258 | 1 301 | –3 | –97 | –154 | 43 | 335 |
In the table above, part of deposits from the public that are payable on demand have been assigned a fixed interest period of between 2 and 3 years.
| of which financial instruments measured at fair value through profit or loss | |
|---|---|
| ------------------------------------------------------------------------------ | -- |
| seK | 11 | 5 | –52 | 114 | –7 | –18 | –161 | –89 | 23 | –174 |
|---|---|---|---|---|---|---|---|---|---|---|
| Foreign currency | –171 | 90 | 74 | 97 | 116 | 15 | 69 | –48 | 20 | 262 |
| Total | –160 | 95 | 22 | 211 | 109 | –3 | –92 | –137 | 43 | 88 |
| 2009 | < 3 mths. | 3—6 mths. | 6—12 mths. | 1—2 yrs | 2—3 yrs | 3—4 yrs | 4—5 yrs | 5—10 yrs | > 10 yrs | Total |
| seK | –300 | –99 | –221 | –2 | 960 | –202 | 110 | 10 | –1 | 255 |
| Foreign currency | 5 | –36 | 20 | 31 | 1 | 4 | 72 | –11 | 12 | 98 |
| Total | –295 | –135 | –201 | 29 | 961 | –198 | 182 | –1 | 11 | 353 |
In the table above, part of deposits from the public that are payable on demand have been assigned a fixed interest period of between 2 and 3 years.
| seK | –70 | –64 | –75 | 249 | 55 | –139 | 114 | 11 | –1 | 80 |
|---|---|---|---|---|---|---|---|---|---|---|
| Foreign currency | –1 | –87 | 19 | 33 | 4 | 6 | 74 | –10 | 12 | 50 |
| Total | –71 | –151 | –56 | 282 | 59 | –133 | 188 | 1 | 11 | 130 |
| Currency distribution | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2010 | SEK | EUR | USD | GBP | EEK | LVL | LTL | RUB | UAH | Other | Total |
| Assets | |||||||||||
| Cash and balances with central | |||||||||||
| banks | 2 491 | 152 | 10 | 4 | 2 045 | 4 702 | |||||
| Loans to credit institutions | 342 253 | 111 507 | 22 944 | 51 | 69 | 3 | 253 | 1 861 | 478 941 | ||
| Loans to the public | 248 546 | 23 468 | 28 623 | 707 | 1 184 | 297 | 62 | 21 775 | 324 662 | ||
| Interest-bearing securities | 130 574 | 12 801 | 2 863 | 9 959 | 156 197 | ||||||
| other assets, not distributed | 154 002 | 154 002 | |||||||||
| Total | 877 866 | 147 928 | 54 440 | 762 | 1 253 | 300 | 315 | 35 640 1 118 504 | |||
| Liabilities | |||||||||||
| amounts owed to credit | |||||||||||
| institutions | 116 344 | 39 583 | 28 077 | 572 | 6 134 | 190 710 | |||||
| Deposits and borrowings from | |||||||||||
| the public | 414 290 | 8 328 | 7 967 | 563 | 143 | 6 579 | 437 870 | ||||
| Debt securities in issue and | |||||||||||
| subordinated liabilities | 79 437 | 97 504 | 102 579 | 5 477 | 16 484 | 301 481 | |||||
| other liabilities, not distributed | 122 684 | 122 684 | |||||||||
| equity | 65 759 | 65 759 | |||||||||
| Total | 798 514 | 145 415 | 138 623 | 6 612 | 143 | 29 197 1 118 504 | |||||
| other assets and liabilities, | |||||||||||
| including positions in derivatives | –18 500 | 84 282 | 5 935 | 27 600 | –1 243 | –297 | 151 | 975 | –6 443 | ||
| Net position in currency | –15 987 | 99 | 85 | 27 600 | 9 | 3 | 323 | 975 | 13 107 | ||
| Currency distribution | |||||||||||
| 2009 | SEK | EUR | USD | GBP | EEK | LVL | LTL | RUB | UAH | Other | Total |
| Assets | |||||||||||
| Cash and balances with central | 11 | 1 282 | |||||||||
| banks | 3 152 | 14 788 | 19 238 | ||||||||
| Loans to credit institutions | 5 | ||||||||||
| 336 350 | 99 971 | 22 657 | 257 | 15 | 4 | 2 | 394 | 4 808 | 464 458 | ||
| Loans to the public | 320 678 | 34 336 | 33 121 | 886 | 4 | 24 325 | 413 350 | ||||
| Interest-bearing securities | 217 065 | 34 772 | 1 897 | 9 117 | 262 851 | ||||||
| other assets, not distributed | 150 960 | 150 960 | |||||||||
| Total | 1 028 205 | 183 867 | 57 686 | 1 148 | 15 | 4 | 2 | 398 | 39 532 1 310 857 | ||
| Liabilities | |||||||||||
| amounts owed to credit | |||||||||||
| institutions | 246 294 | 52 317 | 29 727 | 1 280 | 27 | 7 | 10 223 | 339 875 | |||
| Deposits and borrowings from | |||||||||||
| the public | 372 958 | 7 638 | 7 308 | 1 237 | 1 | 50 | 4 862 | 394 054 | |||
| Debt securities in issue and | |||||||||||
| subordinated liabilities | 102 735 | 116 505 | 133 847 | 7 087 | 17 906 | 378 080 | |||||
| other liabilities, not distributed | 140 630 | 140 630 | |||||||||
| equity | 58 218 | 58 218 | |||||||||
| Total | 920 835 | 176 460 | 170 882 | 9 604 | 1 | 27 | 7 | 50 | 32 991 1 310 857 | ||
| other assets and liabilities, | |||||||||||
| including positions in derivatives Net position in currency |
–11 890 –19 271 |
113 228 21 |
8 496 35 |
31 474 31 488 |
23 | 5 | 706 1 054 |
1 042 1 042 |
–5 259 | 14 369 |
| 2010 | 2009 |
|---|---|
| 85 170 | 91 992 |
| 32 779 | 37 204 |
| 52 391 | 54 788 |
| 2.60 | 2.47 |
| 409 740 | 465 046 |
| 15.0 | 12.3 |
| 16.7 | 14.3 |
| 20.8 | 19.8 |
| Capital base | 2010 | 2009 |
|---|---|---|
| tier 1 capital | 68 386 | 66 595 |
| tier 2 capital | 19 685 | 25 952 |
| of which, undated subordinated loans | 2 431 | 4 243 |
| total tier 1 and tier 2 captial | 88 071 | 92 547 |
| Less shares * | –2 901 | –555 |
| Total | 85 170 | 91 992 |
| Capital requirement | 2010 | 2009 |
|---|---|---|
| Credit risks | 28 733 | 33 017 |
| market risks | 853 | 893 |
| Currency risks | 730 | 840 |
| operational risks | 2 463 | 2 454 |
| Total | 32 779 | 37 204 |
| Capital requirement for credit risks | 2010 | 2009 |
| Credit risks according to the standardised approach | 9 032 | 10 941 |
| Credit risks according to IrB | 19 701 | 22 076 |
| of which institutional exposures | 1 736 | 2 324 |
| of which corporate exposures | 15 350 | 16 915 |
| of which retail exposures | 2 128 | 2 273 |
| of which securitisation | 33 | 64 |
| of which non-credit-obligation asset exposures | 454 | 500 |
| Total | 28 733 | 33 017 |
| Capital requirement for market risks | 2010 | 2009 |
| Interest-rate risks, specific risk | 587 | 568 |
| share price risk, generel risk | 1 | 1 |
| Commodity risk | 2 | |
| Capital requirement according to Var calculation * | 263 | 324 |
| Total | 853 | 893 |
* Companies where deductions for tier 1 capital are brought are sparia Försäkrings aB and swedbank Försäkring aB.
| Tier 1 capital | 2010 | 2009 |
|---|---|---|
| equity attributable to the shareholders according to | ||
| balance sheet in annual report | 65 759 | 58 218 |
| Proposed dividend | –2 995 | |
| 74 per cent of accrual reserve | 535 | 526 |
| Goodwill | –689 | –813 |
| other deductions | ||
| Deferred tax assets | –196 | –349 |
| Intangible assets | –192 | –220 |
| Deduction internal risk classification, provisions surplus/ | ||
| deficit | –1 053 | –723 |
| Cash flow hedges | 307 | 743 |
| shareholdings deducted from tier 1 capital* | –5 | –5 |
| Total core Tier 1 capital | 61 471 | 57 377 |
| tier 1 capital contribution** | 6 915 | 9 218 |
| Total Tier 1 capital | 68 386 | 66 595 |
* Company where deduction for tier 1 capital is brought is BGC Holding.
** tier 1 mainly comprises equity, with adjustments for certain assets that may not be included and certain deductions. tier 1 capital contributions are perpetual debenture loans whose terms are such that they may be included after approval from the swedish Financial supervisory authority. the contributions' preferential rights are subordinate to all other deposits and lending. Interest payment is set in accordance with the agreement, but may only occur if there are distributable funds. the contribution is reported in the balance sheet as a liability. all tier 1 capital contributions are based on transition rules according to FFFs 2010:10.
* Capital requirement for general interest-rate risk, share price risk and currency risk in the trading-book are calculated in accordance with the Var model.
| Capital requirement for operational risks | 2010 | 2009 |
|---|---|---|
| trading and sales | 691 | 811 |
| retail banking | 1 433 | 1 341 |
| Commercial banking | 269 | 231 |
| Payment and settlement | 55 | 51 |
| agency services | 15 | 15 |
| asset management | 5 | |
| Total | 2 463 | 2 454 |
the standard approach is used for calculating capital requirments for operational risk.
| 2010 | 2009 | |||||
|---|---|---|---|---|---|---|
| Credit risks acording to IRB | Exposure after credit risk mitigation |
Average risk weight | Capital requirement | Exposure after credit risk mitigation |
Average risk weight | Capital requirement |
| Institutional exposures | 152 312 | 14% | 1 736 | 87 218 | 33% | 2 324 |
| Corporate exposures | 281 280 | 68% | 15 350 | 299 866 | 71% | 16 915 |
| retail exposures | 94 033 | 28% | 2 128 | 97 415 | 29% | 2 273 |
| securitisations | 3 535 | 12% | 33 | 6 753 | 12% | 64 |
| exposures without counterparties |
5 686 | 100% | 454 | 8 552 | 73% | 500 |
| Total | 536 846 | 46% | 19 701 | 499 804 | 55% | 22 076 |
| 2010 | Sweden | Norway | Denmark | Finland | USA | Other | Total |
|---|---|---|---|---|---|---|---|
| Interest income | 21 991 | 1 918 | 35 | 27 | 423 | 34 | 24 428 |
| Dividends received | 6 230 | 6 230 | |||||
| Commission income | 6 020 | 62 | 9 | 14 | 41 | 3 | 6 149 |
| Net gains or losses on financial items at fair value | 1 106 | 18 | –1 | 57 | 3 | 1 182 | |
| other income | 1 332 | 1 | 1 333 | ||||
| Total income | 36 679 | 1 999 | 44 | 40 | 520 | 40 | 39 322 |
| 2009 | Sweden | Norway | Denmark | Finland | USA | Other | Total |
|---|---|---|---|---|---|---|---|
| Interest income | 27 624 | 3 002 | 44 | 120 | 663 | 45 | 31 498 |
| Dividends received | 1 493 | 1 493 | |||||
| Commission income | 5 357 | 80 | 12 | 4 | 63 | 7 | 5 522 |
| Net gains or losses on financial items at fair value | 386 | 107 | 1 | 93 | 587 | ||
| other income | 1 706 | 3 | 1 709 | ||||
| Total income | 36 567 | 3 191 | 56 | 124 | 819 | 52 | 40 809 |
the geographical distribution has been allocated to the country where the business was carried out.
| 2010 | 2009 | |||||
|---|---|---|---|---|---|---|
| Average balance | Interest rate | Average annual interest rate, % |
Average balance | Interest rate | Average annual interest rate, % |
|
| Loans to credit institutions | 517 860 | 6 988 | 1.35 | 585 326 | 10 439 | 1.78 |
| Loans to the public | 356 527 | 8 379 | 2.35 | 381 336 | 10 235 | 2.68 |
| Interest-bearing securities | 205 292 | 3 032 | 1.48 | 232 156 | 6 030 | 2.60 |
| Total interest-bearing assets | 1 079 679 | 18 399 | 1.70 | 1 198 819 | 26 704 | 2.23 |
| Derivatives | 95 607 | 5 923 | 110 967 | 4 757 | ||
| other assets | 76 720 | 106 | 78 672 | 37 | ||
| Total assets | 1 252 006 | 24 428 | 1.95 | 1 388 457 | 31 498 | 2.27 |
| amounts owed to credit institutions | 296 629 | 1 553 | 0.52 | 432 912 | 3 920 | 0.91 |
| Deposits and borrowings from the public | 416 538 | 2 295 | 0.55 | 374 891 | 2 776 | 0.74 |
| of which deposit guarantee fees | 213 | 223 | ||||
| Debt securities in issue | 304 326 | 8 242 | 2.71 | 346 553 | 10 201 | 2.94 |
| of which commissions for funding with | ||||||
| state guarantee | 3 276 | 1 696 | ||||
| subordinated liabilities | 32 302 | 1 405 | 4.35 | 41 195 | 1 949 | 4.73 |
| Interest-bearing liabilities | 1 049 795 | 13 495 | 1.29 | 1 195 551 | 18 846 | 1.58 |
| Derivatives | 89 595 | 3 427 | 113 134 | 2 911 | ||
| other liabilities | 51 089 | 172 | 33 596 | 179 | ||
| of which stability fee | 147 | 161 | ||||
| Total liabilities | 1 190 479 | 17 094 | 1.44 | 1 342 281 | 21 936 | 1.63 |
| Equity | 61 527 | 46 176 | ||||
| Total liabilities and equity | 1 252 006 | 17 094 | 1.37 | 1 388 457 | 21 936 | 1.58 |
| Net interest income | 7 334 | 9 562 | ||||
| Net interest margin | 0.59 | 0.69 | ||||
| Interest income impaired loans | 21 | 26 | ||||
| Interest income on financial assets at amortised cost | 15 785 | 20 837 | ||||
| Interest expenses on financial liabilities at amortised cost |
12 722 | 16 624 |
| 2010 | 2009 | |
|---|---|---|
| shares and participating interests | 382 | 178 |
| Investments in associates | 42 | 44 |
| Investments in Group entities* | 5 806 | 1 271 |
| Total | 6 230 | 1 493 |
| * of which, through Group contributions | 3 427 | 1 218 |
| Commission income | 2010 | 2009 |
|---|---|---|
| Payment processing | 1 836 | 1 822 |
| asset management | 1 537 | 1 337 |
| Life insurance | 549 | 431 |
| Brokerage | 363 | 389 |
| other securities | 187 | 122 |
| Corporate finance | 46 | 43 |
| Lending | 451 | 305 |
| Guarantee | 184 | 179 |
| Cards | 497 | 473 |
| Deposits | 63 | 68 |
| Non-life insurance | 37 | 2 |
| other commission income | 399 | 351 |
| Total | 6 149 | 5 522 |
| Commission expenses | 2010 | 2009 |
|---|---|---|
| Payment processing | –639 | –585 |
| asset management | –51 | –44 |
| Life insurance | –4 | –5 |
| other securities | –378 | –724 |
| Lending and guarantees | –65 | –70 |
| Cards | –97 | –83 |
| other commission expenses | –80 | –51 |
| Total | –1 314 | –1 562 |
| Net commissions | 2010 | 2009 |
|---|---|---|
| Payment processing | 1 197 | 1 237 |
| asset management | 1 486 | 1 293 |
| Life insurance | 545 | 426 |
| Brokerage | 363 | 389 |
| other securities | –191 | –602 |
| Corporate finance | 46 | 43 |
| Lending | 386 | 235 |
| Guarantee | 184 | 179 |
| Cards | 400 | 390 |
| Deposits | 63 | 68 |
| Non-life insurance | 37 | 2 |
| other commission income | 319 | 300 |
| Total | 4 835 | 3 960 |
| 2010 | 2009 | |
|---|---|---|
| Valuation category, fair value through profit or loss | ||
| Trading and derivatives | ||
| shares and related derivatives | 542 | 891 |
| Interest-bearing instruments and related derivatives | –526 | 697 |
| Total | 16 | 1 588 |
| Other financial instruments | ||
| shares | –6 | |
| Loans | –198 | –345 |
| Financial liabilities | 289 | 120 |
| Total | 91 | –231 |
| Hedge accounting at fair value | ||
| Hedging instruments | –335 | 786 |
| Hedged item | 564 | –959 |
| Total | 229 | –173 |
| Ineffective part in hedging of net investments in | ||
| foreign operations | 131 | |
| Ineffective part in cash flow hedge | –37 | |
| Financial liabilities valued at amortised cost | 120 | 71 |
| Change in exchange rates | 726 | –762 |
| Total | 1 182 | 587 |
Comparing figures have been adjusted according to description in the Group's accounting policies, which is shown in Changes in accounting policies page 56.
| 2009 | ||||
|---|---|---|---|---|
| Adjustment | Before adjustment |
Adjustment | After adjustment |
|
| Valuation category, fair value through profit or loss |
||||
| Trading and derivatives | ||||
| Interest-bearing instruments and related derivatives |
498 | 199 | 697 | |
| Total | 498 | 199 | 697 | |
| Hedge accounting at fair value | ||||
| Hedging instruments | –462 | 1 248 | 786 | |
| Hedged item | 488 | –1 447 | –959 | |
| Total | 26 | –199 | –173 |
In 2010 swedbank aB disposed the shareholdings in the associate Bergslagens sparbank aB with a capital gain of seK 22m in 2009 the shareholdings in the associate NCsD Holding aB was dipsosed for seK 6m and the associate Privatgirot aB for seK 7m.
