FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Dated April 29, 2021
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
Aktiebolaget Svensk Exportkredit
Swedish Export Credit Corporation
(Translation of Registrant’s Name into English)
Klarabergsviadukten
61-63
SE-101 23 Stockholm
Sweden
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x | Form 40-F ¨ |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): N/A
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): N/A
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ | No x |
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
Incorporation by Reference
This Report on Form 6-K, including the exhibits hereto, is hereby incorporated by reference, in its entirety, into the registration statement on Form F-3 (File No. 333-249829) of Aktiebolaget Svensk Exportkredit (publ) (“SEK”).
This Report comprises the following:
1. Registrant’s report for the first quarter of 2021. |
2. Table of unaudited consolidated capitalization of the Registrant (attached as Exhibit 99.2 hereto). |
1 |
AB Svensk Exportkredit
Swedish Export Credit Corporation
Interim Report
January-March 2021
2 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: April 29, 2021
AB Svensk Exportkredit | ||
(Swedish Export Credit Corporation) | ||
By: | /s/ Catrin Fransson | |
Catrin Fransson, Chief Executive Officer |
3 |
AB Svensk Exportkredit Swedish Export Credit Corporation |
Summary
January-March 2021
(Compared to the period January-March 2020)
· | Net interest income Skr 485 million (3M20: Skr 405 million) |
· | Operating profit Skr 291 million (3M20: Skr 157 million) |
· | Net profit Skr 231 million (3M20: Skr 123 million) |
· | New lending Skr 14.9 billion (3M20: Skr 33.3 billion) |
· | Volume of green bonds issued Skr 2.4 billion (3M20: -) |
· | Basic and diluted earnings per share Skr 58 (3M20: Skr 31) |
· | After-tax return on equity 4.6 percent (3M20: 2.6 percent) |
Equity and balances
(Compared to December 31, 2020)
· | Total capital ratio 21.8 percent (year-end 2020: 21.8 percent) |
· | Total assets Skr 344.8 billion (year-end 2020: Skr 335.4 billion) |
· | Loans, outstanding and undisbursed Skr 290.6 billion (year-end 2020: Skr 288.9 billion) |
Page 2 of 28
Statement by the CEO
Moderate demand for financing
Global trade and the Swedish export industry have recovered well during the COVID-19 pandemic. The fall in GDP has been limited due to extensive government crisis packages and support measures around the world. At the same time, there is no lack of challenges. Growth is restricted by continued lockdowns, disrupted logistics chains, shortages of inputs such as semiconductors, problems with container shipping and vaccination delays.
According to the export promotion agency, Business Sweden, Sweden’s economy fared significantly better than most European countries. Strong optimism prevails in industry and export managers have a positive outlook on export developments. Sweden is expected to post GDP growth of 4 percent this year and 3.5 percent next year according to Business Sweden. First quarter growth was at half speed, but increased activity is expected.
In the first quarter, new lending amounted to Skr 14.9 billion, which was substantially below the previous quarter (4Q20: Skr 18.6 billion) and the corresponding period last year (3M20: Skr 33.3 billion). Conversely, net interest income was higher due to the record high volumes of lending during 2020, and totaled Skr 485 million (3M20: Skr 405 million). The COVID-19 pandemic has led to many companies securing their financing needs in the early stages of the pandemic, providing them with strong liquidity. In parallel, many companies became cautious and are still being cautious about new investments. Moreover, measures taken by the central banks to secure market access to liquidity have led to historically low interest rates.
Operating profit for the period was up significantly year-on-year at Skr 291 million (3M20: Skr 157 million) and net profit amounted to Skr 231 million (3M20: Skr 123 million). Strengthened net interest income in combination with improved net results of financial transactions, positively impacted earnings. SEK’s credit quality is high, with net credit losses amounting to Skr -12 million (3M20: Skr -24 million), consisting entirely of increased provisions for expected credit losses.
While lending to Swedish exporters has been relatively low in the first quarter, financing for their customers abroad was normal. In particular, we are noting increased demand for Swedish sustainable energy solutions, which has positively impacted project financing and export credits. We are now able to offer our customers small export credits. As implied by the name, these finance smaller transactions with lower amounts (Skr 20-300 million) and slightly shorter maturities (3-5 years). Financing is offered in USD and EUR and includes a guarantee from the Swedish Export Credit Agency (EKN) of up to 95 percent. This product has been requested by our customers and developed in collaboration with them.
SEK expects continued strong demand within these areas as the need for transition financing increases both in Sweden and globally. Investing in transition not only increases Sweden’s long-term competitiveness, it also means the exports of sustainable solutions could become one of Sweden’s greatest contributions to the global climate transition.
Catrin Fransson |
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Operations
Lower lending due to healthy liquidity
First quarter lending amounted to Skr 14.9 billion, significantly lower year-on-year (3M20: Skr 33.3 billion) and was mainly due to reduced demand from the Swedish export industry. In terms of SEK’s different offerings, demand for working capital financing and trade finance declined, while demand for project finance and export credits increased.
A downturn in lending was expected, partially due to surplus capital in the market, which led to historic lows in terms of financing costs, and partially due to unusually high lending in the first quarter of last year, when the COVID-19 pandemic struck. One consequence of the high lending volumes last year is that many exporters have already covered their financing needs and thus have strong liquidity. The COVID-19 pandemic is causing many companies to put new investments on hold, thereby reducing the need for financing.
