STOCKHOLM, Sweden, Nov. 1, 2005 (PRIMEZONE) -- Svensk Exportkredit AB (SEK):
BUSINESS ACTIVITIES
The volume of new export credits is higher than in many years and includes several large credits, e.g., a credit related to Volvo's delivery of busses to Chile. The total volume of SEK's new lending is also increasing, related to the private sector and the financial sector, as well as to infrastructure investments by Swedish and Finnish municipalities, even though at lower margins than previously. This has led to a substantial increase in volumes of credits outstanding and credits committed though not yet disbursed (see below). The market continues to be characterized by considerable liquidity and strong price competition. Demand for new credits, including syndicated credits, from the corporate sector in the capital markets was weak except for some extensions and refinancing transactions. Given this situation, SEK is holding its position well. SEK's total volume of new customer financial transactions during the nine-month period of 2005 amounted to Skr 35.1 billion (17.1). New transactions included several bilateral loans to Nordic financial institutions and to municipalities in Sweden, Finland and the Baltic states.
The aggregate amount of outstanding offers for new credits totaled Skr 35.9 billion at period-end (y-e: 39.1). The total amount of credits outstanding and credits committed though not yet disbursed increased during the period to Skr 90.0 billion at period-end (y-e: 73.4), of which Skr 72.5 billion (y-e: 57.9) represented credits outstanding.
SEK has expanded its financial consulting services through an acquisition, which has given SEK a strengthened strategic position within the segment.
Borrowings
SEK has shown high activity in the capital markets in 2005. During the period, the volume of new long-term borrowings, meaning borrowings with original maturities exceeding one year, amounted to the equivalent of Skr 46.8 billion (26.6) or USD 6.4 billion (3.6), which is the highest volume ever for a nine-month period.
During the nine-month period two global benchmark transactions has been made. Among other transactions SEK issued public plain "vanilla" retail bonds in Icelandic Krona and Mexican Pesos, and made a four-year issue on the European retail market denominated in USD as well as a large number of structured transactions. SEK's borrowing operations continues to stand on a stable and well-diversified foundation.
INCOME STATEMENT -- Return on Equity
Return on equity was 14.7 percent (20.1) before taxes, and 10.6 percent (14.5) after taxes, respectively.
Results
Operating profit amounted to Skr 373.6 million (445.5). Net interest earnings totaled Skr 563.5 million (611.8). The decrease in net interest earnings was due to a decline in earnings from the investment portfolio (see below). The contribution to net interest earnings from debt-financed assets increased to Skr 422.8 million (419.3). Lower margins on debt-financed assets were offset by higher volumes. The average volume of debt-financed assets totaled Skr 161.8 billion (137.6), and the average margin of such volume was 0.35 percent p.a. (0.41). The decrease in average margin was due to high volumes of credit granted to the financial and public sector with relatively lower margins than in the corporate sector. (See also "Business Activities" above.)
The contribution to net interest earnings from the investment portfolio, which represents the investment of SEK's equity, decreased substantially to Skr 140.7 million (192.5). The decline was due to a significantly lower average yield on the portfolio, in which some long-term, fixed-rate assets with high interest rates have matured and been reinvested at substantially lower interest rates.
Administrative expenses totaled Skr 175.3 million (166.8), not including any incurred costs related to the general incentive system (11.5). The increase in administrative expenses was due mainly to costs related to compliance with new and pending regulations regarding capital adequacy, financial reporting, and corporate governance. Additional costs for these matters are also included in commissions incurred.
No credit losses were incurred.
SEK is preparing its implementation of international accounting rules on January 1, 2007. (See Notes for further details.)
BALANCE SHEET -- Total Assets and Liquidity
SEK's total assets at period-end increased to Skr 205.4 billion (y-e: 162.1). The increase was due to high volumes of new transactions but also to currency exchange effects related to a weaker Swedish krona. The aggregate volume of funds borrowed and shareholders' funds exceeded the aggregate volume of credits outstanding and credits committed though not yet disbursed at all maturities. This means that SEK has funded all its outstanding commitments through maturity.
There were no major shifts in the breakdown of SEK's counter party risk exposures. Of the total risk exposures, 69 percent (y-e: 70) were against banks, mortgage institutions and other financial institutions; 16 percent (y-e: 15) were against highly rated OECD states; 8 percent (y-e: 9) were against corporations; and 7 percent (y-e: 6) were against local and regional authorities.
Capital Adequacy
SEK's capital adequacy ratio is well above the minimum required by law. At period-end, SEK's adjusted total capital adequacy ratio was 17.0 percent (y-e: 17.9), of which 10.9 percent (y-e: 11.9) represented adjusted Tier-1 ratio. When calculating the adjusted capital adequacy ratios, SEK's guarantee capital of Skr 600 million is included in the Tier-1 capital base, in addition to the regulatory capital base. The regulatory total capital adequacy ratio (which does not take into account the guarantee capital) was 15.6 percent at period-end (y-e: 16.3), of which 9.5 percent (y-e: 10.2) represented Tier-1 ratio. The primary reason for the lower ratios is the increased level of assets with a 20 percent risk weight.
AB SVENSK EXPORTKREDIT SWEDISH EXPORT CREDIT CORPORATION Peter Yngwe President
The full report including tables can be downloaded from the enclosed link: http://hugin.info/132909/R/1019038/160147.pdf
SEK is wholly owned by the Kingdom of Sweden. SEK's objective is to engage in financing activities and in connection therewith primarily promote the development of Swedish commerce and industry and Swedish export industry as well as otherwise engaging in Swedish and international financing activities on commercial grounds. Credits are granted at fixed or floating interest rates. SEK funds its activities primarily by issues in the international capital markets. SEK's balance sheet and assets are of high quality. SEK's long-term debt rating is AA+ from Standard & Poor's and Aa1 from Moody's.