| 2010 | 2009 | |
|---|---|---|
| salaries and remuneration | 3 984 | 3 717 |
| Compensation through shares in swedbank aB | 25 | |
| social insurance charges | 1 320 | 1 201 |
| Pension costs | 987 | 988 |
| training costs | 67 | 74 |
| other staff costs | 157 | 156 |
| Total | 6 540 | 6 136 |
| of which variable staff costs | 201 | 18 |
| of which personnel redundancy costs | 111 | 37 |
| 2010 | |||||
|---|---|---|---|---|---|
| Salaries and remuneration | Board, President, EVPs and other senior executives |
Other employees | Total | ||
| sweden | 61 | 3 816 | 3 877 | ||
| Denmark | 20 | 20 | |||
| Norway | 31 | 31 | |||
| Usa | 14 | 14 | |||
| Finland | 32 | 32 | |||
| other countries | 10 | 10 | |||
| Total | 61 | 3 923 | 3 984 |
| 2009 | |||
|---|---|---|---|
| Salaries and remuneration | Board, President, EVPs and other senior executives |
Other employees | Total |
| sweden | 47 | 3 562 | 3 609 |
| Denmark | 24 | 24 | |
| Norway | 34 | 34 | |
| Usa | 22 | 22 | |
| Finland | 10 | 10 | |
| other countries | 18 | 18 | |
| Total | 47 | 3 670 | 3 717 |
| Compensation Program 2010 | 2010 |
|---|---|
| recognised expense for compensation that is settled with shares in | |
| swedbank aB | 25 |
| recognised expense for social charges | 8 |
| recognised expense for cash settled compensation | 115 |
| recognised expense for payroll overhead costs related to the cash settled | |
| compensation | 61 |
| Total recognised expense | 209 |
| total estimated number of performance rights to grant, million | 1.0 |
| estimated number of performance rights that are | |
| forfeited due to employee turnover, million | 0.0 |
| Number of performance rights that establish the recognised expense, | |
| million | 1.0 |
| estimated fair value of the performance right at measurement date, seK | 102 |
the fair value of one performance right corresponds to estimated stock-exchange rate for one ordinary share at grant date, since one performance right entitles to one ordinary share with additional ordinary shares that compensate the value of the dividends the ordinary shares have been entitled to during the vesting period.
| 2010 | 2009 |
|---|---|
| 18 | 37 |
| 13 | 13 |
| 80 | 64 |
| 17 | 15 |
| 2010 | 2009 |
| 2.9 | 3.0 |
| 45.1 | 52.3 |
| 3.7 | 3.8 |
| 1.8 | 1.9 |
| 2.6 | 2.3 |
| 2010 | 2009 | |||
|---|---|---|---|---|
| Distribution by gender, % | Female | Male | Female | Male |
| all employees | 55 | 45 | 56 | 44 |
| Directors | 50 | 50 | 58 | 42 |
| other senior executives, incl. | ||||
| President | 33 | 67 | 45 | 55 |
sick leave for age group 30-49 2.5 2.7 sick leave for age group 50 and above 3.4 3.5
more information on remuneration to senior executives and on the Program 2010 remuneration program can be found in note G14.
| 2010 | 2009 | |
|---|---|---|
| rents, etc. | 840 | 873 |
| It expenses | 1 288 | 1 276 |
| telecommunications, postage | 158 | 175 |
| Consulting and outside services | 946 | 955 |
| travel | 148 | 147 |
| entertainment | 42 | 41 |
| office supplies | 211 | 213 |
| advertising, public relations, marketing | 215 | 244 |
| security transports, alarm systems | 378 | 409 |
| maintenance | 154 | 158 |
| other administrative expenses | 277 | 279 |
| other operating expenses | 128 | 110 |
| Total | 4 785 | 4 880 |
| Remuneration to Auditors elected by Annual General | ||
|---|---|---|
| Meeting, Deloitte AB | 2010 | 2009 |
| statutory audit | 16 | 15 |
| other audit | 5 | 6 |
| tax advisory | 1 | |
| other | 1 | |
| Total | 21 | 23 |
| Internal audit | 52 | 48 |
| Depreciation/amortisation | 2010 | 2009 |
|---|---|---|
| Equipment | 192 | 200 |
| Owner-occupied properties | 1 | 1 |
| Intangible fixed assets | 157 | 158 |
| Total | 350 | 359 |
| 2010 | 2009 | |
|---|---|---|
| Provisions for loans that individually are assessed as impaired |
||
| Provisions | 299 | 831 |
| Reversal of previous provisions | –156 | –88 |
| Provision for homogenous groups of impaired loans, net | 2 | 17 |
| Total | 145 | 760 |
| Portfolio provisions for loans that individually are | ||
| not assessed as impaired | –323 | 272 |
| Write-offs | ||
| Established losses | 734 | 1 058 |
| Utilisation of previous provisions | –344 | –163 |
| Recoveries | –139 | –63 |
| Total | 251 | 832 |
| Credit impairments for contingent liabilities and | ||
| other credit risk exposures | –84 | 672 |
| Credit impairments | –11 | 2 536 |
| Credit impairments by valuation category | ||
| Loans and receivables | –69 | 2 500 |
| Fair value through profit or loss | 58 | 36 |
| Total | –11 | 2 536 |
| Credit impairments by borrower category | ||
|---|---|---|
| Credit institutions | –32 | 167 |
| General public | 21 | 2 369 |
| Total | –11 | 2 536 |
| 2010 | 2009 | |
|---|---|---|
| Investments in Group entities | ||
| Ektornet AB, Stockholm | 222 | |
| JSC Swedbank, Kiev | 5 814 | |
| Nordic Foodservice Investment, Stockholm | 1 | |
| OAO Swedbank, Moskva |
492 | |
| Swedbank First Securities LLC, New York | 19 | |
| Swedbank Juristbyrå AB, Stockholm | 3 | |
| Swedbank Företagsförmedling AB, Stockholm | 4 | |
| ZAO Swedbank, Moskva | 14 | |
| Loans comprising net investment | ||
| JSC Swedbank | –347 | 1 286 |
| Total | 394 | 7 114 |
The size of recognized impairments reflects the difference between the carrying amount before impairment and the investments' value in use. In these cases value in use corresponds to the investments' group value.
| Untaxed reserves | 2010 | 2009 |
|---|---|---|
| Accelerated depreciation, equipment | 10 | 13 |
| Accelerated depreciation, operation properties | 2 | |
| Tax allocation reserve, withdrawal | 5 024 | |
| Total | 10 | 5 039 |
| Tax expense | 2010 | 2009 |
|---|---|---|
| Tax related to previous years | 13 | –216 |
| Current tax | 1 784 | 2 422 |
| Deferred tax | –3 | –51 |
| Total | 1 794 | 2 155 |
Positive current tax recognised directly in equity amounted 2009 to SEK 156 m.
| 2010 | 2009 | |||
|---|---|---|---|---|
| SEKm | per cent | SEKm | per cent | |
| Results | 1 794 | 20.2 | 2 155 | 162.8 |
| 26.3% of pre-tax profit | 2 332 | 26.3 | 348 | 26.3 |
| Difference | 538 | 6.1 | –1 807 | –136.5 |
| The difference consists of the following items |
||||
| Tax previous years | –13 | –0.1 | 216 | 16.3 |
| Tax -exempt income/non-deductible expenses |
–30 | –0.3 | –168 | –12.7 |
| Non-taxable dividends | 685 | 7.7 | 26 | 2.0 |
| Non-deductible goodwill impairment | –32 | –0.4 | –32 | –2.4 |
| Tax-exempt capital gains and apprecia tion in value of shares and participating |
||||
| interests | 5 | 0.1 | 1 | 0.1 |
| Standard income tax allocation reserve | –4 | –0.1 | –31 | –2.3 |
| Non-deductable impairment of shares | –195 | –2.2 | –1 869 | –141.3 |
| Credit impairments Ukraine and Russia | 105 | 1.2 | ||
| Group contributions | 17 | 0.2 | ||
| Other, net | 50 | 3.8 | ||
| Total | 538 | 6.1 | –1 807 | –136.5 |
| Opening balance |
Income statement |
Other com prehensive income |
Closing balance |
|---|---|---|---|
| 265 | –156 | 109 | |
| 89 | 2 | 91 | |
| –5 | 1 | –4 | |
| 349 | 3 | –156 | 196 |
| Deductible temporary differences |
| Deferred tax assets | Opening balance |
Income statement |
Other com prehensive income |
Closing balance |
|||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Deductible temporary differences | |||||||||||
| Cash flow hedges | 332 | –67 | 265 | ||||||||
| Provisions for pensions | 77 | 12 | 89 | ||||||||
| Other | –44 | 39 | –5 | ||||||||
| Total | 365 | 51 | –67 | 349 |
| 2010 | 2009 | |||||||
|---|---|---|---|---|---|---|---|---|
| Pre–tax amount |
Deferred tax |
Current tax |
Bet–of–tax amount |
Pre–tax amount |
Deferred tax |
Current tax |
Bet–of–tax amount |
|
| Cash flow hedges | 592 | –155 | 437 | 254 | –67 | 187 | ||
| Group contribution | –9 | 3 | –6 | |||||
| Other comprehensive income | 592 | –155 | 437 | 245 | –67 | 3 | 181 |
| Carrying amount | Amortised cost | Nominal amount | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2010 | 2009 | 1/1/2009 | 2010 | 2009 | 1/1/2009 | 2010 | 2009 | 1/1/2009 | ||
| Valuation category, fair value through profit or loss | ||||||||||
| Trading | ||||||||||
| swedish government | 23 089 | 72 864 | 19 870 | 22 864 | 72 637 | 19 624 | 19 821 | 69 913 | 16 668 | |
| swedish municipalities | 722 | 6 | 643 | 724 | 6 | 630 | 772 | 6 | 635 | |
| Foreign governments | 1 700 | 3 969 | 3 130 | 1 712 | 3 969 | 3 032 | 1 678 | 3 936 | 2 923 | |
| other non–swedish issuers | 28 | 27 | 413 | 28 | 27 | 421 | 28 | 26 | 421 | |
| Total | 25 539 | 76 866 | 24 056 | 25 328 | 76 639 | 23 707 | 22 299 | 73 881 | 20 647 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Valuation category, loans and receivables | |||
| swedish banks | 48 903 | 37 118 | 60 328 |
| swedish credit institutions | 216 333 | 181 877 | 181 019 |
| swedish credit institutions, repurchased | |||
| agreements | 66 230 | 5 746 | |
| Foreign banks | 126 233 | 114 773 | 138 714 |
| Foreign banks, repurchase agreements | 823 | ||
| Foreign credit institutions | 668 | 290 | |
| Foreign credit institutions, repurchase | |||
| agreements | 1 544 | ||
| Total | 391 469 | 400 666 | 388 464 |
| Valuation category, fair value through | |||
| profit or loss | |||
| Trading | |||
| swedish banks | 3 378 | ||
| swedish banks, repurchase agreements | 1 942 | 8 564 | 204 |
| swedish credit institutions | 45 579 | 43 330 | |
| swedish credit institutions, repurchased | |||
| agreements | 14 112 | 477 | 108 239 |
| Foreign banks | 548 | ||
| Foreign banks, repurchase agreements | 25 291 | 11 421 | 22 042 |
| Total | 87 472 | 63 792 | 133 863 |
| Total | 478 941 | 464 458 | 522 327 |
| Subordinated loans | 2 010 | 2 009 | 1/1/2009 |
| subsidiaries | 5 930 | 6 995 | 7 202 |
| associates | 120 | 320 | 200 |
| other companies | 57 | 62 | 56 |
| Total | 6 107 | 7 377 | 7 458 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Valuation category, loans and receivables | |||
| swedish public | 161 193 | 203 760 | 242 175 |
| swedish public, repurchase agreements | 7 082 | ||
| Foreign public | 57 714 | 70 440 | 90 780 |
| Total | 218 907 | 274 200 | 340 037 |
| Valuation category, fair value through profit or loss Trading |
|||
| swedish public | 4 | 7 069 | |
| swedish public, repurchase agreements | 35 444 | 29 829 | 23 126 |
| Foreign public | 3 882 | ||
| Foreign public, repurchase agreements | 5 764 | 7 347 | 2 953 |
| Other | |||
| swedish public | 64 543 | 98 092 | 24 330 |
| Total | 105 755 | 139 150 | 57 478 |
| Total | 324 662 | 413 350 | 397 515 |
the maximum credit risk exposure for lending measured at fair value corresponds to the carrying amount.
| Subordinated loans | 2010 | 2009 | 1/1/2009 |
|---|---|---|---|
| other | 308 | 348 | |
| Total | 308 | 348 |
| Issued by other than public agencies | Carrying amount | Amortised cost | Nominal amount | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2010 | 2009 | 1/1/2009 | 2010 | 2009 | 1/1/2009 | 2010 | 2009 | 1/1/2009 | ||
| Valuation category, fair value through profit or loss |
||||||||||
| Trading | ||||||||||
| swedish mortgage institutions | 88 333 | 76 064 | 124 318 | 89 165 | 75 728 | 122 338 | 85 958 | 73 941 | 121 683 | |
| swedish financial entities | 6 049 | 7 280 | 3 094 | 6 060 | 7 037 | 3 168 | 6 016 | 6 784 | 2 998 | |
| swedish non–financial entities | 4 580 | 6 318 | 21 621 | 4 567 | 6 274 | 21 652 | 4 565 | 6 313 | 21 827 | |
| Foreign financial entities | 13 445 | 5 054 | 12 600 | 13 258 | 5 080 | 12 820 | 13 331 | 5 072 | 12 871 | |
| Foreign non–financial entities | 3 463 | 2 131 | 1 292 | 3 364 | 2 125 | 1 383 | 3 472 | 2 145 | 1 416 | |
| Total | 115 870 | 96 847 | 162 925 | 116 414 | 96 244 | 161 361 | 113 342 | 94 255 | 160 795 | |
| Valuation category, held to maturity* | ||||||||||
| swedish mortgage institutions | 10 500 | 81 819 | 63 943 | 10 500 | 81 819 | 63 943 | 10 500 | 81 819 | 64 006 | |
| Foreign financial entities | 3 335 | 6 371 | 7 579 | 3 335 | 6 371 | 7 579 | 3 364 | 6 446 | 7 725 | |
| Foreign non–financial entities | 952 | 948 | 3 163 | 952 | 948 | 3 163 | 967 | 976 | 3 207 | |
| Total | 14 787 | 89 138 | 74 685 | 14 787 | 89 138 | 74 685 | 14 831 | 89 241 | 74 938 | |
| Total | 130 657 | 185 985 | 237 610 | 131 201 | 185 382 | 236 046 | 128 173 | 183 496 | 235 733 | |
| of which subordinated | 200 | 200 | ||||||||
| of which listed | 124 957 | 176 581 | 230 209 |
* the fair value of held–to–maturity investments amounted to seK 14 728m (89 455). Carrying amount is below or corresponds with nominal amount for all securities.
| Carrying amount | Cost | ||||||
|---|---|---|---|---|---|---|---|
| 2010 | 2009 | 1/1/2009 | 2010 | 2009 | 1/1/2009 | ||
| Valuation category, fair value through profit or loss | |||||||
| Trading | |||||||
| trading stock | 5 198 | 5 055 | 3 826 | 5 064 | 5 156 | 3 965 | |
| For protection of claims | 2 | 103 | 186 | 2 | 103 | 186 | |
| Other | |||||||
| Credit institutions | 24 | 25 | 79 | 25 | 27 | 35 | |
| other shares | 31 | 33 | |||||
| Total | 5 255 | 5 183 | 4 091 | 5 124 | 5 286 | 4 186 | |
| Valuation category, available for sale | |||||||
| Condominiums | 28 | 28 | 28 | 28 | 28 | 28 | |
| other | 23 | 16 | 13 | 23 | 16 | 13 | |
| Total | 51 | 44 | 41 | 51 | 44 | 41 | |
| Total | 5 306 | 5 227 | 4 132 | 5 175 | 5 330 | 4 227 | |
| of which unlisted | 53 | 147 | 227 |
Unlisted holdings are valued at their last transaction price. Holdings in the valuation category available for sale have been estimated at acquisition cost, since a more reliable fair value is not considered to be available.
| Fixed assets | 2010 | 2009 | 1/1/2009 |
|---|---|---|---|
| Credit institutions | 1 130 | 1 248 | 1 248 |
| other associates | 38 | 23 | 18 |
| Total | 1 168 | 1 271 | 1 266 |
| Opening balance | 1 271 | 1 266 | |
| additions during the year | 15 | 6 | |
| Disposals during the year | –118 | –1 | |
| Closing balance | 1 168 | 1 271 |
| 2010 Corporate identity, domicile |
Corporate identity number |
Number | Carrying amount |
Cost | Share of capital, % |
|---|---|---|---|---|---|
| Credit institutions | |||||
| enterCard Holding aB, stockholm | 556673–0585 | 3 000 | 420 | 420 | 50.00 |
| Färs & Frosta sparbank aB, Lund | 516401–0091 | 1 478 700 | 257 | 257 | 30.00 |
| sparbanken rekarne aB, eskilstuna | 516401–9928 | 865 000 | 125 | 125 | 50.00 |
| swedbank sjuhärad aB, Borås | 516401–9852 | 950 000 | 287 | 287 | 47.50 |
| Vimmerby sparbank aB, Vimmerby | 516401–0174 | 340 000 | 41 | 41 | 40.00 |
| Total | 1 130 | 1 130 | |||
| Other associates | |||||
| Bankernas automatbolag aB, stockholm | 556817–9716 | 15 000 000 | 15 | 15 | 20.00 |
| BDB Bankernas Depå aB, stockholm | 556695–3567 | 13 000 | 3 | 7 | 20.00 |
| BGC Holding aB, stockholm | 556607–0933 | 29 177 | 11 | 11 | 29.18 |
| Finansiell ID–teknik BID aB, stockholm | 556630–4928 | 12 735 | 4 | 23 | 28.30 |
| rosengård Invest aB, malmö | 556756–0528 | 2 500 | 5 | 5 | 25.00 |
| Upplysningscentralen, stockholm | 556137–5113 | 2 000 | 0 | 0 | 20.00 |
| Total | 38 | 61 | |||
| Total | 1 168 | 1 191 |
| Fixed assets | 2010 | 2009 | 1/1/2009 |
|---|---|---|---|
| swedish credit institutions | 14 898 | 14 898 | 14 898 |
| Foreign credit institutions | 26 014 | 25 633 | 24 499 |
| other entities | 7 921 | 3 961 | 3 982 |
| Total | 48 833 | 44 492 | 43 379 |
| Opening balance | 44 492 | 43 379 | |
| additions during the year | 5 082 | 6 990 | |
| Impairments during the year | –741 | –5 828 | |
| Disposals during the year | –49 | ||
| Closing balance | 48 833 | 44 492 |
| 2010 Corporate name, domicile |
Corporate identity number |
Number | Carrying amount |
Cost | Share of capital, % |
|---|---|---|---|---|---|
| Swedish credit institutions | |||||
| swedbank Finans aB, stockholm | 556131–3395 | 345 000 | 415 | 415 | 100 |
| swedbank Företagskredit aB, stockholm | 556204–2340 | 200 000 | 20 | 120 | 100 |
| swedbank Hypotek aB, stockholm | 556003–3283 | 23 000 000 | 14 328 | 14 328 | 100 |
| Ölands Bank aB, Borgholm | 516401–0034 | 780 000 | 135 | 135 | 60 |
| Total | 14 898 | 14 998 | |||
| Foreign credit institutions | |||||
| swedbank as, tallinn | 10060701 | 943 232 436 | 22 919 | 22 919 | 100 |
| First securities as, oslo | 980645487 | 1 560 021 | 934 | 1 000 | 100 |
| oao swedbank, moskva | 1027739131529 | 28 000 000 | 969 | 1 460 | 100 |
| JsC swedbank, Kiev | 19356840 | 544 091 614 703 | 1 080 | 9 858 | 100 |
| swedbank First securities LLC, New york | 20–416–7414 | 67 | 18 | 37 | 67 |
| swedbank (Luxembourg) s.a., Luxemburg | 302018–5066 | 299 999 | 94 | 138 | 100 |
| Total | 26 014 | 35 412 | |||
| Other entities | |||||
| ektornet aB, stockholm | 556788–7152 | 5 000 000 | 1 433 | 1 655 | 100 |
| Fr & r Invest, stockholm | 556815–9718 | 10 000 000 | 10 | 10 | 100 |
| Frir rUs ooo, moskva | 11107746962377 | 1 | 166 | 166 | 100 |
| ooo Leasing, moskva | 1047796412531 | 2 | 139 | 139 | 100 |
| mandab aB, stockholm | 556318–3119 | 500 | 5 | 230 | 100 |
| sparia Försäkrings aB, stockholm | 516401–8631 | 30 000 | 555 | 595 | 100 |
| swedbank administration aB, stockholm | 556284–5387 | 10 000 | 6 | 6 | 100 |
| swedbank BaBs Holding aB, stockholm | 556691–3579 | 1 000 | 55 | 55 | 100 |
| swedbank Fastighetsbyrå aB, stockholm | 556090–2115 | 130 000 | 5 | 5 | 100 |
| swedbank Företagsförmedling aB, stockholm | 556184–2120 | 20 000 | 2 | 6 | 100 |
| swedbank Försäkring aB, stockholm | 516401–8292 | 150 000 | 2 346 | 2 346 | 100 |
| swedbank Juristbyrå aB, stockholm | 556576–8891 | 5 000 | 1 | 9 | 100 |
| swedbank robur aB, stockholm | 556110–3895 | 10 000 000 | 3 197 | 3 197 | 100 |
| other | 1 | 20 | 100 | ||
| Total | 7 921 | 8 439 | |||
| Total | 48 833 | 58 849 |
the share of the voting rights in each entity corresponds to the share of its equity. all entities are unlisted.