SEK’s new lending | ||||||||||||
Skr bn | Jan-Mar 2021 | Jan-Mar 2020 | Jan-Dec 2020 | |||||||||
Lending to Swedish exporters1 | 2.1 | 19.9 | 62.2 | |||||||||
Lending to exporters’ customers2 | 12.8 | 13.4 | 63.3 | |||||||||
Total | 14.9 | 33.3 | 125.5 | |||||||||
CIRR loans as percentage of new lending | 17 | % | 0 | % | 15 | % |
1 | Of which Skr 0.3 billion (3M20: Skr 1.1 billion; year-end 2020: Skr 1.1 billion) had not been disbursed at period end. |
2 | Of which Skr 4.1 billion (3M20: Skr 0.4 billion; year-end 2020: Skr 17.9 billion) had not been disbursed at period end. |
Page 4 of 28
Lower borrowing costs and healthy bond market demand
After a sharp increase in customer demand for long-term financing in 2020, SEK saw demand return to more normal levels. This means that SEK’s need to raise long-term financing is now also being normalized. During the first quarter, SEK raised borrowings corresponding to Skr 34.2 billion with maturities of at least one year. SEK also conducted two larger public offerings, a USD 500 million two-and-half-year fixed rate bond in January and a USD 1.25 billion three-year fixed rate benchmark bond in March. In addition, SEK carried out a GBP 450 million public offering with a five-year maturity. The cost for new borrowing has gradually declined over the quarter in pace with improvement in market levels, which are now below pre-pandemic levels for the respective maturities.
The share of structured debt is on a par with last year. As part of its efforts to adapt to the new reference rate that will replace the USD LIBOR, SEK issued four SOFR-linked bonds for a total of USD 850 million. In line with SEK’s focus on sustainability, the company has issued Skr 2.4 billion in green bonds during the first quarter.
SEK continues to have high liquidity for new lending and is well prepared to meet the future financing needs of the Swedish export industry.
SEK’s borrowing | ||||||||||||
Skr bn | Jan-Mar 2021 | Jan-Mar 2020 | Jan-Dec 2020 | |||||||||
New long-term borrowings | 34.2 | 36.3 | 123.2 | |||||||||
Volume of green bonds issued during the period | 2.4 | - | 5.1 | |||||||||
Outstanding senior debt | 304.7 | 312.8 | 287.5 | |||||||||
Repurchase and redemption of own debt | 0.5 | 2.2 | 3.0 |
Page 5 of 28
Comments on the consolidated financial accounts
January-March 2021
Operating profit amounted to Skr 291 million (3M20: Skr 157 million). Net profit amounted to Skr 231 million (3M20: Skr 123 million). Strengthened net interest income and an improved net result of financial transactions compared to the same period in the previous year had a positive effect on profit.
Net interest income
Net interest income amounted to Skr 485 million (3M20: Skr 405 million), an increase of 20 percent compared to the same period in the previous year. The record high volumes of lending during 2020 affected net interest income positively.
The table below shows average interest-bearing assets and liabilities.
Skr bn, average | Jan-Mar 2021 | Jan-Mar 2020 | Change | |||||||||
Total loans | 234.0 | 229.8 | 2 | % | ||||||||
Liquidity investments | 67.8 | 60.7 | 12 | % | ||||||||
Interest-bearing assets | 318.1 | 308.3 | 3 | % | ||||||||
Interest-bearing liabilities | 296.1 | 292.9 | 1 | % |
Net results of financial transactions
Net results of financial transactions amounted to Skr -17 million (3M20: Skr -67 million) mainly due to unrealized value changes in derivatives.
Operating expenses
Operating expenses amounted to Skr -155 million (3M20: Skr -150 million), an increase of 3 percent compared to the same period in the previous year. A provision of Skr 2 million (3M20: -) was made for the individual variable remuneration program.
Net credit losses
Net credit losses amounted to Skr -12 million (3M20: Skr -24 million), which consisted entirely of increased provisions for expected credit losses. Provisions for expected credit losses were primarily attributable to increased provisions for exposures in stage 3, somewhat offset by decreased provisions for exposures in stage 1 and stage 2.
SEK’s IFRS 9 model is based on GDP growth projections estimating the impact on the probability of default. SEK’s management believes it underestimates the probability of default within the asset portfolio, see Note 4. SEK has made an overall adjustment accordingly.
Loss allowances as of March 31, 2021 amounted to Skr -265 million compared to Skr -249 million as of December 31, 2020, of which exposures in stage 3 amounted to Skr -75 million (year-end 2020: Skr -46 million). The increase in stage 3 is the result of a counterparty being moved from stage 2 to stage 3.
The provision ratio amounted to 0.09 percent (year-end 2020: 0.08 percent).
Taxes
Tax costs amounted to Skr -60 million (3M20: Skr -34 million) and the effective tax rate amounted to 20.6 percent (3M20: 21.7 percent).
Other comprehensive income (OCI)
Other comprehensive income before tax amounted to Skr 13 million (3M20: Skr 102 million), due to positive results related to the revaluation of defined benefit plans, which have been affected by a higher discount rate. This result was partly offset by a negative result from changes in own credit risk.
Statement of Financial Position
Total assets and liquidity investments
Total assets increased compared to the end of 2020, mainly driven by an increase in liquidity investments. The higher volume of liquidity investments is a result of the pre-financing of a larger borrowing with maturity in the beginning of April.
Skr bn | March 31, 2021 | December 31, 2020 | Change | |||||||||
Total assets | 344.8 | 335.4 | 3 | % | ||||||||
Liquidity investments | 76.4 | 59.2 | 29 | % | ||||||||
Total loans | 236.2 | 231.7 | 2 | % | ||||||||
of which loans in the CIRR-system | 77.4 | 69.2 | 12 | % |
SEK’s total net exposures, after risk mitigation, amounted to Skr 389.7 billion as of March 31, 2021 (year-end 2020: Skr 359.5 billion). Credit exposures have primarily increased to central governments but also to financial institutions, which is mainly due to the increase in liquidity investments.
Liabilities and equity
As of March 31, 2021, the aggregate volume of available funds and shareholders’ equity exceeded the aggregate volume of loans outstanding and loans committed at all maturities. SEK considers all of its outstanding commitments to be covered through maturity.
SEK has a credit facility in place with the Swedish National Debt Office of up to Skr 200 billion, of which Skr 10 billion was utilized as of March 31, 2021. The credit facility can be utilized when the Swedish export industry’s demand for financing is particularly high.
Capital adequacy
As of March 31, 2021, SEK’s total own funds amounted to Skr 19.6 billion (year-end 2020: Skr 19.5 billion). The total capital ratio was 21.8 percent (year-end 2020: 21.8 percent), representing a margin of 6.8 percentage points above SEK’s estimate of Finansinspektionen’s (the Swedish FSA) requirement of 15.0 percent as of March 31, 2021. The corresponding Common Equity Tier 1 capital estimated requirement was 9.5 percent. Given that SEK’s own funds are comprised solely of Common Equity Tier 1 capital, this represents a margin of 12.3 percentage points above the requirement. Overall, SEK is strongly capitalized and has healthy liquidity.
Page 6 of 28
Percent | March 31, 2021 | December 31, 2020 | ||||||
Common Equity Tier 1 capital ratio | 21.8 | 21.8 | ||||||
Tier 1 capital ratio | 21.8 | 21.8 | ||||||
Total capital ratio | 21.8 | 21.8 | ||||||
Leverage ratio | 5.4 | 5.8 | ||||||
Liquidity coverage ratio (LCR) | 941 | 447 | ||||||
Net stable funding ratio (NSFR) | 138 | 135 |
Rating
Skr | Foreign currency | |||||
Moody’s | Aa1/Stable | Aa1/Stable | ||||
Standard & Poor’s | AA+/Stable | AA+/Stable |
Other events
SEK has implemented a new organizational structure aimed at meeting its customers’ needs in a more efficient way, which became effective on January 1, 2021. The Large Corporates and Mid Corporates functions have been replaced by the Customer Relations and Structured Finance functions. The Sustainability Analysis function has moved from Credit to Legal, with the Legal function changing its name to Legal and Sustainability Analysis.
Catrin Fransson informed the Board of her intention to resign as CEO at SEK, which the Board accepted on January 15, 2021. She has a six month notice period, and will continue working in her present position until further notice.
In February 2021, the Swedish parliament decided to extend the credit facility of Skr 200 billion, that SEK has in place with the Swedish National Debt Office, for 2021.
At SEK’s annual general meeting on March 24, 2021, Lennart Jacobsen was elected as a new member of the Board of Directors of SEK (the “Board”). After ten years of service, Ulla Nilsson and Cecilia Ardström stepped down from their positions as members of the Board. A resolution passed at the annual general meeting to adopt the income statement and balance sheet in the Annual Report 2020 on Form 20-F, and to appropriate distributable funds pursuant to the Board’s proposal. Resolutions were also passed at the annual general meeting relating to the company’s financial goals. The profitability target was changed from 6 percent to 5 percent return on equity after tax. Furthermore, the dividend policy was changed from the previous 30 percent dividend to a 20-40 percent dividend range of the year’s profit. The company’s capital target was left unchanged.
SEK will move premises in 2021. A new lease was signed in the first quarter which will commence in the fourth quarter.
Risk factors and
the macro environment
Various risks arise as part of SEK’s operations, primarily credit risks, but also market, liquidity, re-financing, operational and sustainability risks. For a more detailed description of these risks, refer to the separate risk report Capital Adequacy and Risk Management Report – Pillar 3 2020 and Note 30 to the annual financial statements included in SEK’s 2020 Annual Report on Form 20-F, as well as the “Risk Factors” section in SEK’s 2020 Annual Report on Form 20-F.
According to Statistics Sweden, the annualized rate of Swedish GDP growth was -2.2 percent in the fourth quarter of 2020 and the unemployment rate was 8.9 percent as of February 2021. The consumer price index rose 1.4 percent on an annualized basis in February 2021 and the repo rate remained unchanged at zero percent.
Brexit, trade conflicts and geopolitical risks were overshadowed in the first quarter of 2021 by the effects of the COVID-19 pandemic with the closure of the majority of societal functions worldwide. However, with increasing numbers of people receiving vaccinations, some closures and restrictions have begun to be relaxed, particularly in countries with the highest vaccination rates, while in other countries severe restrictions remain in place and new ones have, in some cases, been introduced. However, the overall trend, particularly in developed countries, seems to be moving in the right direction as vaccines are distributed at a rapid pace. The World Bank’s most recent projection in January 2021 of global growth in 2020 has now been revised upward to -4.3 percent from -5.2 percent, the previous projections from June 2020. The World Bank further forecasts world growth in 2021 at 4.0 percent. In early April 2021, the IMF also updated its forecast for annualized world growth by approximately half a percentage point for the 2021–2022 period. In the US, non-farm payroll data for March 2021 also posted significantly stronger figures than expected. Overall, this is a far more positive trend than many had anticipated at the start of the COVID-19 pandemic. The massive support programs introduced are impacting growth positively, but at the same time are increasing public debt.