| Nominal amount/ remaining contractual maturity |
Nominal amount | Positive fair value | Negative fair value | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| < 1 yr. | 1–5 yrs. | > 5 yrs. | 2010 | 2009 | 1/1/2009 | 2010 | 2009 1/1/2009 | 2010 | 2009 1/1/2009 | |||
| Derivatives in hedge accounting | ||||||||||||
| Fair value hedges | ||||||||||||
| Interest–rate–related | ||||||||||||
| swaps | 58 408 | 66 188 | 5 072 | 129 667 | 110 602 | 72 866 | 2 938 | 3 910 | 2 798 | |||
| Currency–related | ||||||||||||
| swaps | 4 746 | 17 619 | 1 340 | 23 704 | 24 385 | 1 558 | 2 048 | 351 | 429 | 790 | ||
| Total | 63 154 | 83 806 | 6 411 | 153 371 | 134 987 | 74 424 | 4 986 | 4 261 | 3 228 | 790 | ||
| Cash flow hedges | ||||||||||||
| Interest–rate–related | ||||||||||||
| swaps | 2 849 | 6 527 | 9 376 | 18 801 | 26 577 | 328 | 798 | 902 | ||||
| Total | 2 849 | 6 527 | 9 376 | 18 801 | 26 577 | 328 | 798 | 902 | ||||
| Hedges of net investment in foreign operations |
||||||||||||
| Currency–related | ||||||||||||
| swaps | 915 | 915 | 993 | 6 | 186 | |||||||
| Total | 915 | 915 | 993 | 6 | 186 | |||||||
| Other derivatives | ||||||||||||
| Interest–rate–related contracts | ||||||||||||
| options held | 974 037 | 298 299 | 48 882 | 1 321 217 | 828 079 | 160 428 | 1 279 | 1 034 | 868 | 1 264 | 776 | 466 |
| Forward contracts | 4 321 591 | 1 314 533 | 5 636 124 | 5 186 013 | 5 982 882 | 4 062 | 6 252 | 20 445 | 3 849 | 5 946 | 21 245 | |
| swaps | 704 498 | 1 456 005 | 459 583 | 2 620 086 | 2 569 878 | 2 784 088 | 38 471 | 54 115 | 66 568 | 40 239 | 54 931 | 65 029 |
| Currency–related contracts | ||||||||||||
| options held | 37 670 | 44 | 37 715 | 33 436 | 12 026 | 393 | 275 | 247 | 352 | 398 | 205 | |
| Forward contracts | 926 060 | 7 407 | 7 | 933 474 | 745 865 | 782 658 | 10 304 | 9 118 | 37 737 | 12 091 | 13 283 | 39 047 |
| swaps | 41 780 | 236 049 | 104 716 | 382 545 | 348 565 | 252 720 | 20 478 | 5 602 | 10 447 | 15 072 | 7 330 | 18 252 |
| equity–related contracts | ||||||||||||
| options held | 41 441 | 9 571 | 45 605 | 96 618 | 169 318 | 75 414 | 2 234 | 3 155 | 3 746 | 1 650 | 1 574 | 1 005 |
| Forward contracts | 481 | 3 | 483 | 296 | 431 | 3 | 4 | 27 | 10 | 12 | 4 | |
| swaps | 259 | 13 | 7 478 | 7 750 | 1 005 | 679 | ||||||
| Total | 7 047 816 | 3 321 923 | 666 272 | 11 036 011 | 9 881 450 10 050 647 | 78 229 | 79 555 140 084 | 75 207 | 84 250 145 253 | |||
| Total | 7 114 734 | 3 412 257 | 672 683 | 11 199 674 | 10 035 238 10 152 641 | 83 220 | 83 816 143 498 | 75 534 | 85 838 146 155 | |||
| of which cleared | 236 119 | 2 133 210 | 165 548 | 2 979 | 3 804 | 10 470 | 3 589 | 4 108 | 9 650 |
Principles and managing of derivatives in the parent company are the same as the Group's, which is shown in note G29.
| < 1 yr. | 1–3 yrs. | 3–5 yrs. | ||
|---|---|---|---|---|
| Negative cash flows (liabilities) | 23 | 56 | 74 | |
Future cash flows above, expressed in seKm, are exposured to variablity attibutable to changed interest rates and/or changed currency rates.
these future cash flows are hedged with derivatives, recognised as cash flow hedges, with opposite cash flows that eliminate the variability.
Comparing figures have been adjusted according to description in the Group's accounting policies, which is shown in Changes in accounting policies page 56.
| Adjustment | Nominal amount 2009 | Positive fair value 2009 | Negative fair value 2009 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Before | adjustment Adjustment | After adjustment |
Before | adjustment Adjustment | After adjustment |
Before | adjustment Adjustment | After adjustment |
|
| Interest–rate–related contracts within Fair value hedges | |||||||||
| swaps | 20 712 | 89 890 | 110 602 | 1 402 | 2 508 | 3 910 | |||
| Currency–related contracts within Fair value hedges | |||||||||
| swaps | 1 053 | 23 332 | 24 385 | 62 | 289 | 351 | 790 | 790 | |
| Interest–rate–related contracts within other derivatives | |||||||||
| swaps | 2 659 768 | –89 890 | 2 569 878 | 56 623 | –2 508 | 54 115 | |||
| Currency–related contracts within other derivatives | |||||||||
| swaps | 371 897 | –23 332 | 348 565 | 5 891 | –289 | 5 602 | 8 120 | –790 | 7 330 |
| 2010 | 2009 | |||||||
|---|---|---|---|---|---|---|---|---|
| Goodwill | Customer base |
Other | Total | Goodwill | Customer base |
Other | Total | |
| Cost, opening balance | 2 202 | 41 | 324 | 2 567 | 2 202 | 41 | 314 | 2 557 |
| additions through separate acquisitions | 7 | 7 | 11 | 11 | ||||
| sales and disposals | –3 | –3 | ||||||
| exchange rate differences | –3 | –3 | 2 | 2 | ||||
| Cost, closing balance | 2 202 | 41 | 328 | 2 571 | 2 202 | 41 | 324 | 2 567 |
| Amortisation, opening balance | –1 389 | –19 | –125 | –1 533 | –1 266 | –13 | –92 | –1 371 |
| amortisation for the year | –123 | –6 | –28 | –157 | –123 | –6 | –29 | –158 |
| exchange rate differences | 1 | 1 | –4 | –4 | ||||
| Amortisation, closing balance | –1 512 | –25 | –152 | –1 689 | –1 389 | –19 | –125 | –1 533 |
| Carrying amount | 690 | 16 | 176 | 882 | 813 | 22 | 199 | 1 034 |
Goodwill is amortised over an estimated useful life of 5 to 20 years. For other intangible assets with a finite useful life, the amortisable amount is divided systematically over the useful life. systematic amortisation refers to both straight–line and increasing or
decreasing amortisation. the original useful life is between 3 and 15 years. No need for impairment was found.
| 2010 | 2009 | |||||||
|---|---|---|---|---|---|---|---|---|
| Current assets | Fixed assets | Current assets | Fixed assets | |||||
| Properties recognised as inventory |
Equipment | Owner– occupied properties |
Total | Properties recognised as inventory |
Equipment | Owner– occupied properties |
Total | |
| Cost, opening balance | 5 | 2 443 | 24 | 2 472 | 2 486 | 24 | 2 510 | |
| additions | 1 | 121 | 122 | 5 | 181 | 186 | ||
| sales and disposals | –5 | –77 | –82 | –223 | –223 | |||
| exchange rate differences | –1 | –1 | –1 | –1 | ||||
| Cost, closing balance | 1 | 2 486 | 24 | 2 511 | 5 | 2 443 | 24 | 2 472 |
| Amortisation, opening balance | –1 932 | –10 | –1 942 | –1 942 | –10 | –1 952 | ||
| amortisation for the year | –192 | –1 | –193 | –200 | –1 | –201 | ||
| sales and disposals | 75 | 75 | 211 | 211 | ||||
| exchange rate differences | –1 | –1 | –1 | 1 | ||||
| Amortisation, closing balance | –2 050 | –11 | –2 061 | –1 932 | –10 | –1 942 | ||
| Impairments, opening balance | 2 | 2 | ||||||
| Impairments for the year | 2 | 2 | ||||||
| sales and disposals | –2 | –2 | ||||||
| Impairments, closing balance | 2 | 2 | ||||||
| Carrying amount | 1 | 436 | 13 | 450 | 3 | 511 | 14 | 528 |
the useful life of the equipment is deemed to be five years on average and its residual value is deemed to be zero as in previous years. the depreciable amount is recognized on a straight–line basis in profit or loss during the useful life. No indications of impairment were identified on the balance sheet date. Individual structural components concerning
owneroccupied properties are depreciated during the useful life. the residual value is deemed to be zero. Land is deemed to have an indefinite useful life and therefore is not depreciated.
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| security settlement claims * | 87 | 3 928 | 7 259 |
| Group contributions | 3 427 | 1 265 | 830 |
| other | 4 049 | 725 | 1 904 |
| Total | 7 563 | 5 918 | 9 993 |
| Gross, security settlement claims | 2 693 | 5 995 | 9 103 |
* recognised in the balance sheet according to current netting rules.
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| accrued interest income | 7 063 | 9 788 | 13 346 |
| other | 1 142 | 1 250 | 1 851 |
| Total | 8 205 | 11 038 | 15 197 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Valuation category, loans and receivables | |||
| swedish banks | 99 708 | 131 200 | 191 032 |
| swedish credit institutions | 39 906 | 102 459 | 116 013 |
| Foreign banks | 31 282 | 87 311 | 92 048 |
| Foreign credit institutions | 51 | 660 | 303 |
| Total | 170 947 | 321 630 | 399 396 |
| Valuation category, fair value through profit or loss |
|||
| Trading | |||
| swedish banks, repurchase agreements | 2 677 | 5 730 | 8 624 |
| swedish credit institutions, repurchased agreements |
5 630 | 1 335 | |
| Foreign banks, repurchase agreements | 11 456 | 11 180 | 17 264 |
| Total | 19 763 | 18 245 | 25 888 |
| Total | 190 710 | 339 875 | 425 284 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Valuation category, other financial liabilities |
|||
| Deposits from swedish public | 396 310 | 357 213 | 325 682 |
| Deposits from foreign public | 13 186 | 10 568 | 8 292 |
| Total | 409 496 | 367 781 | 333 974 |
| Valuation category, fair value through profit or loss Trading |
|||
| Deposits from swedish public, repurchase agreements |
17 146 | 7 689 | 30 939 |
| Other * | |||
| Deposits from swedish public | 11 228 | 18 584 | 28 166 |
| Total | 28 374 | 26 273 | 59 105 |
| Total | 437 870 | 394 054 | 393 079 |
| * nominal amount amounts to | 11 269 | 18 332 | 27 794 |
| 2010 | 2009 | 1/1/2009 |
|---|---|---|
| 11 532 | 62 780 | 16 170 |
| 190 149 | 211 734 | 139 107 |
| 224 | 1990 | 561 |
| 201 905 | 276 504 | 155 838 |
| 51 423 | 28 001 | 87 691 |
| 20 491 | 36 424 | 34 522 |
| 71 914 | 64 425 | 122 213 |
| 273 819 | 340 929 | 278 051 |
turnover of debt securities in issue is reported in note P2 Liquidity risks, page 131.
* Comparing figures have been adjusted according to description in the Group's accounting policies, which is shown in Changes in accounting policies page 56. For 2009 seK 172 473m has been moved from other interest–bearing bond loans within the trading category. seK 170 467m has been moved to other interest–bearing bond loans and seK 2 007m has been moved to Change in value due to hedge accounting at fair value within the category other financial liabilities.
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| security settlement liabilities * | 3 341 | 470 | 4 956 |
| Unregistered shares | 3 009 | ||
| Group liabilities | 1 093 | 1 098 | 1 681 |
| short position in shares | 183 | 192 | 112 |
| of which own issued shares | 62 | 48 | 30 |
| short position in interest–bearing securities | 33 996 | 40 218 | 53 060 |
| of which own issued interest–bearing securities |
1 106 | 4 292 | 10 372 |
| other | 5 017 | 8 453 | 8 629 |
| Total | 43 630 | 50 431 | 71 447 |
| Gross, security settlement liabilities | 5 947 | 2 537 | 6 800 |
* recognised in the balance sheet according to current netting rules.
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| accrued interest expenses | 3 306 | 3 876 | 5 261 |
| other | 1 341 | 1 184 | 1 973 |
| Total | 4 647 | 5 060 | 7 234 |
| P35 Provisions | |||
|---|---|---|---|
| 2010 | 2009 | 1/1/2009 | |
| Provisions for pensions | 1 | 2 | 3 |
| Provisions for guaranties | 143 | 702 | 68 |
| other | 62 | 68 | 64 |
| Total | 206 | 772 | 135 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Valuation category, other financial liabilities |
|||
| subordinated loans | 17 747 | 22 803 | 27 248 |
| Change in the value due to hedge accounting at fair value |
567 | 885 | 904 |
| Total subordinated loans | 18 314 | 23 688 | 28 152 |
| Undated subordinated loans | 8 940 | 12 877 | 13 471 |
| of which tier 1 capital contribution | 6 915 | 9 218 | 9 709 |
| Change in the value due to hedge accounting at fair value |
407 | 586 | 1 054 |
| Total undated subordinated loans | 9 347 | 13 463 | 14 525 |
| Total | 27 661 | 37 151 | 42 677 |
| Maturity | Right to prepayment for Swedbank AB |
Currency | Nominal amount, million |
Carrying amount, SEKm |
Coupon interest, % |
|---|---|---|---|---|---|
| 1989/2019 | seK | 111 | 133 | 11.00 | |
| 2006/2016 | 2011 | seK | 685 | 685 | variable |
| 2006/2016 | 2011 | seK | 89 | 90 | 4.23 |
| 2006/2016 | 2011 | seK | 1890 | 1 890 | variable |
| 2006/2016 | 2011 | seK | 600 | 600 | variable |
| 2006/2016 | 2011 | GBP | 120 | 1 279 | 5.25 |
| 2006/2016 | 2011 | UsD | 75 | 507 | variable |
| 2006/2016 | 2011 | eUr | 136 | 1294 | variable |
| 2007/2017 | 2012 | seK | 725 | 753 | 5.9 |
| 2007/2017 | 2012 | seK | 374 | 374 | variable |
| 2007/2017 | 2012 | UsD | 400 | 2 704 | variable |
| 2007/2017 | 2012 | eUr | 382 | 3 730 | 5.57 |
| 2007/2017 | 2012 | NoK | 156 | 187 | 5.36 |
| 2008/2018 | 2013 | eUr | 400 | 4 088 | 7.38 |
| Total | 18 314 |
| Maturity | Right to prepayment for Swedbank AB |
Currency | Nominal amount, million |
Carrying amount, SEKm |
Coupon interest, % |
|---|---|---|---|---|---|
| 1996/undated | 2011 | JPy | 10 000 | 844 | 4.35 |
| 1997/undated | 2012 | UsD | 50 | 364 | 8.01 |
| 1997/undated | 2012 | UsD | 105 | 780 | 7.50 |
| 1998/undated | 2028 | JPy | 5 000 | 444 | 5.00 |
| Total | 2 432 |
| Supervisory Authority as tier 1 capital contribution | |||||
|---|---|---|---|---|---|
| Maturity | Right to prepayment for Swedbank AB |
Currency | Nominal amount, million |
Carrying amount, SEKm |
Coupon interest. % |
| 2004/undated | 2016 | GBP | 200 | 2 270 | 5.75 |
| 2005/2035 * | 2015 | JPy | 14 000 | 1 110 | 4.00 |
| 2007/undated | 2017 | seK | 2 000 | 2 145 | 6.67 |
| 2008/undated | 2018 | seK | 873 | 855 | 8.28 |
| 2008/undated | 2013 | seK | 536 | 535 | variable |
| Total | 6 915 |
* Interest in UsD.
Certain subordinated loans are used as hedging instruments to hedge the net investment in foreign operations. the currency component of these liabilities is recognised at cost.
| Accumulated accelerated depreciation |
Tax allocation reserve |
Total | |
|---|---|---|---|
| Opening balance 2009 | 100 | 5 755 | 5 855 |
| reversal | –15 | –5 024 | –5 039 |
| Closing balance 2009 | 85 | 731 | 816 |
| Opening balance 2010 | 85 | 731 | 816 |
| reversal | –10 | –10 | |
| Closing balance 2010 | 74 | 731 | 805 |
| Tax allocation reserve | 2010 | 2009 | 1/1/2009 |
| allocation 2004 | 3 000 | ||
| allocation 2007 | 2 024 | ||
| allocation 2008 | 731 | 731 | 731 |
| Total | 731 | 731 | 5 755 |
| 2010 | 2009 | 1/1/2009 | |
|---|---|---|---|
| Restricted equity | |||
| share capital, common shares | 19 999 | 19 739 | 10 823 |
| share capital, preference shares | 4 352 | 4 612 | 4 095 |
| statutory reserve | 6 489 | 6 489 | 6 489 |
| Total | 30 840 | 30 840 | 21 407 |
| Non–restricted equity | |||
| Cash flow hedges | –306 | –743 | –930 |
| share premium reserve | 13 083 | 13 083 | 4 871 |
| retained earnings | 22 142 | 15 038 | 15 876 |
| Total | 34 919 | 27 378 | 19 817 |
Changes in equity for the period and the distribution according to IFrs are indicated in the statement of changes in equity. In the Parent Company, unregistered shares are recognised as a liability according to FFFs 2008:25. In connection with the issuance of preference shares in 2008, seK 3 009m was debited through settlement notices. these funds were paid in cash on 7 January, three business days after the settlement date, an registered on 19 January 2009.
a comparison between the carrying amount and fair value of the parent company's financial assets and financial liabilities according to the definition in Ias 39 is presented below.