In the first half of 2020, the COVID-19 pandemic had a substantial adverse effect on Swedish exports, but was followed by a relatively strong recovery in the second half of the year. In the fourth quarter of 2020, exports increased 4.5 percent compared with the previous quarter. Industry order intake in Sweden grew 0.3 percent between January and February 2021, and Business Sweden’s Export Managers’ Index rose 4.8 points to 64.9 in the first quarter of 2021 compared with the fourth quarter of 2020, which also had a strong upturn compared with the third quarter of 2020.
The strong state of Sweden’s public finances, with low public debt, has allowed the use of fiscal stimuli. The Swedish state has implemented special measures to promote Swedish exports during the COVID-19 pandemic and SEK’s role of securing financing for the Swedish export industry has become even clearer in the form of, among other things, the expanded credit facility with the Swedish National Debt Office.
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Financial targets
Profitability target | A return on equity after tax of at least 5 percent. |
Dividend policy | Payment of an ordinary dividend of 20-40 percent of the profit for the year. |
Capital target | SEK’s total capital ratio is to exceed the Swedish FSA’s requirement by 2 to 4 percentage points and SEK’s Common Equity Tier 1 capital ratio is to exceed the Swedish FSA’s requirement by at least 4 percentage points. Currently, the capital targets mean that the total capital ratio should amount to 17.0-19.0 percent and the Common Equity Tier 1 capital ratio should amount to 13.5 percent, based on SEK’s estimation of the Swedish FSA’s requirements as of March 31, 2021. |
Key performance indicators (unaudited)
Skr mn (if not otherwise indicated) | Jan-Mar 2021 | Oct-Dec 2020 | Jan-Mar 2020 | Jan-Dec 2020 | ||||||||||||
New lending | 14,868 | 18,574 | 33,290 | 125,470 | ||||||||||||
of which to Swedish exporters | 2,091 | 6,494 | 19,888 | 62,148 | ||||||||||||
of which to exporters’ customers | 12,777 | 12,080 | 13,402 | 63,322 | ||||||||||||
CIRR-loans as a percentage of new lending | 17 | % | 8 | % | 0 | % | 15 | % | ||||||||
Loans, outstanding and undisbursed | 290,600 | 288,891 | 290,235 | 288,891 | ||||||||||||
New long-term borrowings | 34,153 | 23,372 | 36,292 | 123,156 | ||||||||||||
Volume of green bonds issued during the period | 2,400 | 1,600 | - | 5,100 | ||||||||||||
Outstanding senior debt | 304,682 | 287,462 | 312,839 | 287,462 | ||||||||||||
After-tax return on equity | 4.6 | % | 6.9 | % | 2.6 | % | 4.9 | % | ||||||||
Common Equity Tier 1 capital ratio | 21.8 | % | 21.8 | % | 19.9 | % | 21.8 | % | ||||||||
Tier 1 capital ratio | 21.8 | % | 21.8 | % | 19.9 | % | 21.8 | % | ||||||||
Total capital ratio | 21.8 | % | 21.8 | % | 19.9 | % | 21.8 | % | ||||||||
Leverage ratio | 5.4 | % | 5.8 | % | 5.4 | % | 5.8 | % | ||||||||
Liquidity coverage ratio (LCR) | 941 | % | 447 | % | 681 | % | 447 | % | ||||||||
Net stable funding ratio (NSFR) | 138 | % | 135 | % | 131 | % | 135 | % |
See definitions on page 30.
Page 8 of 28
Condensed Consolidated Statement of Comprehensive Income (unaudited)
Skr mn | Note | Jan-Mar 2021 | Oct-Dec 2020 | Jan-Mar 20201 | Jan-Dec 2020 | |||||||||||||||
Interest income | 660 | 737 | 1,303 | 4,108 | ||||||||||||||||
Interest expenses | -175 | -218 | -898 | -2,162 | ||||||||||||||||
Net interest income | 2 | 485 | 519 | 405 | 1,946 | |||||||||||||||
Net fee and commission expense | -10 | -14 | -7 | -42 | ||||||||||||||||
Net results of financial transactions | 3 | -17 | 87 | -67 | 83 | |||||||||||||||
Total operating income | 458 | 592 | 331 | 1,987 | ||||||||||||||||
Personnel expenses | -89 | -95 | -85 | -347 | ||||||||||||||||
Other administrative expenses | -55 | -56 | -52 | -198 | ||||||||||||||||
Depreciation and impairment of non-financial assets | -11 | -12 | -13 | -51 | ||||||||||||||||
Total operating expenses | -155 | -163 | -150 | -596 | ||||||||||||||||
Operating profit before credit losses | 303 | 429 | 181 | 1,391 | ||||||||||||||||
Net credit losses | 4 | -12 | 7 | -24 | -153 | |||||||||||||||
Operating profit | 291 | 436 | 157 | 1,238 | ||||||||||||||||
Tax expenses | -60 | -95 | -34 | -270 | ||||||||||||||||
Net profit2 | 231 | 341 | 123 | 968 | ||||||||||||||||
Other comprehensive income related to: | ||||||||||||||||||||
Items not to be reclassified to profit or loss | ||||||||||||||||||||
Own credit risk | -18 | -9 | 111 | 18 | ||||||||||||||||
Revaluation of defined benefit plans | 31 | 34 | -9 | 1 | ||||||||||||||||
Tax on items not to be reclassified to profit or loss | -3 | -5 | -23 | -5 | ||||||||||||||||
Net items not to be reclassified to profit or loss | 10 | 20 | 79 | 14 | ||||||||||||||||
Total other comprehensive income | 10 | 20 | 79 | 14 | ||||||||||||||||
Total comprehensive income2 | 241 | 361 | 202 | 982 | ||||||||||||||||
Skr | ||||||||||||||||||||
Basic and diluted earnings per share3 | 58 | 86 | 31 | 243 |
1 | Since Q4 2020, SEK has changed the accounting principle regarding the CIRR-system, see Note 1 to the consolidated financial statements included in SEK’s 2020 Annual Report on Form 20-F. The comparative figures have been adjusted. |
2 | The entire profit is attributable to the shareholder of the Parent Company. |
3 | Net profit divided by average number of shares, which amounts to 3,990,000 for each period. |
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Consolidated Statement of Financial Position (unaudited)
Skr mn | Note | March 31, 2021 | December 31, 2020 | |||||||||
Assets | ||||||||||||
Cash and cash equivalents | 5 | 14,171 | 3,362 | |||||||||
Treasuries/government bonds | 5 | 16,134 | 22,266 | |||||||||
Other interest-bearing securities except loans | 5 | 46,142 | 33,551 | |||||||||
Loans in the form of interest-bearing securities | 4, 5 | 46,140 | 50,780 | |||||||||
Loans to credit institutions | 4, 5 | 21,857 | 31,315 | |||||||||
Loans to the public | 4, 5 | 178,891 | 171,562 | |||||||||
Derivatives | 5, 6 | 8,560 | 7,563 | |||||||||
Tangible and intangible assets | 154 | 145 | ||||||||||
Deferred tax asset | 8 | 15 | ||||||||||
Other assets | 10,455 | 12,853 | ||||||||||
Prepaid expenses and accrued revenues | 2,333 | 1,987 | ||||||||||
Total assets | 344,845 | 335,399 | ||||||||||
Liabilities and equity | ||||||||||||
Borrowing from credit institutions | 5 | 3,849 | 3,486 | |||||||||
Borrowing from the public | 5 | 10,000 | 10,000 | |||||||||
Debt securities issued | 5 | 290,833 | 273,976 | |||||||||
Derivatives | 5, 6 | 16,422 | 25,395 | |||||||||
Other liabilities | 1,568 | 455 | ||||||||||
Accrued expenses and prepaid revenues | 2,091 | 1,924 | ||||||||||
Provisions | 67 | 99 | ||||||||||
Total liabilities | 324,830 | 315,335 | ||||||||||
Share capital | 3,990 | 3,990 | ||||||||||
Reserves | -119 | -129 | ||||||||||
Retained earnings | 16,144 | 16,203 | ||||||||||
Total equity | 20,015 | 20,064 | ||||||||||
Total liabilities and equity | 344,845 | 335,399 |
Page 10 of 28
Condensed Consolidated Statement of Changes in Equity (unaudited)
Reserves | ||||||||||||||||||||
Skr mn | Equity | Share capital | Own credit risk | Defined benefit plans | Retained earnings | |||||||||||||||
Opening balance of equity January 1, 2020 | 19,082 | 3,990 | -98 | -45 | 15,235 | |||||||||||||||
Net profit Jan-Mar 2020 | 123 | 123 | ||||||||||||||||||
Other comprehensive income Jan-Mar 2020 | 79 | 87 | -8 | |||||||||||||||||
Total comprehensive income Jan-Mar 2020 | 202 | - | 87 | -8 | 123 | |||||||||||||||
Dividend | - | - | ||||||||||||||||||
Closing balance of equity March 31, 20201 | 19,284 | 3,990 | -11 | -53 | 15,358 | |||||||||||||||
Opening balance of equity January 1, 2020 | 19,082 | 3,990 | -98 | -45 | 15,235 | |||||||||||||||
Net profit Jan-Dec 2020 | 968 | 968 | ||||||||||||||||||
Other comprehensive income Jan-Dec 2020 | 14 | 14 | 0 | |||||||||||||||||
Total comprehensive income Jan-Dec 2020 | 982 | - | 14 | 0 | 968 | |||||||||||||||
Dividend | - | - | ||||||||||||||||||
Closing balance of equity December 31, 20201 | 20,064 | 3,990 | -84 | -45 | 16,203 | |||||||||||||||
Opening balance of equity January 1, 2021 | 20,064 | 3,990 | -84 | -45 | 16,203 | |||||||||||||||
Net profit Jan-Mar 2021 | 231 | 231 | ||||||||||||||||||
Other comprehensive income Jan-Mar 2021 | 10 | -14 | 24 | |||||||||||||||||
Total comprehensive income Jan-Mar 2021 | 241 | - | -14 | 24 | 231 | |||||||||||||||
Dividend | -290 | -290 | ||||||||||||||||||
Closing balance of equity March 31, 20211 | 20,015 | 3 990 | -98 | -21 | 16,144 |
1 | The entire equity is attributable to the shareholder of the Parent Company. |
Page 11 of 28
Condensed Statement of Cash Flows in the Consolidated Group (unaudited)
Skr mn | Jan-Mar 2021 | Jan-Mar 2020 | Jan-Dec 2020 | |||||||||
Operating activities | ||||||||||||
Operating profit | 291 | 157 | 1,238 | |||||||||
Adjustments for non-cash items in operating profit | 92 | -119 | 140 | |||||||||
Income tax paid | -152 | -126 | -311 | |||||||||
Changes in assets and liabilities from operating activities | 8,939 | -1,733 | -19,055 | |||||||||
Cash flow from operating activities | 9,170 | -1,821 | -17,988 | |||||||||
Investing activities | ||||||||||||
Capital expenditures | -13 | -5 | -35 | |||||||||
Cash flow from investing activities | -13 | -5 | -35 | |||||||||
Financing activities | ||||||||||||
Change in senior debt | 3,527 | 6,564 | 29,460 | |||||||||
Derivatives, net | -2,060 | 1,341 | -8,651 | |||||||||