When the parent company determines fair value for financial instruments different methods are used depending on the grade of observable market data. the methods are divided in three different levels. Fair value for financial instruments that are classified to level 1 is determined based on quoted market prices on an active market. Fair value for financial instruments that are classified as level 2 is determined based on observable market data. When interest–related and currency–related derivatives, lending and deposits are measured at fair value future cash flows from the financial instruments are discounted. Used interest yield in the discounting is based on observable market data, i.e. derived from quoted market rates for each maturity in which the cash flows will be received or paid. the measurement of options is done according to generally accepted valuation models, such as Black & scholes. the models are updated with for the measurement observable market data for, among other things, interest rates, currency rates, credit risks, volatilities, correlations and market liquidity. Fair value for financial instruments that are classified as level 3 is also determined mainly based on observable market data, but there are inputs from own assumptions that are viewed as significant for the measurement.
For variable–rate lending and deposits, the carrying amount is assessed to coincide with the fair value. the carrying amounts and fair values coincide for the most part because of the large share of financial instruments recognised at fair value.
| 2010 | 2009 | 1/1/2009 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Assets | Fair value | Carrying amount |
Difference | Fair value | Carrying amount |
Difference | Fair value | Carrying amount |
Difference |
| Financial assets covered by IAS 39 | |||||||||
| treasury bills etc. | 25 539 | 25 539 | 76 866 | 76 866 | 24 056 | 24 056 | |||
| of which fair value through profit or loss | 25 539 | 25 539 | 76 866 | 76 866 | 24 056 | 24 056 | |||
| Loans to credit institutions | 478 941 | 478 941 | 464 458 | 464 458 | 522 327 | 522 327 | |||
| of which loans receivables | 391 469 | 391 469 | 400 666 | 400 666 | 388 464 | 388 464 | |||
| of which fair value through profit or loss | 87 472 | 87 472 | 63 792 | 63 792 | 133 863 | 133 863 | |||
| Loans to the public | 324 662 | 324 662 | 413 350 | 413 350 | 397 515 | 397 515 | |||
| of which loan receivables | 218 907 | 218 907 | 274 200 | 274 200 | 340 037 | 340 037 | |||
| of which fair value through profit or loss | 105 755 | 105 755 | 139 150 | 139 150 | 57 478 | 57 478 | |||
| Bonds and interest–bearing securities | 130 598 | 130 657 | –59 | 186 302 | 185 985 | 317 | 238 847 | 237 610 | 1 237 |
| of which fair value through profit or loss | 115 870 | 115 870 | 96 847 | 96 847 | 162 925 | 162 925 | |||
| of which investments held to maturity | 14 728 | 14 787 | –59 | 89 455 | 89 138 | 317 | 75 922 | 74 685 | 1 237 |
| shares and participating interest | 5 306 | 5 306 | 5 227 | 5 227 | 4 132 | 4 132 | |||
| of which fair value through profit or loss | 5 255 | 5 255 | 5 183 | 5 183 | 4 091 | 4 091 | |||
| of which available for sale | 51 | 51 | 44 | 44 | 41 | 41 | |||
| Derivatives | 80 325 | 80 325 | 80 438 | 80 438 | 133 982 | 133 982 | |||
| other financial assets | 19 328 | 19 328 | 34 944 | 34 944 | 33 958 | 33 958 | |||
| Total | 1 064 699 | 1 064 758 | –59 | 1 261 585 | 1 261 268 | 317 | 1 354 817 | 1 353 580 | 1 237 |
| Investment in associates | 1 168 | 1 168 | 1 271 | 1 271 | 1 266 | 1 266 | |||
| Investment in subsidiaries | 48 833 | 48 833 | 44 492 | 44 492 | 43 379 | 43 379 | |||
| Non–financial assets | 3 745 | 3 745 | 3 826 | 3 826 | 3 595 | 3 595 | |||
| Total | 1 118 445 | 1 118 504 | –59 | 1 311 174 | 1 310 857 | 317 | 1 403 057 | 1 401 820 | 1 237 |
| 2010 | 2009 | 1/1/2009 | ||||||
|---|---|---|---|---|---|---|---|---|
| Liabilities | Fair value | Carrying amount |
Difference | Fair value | Carrying amount |
Difference Fair value |
Carrying amount |
Difference |
| Financial liabilities covered by IAS 39 | ||||||||
| amounts owed to credit institutions | 190 710 | 190 710 | 339 875 | 339 875 | 425 284 | 425 284 | ||
| of which other financial liabilities | 170 947 | 170 947 | 321 630 | 321 630 | 399 396 | 399 396 | ||
| of which fair value through profit or loss | 19 763 | 19 763 | 18 245 | 18 245 | 25 888 | 25 888 | ||
| Deposits and borrowings from the public | 437 870 | 437 870 | 394 054 | 394 054 | 393 079 | 393 079 | ||
| of which other financial liabilities | 409 496 | 409 496 | 367 781 | 367 781 | 333 974 | 333 974 | ||
| of which fair value through profit or loss | 28 374 | 28 374 | 26 273 | 26 273 | 59 105 | 59 105 | ||
| Debt securities in issue | 274 989 | 273 819 | 1 170 | 340 929 | 340 929 | 277 885 | 278 051 | –166 |
| of which other financial liabilities | 203 075 | 201 905 | 1 170 | 276 504 | 276 504 | 155 672 | 155 838 | –166 |
| of which fair value through profit or loss | 71 914 | 71 914 | 64 425 | 64 425 | 122 213 | 122 213 | ||
| subordinated liabilities | 26 290 | 27 661 | –1 371 | 37 151 | 37 151 | 44 924 | 42 677 | 2 247 |
| of which other financial liabilities | 26 290 | 27 661 | –1 371 | 37 151 | 37 151 | 44 924 | 42 677 | 2 247 |
| Derivatives | 72 639 | 72 639 | 82 460 | 82 460 | 136 639 | 136 639 | ||
| short position in securities | 34 179 | 34 179 | 40 410 | 40 410 | 53 172 | 53 172 | ||
| of which fair value through profit or loss | 34 179 | 34 179 | 40 410 | 40 410 | 53 172 | 53 172 | ||
| other financial liabilities | 13 514 | 13 514 | 14 988 | 14 988 | 23 539 | 23 539 | ||
| Total | 1 050 191 | 1 050 392 | –201 | 1 249 867 | 1 249 867 | 1 354 522 | 1 352 441 | 2 081 |
| Non–financial liabilities | 2 353 | 2 353 | 2 772 | 2 772 | 8 155 | 8 155 | ||
| Total | 1 052 544 | 1 052 745 | –201 | 1 252 639 | 1 252 639 | 1 362 677 | 1 360 596 | 2 081 |
Following tables describe fair values divided on the three different valuation levels for financial instruments that are recognised at fair value.
Level 1 contains primarily stocks, bonds, treasury bills, commercial paper and standardised derivatives, where the quoted price is used in the valuation. securities in issue that are traded on an active market are included in this category as well.
Level 2 contains primarily less liquid bonds, loans to the public, deposits and derivatives measured on the basis of observable prices. For less liquid bond holdings, an adjustment is made for the credit spread based on observable market inputs such as the market for credit derivatives. For loans to the public where there are no observable market inputs for credit margins at the time of measurement, the credit margin of the last transaction executed with the same counterparty is used. securities in issue that are not quoted but measured according to quoted prices for similar quoted bonds are also included in Level 2.
Level 3 contains primarily corporate bonds and securities in issue. For corporate bonds where there is no observable quote for the credit spread in question, a reasonable assumption is used, such as a comparison with similar counterparties where there is an observable quote for the credit spread. an increase in the assumed credit spread with 10 bp would lead to a negative impact with seK 1m.
When valuation models are used to determine fair value for financial instrument in level 3 the consideration that has been paid or received is assessed to be the best evidence of fair value at initial recognition. Because it is possible that a difference could arise between this consideration and the fair value calculated at that time in the valuation model, so called day 1– profit or loss, the parent company adjusts the valuation models to avoid such differences.
as of year–end there were no cumulative differences not recognised through profit or loss.
the table shows financial instruments measured at fair value as per 31 December 2010 distributed by valuation method.
| 2010 | 2009 | |||||||
|---|---|---|---|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |
| Assets | ||||||||
| treasury bills and other bills eligible for refinancing with central | ||||||||
| banks, etc | 25 539 | 25 539 | 76 866 | 76 866 | ||||
| Loans to credit institutions | 87 472 | 87 472 | 63 792 | 63 792 | ||||
| Loans to the public | 105 755 | 105 755 | 139 150 | 139 150 | ||||
| Bonds and interest–bearing securities | 92 244 | 22 935 | 691 | 115 870 | 72 502 | 23 684 | 661 | 96 847 |
| shares and participating interest | 5 135 | 120 | 5 255 | 5 055 | 128 | 5 183 | ||
| Derivatives | 2 997 | 77 328 | 80 325 | 3 850 | 76 579 | 9 | 80 438 | |
| Total | 125 915 | 293 610 | 691 | 420 216 | 158 273 | 303 333 | 670 | 462 276 |
| Liabilities | ||||||||
| amounts owed to credit institutions | 19 763 | 19 763 | 18 245 | 18 245 | ||||
| Deposits and borrowings from the public | 28 374 | 28 374 | 26 273 | 26 273 | ||||
| Debt securities in issue | 71 914 | 71 914 | 64 425 | 64 425 | ||||
| Derivatives | 3 615 | 69 015 | 9 | 72 639 | 4 118 | 78 301 | 41 | 82 460 |
| short Position in securities | 34 162 | 17 | 34 179 | 40 410 | 40 410 | |||
| Total | 37 777 | 189 083 | 9 | 226 869 | 44 528 | 187 244 | 41 | 231 813 |
| 2010 | 2009 | |||
|---|---|---|---|---|
| Assets | Liabilities | Assets | Liabilities | |
| Opening balance | 670 | 41 | 664 | 2 |
| Purchase for the year | 37 | 6 | ||
| Issued | 32 | |||
| sales/maturities during the year | –14 | |||
| transferred from Level 3 | –48 | –75 | ||
| Gains or loss | 46 | 43 | 7 | |
| of which in profit or loss | 46 | 43 | 7 | |
| Closing balance | 691 | 9 | 670 | 41 |
| total recognised result in Net gains and losses on financial items at fair value | 46 | 43 | 7 | |
| of which financial instruments held on closing day | 15 | 7 | 7 |
Comparing figures have been adjusted according to description in the Group's accounting policies, which is shown in Changes in accounting policies page 56.
| Adjustment | Liablilites 2009 | ||||
|---|---|---|---|---|---|
| Before adjustment | Adjustment | After adjustment | |||
| Opening balance | 60 845 | –60 843 | 2 | ||
| Issued | 82 868 | –82 836 | 32 | ||
| Gains or loss | –1 240 | 1 247 | 7 | ||
| of which profit or loss | –1 240 | 1 247 | 7 | ||
| Closing balance | 142 474 | –142 433 | 41 | ||
| total recognised result in Net gains and losses on financial items at fair value | –1 240 | 1 247 | 7 | ||
| of which financial instruments held on closing day | –1 240 | 1 247 | 7 |
swedbank chose as of 1 July 2008 to reclassify certain interest–bearing securities which, owing to extraordinary market conditions, had become illiquid. market conditions at the time were distinguished by extreme turbulence, a shortage of liquidity and a lack of quoted prices on active markets. the holdings listed in the table below were reclassified from trading to the category Held to maturity since the instruments are no longer held for trading purposes. Instead, management intends and is able to hold them to maturity. Financial instruments in the category trading are recognised at fair value with changes in value recognised through profit or loss. Financial instruments in the
category Held to maturity are recognised at amortised cost less impairments. No impairments were needed as of 31 December 2010, which means that all contractual cash flows are expected to be received. of the holdings listed below, residential mortgage Backed securities (rmBs) and Commercial mortgage Backed securities (CmBs) account for 80 per cent of the exposure, while the remaining 20 per cent consists of a bond issued by companies controlled by the U.s. government.
| 2010 | 2009 | 2008 | 30/6/2008 | 2007 | |
|---|---|---|---|---|---|
| Carrying amount | 4 287 | 7 203 | 8 138 | 7 376 | 7 563 |
| Nominal amount | 4 332 | 7 306 | 8 328 | 7 558 | 7 618 |
| Fair value | 4 140 | 6 872 | 7 988 | 7 376 | 7 563 |
| Gains/loss recognised through profit or loss | –187 | –56 | |||
| Gains/loss that would be recognised through profit or loss if the assets were not reclassified | –147 | –332 | –150 | –187 | –56 |
| effective interest rate on day of reclassification, % | 5.62 | ||||
| recognised interest income after reclassification | 70 | 185 | 160 |
the decrease in the value of the first half year of 2008 amounted to seK 187m and the decrease in the value of the secound half year of 2008 amounted to seK 150m. Nominal amounts and carrying amounts are affected by changes in exchange rates. Carrying amounts are also affected by the allocations of discounts in accordance with the effective interest method.
| 2010 | 2009 | |
|---|---|---|
| amortised origination fees | 216 | 174 |
| Unrealised changes in value/currency changes | 1 293 | 158 |
| Capital gains/losses on sales of subsidiaries and associates |
–22 | –15 |
| Capital gains/losses on property and equipment | –7 | –433 |
| Depreciation and impairment of tangible fixed assets | 193 | 201 |
| amortisation and impairment of financial fixed assets | 394 | 7 114 |
| amortisation and impairment of goodwill and other intangible fixed assets |
157 | 158 |
| Credit impairment | 149 | 2 599 |
| Dividend Group entities * | –3 427 | –1 217 |
| Prepaid expenses and accrued income | 2 833 | 4 160 |
| accrued expenses and prepaid income | –415 | –2 176 |
| other | –6 | 4 |
| Total | 1 358 | 10 728 |
* refers to the net between the unpaid dividend recognised as income during the financial year and the dividend paid this year for the previous financial year.
| Assets pledged for own liabilities | 2010 | 2009 | 1/1/2009 |
|---|---|---|---|
| Government securities and bonds pledged with the riksbank |
17 749 | 137 998 | 227 405 |
| Government securities and bonds pledged with foreign central banks |
11 539 | 25 403 | 12 105 |
| Government securities and bonds pledged for liabilities credit institutions |
19 874 | 12 148 | 25 343 |
| Government securities and bonds pledged for deposits from the public |
17 146 | 7 689 | 31 034 |
| Government securities and bonds pledged for derivatives |
425 | ||
| Cash | 12 038 | 9 065 | 7 847 |
| Total | 78 346 | 192 303 | 304 160 |
the carrying amount of liabilities for which assets are pledged amounted to seK 78 346m (192 303) in 2010.
| Other assets pledged | 2010 | 2009 | 1/1/2009 |
|---|---|---|---|
| security loans | 521 | 593 | 347 |
| Government securities and bonds pledged | |||
| for other commitments | 1 897 | 1 737 | 2 838 |
| Cash | 171 | 185 | 164 |
| Total | 2 589 | 2 515 | 3 350 |
Collateral is pledged in the form of government securities or bonds to central banks in order to execute transactions with the central banks. In so–called genuine repurchase transactions, where the parent company sells a security and at the same time agrees to repurchase it, the sold security remains on the balance sheet. the carrying amount of the security is also recognised as a pledged asset. In principle, the parent company cannot dispose of pledged collateral. Generally, the assets are also separated on behalf of the beneficiaries in the event of the parent company's insolvency.
| Nominal amount | 2010 | 2009 | 1/1/2009 |
|---|---|---|---|
| Loan guarantees | 440 288 | 387 025 | 11 361 |
| other guarantees | 15 308 | 19 082 | 22 740 |
| accepted and endorsed notes | 171 | 227 | 235 |
| Letters of credit granted but not utilised | 1 492 | 1 616 | 2 213 |
| other contingent liabilities | 62 | 96 | 314 |
| Total | 457 321 | 408 045 | 36 862 |
| Provision for anticipated credit impairments | –143 | –702 | –68 |
| Nominal amount | 2010 | 2009 | 1/1/2009 |
|---|---|---|---|
| Loans granted but not paid | 90 331 | 92 346 | 85 719 |
| overdraft facilities granted but not utilised | 56 886 | 59 180 | 71 606 |
| Total | 147 217 | 151 526 | 157 325 |
the nominal amount of interest–, equity– and currency related contracts are shown in note P25 Derivatives.
the agreements relate mainly to premises in which the parent company is the lessee. the terms of the agreements comply with customary practices and include clauses on inflation and property tax. the combined amount of future minimum lease payments that relate to non–cancellable agreements is allocated on the due dates as follows.
| 2010 | Expenses | Income subleasing |
Total |
|---|---|---|---|
| 2011 | 653 | 59 | 594 |
| 2012 | 500 | 46 | 454 |
| 2013 | 406 | 38 | 368 |
| 2014 | 227 | 21 | 206 |
| 2015 | 189 | 18 | 171 |
| 2016 | 79 | 79 | |
| 2017 | 80 | 80 | |
| 2018 | 80 | 80 | |
| 2019 | 77 | 77 | |
| 2020 or later | 9 | 9 | |
| Total | 2 300 | 182 | 2 118 |
| 2009 | Expenses | Income subleasing |
Total |
|---|---|---|---|
| 2010 | 641 | 57 | 584 |
| 2011 | 491 | 44 | 447 |
| 2012 | 401 | 37 | 364 |
| 2013 | 222 | 21 | 201 |
| 2014 | 184 | 17 | 167 |
| 2015 | 76 | 76 | |
| 2016 | 76 | 76 | |
| 2017 | 76 | 76 | |
| 2018 | 73 | 73 | |
| 2019 or later | 68 | 68 | |
| Total | 2 308 | 176 | 2 132 |
| Subsidiaries | Associates | ||||
|---|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | ||
| Assets | |||||
| Loans to credit institutions | 319 267 | 377 862 | 8 497 | 7 778 | |
| Loans to the public | 12 790 | 16 842 | 1 466 | 1 357 | |
| Bonds and other interest–bearing securities | 38 122 | 109 985 | 200 | 200 | |
| Derivatives | 15 743 | 8 176 | |||
| other assets | 3 488 | 9 260 | 6 | 24 | |
| Prepaid expenses and accrued income | 5 869 | 487 | 9 | ||
| Total assets | 395 279 | 522 612 | 10 169 | 9 368 | |
| Liabilities | |||||
| amount owed to credit institutions | 58 647 | 114 799 | 3 054 | 3 951 | |
| Deposits and borrowing from the public | 6 743 | 3 442 | 30 | ||
| Derivatives | 6 967 | 10 454 | |||
| other liabilities | 1 522 | 1 594 | |||
| accrued expenses and prepaid income | 4 | ||||
| Total liabilities | 73 883 | 130 289 | 3 085 | 3 951 | |
| Contingent liabilities | |||||
| Guarantees | 435 452 | 381 982 | 123 500 | 93 500 | |
| Derivatives, nominal amount | 479 997 | 152 812 | |||
| Income and expenses | |||||
| Interest income | 8 262 | 13 075 | 73 | 15 | |
| Interest expenses | 3 306 | 2 285 | 52 | 13 | |
| Dividends received | 2 379 | 53 | 42 | 44 | |
| Commission income | 853 | 700 | 10 | ||
| Commission expenses | 232 | 525 | |||
| other income | 323 | 286 | 186 | 201 | |
| other general administrative expenses | 23 | 19 | 29 |
The Board of Directors and the President hereby affirm that the annual report has been prepared in accordance with the Act on Annual Accounts in Credit Institutions and Securities Companies (ÅRKL), the instructions and general guidelines of the Swedish Financial Supervisory Authority (FFFS 2008:25) and the Swedish Financial Accounting Standards Council's recommendation RFR 2 Accounting for Legal Entities, and provides an accurate portrayal of the Parent Company's position and earnings and that the Board of Directors' Report provides an accurate review of trends in the company's
operations, position and earnings, as well as describes significant risks and instability factors faced by the company.