Payment of lease liability | -7 | -7 | -27 | |||||||||
Cash flow from financing activities | 1,460 | 7,897 | 20,782 | |||||||||
Cash flow for the period | 10,617 | 6,071 | 2,759 | |||||||||
Cash and cash equivalents at beginning of the period | 3,362 | 1,362 | 1,362 | |||||||||
Cash flow for the period | 10,617 | 6,071 | 2,759 | |||||||||
Exchange-rate differences on cash and cash equivalents | 192 | 250 | -759 | |||||||||
Cash and cash equivalents at end of the period1 | 14,171 | 7,683 | 3,362 |
1 | Cash and cash equivalents include, in this context, cash at banks that can be immediately converted into cash and short-term deposits for which the time to maturity does not exceed three months from trade date. |
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Notes
Note 1. | Accounting policies |
Note 2. | Net interest income |
Note 3. | Net results of financial transactions |
Note 4. | Impairments |
Note 5. | Financial assets and liabilities at fair value |
Note 6. | Derivatives |
Note 7. | CIRR-system |
Note 8. | Pledged assets and contingent liabilities |
Note 9. | Capital adequacy |
Note 10. | Exposures |
Note 11. | Transactions with related parties |
Note 12. | Events after the reporting period |
References to “SEK” or the “Parent Company” are to AB Svensk Exportkredit. References to “Consolidated Group” are to SEK and its consolidated subsidiary. All amounts are in Skr million, unless otherwise indicated. All figures concern the Consolidated Group, unless otherwise indicated.
Note 1. Accounting policies
This condensed interim report is presented in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting. The Consolidated Group’s consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), together with the interpretations from IFRS Interpretations Committee (IFRS IC). The IFRS standards applied by SEK are all endorsed by the European Union (EU). The accounting also follows the additional standards imposed by the Annual Accounts Act for Credit Institutions and Securities Companies (1995:1559) (ÅRKL) and the regulation and general guidelines issued by Finansinspektionen (the Swedish FSA), “Annual Reports in Credit Institutions and Securities Companies” (FFFS 2008:25). In addition to this, the supplementary accounting rules for groups (RFR 1) issued by the Swedish Financial Reporting Board have been applied. SEK also follows the state’s principles for external reporting in accordance with its State Ownership Policy and principles for state-owned enterprises.
The accounting policies, methods of computation and presentation of the Consolidated Group are, in all
material aspects, the same as those used for the 2020 annual financial statements on Form 20-F, except for the changes described below. In addition to the changes below, certain amounts reported in prior periods have been restated to conform to the current presentation. SEK analyzes and assesses the application and impact of changes in financial reporting standards that are applied within the Group. Changes that are not mentioned are either not applicable to SEK or have been determined to not have a material impact on SEK’s financial reporting.
The amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 in “Reform for new reference rates - phase 2” are applicable from January 1, 2021. Phase 2 of the reform of the reference rates is comprised of three main areas: hedge accounting, modifications and information. The changes clarify that hedge accounting does not have to cease just because the hedged items and hedging instruments were modified as a result of the IBOR reform. Security conditions (and associated documentation) must be changed to reflect the modifications made to the hedged item, the hedging instrument and the hedged risk. Any value adjustments resulting from the changes must be reported as hedging inefficiency. The reform of the reference rates further clarifies that modifications required as a direct result of the IBOR reform and made in an economically equivalent way should not be reported as modifications for instruments valued at accrued acquisition value. For such modifications, the effective interest rate must be adjusted in line with those modified cash flows. The changes are not expected to result in a change to SEK’s hedging conditions and no significant modification gains or modification losses are expected to be reported. The changes are therefore not expected to have any significant impact on SEK’s accounts, capital adequacy or large exposures when first applied.
There are no other IFRS or IFRS Interpretations Committee interpretations that are not yet applicable that are expected to have a material impact on SEK’s financial statements, capital adequacy or large exposure ratios.
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Note 2. Net interest income
Skr mn | Jan-Mar 2021 | Oct-Dec 2020 | Jan-Mar 20202 | Jan-Dec 2020 | ||||||||||||
Interest income | ||||||||||||||||
Loans to credit institutions | 33 | 36 | 96 | 236 | ||||||||||||
Loans to the public | 920 | 975 | 1,075 | 4,210 | ||||||||||||
Loans in the form of interest-bearing securities | 195 | 208 | 214 | 897 | ||||||||||||
Interest-bearing securities excluding loans in the form of interest-bearing securities | 19 | 20 | 120 | 242 | ||||||||||||
Derivatives | -558 | -557 | -265 | -1,708 | ||||||||||||
Administrative remuneration CIRR-system | 45 | 46 | 50 | 197 | ||||||||||||
Other assets | 6 | 9 | 13 | 34 | ||||||||||||
Total interest income1 | 660 | 737 | 1,303 | 4,108 | ||||||||||||
Interest expenses | ||||||||||||||||
Interest expenses | -150 | -197 | -872 | -2,076 | ||||||||||||
Resolution fee | -25 | -21 | -26 | -86 | ||||||||||||
Total interest expenses | -175 | -218 | -898 | -2,162 | ||||||||||||
Net interest income | 485 | 519 | 405 | 1,946 |
1 | Interest income calculated using the effective interest method amounted to Skr 1,049 million during January-March 2021 (3M20: Skr 1,304 million). |
2 | Since Q4 2020, SEK has changed the accounting principle regarding the CIRR-system, see Note 1 to the consolidated financial statements included in SEK’s 2020 Annual Report on Form 20-F. The comparative figures have been adjusted. |
Note 3. Net results of financial transactions
Skr mn | Jan-Mar 2021 | Oct-Dec 2020 | Jan-Mar 2020 | Jan-Dec 2020 | ||||||||||||
Derecognition of financial instruments not measured at fair value through profit or loss | 1 | 3 | 2 | 14 | ||||||||||||
Financial assets or liabilities at fair value through profit or loss | -11 | 39 | -110 | -22 | ||||||||||||
Financial instruments under fair-value hedge accounting | -4 | 42 | 45 | 86 | ||||||||||||
Currency exchange-rate effects on all assets and liabilities excl. currency exchange-rate effects related to revaluation at fair value | -3 | 3 | -4 | 5 | ||||||||||||
Total net results of financial transactions | -17 | 87 | -67 | 83 |
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Note 4. Impairments
Skr mn | Jan-Mar 2021 | Oct-Dec 2020 | Jan-Mar 2020 | Jan-Dec 2020 | ||||||||||||
Expected credit losses, stage 1 | 5 | 9 | -17 | -98 | ||||||||||||
Expected credit losses, stage 2 | 10 | -2 | -7 | -48 | ||||||||||||
Expected credit losses, stage 3 | -27 | 0 | 0 | -7 | ||||||||||||
Established losses | - | - | - | -20 | ||||||||||||
Reserves applied to cover established credit losses | - | - | - | 20 | ||||||||||||
Recovered credit losses | - | - | - | 0 | ||||||||||||
Net credit losses | -12 | 7 | -24 | -153 |
Skr mn | March 31, 2021 | December 31, 2020 | ||||||||||||||
Stage 1 | Stage 2 | Stage 3 | Total | Total | ||||||||||||
Loans, before expected credit losses | 197,405 | 37,475 | 1,614 | 236,494 | 231,927 | |||||||||||
Off balance sheet exposures, before expected credit losses | 29,302 | 31,962 | - | 61,264 | 62,504 | |||||||||||
Total, before expected credit losses | 226,707 | 69,437 | 1,614 | 297,758 | 294,431 | |||||||||||
Loss allowance, loans | -138 | -46 | -75 | -259 | -240 | |||||||||||
Loss allowance, off balance sheet exposures1 | -6 | 0 | - | -6 | -9 | |||||||||||
Total loss allowance | -144 | -46 | -75 | -265 | -249 | |||||||||||
Provision ratio (in percent) | 0.06 | 0.07 | 4.65 | 0.09 | 0.08 |
1 | Recognized under provision in Consolidated Statement of Financial Position. Off balance sheet exposures consist of guarantee commitments, committed undisbursed loans and binding offers, see Note 8. |
The table above shows the book value of loans and nominal amounts for off-balance sheet exposures before expected credit losses for each stage as well as related loss allowance amounts, in order to place expected credit losses in relation to credit exposures. Overall, the credit portfolio has an extremely high credit quality and SEK often uses risk mitigation measures, primarily through guarantees
from the Swedish Export Credit Agency (EKN) and other government export credit agencies in the Organisation for Economic Co-operation and Development (OECD), which explains the low provision ratio.
Loss Allowance
March 31, 2021 | December 31, 2020 | |||||||||||||||
Skr mn | Stage 1 | Stage 2 | Stage 3 | Total | Total | |||||||||||
Opening balance January 1 | -147 | -56 | -46 | -249 | -128 | |||||||||||
Increases due to origination and acquisition | -17 | 0 | - | -17 | -84 | |||||||||||
Net remeasurement of loss allowance | 9 | -6 | 1 | 4 | -69 | |||||||||||
Transfer to stage 1 | 0 | 0 | - | 0 | - | |||||||||||
Transfer to stage 2 | 0 | -2 | - | -2 | - | |||||||||||
Transfer to stage 3 | - | 18 | -28 | -10 | -9 | |||||||||||
Decreases due to derecognition | 13 | 0 | - | 13 | 8 | |||||||||||
Decrease in allowance account due to write-offs | - | - | - | - | 20 | |||||||||||
Exchange-rate differences1 | -2 | 0 | -2 | -4 | 13 | |||||||||||
Closing balance | -144 | -46 | -75 | -265 | -249 |
1 | Recognized under net results of financial transactions in Statement of Comprehensive Income. |
Provisions for expected credit losses (ECLs) are calculated using quantitative models based on inputs, assumptions and methods that are highly reliant on assessments. In particular, the following could heavily impact the level of provisions: the establishment of a material increase in credit risk, allowing for forward-looking macroeconomic scenarios, and the measurement of both ECLs over the next 12 months and lifetime ECLs. ECLs are based on objective assessments of what SEK expects to lose on the exposures given what was known on the reporting date and taking into account possible future events. The ECL is a probability-weighted amount that is determined by evaluating the outcome of several possible scenarios and where the data taken into consideration comprises information from previous conditions, current conditions and projections of future economic conditions. SEK’s method entails three scenarios being prepared for each probability of default curve: (i) a base scenario, (ii) a downturn scenario and (iii) an upturn scenario. The base scenario consists of
GDP forecasts from the World Bank. When calculating the ECL as of March 31, 2021 the latest available forecast was the World Bank’s forecast from January 2021. According to the World Bank’s forecast, global economic output is expected to increase by 4 percent in 2021, still more than 5 percent below the forecasts before the COVID-19 pandemic, and to increase by 3.8 percent in 2022. The base scenario has been weighted at between 72 and 78 percent, and the downturn and upturn scenarios weighted equally at between 11 and 14 percent.