The Board of Directors and the President hereby affirm that the consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the EU, and provide an accurate portrayal of the Group's position and earnings and that the Board of Directors' report for the Group provides an accurate review of trends in the Group's operations, position and earnings, as well as describes significant risks and instability factors faced by the company.
| Stockholm 22 february 2011 | ||
|---|---|---|
| Lars Idermark Chair |
Anders Sundström Vice Chair |
|
| Ulrika Francke | Göran Hedman | Berith Hägglund-Marcus |
| Anders Igel | Helle Kruse Nielsen | Pia Rudengren |
| Karl-Henrik Sundström | Siv Svensson | |
Kristina Janson Jimmy Johnsson Employee representative Employee representative
Michael Wolf President
our auditors' report was submitted on 22 february 2011
Deloitte AB
Svante Forsberg Authorised Public Accountant
We have audited the annual report, the consolidated accounts, the accounting records and the administration of the Board of Directors and the President of Swedbank AB (publ) for the financial year 2010. The annual accounts and the consolidated accounts of the company are included in the printed version of this document on pages 18–152. The Board of Directors and the President are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act for Credit Institutions and Securities Companies when preparing the annual accounts and the application of the International Financial Reporting Standards (IFRS) as adopted by the EU and the Annual Accounts Act for Credit Institutions and Securities Companies when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.
The audit was conducted in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the Board of Directors and the President and significant estimates made by the Board of Directors and the President when preparing the annual accounts and the consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the company to be able to determine the liability, if any, to the company of any Board member or the President. We also examined whether any Board member or the President has, in any other way, acted in contravention of the Companies Act, Banking and Financing Business Act, the Annual Accounts Act
for Credit Institutions and Securities Companies or the company's Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.
The annual accounts have been prepared in accordance with the Annual Accounts Act for Credit Institutions and Securities Companies and give a true and fair view of the company's financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and the Annual Accounts Act for Credit Institutions and Securities Companies and give a true and fair view of the Group's financial position and results of operations. The statutory Board of Directors' report is consistent with the other parts of the annual accounts and the consolidated accounts.
We recommend to the Annual General Meeting that the income statements and the balance sheets of the Parent Company and the Group be adopted, that the profit of the Parent Company be dealt with in accordance with the proposal in the Board of Directors' report and that the members of the Board of Directors and the President be discharged from liability for the fiscal year.
It is the Board of Directors and the President who are responsible for the corporate governance statement on pages 154–165 and that it has been prepared in accordance with the Annual Accounts Act.
As a basis for our opinion that the corporate governance statement has been prepared and is consistent with the other parts of the annual accounts and the consolidated accounts, we have read the corporate governance statement and assessed its statutory content based on our knowledge of the company.
A corporate governance statement has been prepared and its statutory content is consistent with the other parts of the annual accounts and the consolidated accounts.
Stockholm 22 february 2011
Deloitte AB
Svante Forsberg Authorised Public Accountant
The purpose of Swedbank's corporate governance is to strenghtened profitability and ensure that the bank is governed with a focus on close customer relationships and advisory services. This is achieved through a decentralised business model where business decisions are made as close to the customer as possible. Corporate governance at Swedbank comprises carefully considered rules and principles on management, control and delegation of responsibility between the shareholders, the Board of Directors and the CEO. The goal is to maintain the trust of customers and the public, and to help the many households and businesses achieve a sound and sustainable financial situation.
Swedbank is a bank for the many. In other words, an inclusive rather than an exclusive bank whose core business offers a wide spectrum of financial products and services to individuals and businesses. Swedbank is firmly convinced that a traditional banking model focused on close customer relationships and advisory services best serves its purpose. Such advice is always based on customers' needs, not the bank's products.
The Swedbank Group has four geographical home markets – Sweden, Estonia, Latvia and Lithuania – in addition to operations in Finland, Norway, Denmark, the US, China, Luxembourg, Spain, Russia and Ukraine. Swedbank has over 9.6 million private customers and over 700 000 corporate customers and about 600 branches in Sweden (including the saavings banks) and over 220 branches in the Baltic countries.
Swedbank's shares have been listed on NASDAQ OMX Stockholm since 1995. As of 31 December 2010 there were 333 145 shareholders, the largest of which was an ownership group comprised of the insurance companies Folksam, KPA and Förenade Liv, with 9.3 per cent of the capital and votes. A total of 304 670 shareholders, or 91.5 per cent, had 1 000 shares or fewer. International shareholders owned 34.2 per cent of the shares. More information on shareholders and their holdings can be found on pages 47–49.
Good corporate governance is necessary in order to attain and retain public confidence in Swedbank. Its values – simplicity, openness and consideration – are the foundation for creating trust in the bank. These values are tied to the bank's purpose, goals and strategies, and provide guidance on how it is governed and how employees act on a day-to-day basis.
Corporate governance at Swedbank is based on current external regulations such as the Swedish Companies Act, the Annual Accounts Act and the Banking and Financing Business Act, the bank's Articles of Association, the Swedish Code of Corporate Governance ("the Code"), the Swedish financial supervisory authority's rules as well as internal policies and instructions. These specify the delegation of responsibility for governance, control and monitoring of operations between the shareholders, the Board of Directors and the CEO. The Board has established the principles of corporate governance, which are reviewed annually to ensure that they are appropriate, effective and compatible with the latest developments in this area. The Board and the CEO in turn govern operations through a clearly-defined governance model that includes a number of policies and instructions. Their purpose is to describe the delegation of responsibilities in order to create strong, intra-Group processes whose goal is to maintain the trust of customers and the public and to help many households and businesses attain a sound and sustainable financial situation.
The structure for corporate governance and governance philosophy comprises:
See the illustration on the next page for a more detailed description.
The shareholders of Swedbank exercise their influence at the Annual General Meeting (AGM), which is the bank's highest decision-making body. In addition, Extraordinary General Meetings can be called.
The AGM resolves, among other things, to:
The members of the Board, including the Chair and Auditors, are nominated through the Nomination Committee. The Nomination Committee, which represents the AGM, is comprised of the Chair of the Board and ordinarily the four largest shareholders.
The External Auditor is elected by the AGM and nominated by the Nomination Committee. The Auditor reviews Swedbank's annual report, corporate governance report and the administration of the Board and the CEO and prepares the Board of Directors' report. At the AGM, the Auditor presents the Auditor's report and describes the audit work.
The Board of Directors is elected by the shareholders at the AGM for a mandate of one year. The Board has overarching responsibility for managing Swedbank's affairs in the interests of the company and all shareholders. The Board's tasks include setting operational goals and strategies, appointing and evaluating the CEO, and ensuring that effective systems are in place to monitor and control operations, that laws and regulations are followed, and that the information released to the public is distinguished by transparency and accuracy.
The overarching responsibility of the Board cannot be delegated. On the other hand, the Board has committees that monitor, prepare and evaluate issues within their respective areas for resolution by the Board.
4.1 RISK AND CAPITAL COMMITTEE prepares issues involving market risk, credit risk, liquidity, funding and capital.
prepares compensation issues and ensures, among other things, that compensation systems comply with effective risk management and do not encourage exaggerated risk-taking.
4.3 AUDIT AND COMPLIANCE COMMITTEE gives the Board, through its work and in dialogue with the External Auditor, the head of Internal Audit and the Group Executive Committee, greater access to information on any deficiencies in routines and organisation from the standpoint of corporate governance, risk management and control.
The Internal Auditor, directly subordinated to the Board, reviews and evaluates efficiency, governance, risk management and control in the Group. Internal Audit reports regularly to the Board, the Audit Committee, the CEO and the External Auditor, and takes preventive measures by suggesting improvements to internal control.
The President and CEO is responsible for operating management of Swedbank in accordance with laws and regulations and within the framework established by the Board. Aside from the stipulations of the Swedish Companies Act, the delegation of responsibility between the Board and the CEO is mandated by the Board's rules of procedure and its instruction for the CEO, among other things. The CEO leads the work of the Group Ex- ecutive Committee and makes decisions after consulting its members. The Group Executive Committee consists of the heads of Swedbank's business areas and Group functions.
Swedbank's culture is based on simplicity, openness and caring. The business model focuses on advisory services, where decisions are made as close to customers and business as possible. The model is based on decentralisation with clear job descriptions and a delegation of authority and responsibility.
The CEO has decided that Swedbank will be organised in the above-mentioned six business areas. The head of each business area is responsible for its operations with the support of, among others, Group functions.
This includes the Group Executive Committee. The purpose of the Group functions is to draft Groupwide policies for decision by the Board and instructions for approval by either the Board or the CEO. The purpose of the Group-wide rules and processes is to support the CEO and the Group's business operations and to clarify Swedbank's vision, purpose and values. The Group functions are also responsible for compiling, analysing and providing information to the CEO and the Board. The control functions include Group Finance, Risk and Compliance, which continuously monitor operations.
Swedbank shall provide shareholders, analysts and other stakeholders prompt, accurate, consistent and simultaneous information on the Group's operations and financial position. The Group's information policy includes the internal control environment and ensures that Swedbank meets the requirements for listed companies. Interim reports, annual reports, year-end reports and press releases are published on the Group's website.
The policies laid down by the Board apply to all companies in the Group after adoption by each company. The Board has established a comprehensive code of conduct and guidelines for internal governance and control. Policies and instructions at the Board and CEO level follow an established structure. The same applies to regulations issued by Swedbank's Group functions. In addition, the Board has established policies on ethics, financial reporting, risk management, and communication. A Group-wide system is in place for internal accounting principles, planning and monitoring processes, and reporting routines. At the company level, detailed instructions regulate practical account registration and reconciliation routines.
The Annual General Meeting (AGM) is the bank's highest decision-making body, where the shareholders exercise their rights.
The 2010 AGM was held on Friday 26 March in Stockholm. In total, 726 shareholders attended personally or by proxy. They represented nearly 53 per cent of the votes in the bank.
The AGM is normally held before the end of April, or under special circumstances not later than 30 June. The AGM is normally held in Stockholm. The time and location are published in Swedbank's year-end report and on its website. The notice of the AGM is usually published five weeks in advance in the Swedish dailies Dagens Nyheter and Svenska Dagbladet, as well as Post och Inrikes Tidningar (Official Swedish Gazette) and at least one other newspaper, usually Dagens Industri. The notice is also made available on the bank's website. The latest AGMs have also been announced in Göteborgs-Posten and Sydsvenska Dagbladet.
Swedbank is a VPC company, which means that its share register is maintained by Euroclear Sweden AB. All shareholders who are directly recorded in the register five working days prior to the meeting and who have notified Swedbank in time of their intention to participate are entitled to attend the meeting. Shareholders may attend the meeting in person or by proxy and may be accompanied. Shareholders are able to register for the meeting in several different ways: by telephone, email or letter. Swedbank has two classes of shares, common shares and preference shares, which carry equal voting rights.
Shareholders wishing to have an issue discussed at the AGM must submit a written request to that effect to the Board. Any such requests must reach the Board no later than seven weeks prior to the AGM.
The AGM is held in Swedish and interpreted to English. The material released prior to and in connection with the meeting is in Swedish, but is translated to English, including the minutes. The documents are posted on the website.
Among the resolutions passed by the 2010 AGM are the following:
The 2010 AGM was attended by all the Board members and all members of the Group Executive Committee as well as the Chief Auditor.
The Nomination Committee is the AGM's governing body, which nominates Board members and proposes remuneration, among other things. The 2010 AGM decided on the principles for the appointment of the Nomination Committee for the 2011 AGM. They include that the Committee will be comprised of five members: the Chair of the Board and one representative of each of the four largest shareholders based on known data on the last business day in August 2010. This assumes, however, that they wish to appoint a member. The largest shareholders may also consist of groups of shareholders under certain circumstances. If a member leaves the Nomination Committee before its work is completed, the Committee may decide to replace them with a another person representing the same shareholder or with a person representing the next largest shareholder in size that has not already appointed a member to the Committee. The Nomination Committee appoints a Chair from among its members. The Chair of the Board may not be Chair of the Nomination Committee. The Committee's mandate is for the period until a new Nomination Committee has been constituted. Members of the Nomination Committee are not remunerated for their work or costs incurred. However, the Nomination Committee has the right, at the bank's expense, to engage a recruitment consultant or other external consultants which it deems necessary to fulfil its assignment.
The duties of the Nomination Committee, where applicable, are to submit proposals to the AGM for resolutions regarding:
In essence, the composition of the Board should reflect diversity and breadth regarding the competence, experience and background of its members. The composition also takes into account the bank's operations, stage of development and future direction. While it is important that the Board has the support of shareholders, the need for independence in relation to the bank and its management, as well as major shareholders, is important.
The Nomination Committee for the 2011 AGM consists of Lennart Anderberg, appointed by the owner-group Föreningen Sparbanksintressenter and Chair of the Nomination Committee; Christer Gardell, appointed by the owner-group Cevian; Anders Sundström, appointed by the owner-group Folksam and Board member of Swedbank; Rose Marie Westman, appointed by Alecta Pensionsförsäkring, and Lars Idermark, Chair of Swedbank's Board of Directors. Committee members have had numerous contacts in addition to their 10 meetings.
The Board of Directors has overall responsibility for managing Swedbank's affairs in the interests of the company and the shareholders. The Board consists of ten members elected by the AGM. The composition of the Board meets the requirements of the Code with respect to its members' independence. This means that the majority of members elected by the AGM are independent in relation to Swedbank and the Group Executive Committee and that at least two of the members who are independent in relation to Swedbank and the Group Executive Committee are also independent in relation to Swedbank's major shareholders. An ongoing even gender distribution is desirable; the distribution of the current Board is 50/50. The 2010 AGM resolved to expand the Board by two members compared with the number elected by the 2009 AGM. The 2010 AGM elected three new members: Lars Idermark, Göran Hedman and Siv Svensson. Lars Idermark was named the Chair of the Board of Directors by the AGM. The Board also includes two employee representatives and deputies in accordance with special agreements with the Financial Sector Union of Sweden and Akademikerföreningen. Both unions also have one deputy member each.
The CEO is not a member of the Board, but attends the Board's meetings except when issues are discussed where the CEO has vested interests, or it is otherwise unsuitable that he attends, e.g. when the CEO's work is evaluated. The Head of Internal Audit and the Company Secretary, also Chief Legal Officer, attend the Board's meetings too. The deputies (employee representatives) normally do not.
For more information on the Board's composition, see pages 162–165.
The Board appoints/dismisses the CEO and is the ultimate decision-making body as regards the appointment/dismissal of the CFO and the CRO. The delegation between the Board, the Chair of the Board and the CEO is stipulated in the Board's rules of procedure and its instruction for the CEO. In addition, special instructions are in place for the Board's committees. More information on the work of these committees can be found in this report. The Board also has at its disposal an independent audit function, Internal Audit, directly subordinated to the Board.
The Chair of the Board has specific responsibilities, including:
The Board conducts an annual evaluation of its work, working arrangements and related issues. The evaluation 2010 was conducted through a written questionnaire and in-depth interviews with the Chair of the Board and each Board member. The results are compiled and presented to the Board.
In 2010 the Board had 19 meetings, three of which were held per capsulam. All the meetings except one were held in Stockholm. Each year the Board establishes an annual plan for its work, where it decides which issues will be treated in depth. The major issues in 2010 included the following:
No objections were were noted to any of the decisions during the year. Göran Hedman has chosen not to attend the Board discussions on the new savings bank agreement. In 2010 the
Auditor reported at four of the Board's meetings. At one of these meetings neither the CEO nor other members of the Group Executive Committee were present.
Prior to each meeting the proposed agenda is distributed together with detailed material. The documents are normally distributed one week in advance. The material from Board meetings is saved electronically, including documents that were not enclosed with the minutes.
The new members elected by the 2010 AGM – Göran Hedman, Lars Idermark and Siv Svensson – have undergone Swedbank's introductory training and attended stock market training.
The role of the Risk and Capital Committee is to support the Board in its risk management work. However, the Board has ultimate responsibility for the risks taken by the bank and for assessing its capital requirements. The Board ensures that operational risks are identified and defined and that risktaking is measured and controlled according to current laws and the Group's policies on risks and capital. Through the risk and capital policy, the Board establishes guidelines for the CEO regarding risk control and management, risk and capital evaluation, and capital management within the bank. The policy describes the connection between risk and capital as well as how risk and capital management support the business strategy. The Committee's role is to prepare cases in these areas for resolution by the Board. In addition, the Committee recommends strategies in risk areas for resolution by the Board. The Committee monitors, prepares and decides, where appropriate, the following areas:
A more detailed description of the various risk areas can be found in the risk section beginning on page 35.
The Risk and Capital Committee consists of not more than five members appointed from among the Board's members. The CEO is not a member of the Committee, but normally attends the Committee's meetings. If any of those present expresses reservations about a decision, it is referred to the Board for a ruling.
When electing members of the Committee, special consideration is given to competence and experience with risks. For information on the members of the Committee, see pages 162–165.
The Board's Compensation Committee monitors, evaluates and prepares compensation issues for resolution by the Board. In addition, the Committee ensures that compensation models comply with effective risk management and are designed to reduce the risk of exaggerated risk-taking, and that they comply with the Code, current regulations from the Swedish Financial Supervisory Authority and other applicable rules.
The work of the Compensation Committee includes as follows:
The Committee consists of no fewer than two and no more than four Board members. For information on the members of the Committee, see pages 162–165.
In 2010 the Committee dealt with the issue of introducing a performance and share based remuneration programme in order to harmonise the interests of employees with those of shareholders, encourage long-term value creation in the bank and create the conditions necessary to recruit and retain competent personnel. The Board has accepted the programme. Pending the approval of the 2011 AGM, the programme will apply from 1 January 2010. For more information, see page 46 and note G14. Further, the Committee treated issues concerning:
For information on compensation to members of the Board of Directors, the CEO and other members of the Group Executive Committee, see pages 162–165 and note G14.
The Audit and Compliance Committee is a drafting committee for the Board. The Committee's main task is to provide the Board with increased access to information on operations through its work and in consultation with the outside auditor, the Head of Internal Audit and the Group Executive Committee. The focus is on whether internal control and governance processes are sufficient and monitoring the effectiveness of Swedbank's internal audit. The information also comprises financial reporting, including the quality of the financial reports and that they are prepared in accordance with current laws, applicable accounting standards and other requirements for listed companies. In the area of compliance, the information includes activities within Swedbank and whether they comply with external laws and regulations as well as internal policies and instructions. The focus is primarily on identifying any deficiencies in routines and organisation in terms of governance, risk management and control. The Audit and Compliance Committee also reviews the Auditors' work to ensure that it has been conducted efficiently and in an otherwise satisfactory manner. Based on its review, the Committee proposes measures that are voted on by the Board where deemed necessary.
The Audit and Compliance Committee consists of not more than four Board members. The Head of Internal Audit is a co-opted member of the Committee. When selecting the members of the Committee, special consideration is given to competence and experience in the accounting field. Two members have specific accounting expertise through previous experience. For information on the members of the Committee, see pages 162–165.
Internal Audit, directly subordinated to the Board, is an audit function independent of the Group Executive Committee, which reports directly to the Board. Its purpose is to review and evaluate efficiency, governance, risk management and control in the Group. The function works proactively to propose improvements to internal control. Reviews are summarised quarterly in reports to the Board, the Audit Committee, the CEO and the external Auditor.
All auditing activities in the Group are coordinated, i.e. reviews are planned, implemented and reported using the same approaches and methods.
The external Auditor is elected by the AGM after being nominated by the Nomination Committee. The Auditor presented his review and comments to the Board four times during the current mandate, one of which was in the CEO's absence. In addition, the Auditor regularly meets the Chair of the Board and the Chair of the Audit and Compliance Committee. Swedbank's interim reports are reviewed by the bank's Auditor.
In accordance with its Articles of Association, Swedbank shall have no less than one and no more than two authorised public accountants. The appointed auditor is Deloitte AB, Sweden, with Authorised Public Accountant Svante Forsberg as Chief Auditor. Svante Forsberg has been in charge of auditing duties for Swedbank since 2010. Aside from Swedbank, he has auditing assignments for primarily the following companies: Alliance Oil, Black Earth Farming, Fabege, Lannebo Fonder, Max Matthiessen and Skandia Liv. Svante Forsberg has no assignments for other companies that affect his independence as an auditor of Swedbank. Compensation for the Group's auditors is reported in note G15. The Swedish Financial Supervisory Authority, under whose jurisdiction Swedbank lies, did not appoint an auditor for 2010.
The CEO is responsible for managing Swedbank's operations. The delegation of responsibility between the Board and the CEO is stipulated in, among other places, the Board's rules of procedure, the Board's instruction for the CEO, external rules and internal policies and regulations.
The CEO also establishes Group-level rules on internal control. To support internal control, the CEO has a number of monitoring units within the Group, mainly Group Finance, Risk and Compliance. Follow-ups are done monthly through written reports and detailed meetings with the heads of the various functions and with the business areas. For more information, see the Board of Directors' report on internal control of financial reporting on page 161.
The CEO leads the work of the Group Executive Committee and makes decisions after consulting its members. The Group Executive Committee consists of (I) the CEO, (II) the Head of Baltic Banking, (III) the Head of Retail, (IV) the Head of Large Corporates & Institutions, (V) the Head of Large Corporates & Institutions, (VI) the Head of Russia & Ukraine, (VII) the Head of Group Business Support, (VIII) the Chief Financial Officer, (IX) the Chief Risk Officer, (X) the Head of Human Resources, (XI) the Head of Corporate Affairs and (XII) the Chief Legal Officer, totalling twelve members. The Head of Group Compliance is a co-opted member of the Group Executive Committee. The Group Executive Committee normally meets four times a month.
The CEO ensures that an evaluation of other senior executives is performed as well as being responsible for and ensuring that the Group has a strategy for competence management.
In late 2009 Swedbank introduced a new management structure as a step towards shifting responsibility and authority closer to the bank's customers and thus making Swedbank a more customer-oriented bank.
At Group level there is also an Asset and Liability Committee, which handles issues concerning the balance sheet, liquidity and financial risk; a Group Risk and Compliance Committee, whose task is to improve efficiencies and handle operational
risk issues; as well as a Remuneration Committee, GecRemco, which drafts proposals of remuneration systems and recommends variable compensation for employees to the Board's Compensation Committee.
The CEO decided that Swedbank would be organised in the following six business areas: Retail, Large Corporates & Institutions, Baltic Banking, Asset Management, Russia & Ukraine and Ektornet. The head of each business area is responsible for the business area's operations. The business areas receive support from a number of Group functions. Retail, Swedbank's dominant business area, is responsible for all Swedish customers except large companies and financial institutions. The bank's services are sold through its branch network, the Telephone Bank and the Internet Bank, as well as the savings banks' distribution network. The business area also includes a number of subsidiaries. In Large Corporates & Institutions, Swedbank has consolidated its offering for large Nordic and Baltic companies, financial institutions, organisations and banks. The business area offers products and services in the equity, fixed income and currency areas, as well as various financing solutions. First Securities, which has been wholly owned by Swedbank since November 2010, is part of the business area. Baltic Banking is responsible for private and corporate customers in the Baltic countries: Estonia, Latvia and Lithuania. The bank's products and services are offered through the bank's branch network, the Telephone Bank and the Internet Bank. Asset Management comprises the Swedbank Robur group with operations in fund management,
institutional and discretionary asset management. Asset Management is represented in Swedbank's four home markets. The Russia & Ukraine business area comprises the Group's Russian and Ukrainian banking operations. Ektornet, which is also an independent subsidiary of Swedbank, acquires, manages and develops the bank's repossessed assets, primarily real estate. The head office is located in Stockholm, and the repossessed properties are managed by local subsidiaries. For more information on Swedbank's business areas, see pages 22–33.
Swedbank has Group functions in Accounting & Finance, Risk, Corporate Affairs (communication, strategic marketing and community affairs), HR, Legal Affairs, Compliance and Group Business Support, fully operational from 1 January 2011. Group Business Support, which will be responsible for the bank's products and production, IT, internal services and process efficiencies.
Among the roles of the Group functions are to create and monitor Group-wide processes. They are also responsible for compiling and analysing reports to the CEO and the Board. In this way the Group functions support the CEO in his efforts to ensure that governance and monitoring are based on, among other things, Swedbank's vision, purpose and values. Shared procedures provide support to business operations and facilitate knowledge transfers between the bank's various markets.
Part of the work of the Group functions is to draft written frameworks for operations. Group-wide frameworks are established by the Board or the CEO. More detailed rules are based on the bank's Code of Conduct, which was established by the Board. The rules are available to all employees on the intranet and are updated continuously.
On Swedbank's website, www.swedbank.com, under the tab "About Swedbank", is a separate section on corporate governance that includes:
The Board of Directors' responsibility for internal control is governed by the Swedish Companies Act, the statutes of the Swedish Financial Supervisory Authority and the Swedish Code of Corporate Governance. The code requires an annual independent report on how the internal control of financial reporting is organised. The purpose of the control is to provide reasonable certainty about the financial reporting, which comprises Swedbank's interim reports, year-end report and a large part of the annual report. The following information does not describe the quality of the control, however.
Swedbank's internal control of financial reporting is based on the COSO model (The Committee of Sponsoring Organisations of the Treadway Commission), which comprises five internal control components: control environment, risk assessment, control activities, information and communication, as well as monitoring.
Ultimate responsibility for internal control of financial reporting rests with Swedbank's Board of Directors. The Board's Audit and Compliance Committee is tasked with monitoring the financial reporting and the effectiveness of Swedbank's internal control, internal audit and risk management. The Board reviewed the bank's policy documents covering corporate governance during the year to underscore the importance of good internal control and risk management. There is a special Group-level instruction for internal control established by the CEO, who is responsible for ensuring that the required organisation is in place. This, together with other operating governance documents, constitutes the bank's framework for the internal control of financial reporting.
The purpose of risk assessment of financial reporting is to identify significant risks that affect reporting in the Group's companies, business areas and processes. The key to risk assessment, from a balance sheet and income statement perspective, is materiality. From a process perspective, it is complexity. The risk assessment serves as the basis of measures to improve internal control over financial reporting processes. Based on the risk assessment, the control environment is reviewed through self-evaluations.
The Group has overarching control activities that are shared by several processes. Continuous work is done to evaluate, improve and document control activities in all significant processes. Control activities associated with financial reporting are performed on several levels. Group-level rules are in place for internal accounting principles, planning and monitoring processes, and reporting routines. The central accounting department is responsible for updating the bank's accounting instructions and for communicating and making them available to reporting units.
To ensure the correct application of the bank's accounting rules, finance managers regularly meet with local accounting managers, at which time current accounting and reporting issues are addressed as well. Swedbank has a central valuation group whose purpose is to ensure the consistent and accurate valuation of assets and liabilities at fair value. Local and central controller and accounting departments perform controls mainly through reconciliations between sub-ledgers and ledgers, through routines to ensure the existence of assets and liabilities and that assets, liabilities and business transactions have been correctly recorded. Analyses of financial results against budgeted figures are presented monthly to Swedbank's management.
The main communication channel within Swedbank is its intranet, where the Group publishes policies, instructions, directives and manuals. The rules for financial reporting are available on the intranet. Each country also has its own intranet, where national accounting routines are available. A whistleblower procedure is in place for employees to anonymously report suspicions of fraud or other wrongdoing. Reports are handled by Group Compliance.
Profitability, efficiency, risk, sales and market shares, customer satisfaction and employeeship are reported and evaluated. In addition, in-depth monitoring meetings are held monthly between the reporting units and the CEO, the CFO and the Chief Risk Officer. The internal control over financial reporting is monitored by Group Finance. The other control functions within Swedbank are Group Compliance and Group Risk Control, which regularly monitor internal control. On behalf of the Board, Internal Audit also reviews and evaluates how governance, risk management and internal control are organised and how well they work.
| Lars Idermark | anders Sundström | Ulrika Francke | |
|---|---|---|---|
| Born | Born 1957 Chair since 2010 |
Born 1952 Deputy chair since 2009 |
Born 1956 Board Member since 2002 |
| Shareholding | Own and kindred's shareholding in Swedbank: 143 A shares and 0 preference shares |
Own and kindred's shareholding in Swedbank: 11 000 A shares and 16 000 preference shares |
Own and kindred's shareholding in Swedbank: 10 050 A shares and 3 300 preference shares |
| In Swedbank as | Board of Directors, Chair Compensation Committee, Chair Risk and Capital Committee, Chair Attendance: 13/13 8/8 9/9 Total fees: 1 350 000 100 000 250 000 |
Board of Directors, Deputy Chair Compensation Committee, member Risk and Capital Committee, member Attendance: 17/19 10/12 10/12 Total fees: 675 000 100 000 250 000 |
Board of Directors, member Audit and Compliance Committe, Chair Risk and Capital Committee, member Attendance: 18/19 7/7 12/12 Total fees: 400 000 175 000 250 000 |
| Board member's independence |
Independent in relation to the bank and the management of the bank and independent in relation to the bank's major shareholders |
Anders Sundström is CEO in Folksam ömse sidig sakförsäkring and Folksam ömsesidig livförsäkring, The Nomination Committee is of the view that Anders Sundström – all aspects considered, and also taking into consideration the co-operation agreement between the bank and Folksam regarding property insurance and asset management among other things as well as the particular extent and nature and way in which these business relations are managed – is considered to be independent in relation to the bank, the management of the bank and the bank's major shareholders. |
Independent in relation to the bank and the management of the bank and independent in relation to the bank's major shareholders |
| Education | Master Business Administration | University studies in Social Sciences | University studies |
| Bank specific experience | Operative: 7 years. Board: 10 years | Operative: 3 years. Board: 8 years | Board: 16 years |
| Employment experience | President and CEO, Posten AB from 1 March 2011 President and CEO, KF/Coop. President and CEO, Second Swedish National Pension Fund Deputy President and CEO, Capio AB Executive Vice President and Deputy President and CEO, FöreningsSparbanken (Swedbank) CFO and Executive Vice President, Föreningsbanken AB President and CEO, LRF Holding AB |
CEO Folksam ömsesidig sakförsäkring and Folksam ömsesidig livförsäkring Minister for Employment, Minister for Enterprise and Energy and Minister for Social Affairs Local Government Commissioner, Piteå municipality Member of Parliament Chair of the Board of Directors, Sparbanken Nord (the Savings bank Nord) CEO, Sparbanken Nord (the Savings bank Nord) |
President and CEO, Tyréns AB President and CEO, SBC Sveriges Bostadsrättscentrum AB City of Stockholm municipal government, Deputy President, Fastighets AB Brommastaden |
| Other assignments | The foundation Chalmers University of Technology, Board member |
Forsikrings-Aktieselskabet ALKA (DK), Board member Bommersvik AB, Chair Förenade Liv Gruppförsäkrings AB (Group insurances for employees and for members of trade unions), Chair Försäkringsförbundets Serviceaktiebolag SFAB (The Swedish Insurance Federation), Board member The Swedish Insurance Federation, Board member ICMIF (Great Britain), Board mem ber Arbetsgivarföreningen KFO, Board member KFO-Service Aktiebolag, Board member Konsumentkooperationens pen sionsstiftelse, Chair KPA AB, Chair KPA Pensionsförsäkring AB, Chair The founda tion Nils Adlers Stipendiefond, Board Member |
Hexagon AB, Board member STD Svensk Teknik och Design (Swedish Technology and Design), Board member Stockholm Stads Brandförsäkringskontor, Board member The foundation Nils Adlers Stipendiefond, Board member Stockholms Stadsteater (The Stockholm City Theatre), Chair The City Council of Stockholm, Deputy Tyréns AB, Board member |
| göran Hedman | Berith Hägglund-Marcus | anders Igel | |
|---|---|---|---|
| Born 1954 Board member since 2010 |
Born 1950 Board member since 2005 |
Born 1951 Board member since 2009 |
Born |
| Own and kindred's shareholding in Swedbank: 85 A shares and 24 preference Shares |
Own and kindred's shareholding in Swedbank: 450 A shares and 0 preference shares |
Own and kindred's shareholding in Swedbank: 7500 A shares and 0 preference shares |
Shareholding |
| Board of Directors, member Risk and Capital Committee, member |
Board of Directors, member Audit and Compliance Committee, member |
Board of Directors, member Compensation Committee, member |
In Swedbank as |
| Attendance: 13/13 9/9 Total fees: 400 000 250 000 |
Attendance: 17/19 5/7 Total fees: 400 000 125 000 |
Attendance: 19/19 12/12 Total fees: 400 000 100 000 |
|
| Göran Hedman is the CEO of Sparbanken in Enköping. All aspects considered, Göran Hedman is not considered to be independent in relation to Swedbank based on the fact that the cooperation agreement signed bet ween Swedbank and Sparbanken in Enköping was taken into account when making the assessment. Göran Hedman is considered to be independent in relation to the mana gement of the bank and the bank's major shareholders. |
Independent in relation to the Bank and the Bank's senior management and independent in relation to the Bank's major shareholders |
Independent in relation to the bank and the management of the bank and independent in relation to the bank's major shareholders |
Board member's independence |
| High school degree | B.Sc. Business Administration and Economics | M. Sc. M Sc Electrical Engineering and B. Sc. Business and Economics |
Education |
| Operative: 36 years, Board: 8 years | Board: 17 years | Board: 2 years | Bank specific experience |
| CEO, Sparbanken in Enköping Head of analysis at Group Credit, FöreningsSparbanken AB (Swedbank) Deputy Chief Credit Officer, Föreningsbanken AB Leading management positions, Föreningsbanken AB |
Director HR Group Staff & Functions AB Electrolux Executive Vice President Electrolux IT President and Board mem ber Electrolux IT Solutions Sverige AB Organisation and marketing manager Nordic region, Electrolux-Euroclean Logistics manager Nordic region, Electrolux-Euroclean Market support manager Nordic region, Electrolux-Euroclean Finance and admi nistration manager, Swedish Association of Graduate Engineers Financial controller Bonnier Group - Åhlen&Åkerlunds Förlag AB |
Self-employed President and CEO, Telia Sonera AB President and CEO, Esselte AB Executive Vice President, Telefonaktiebolaget LM Ericsson |
Employment experience |
| Sparbanken i Enköping, Board member Handelskammaren Uppsala, Board member |
Muscito Group AB, Board member The foundation Nils Adlers Stipendiefond, Board member |
The foundation Nils Adlers Stipendiefond, Board member Consultancy business in Telecom Industrial advisor to EQT Own business under development |
Other assignments |
| Kristina Janson | Jimmy Johnsson | Helle Kruse nielsen | |
|---|---|---|---|
| Born | Born 1953 Employee representative since 2009 |
Born 1976. Employee representative since 2010 |
Born 1953 Board member since 2008 |
| Shareholding | Own and kindred's shareholding in Swedbank: 700 A shares and 200 preference shares |
Own and kindred's shareholding in Swedbank: 75 A shares and 0 preference shares |
Own and kindred's share holding in Swedbank: 2 500 A shares, 5 000 preference shares |
| In Swedbank as | Board of Directors, member. Employee representative since 2009. Deputy member, employee representative 2007–2009 |
Board of Directors, member. Employee representative since 2009. |
Board of Directors, member Compensation Committee, member |
| Total fees: No fees | Total fees: No fees | Attendance: 19/19 12/12 Total fees: 400 000 100 000 |
|
| Board member's independence |
Not applicable | Not applicable | Independent in relation to the bank and the management of the bank and independent in relation to the bank's major shareholders |
| Education | Upper Secondary School | Upper Secondary School | B. Sc. Economics and Business Administration |
| Bank specific experience | Operative: 38 years | Operative: 11 years | Board: 3 years |
| Employment experience | Swedbank Försäkring AB, systems manager Swedbank Robur AB, systems manager Lux Svenska AB, sales manager AB Norrtälje Bilcentral, sales manager |
Self-employed Head of the European division "Food", Mars Inc President of the Scandinavian companies within the Mars Group Head of Marketing, Denofa and Lilleborg, Norway |
|
| Other assignments | FöreningsSparbanken ABs resultatandels stiftelse Kopparmyntet, Board member Stiftelsen Guldeken, Board member SPK Sparinstitutens Pensionskassa, Board member |
Aker BioMarine ASA, Board member Oriflame Cosmetics SA, Board member Gumlink A/S, Board member New Wave Group AB, Board member The foundation Nils Adlers Stipendiefond, Board member Lantmännen, Board member |
| pia rudengren | Karl-Henrik Sundström | Siv Svensson | |
|---|---|---|---|
| Born 1965 Board member since 2009 |
Born 1960 Board member since 2009 |
Born 1957 Board member since 2010. |
Born |
| Own and kindred's shareholding in Swedbank: 0 A shares, 0 preference shares |
Own and kindred's shareholding in Swedbank: 9 750 A shares through Alma Patria AB and 0 preference shares |
Own and kindred's shareholding in Swedbank: 1 500 A shares and 0 preference shares |
Shareholding |
| Board of Directors, member Risk and Capital Committee, member |
Board of Directors, member Audit and Compliance Committee, member |
Board of Directors, member Audit and Compliance Committee, member |
In Swedbank as |
| Attendance: 17/19 11/12 Total fees: 400 000 250 000 |
Attendance: 17/19 5/7 Total fees: 400 000 125 000 |
Attendance: 11/13 4/6 Total fees: 400 000 125 000 |
|
| Independent in relation to the bank and the management of the bank and independent in relation to the bank's major shareholders |
Independent in relation to the bank and the management of the bank and independent in relation to the bank's major shareholders |
Independent in relation to the bank and the management of the bank and indepen dent in relation to the bank's major share holders |
Board member's independence |
| B. Sc. Business and Economics | B. Sc. Business Administration | B. Sc. International economy | Education |
| Board: 2 years | Board: 2 years | Operative: 25 years, Board: 1 year | Bank specific experience |
| Self-employed Vice President W Capital Management AB CFO Investor AB |
CFO and Vice President, NXP Semiconductors CFO and Vice President, Telefonaktiebolaget LM Ericsson Head of Global Services, Telefonaktiebolaget LM Ericsson Head of Australia and New Zeeland, Telefonaktiebolaget LM Ericsson |
President and CEO, Sefina Finance AB President and CEO, Sefina Svensk Pantbelåning AB Vice President and Regional Head, Nordea AB Group controller and Nordic Head of Global Operation Services, Nordea AB Group Controller, Merita Nordbanken AB Administrative Head, PK Fondkommission AB |
Employment experience |
| Duni AB, Board member Metso Oyj, Board member Social Initiative AB, Board member Tikkurila Oyj, Board member WeMind Digital Psykologi AB, Board member The foundation Nils Adlers Stipendiefond, Board member |
Exencotech AB, Board member The founda tion Nils Adlers Stipendiefond, Board member |
Svenska Pantbanksföreningen, Deputy Chair |
Other assignments |
Born 1963 Employed since 2008
In Swedbank as: President and CEO
Shareholding: Own and kindred's share holding in Swedbank: 38 500 A shares and 43 000 preference shares
Education: M Sc in Business administration and Economics
Born 1965 Employed since 2009
In Swedbank as: Head of Corporate Affairs
Shareholding: Own and kindred's share holding in Swedbank: 4 000 A shares and 12 000 preference shares
Education: B Sc in Business Administration and Economics
Born 1955 Employed since 1985
In Swedbank as: Head of Baltic Banking
Shareholding: Own and kindred's shareholding in Swedbank: 21 500 A shares and 3 500 preference shares
Education: LL M degree
Employed since August 2010 In Swedbank as: Head of Group Business Support
Shareholding: Own and kindred's shareholding in Swedbank: 1 500 A shares and 0 preference shares
Education: B Sc in Business Administration and Economics
Born 1962 Employed since 2009 In Swedbank as:
Group Chief Risk Officer (CRO)
Shareholding: Own and kindred's share holding in Swedbank: 110 000 A shares and 90 000 preference shares via companies
Education: B Sc in Business Administration and Economics
Born 1961 Employed since 2009
In Swedbank as: Head of Large Corporates & Institutions
Shareholding: Own and kindred's shareholding in Swedbank: 8 000 A shares and 0 preference shares
Education: MBA och B Sc
Born 1962 Employed since 1987 In Swedbank as:
Head of Retail Shareholding: Own and kindred's share holding in Swedbank: 3 150 A shares and
300 preference shares Education: B Sc Economics
Born 1969 Employed since 1990
In Swedbank as: Head of Large Corporates
Shareholding: Own and kindred's shareholding in Swedbank: 0 A shares and
0 preference shares
Education: Business administration at upper secondary school level
Born 1961 Employed since 2009
In Swedbank as: Head of Group Human Resources
Shareholding: Own and kindred's share holding in Swedbank: 0 A shares and 0 preference shares
Education: Diploma in Business Administration, IHM B Sc Psychology and Pedagogy
Born 1960 Employed since 1990
In Swedbank as: Head of Group Legal
Shareholding: Own and kindred's shareholding in Swedbank: 3 937 A shares and 1 125 preference shares
Education: LL M degree
Employed in Swedbank Group since 1994
Group Chief Financial Officer (CFO)
Own and kindred's shareholding in Swedbank: 24 000 A shares and
M Sc in Business Administration and Economics
Born 1951 Employed since 1986
In Swedbank as: Head of Russia & Ukraine
Shareholding: Own and kindred's shareholding in Swedbank: 6 500 A shares and 1 000 preference shares
Education: BA in Language and Economics
The Annual General Meeting will be held at Cirkus in Stockholm on Friday 25 March 2011.
Shareholders who wish to attend the Annual General Meeting must:
Notification may be submitted in writing to Swedbank's head office, Box 7839, SE-103 98 Stockholm, Sweden or by telephone +46 8 402 90 60, labelled "Swedbank's Annual General Meeting" or online at www.swedbank.se/ir under Årsstämma (Annual General Meeting). When notifying the company, please indicate your name, personal/company registration number (for Swedish citizens or companies), address and telephone number. Participation by proxy is permitted, provided the proxy is no more than one year old and is submitted to Swedbank well in advance of the meeting, preferably not later than 21 March 2011. If issued by a legal entity, the proxy must be accompanied by a certified registration certificate or other document attesting to the authority of the signatory.
To be entitled to attend the meeting, shareholders whose shares are nominee-registered must request to have them temporarily re-registered in their own names in the shareholders' register maintained by Euroclear. The re-registration process must be completed by the nominee well in advance of the record day. Since the record day is a Saturday, shareholders should advise their nominees well in advance of this date so that re-registration is completed by 18 March 2011.
A list of the matters on the agenda for the Annual General Meeting will be included in the notice of the meeting, which will be published at the latest on 25 February in, among others, the dailies Dagens Nyheter, Svenska Dagbladet, and Dagens Industri. As of the same date, the notice will also be available online at http://www.swedbank.com/ir under the heading Årsstämma (Annual General Meeting).
The Board of Directors recommends that shareholders receive a dividend of SEK 2.10 per common share and SEK 4.80 per preference share. The proposed record day for the dividend is 30 March, 2011. The last day for trading in Swedbank's shares including the right to the dividend is 25 March 2001. If the Annual General Meeting adopts the Board of Directors' recommendation, the dividend is expected to be paid by Euroclear on 4 April 2011.
| Market shares, per cent | Volumes, SEKbn | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Sweden | 2010 | 2009 | 2008 | 2007 | 2010 | 2009 | 2008 | 2007 | |
| Private market | |||||||||
| Deposits | 24 | 24 | 24 | 26 | 245 | 223 | 216 | 215 | |
| Lending | 26 | 26 | 27 | 26 | 642 | 609 | 571 | 498 | |
| of which mortgage lending | 27 | 28 | 29 | 29 | 549 | 519 | 483 | 444 | |
| Individual pension savings * | 44 | 41 | 36 | 36 | 26 | 24 | 18 | 23 | |
| SPAX** | 16 | 22 | 24 | 27 | 19 | 28 | 28 | 29 | |
| Bank cards (thousands) | n.a. | n.a. | n.a. | n.a. | 3 751 | 3 715 | 3 637 | 3 498 |
* Excluding savings banks' investments in Swedbank Robur
** Including issued from Svensk Exportkredit during 2010.
| Deposits | 17 | 16 | 14 | 16 | 123 | 115 | 96 | 94 |
|---|---|---|---|---|---|---|---|---|
| Lending | 17 | 18 | 18 | 19 | 308 | 324 | 347 | 328 |
| Market shares, per cent | Volumes, SEKbn | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Baltic countries | 2010 | 2009 | 2008 | 2007 | 2010 | 2009 | 2008 | 2007 | |
| Private market | |||||||||
| Estonia | |||||||||
| Deposits | 55 | 55 | 56 | 62 | 20 | 21 | 22 | 19 | |
| Lending | 47 | 48 | 49 | 49 | 29 | 34 | 38 | 31 | |
| of which mortgage lending | 47 | 47 | 48 | 49 | 26 | 31 | 34 | 28 | |
| Bank cards (thousands) | 62 | 63 | 64 | 65 | 1 123 | 1 165 | 1 187 | 1 151 | |
| Latvia | |||||||||
| Deposits | 23 | 23 | 24 | 28 | 10 | 11 | 13 | 13 | |
| Lending | 27 | 27 | 28 | 27 | 20 | 25 | 28 | 23 | |
| of which mortgage lending | 27 | 27 | 27 | 28 | 16 | 19 | 21 | 18 | |
| Bank cards (thousands) | 39 | 38 | 37 | 37 | 938 | 941 | 931 | 892 | |
| Lithuania | |||||||||
| Deposits | 32 | 32 | 32 | 36 | 25 | 24 | 26 | 24 | |
| Lending | 26 | 26 | 26 | 29 | 21 | 22 | 24 | 18 | |
| of which mortgage lending | 25 | 25 | 25 | 28 | 18 | 19 | 20 | 16 | |
| Bank cards (thousands) | 40 | 39 | 35 | 34 | 1 719 | 1 671 | 1 497 | 1 310 |
| Market shares, per cent | Volumes, SEKbn | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Baltic countries | 2010 | 2009 | 2008 | 2007 | 2010 | 2009 | 2008 | 2007 | |
| Corporate market | |||||||||
| Estonia | |||||||||
| Deposits | 40 | 43 | 43 | 48 | 21 | 25 | 25 | 24 | |
| Lending | 40 | 41 | 42 | 44 | 31 | 40 | 48 | 41 | |
| Latvia | |||||||||
| Deposits | 10 | 11 | 11 | 11 | 9 | 8 | 10 | 9 | |
| Lending | 21 | 24 | 26 | 26 | 24 | 34 | 44 | 34 | |
| Lithuania | |||||||||
| Deposits | 22 | 21 | 21 | 21 | 12 | 9 | 9 | 10 | |
| Lending | 21 | 22 | 23 | 25 | 26 | 30 | 39 | 33 |
Swedbank 14%
Other 39%
Citadele 10% Aizkraukles Banka 12%
Parex Bank 6%
Rietuma Bank 9% SEB 10%
Estonia, mortgage
40 60
0
06 07 08 09 10
Latvia, deposits
06 07 08 09 10
20 30 40
0
Sources: Statistics Sweden, Estonian Central Bank, Association of Commercial Banks of Latvia, The Financial and Capital Market Commission (Latvia), Association of Lithuanian Banks, public interim reports and Swedbank estimates.
Swedbank 47%
Sampo 9% Other 23% SEB 21%
| Key ratios | 2010 | 2009 | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|
| Profit | |||||
| Return on equity, % | 8.1 | –12.5 | 15.2 | 18.9 | 19.3 |
| Return on total assets, % | 0.40 | –0.58 | 0.64 | 1.02 | 1.10 |
| Cost/income ratio | 0.57 | 0.51 | 0.50 | 0.51 | 0.52 |
| Net interest margin, % | 0.92 | 1.17 | 1.33 | 1.25 | 1.23 |
| Capital adequacy 1) | |||||
| Tier 1 capital ratio, Basel 2, % | 15.2 | 13.5 | 11.1 | 8.5 | 6.5 |
| Capital adequacy ratio, Basel 2, % | 18.4 | 17.5 | 15.2 | 12.7 | 9.8 |
| Total capital quotient, Basel 2 | 2.30 | 2.19 | 1.90 | 1.59 | 1.22 |
| Tier 1 capital ratio, % | 11.0 | 10.4 | 8.4 | 6.2 | 6.5 |
| Capital adequacy ratio, % | 13.3 | 13.5 | 11.6 | 9.3 | 9.8 |
| Tier 1 capital, SEKm | 82 385 | 81 689 | 74 155 | 50 920 | 47 497 |
| Capital base, SEKm | 99 687 | 105 785 | 102 943 | 76 456 | 70 930 |
| Risk-weighted assets, SEKm | 750 440 | 784 469 | 916 113 | 822 363 | 726 712 |
| Credit quality | |||||
| Credit impairment ratio, % | 0.20 | 1.74 | 0.24 | 0.07 | –0.02 |
| Share of impaired loans, gross, % | 2.53 | 2.85 | 0.74 | 0.23 | 0.15 |
| Provision ratio for individually identified impaired loans, % | 53 | 52 | 30 | 43 | 50 |
| Total provision ratio for impaired loans, % | 63 | 65 | 60 | 120 | 195 |
| Customer satisfaction | |||||
| Percentage of satisfied private customers, Sweden, % 2) | 70 | 70 | 71 | 70 | 71 |
| Percentage of satisfied corporate customers, Sweden, % 2) | 68 | 65 | 71 | 71 | 68 |
| Index private customers, Estonia 3) | 6.5 | 5.6 | 8.2 | 8.2 | 8.5 |
| Index corporate customers, Estonia 3) | 6.1 | 6.0 | 8.2 | 8.4 | 8.1 |
| Index private customers, Latvia 3) | 6.2 | 5.2 | 7.7 | 7.8 | 6.6 |
| Index corporate customers, Latvia 3) | 5.3 | 4.9 | 9.0 | 9.0 | 6.5 |
| Index private customers, Lithuania 3) | 49 | 50 | 80 | 84 | 83 |
| Index corporate customers, Lithuania 3) | 59 | 51 | 87 | 89 | 89 |
| Other data | 2010 | 2009 | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|
| Private customers, million | 9.6 | 9.5 | 9.4 | 9.3 | 8.9 |
| Corporate customers, thousands | 710 | 670 | 660 | 512 | 459 |
| Internet banking customers, million 4) | 6.4 | 5.6 | 5.2 | 4.8 | 4.3 |
| Telephone banking customers, million 4) | 3.9 | 3.8 | 3.8 | 3.5 | 3.0 |
| Employees | 17 224 | 19 277 | 21 280 | 22 148 | 17 399 |
| Branches 4) | 924 | 1 020 | 1 181 | 1 213 | 1 051 |
| ATMs 4) | 2 633 | 2 421 | 2 361 | 2 562 | 2 376 |
1) Including total paid-in capital, 2008. As of 2007 according to new rules. 2005–2006 according to old rules. 2) According to SKI. 3) According to TRIM Scale 1 to 10 and 1 to 100. 4) Including savings banks and partly owned banks.
| Income statement | |||||
|---|---|---|---|---|---|
| SEKm | 2010 | 2009 | 2008 | 2007 | 2006 |
| Net interest income | 16 329 | 20 765 | 21 702 | 19 157 | 15 977 |
| Net commissions | 9 525 | 7 825 | 8 830 | 9 880 | 8 869 |
| Net gains and losses on financial items at fair value | 2 400 | 2 770 | 2 351 | 1 691 | 2 738 |
| Net insurance | 612 | 647 | 452 | 548 | 264 |
| Share of profit or loss of associates | 624 | 866 | 512 | 424 | 222 |
| Other income | 1 554 | 1 909 | 2 616 | 1 224 | 1 127 |
| Total income | 31 044 | 34 782 | 36 463 | 32 924 | 29 197 |
| Staff costs | 9 392 | 9 201 | 10 092 | 9 792 | 8 560 |
| Other expenses | 7 300 | 7 758 | 6 994 | 6 222 | 5 920 |
| Depreciation/amortisation of | |||||
| tangible and intangible fixed assets | 950 | 889 | 972 | 705 | 659 |
| Total expenses | 17 642 | 17 848 | 18 058 | 16 719 | 15 139 |
| Profit before impairments | 13 402 | 16 934 | 18 405 | 16 205 | 14 058 |
| Impairments of intangible fixed assets | 37 | 1 305 | 1 403 | ||
| Impairments of tangible fixed assets | 600 | 449 | 27 | ||
| Credit impairments | 2 810 | 24 641 | 3 156 | 619 | –205 |
| Operating profit | 9 955 | –9 461 | 13 819 | 15 586 | 14 263 |
| Tax expense | 2 472 | 981 | 2 880 | 3 450 | 3 211 |
| Profit from continuing operations | 7 483 | –10 442 | 10 939 | 12 136 | 11 052 |
| Profit for the year attributable to: | |||||
| Shareholders in Swedbank AB | 7 444 | –10 511 | 10 887 | 11 996 | 10 880 |
| Non-controlling interests | 39 | 69 | 52 | 140 | 172 |
| Balance sheet | |||||
|---|---|---|---|---|---|
| SEKm | 2010 | 2009 | 2008 | 2007 | 2006 |
| Loans to credit institutions | 166 417 | 92 131 | 128 536 | 174 014 | 161 097 |
| Loans to the public | 1 187 226 | 1 290 667 | 1 287 424 | 1 135 287 | 946 319 |
| Interest-bearing securities | |||||
| Treasury bills and other bills eligible for refinancing with central banks | 34 924 | 88 724 | 27 978 | 37 134 | 23 024 |
| Bonds and other interest-bearing securities | 96 652 | 81 891 | 105 716 | 78 358 | 76 576 |
| Shares and participating interests | |||||
| Financial assets for which customers bear the investment risk | 100 628 | 78 194 | 51 638 | 69 324 | 65 008 |
| Shares and participating interests | 12 852 | 9 505 | 6 557 | 6 101 | 5 610 |
| Shares and participating interests in associates | 2 710 | 2 740 | 1 987 | 2 193 | 1 971 |
| Derivatives | 65 051 | 72 969 | 128 055 | 36 984 | 23 864 |
| Others | 55 892 | 77 866 | 73 799 | 68 589 | 49 520 |
| Total assets | 1 715 681 | 1 794 687 | 1 811 690 | 1 607 984 | 1 352 989 |
| Amounts owed to credit institutions | 136 766 | 231 687 | 316 730 | 163 785 | 130 642 |
| Deposits and borrowings from the public | 534 237 | 504 424 | 508 456 | 458 375 | 400 035 |
| Debt securities in issue | 686 517 | 703 258 | 593 365 | 673 116 | 561 208 |
| Financial liabilities for which customers bear the investment risk | 100 988 | 80 132 | 52 074 | 69 819 | 65 289 |
| Derivatives | 65 935 | 72 172 | 116 720 | 36 267 | 31 607 |
| Other | 69 016 | 75 057 | 93 128 | 98 563 | 69 506 |
| Subordinated liabilities | 27 187 | 37 983 | 44 755 | 39 736 | 34 425 |
| Equity | 95 035 | 89 974 | 86 462 | 68 323 | 60 277 |
| Total liabilities and equity | 1 715 681 | 1 794 687 | 1 811 690 | 1 607 984 | 1 352 989 |
| SEKm | 2010 | 2009 |
|---|---|---|
| Net interest income | 10 100 | 11 166 |
| Net commissions Net gains and losses on financial items at fair value |
4 292 184 |
3 672 150 |
| Net insurance | 274 | 267 |
| Share of profit or loss of associates | 624 | 864 |
| Other income | 729 | 1 078 |
| Total income | 16 203 | 17 197 |
| Staff costs | 3 921 | 3 965 |
| Profit-based staff costs | 43 | 7 |
| IT costs | 715 | 807 |
| Other general administrative expenses | 3 706 | 3 698 |
| Depreciation/amortisation | 285 | 181 |
| Total expenses | 8 670 | 8 658 |
| Profit before impairments | 7 533 | 8 539 |
| Impairments of intangible fixed assets | ||
| Impairments of tangible fixed assets | ||
| Credit impairments | 272 | 833 |
| Operating profit | 7 261 | 7 706 |
| Tax expense | 1 951 | 1 988 |
| Profit for the year attributable to: | ||
| Shareholders of Swedbank AB | 5 301 | 5 710 |
| Non-controlling interests | 9 | 8 |
| Income items | ||
| Income from external customers | 14 712 | 15 879 |
| Income from transactions with other business areas | 1 491 | 1 318 |
| Business volumes, SEKbn | ||
| Lending | 897 | 876 |
| Deposits Mutual funds and insurance |
347 275 |
318 253 |
| Other investment volume | 17 | 22 |
| Risk-weighted assets | 222 | 244 |
| Total assets | 1 006 | 956 |
| Total liabilities | 983 | 936 |
| Allocated equity, SEKm | 22 596 | 20 477 |
| Full-time employees | 5 571 | 5 738 |
| Key ratios | ||
| Return on allocated equity, % | 24.0 | 27.8 |
| Cost/income ratio | 0.54 | 0.50 |
| Credit impairment ratio, % | 0.03 | 0.10 |
| Share of impaired loans, gross, % | 0.18 | 0.23 |
| SEKm | 2010 | 2009 |
|---|---|---|
| Net interest income | 2 817 | 3 712 |
| Net commissions | 1 955 | 1 609 |
| Net gains and losses on financial items at fair value | 1 446 | 2 583 |
| Net insurance | ||
| Share of profit or loss of associates | ||
| Other income | 88 | 108 |
| Total income | 6 306 | 8 012 |
| Staff costs | 1 235 | 1 120 |
| Profit-based staff costs | 254 | 196 |
| IT costs | 424 | 370 |
| Other general administrative expenses | 1 234 | 1 180 |
| Depreciation/amortisation | 55 | 36 |
| Total expenses | 3 202 | 2 902 |
| Profit before impairments | 3 104 | 5 110 |
| Impairments of intangible fixed assets | 5 | |
| Impairments of tangible fixed assets | 7 | |
| Credit impairments | –1 | 1 093 |
| Operating profit | 3 105 | 4 005 |
| Tax expense | 768 | 996 |
| Profit for the year attributable to: | ||
| Shareholders of Swedbank AB | 2 307 | 2 946 |
| Non-controlling interests | 30 | 63 |
| Income items | ||
| Income from external customers | 5 898 | 7 550 |
| Income from transactions with other business areas | 408 | 462 |
| Business volumes, SEKbn | ||
| Lending | 130 | 150 |
| Deposits | 74 | 69 |
| Mutual funds and insurance | 15 | 16 |
| Other investment volume | 23 | 28 |
| Risk-weighted assets | 156 | 164 |
| Total assets | 430 | 438 |
| Total liabilities | 413 | 424 |
| Allocated equity, SEKm | 16 669 | 14 962 |
| Full-time employees | 1 229 | 1 137 |
| Key ratios | ||
| Return on allocated equity, % | 13.8 | 19.7 |
| Cost/income ratio | 0.51 | 0.36 |
| Credit impairment ratio, % | 0.00 | 0.39 |
| Share of impaired loans, gross, % | 0.25 | 0.34 |
| SEKm 2010 2009 Net interest income 3 771 4 235 Net commissions 1 533 1 655 Net gains and losses on financial items at fair value 341 719 Net insurance 317 368 Share of profit or loss of associates 1 Other income 225 394 Total income 6 187 7 372 Staff costs 1 032 1 361 Profit-based staff costs –13 –203 IT costs 379 495 Other general administrative expenses 1 167 1 483 Depreciation/amortisation 164 198 Total expenses 2 729 3 334 Profit before impairments 3 458 4 038 Impairments of intangible fixed assets 23 Impairments of tangible fixed assets 261 223 Credit impairments 3 363 14 888 Operating profit –189 –11 073 Tax expense –182 –1 315 Profit for the year attributable to: Shareholders of Swedbank AB –7 –9 758 Non-controlling interests Income items Income from external customers 5 140 6 165 Income from transactions with other business areas 1 047 1 207 Business volumes, SEKbn Lending to the public 130 170 Deposits 93 103 Mutual funds and insurance 20 19 Risk-weighted assets 136 165 Total assets 172 224 Total liabilities 138 195 Allocated equity annual average, SEKm 35 950 30 912 Full-time employees 5 416 5 924 Key ratios |
|||
|---|---|---|---|
| Return on allocated equity, % | 0.0 | –31.6 | |
| Cost/income ratio 0.44 0.45 |
|||
| Credit impairment ratio, % 2.05 6.67 |
|||
| Share of impaired loans, gross, % 15.54 14.23 |
| SEKm | 2010 | 2009 |
|---|---|---|
| Net interest income | –17 | –23 |
| Net commissions | 1 592 | 655 |
| Net gains and losses on financial items at fair value | 9 | 42 |
| Net insurance | ||
| Share of profit or loss of associates | ||
| Other income | 24 | 16 |
| Total income | 1 608 | 690 |
| Staff costs | 391 | 340 |
| Profit-based staff costs | 49 | |
| IT costs | 117 | 98 |
| Other general administrative expenses | 249 | 270 |
| Depreciation/amortisation | 50 | 48 |
| Total expenses | 856 | 756 |
| Profit before impairments | 752 | –66 |
| Impairments of intangible fixed assets | ||
| Impairments of tangible fixed assets | ||
| Credit impairments | ||
| Operating profit | 752 | –66 |
| Tax expense | 177 | –16 |
| Profit for the year attributable to: | ||
| Shareholders of Swedbank AB | 575 | –50 |
| Non-controlling interests | ||
| Income items | ||
| Income from external customers | 3 319 | 2 366 |
| Income from transactions with other business areas | –1 711 | –1 676 |
| Business volumes, SEKbn | ||
| Mutual funds and insurance | 484 | 448 |
| Other investment volume | 252 | 222 |
| Risk-weighted assets | 3 | 2 |
| Total assets | 2 | 2 |
| Total liabilities | ||
| Allocated equity, SEKm | 2 163 | 1 532 |
| Full-time employees | 313 | 291 |
| Key ratios | ||
| Return on allocated equity, % | 35.4 | –3.3 |
| Cost/income ratio | 0.53 | 1.10 |
| SEKm | 2010 | 2009 |
|---|---|---|
| Net interest income | 638 | 1 766 |
| Net commissions | 81 | 101 |
| Net gains and losses on financial items at fair value | –71 | –44 |
| Net insurance | ||
| Share of profit or loss of associates | ||
| Other income | 32 | 14 |
| Total income | 680 | 1 837 |
| Staff costs | 377 | 511 |
| Profit-based staff costs | –9 | |
| IT costs | 23 | 32 |
| Other general administrative expenses | 402 | 586 |
| Depreciation/amortisation | 78 | 83 |
| Total expenses | 871 | 1 212 |
| Profit before impairments | –191 | 625 |
| Impairments of intangible fixed assets | 14 | 1 300 |
| Impairments of tangible fixed assets | 254 | 219 |
| Credit impairments | –859 | 7 782 |
| Operating profit | 400 | –8 676 |
| Tax expense | –19 | –251 |
| Profit for the year attributable to: | ||
| Shareholders of Swedbank AB | 419 | –8 423 |
| Non-controlling interests | –2 | |
| Income items | ||
| Income from external customers | 680 | 1 837 |
| Income from transactions with other business areas | ||
| Business volumes, SEKbn | ||
| Lending | 15 | 20 |
| Deposits | 3 | 7 |
| Risk-weighted assets | 18 | 23 |
| Total assets | 17 | 24 |
| Total liabilities | 14 | 21 |
| Allocated equity annual average, SEKm | 3 814 | 3 655 |
| Full-time employees | 1 847 | 3 472 |
| Key ratios | ||
| Return on allocated equity, % | 11 | –230 |
| Cost/income ratio | 1.28 | 0.66 |
| Credit impairment ratio, % | –4.35 | 21.72 |
| Share of impaired loans, gross, % | 46.20 | 37.69 |
| SEKm | 2010 | 2009 |
|---|---|---|
| Net interest income | –21 | –1 |
| Net commissions | ||
| Net gains and losses on financial items at fair value | 31 | 2 |
| Net insurance | ||
| Share of profit or loss of associates | ||
| Other income | 108 | |
| Total income | 118 | 1 |
| Staff costs | 74 | 2 |
| Profit-based staff costs | ||
| IT costs | ||
| Other general administrative expenses | 172 | 25 |
| Depreciation/amortisation | 24 | |
| Total expenses | 270 | 27 |
| Profit before impairments | –152 | –26 |
| Impairments of intangible fixed assets | ||
| Impairments of tangible fixed assets | 85 | |
| Credit impairments | ||
| Operating profit | –237 | –26 |
| Tax expense | –25 | –6 |
| Profit for the year attributable to: | ||
| Shareholders of Swedbank AB | –212 | –20 |
| Non-controlling interests | ||
| Income items | ||
| Income from external customers | 118 | 1 |
| Income from transactions with other business areas | ||
| Business volumes, SEKbn | ||
| Risk-weighted assets | 4 | 1 |
| Total assets | 3 | 1 |
| Total liabilities | 2 | |
| Allocated equity, SEKm | 842 | 17 |
| Full-time employees | 150 | 39 |
| Key ratios | ||
| Return on allocated equity, % | –25.2 | –117.6 |
| Cost/income ratio | 2.29 | 27.00 |
The capital base in relation to risk-weighted assets.
The sum of Tier 1 (primary) and Tier 2 (supplementary) capital. To obtain the capital base for capital adequacy purposes, deduction is made for capital contributions in insurance companies.
The capital base in relation to the capital requirement.
Cash flow for the year in relation to the number of shares outstanding during the year.
Core tier 1 capital Tier 1 capital excluding hybrid capital.
Core Tier 1 capital in relation to the risk-weighted assets.
Cost/income ratio
Expenses in relation to income.
Established losses and provisions for the year less recoveries related to loans as well as the year's net expenses for guarantees and other contingent liabilities.
Credit impairments on loans and other credit risk provisions, net, in relation to the opening balance of loans to credit institutions and loans to the public.
The average weighted maturity of payment flows calculated at present value and expressed in number of years.
Profit for the year allocated to shareholders in relation to the weighted average number of shares outstanding during the year, rights issue adjustment factor included, adjusted for the dilution effect of potential shares.
Profit for the year allocated to shareholders in relation to the weighted average number of shares outstanding during the year, rights issue adjustment factor included.
Shareholders' equity in relation to the number of shares outstanding.
Loans where there is, on individual level, objective evidence of a loss event, and where this loss event has an impact on the cash flow of the exposure. Impaired loans, gross, less specific provisions for loans assessed individually and provisions for homogenous loans assessed collectively constitute impaired loans, net.
Contracted period during which interest on an asset or liability is fixed.
Net interest income in relation to average total assets.
Lending to the public excluding Swedish Nat'l Debt Office and repurchase agreements in relation to deposits from the public excluding Swedish Nat'l Debt Office and repurchase agreements
Shareholders' equity according to the balance sheet and the equity portion of the difference between the book value and fair value of the assets and liabilities divided by the number of shares outstanding at year-end.
The number of employees at year-end, excluding long-term absences, in relation to the number of hours worked expressed in terms of full-time positions.
Market capitalisation at year-end in relation to Profit for the financial year allocated to shareholders.
The share price at year-end in relation to the closing-day equity per share.
Provisions for impaired loans assessed individually in relation to impaired loans, gross.
A loan where the terms have been modified to more favourable for the debtor, due to the debtor's financial difficulties.
Profit for the financial year allocated to shareholders in relation to average shareholders' equity.
Profit for the financial year in relation to average total assets.
Capital requirement for credit risk, market risk and operational risk according to the capital adequacy rules multiplied by 12.5.
Carrying amount of impaired loans, gross, in relation to the carrying amount of loans to credit institutions and the public excluding provisions.
Carrying amount of impaired loans, net, in relation to the carrying amount of loans to credit institutions and the public.
Shareholders' equity less proposed dividend, deduction for intangible assets, deferred tax assets and certain other adjustments. Hybrid capital (equity contribution and reserves) may be included in the capital base as Tier 1 capital with an approval from the supervisory authority.
Tier 1 capital in relation to the risk-weighted assets.
Fixed-term subordinated liabilities, less a certain reduction if their remaining maturity is less than five years, and undated subordinated liabilities.
All provisions for loans in relation to impaired loans, gross.
Dividend per share in relation to the share price at year-end.
Swedbank AB Corp. identity no. 502017–7753 Registered office: Stockholm Visiting address: Brunkebergstorg 8 Mailing address: SE-105 34 Stockholm Telephone: +46 8 585 900 00 Card blocking: +46 8 411 10 11 Telephone bank: +46 771-22 11 22 Fax: +46 8 796 80 92 Swift: SWEDSESS E-mail: [email protected] www.swedbank.se
Citigroup Tower 601 No. 33 Huayuanshiqiao Road 200122 Shanghai Telephone: +86 21 386 126 00 Fax: +86 21 386 127 11 Swift: SWEDCNSH www.swedbank.cn
Swedbank Kalvebod Brygge 45 DK-1560 Copenhagen V Telephone: +45 88 97 9000 Swift: SWEDDKKK E-mail: [email protected] www.swedbank.dk
Swedbank AS
Liivalaia 8 EE-150 40 Tallinn Telephone: +372 6310 310 Fax: +372 6310 410 Swift: HABAEE2X E-mail: [email protected] www.swedbank.ee
Visiting address: Mannerheimintie 14 B Mailing address: P.O. Box 1107 FIN-00101 Helsinki Telephone: +358 20 74 69 100 Fax: +358 20 74 69 101 Swift: SWEDFIHH E-mail: [email protected] www.swedbank.fi
AS Swedbank Balasta dambis 1A LV-1048 Riga Telephone: +371 67 444 444 Fax: +371 67 444 344 Swift: HABALV22 E-mail: [email protected] www.swedbank.lv
Swedbank AB Konstitucijos pr. 20A LT-03502 Vilnius Telephone: +370 5 268 4444 Fax: +370 5 268 4700 Swift: HABALT22 E-mail: [email protected] www.swedbank.lt
Swedbank S.A. Visiting address: 8–10 Avenue de la Gare Luxembourg Mailing address: P.O. Box 1305 L-1013 Luxembourg Telephone: +352 404 94 01 Fax: +352 40 49 07 Swift: BNELLULL E-mail: [email protected] www.swedbank.lu
Swedbank Visiting address: Filipstad Brygge 1, Aker Brygge Mailing address: P.O. Box 1441 Vika N-0115 Oslo Telephone: +47 23 11 62 00 Fax: +47 23 11 62 01 Swift: SWEDNOKK E-mail: [email protected] www.swedbank.no
Visiting address: Filipstad Brygge 1, Aker Brygge Mailing address: P.O. Box 1441 Vika N-0115 Oslo Telephone: +47 23 23 80 00 Fax: +47 23 23 80 01 Swift: FISANOK1 www.first.no
OAO Swedbank
5 Lesnaya 125047 Moscow Telephone: +7 495 777 63 63 Fax: +7 495 777 63 64 Swift: HABARUMM E-mail: [email protected] www.swedbank.ru
Swedbank S.A.
Representative Office Spain Centro Comercial Plaza, Oficina 16 ES-29660 Nueva Andalucia (Marbella) Telephone: +34 952 81 48 62 Fax: +34 952 81 93 86 E-mail: [email protected] www.swedbank.lu
Large Corporates & Institutions Visiting address: Regeringsgatan 13 Mailing address: SE-105 34 Stockholm Telephone: +46 8 585 918 00 E-mail: [email protected] www.swedbank.se
Visiting address: Klarabergsviadukten 80 Mailing address: Box 644, SE-101 32 Stockholm Telephone: +46 8 545 455 00 E-mail: [email protected] www.fastighetsbyran.se
Visiting address: Junohällsvägen 1 Mailing address: SE-105 34 Stockholm Telephone: +46 8 585 922 00 E-mail: [email protected] www.swedbankfinans.se
Visiting address: Södra Hamngatan 19–21 Mailing address: SE-411 14 Göteborg Telephone: +46 31 739 01 70 E-mail: [email protected] www.swedbankff.se
Visiting address: Klarabergsviadukten 80, 6 tr Mailing address: Box 371, SE-101 27 Stockholm Telephone: +46 8 545 451 00 www.juristbyran.com
Visiting address: Brunkebergstorg 8 Mailing address: SE-105 34 Stockholm Telephone: +46 8 585 900 00 www.swedbank.se/mortgage
Visiting address: Malmskillnadsgatan 32 Mailing address: SE-105 34 Stockholm Telephone: +46 8 585 924 00 E-mail: [email protected] www.swedbankrobur.se
JSC Swedbank 30 S Petlyura street UA-010 32 Kiev Telephone: +38 044 590 00 00 Swift: KPRVUAUK E-mail: [email protected] www.swedbank.ua
One Penn Plaza, 15th floor New York, NY 10119 Telephone: +1 212 486 8400 Fax: +1 212 486 3220 Swift: SWEDUS33 www.swedbank.us
570 Lexington Avenue, 35th floor New York, NY 10022 Telephone: +1 212 906 0800 Fax: +1 212 759 9205
Press officer Telephone: +46 8 585 921 07 E-mail: [email protected] Johannes Rudbeck Head of In vestor Relations Telephone: +46 8 585 933 22 E-mail: [email protected]
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