SEK’s IFRS 9 model is based on GDP growth projections estimating the impact on the probability of default. SEK’s management believes that the strong positive GDP growth projections for 2021 may understate the probability of default of the asset portfolio, In the first quarter, as the IFRS 9 model is assessed to underestimate the probability of default, SEK made an overall adjustment to increase expected credit losses which was calculated pursuant to SEK’s IFRS 9 model as of March 31, 2021.
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Note 5. Financial assets and liabilities at fair value
March 31, 2021 | ||||||||||
Skr mn | Book value | Fair value | Surplus value (+)/ Deficit value (–) | |||||||
Cash and cash equivalents | 14,171 | 14,171 | - | |||||||
Treasuries/governments bonds | 16,134 | 16,134 | - | |||||||
Other interest-bearing securities except loans | 46,142 | 46,142 | - | |||||||
Loans in the form of interest-bearing securities | 46,140 | 47,381 | 1,241 | |||||||
Loans to credit institutions | 21,857 | 22,082 | 225 | |||||||
Loans to the public | 178,891 | 186,629 | 7,738 | |||||||
Derivatives | 8,560 | 8,560 | - | |||||||
Total financial assets | 331,895 | 341,099 | 9,204 | |||||||
Borrowing from credit institutions | 3,849 | 3,849 | - | |||||||
Borrowing from the public | 10,000 | 10,000 | - | |||||||
Debt securities issued | 290,833 | 291,583 | 750 | |||||||
Derivatives | 16,422 | 16,422 | - | |||||||
Total financial liabilities | 321,104 | 321,854 | 750 |
December 31, 2020 | ||||||||||
Skr mn | Book value | Fair value | Surplus value (+)/ Deficit value (–) | |||||||
Cash and cash equivalents | 3,362 | 3,362 | - | |||||||
Treasuries/governments bonds | 22,266 | 22,266 | - | |||||||
Other interest-bearing securities except loans | 33,551 | 33,551 | - | |||||||
Loans in the form of interest-bearing securities | 50,780 | 52,091 | 1,311 | |||||||
Loans to credit institutions | 31,315 | 31,424 | 109 | |||||||
Loans to the public | 171,562 | 180,453 | 8,891 | |||||||
Derivatives | 7,563 | 7,563 | - | |||||||
Total financial assets | 320,399 | 330,710 | 10,311 | |||||||
Borrowing from credit institutions | 3,486 | 3,486 | - | |||||||
Borrowing from the public | 10,000 | 10,000 | - | |||||||
Debt securities issued | 273,976 | 274,552 | 576 | |||||||
Derivatives | 25,395 | 25,395 | - | |||||||
Total financial liabilities | 312,857 | 313,433 | 576 |
Determination of fair value
The determination of fair value is described in the annual financial statements included in SEK’s 2020 Annual Report on Form 20-F, see Note 1(h)(viii) Principles for determination of fair value of financial
instruments and (ix) Determination of fair value of certain types of financial instruments.
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Financial assets in fair value hierarchy
Financial assets at fair value through profit or loss | ||||||||||||||||
Skr mn | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Treasuries/governments bonds | 10,763 | 5,371 | - | 16,134 | ||||||||||||
Other interest-bearing securities except loans | 23,427 | 22,715 | - | 46,142 | ||||||||||||
Derivatives | - | 7,911 | 649 | 8,560 | ||||||||||||
Total, March 31, 2021 | 34,190 | 35,997 | 649 | 70,836 | ||||||||||||
Total, December 31, 2020 | 33,582 | 28,220 | 1,578 | 63,380 |
Financial liabilities in fair value hierarchy
Financial liabilities at fair value through profit or loss | ||||||||||||||||
Skr mn | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Debt securities issued | - | 6,732 | 30,750 | 37,482 | ||||||||||||
Derivatives | - | 14,128 | 2,294 | 16,422 | ||||||||||||
Total, March 31, 2021 | - | 20,860 | 33,044 | 53,904 | ||||||||||||
Total, December 31, 2020 | - | 29,744 | 43,039 | 72,783 |
Due to an increased element of subjective assessment of the input in the valuation, a transfer of Skr -1 million for derivatives was made from level 2 to level 3 (year-end 2020: a transfer of Skr -10,649 million for debt securities issued was made from level 2 to level 3, a
transfer from level 3 to level 2 of Skr 6,534 million for debt securities issued was made and a transfer from level 3 to level 2 of net Skr -1,259 million for derivatives was made).
Financial assets and liabilities at fair value in Level 3, 2021
Skr mn | January 1, 2021 | Purchases | Settlements & sales | Transfers to Level 3 | Transfers from Level 3 | Gains (+) and losses (–) through profit or loss1 | Gains (+) and losses (–) in Other comprehensive income | Exchange- rate differences | March 31, 2021 | |||||||||||||||||||
Debt securities issued | -41,198 | -2,974 | 13,901 | - | - | -103 | -28 | -348 | -30,750 | |||||||||||||||||||
Derivatives, net | -263 | -275 | -489 | -1 | - | 464 | - | -1,081 | -1,645 | |||||||||||||||||||
Net assets and liabilities | -41,461 | -3,249 | 13,412 | -1 | - | 361 | -28 | -1,429 | -32,395 |
Financial assets and liabilities at fair value in Level 3, 2020
Skr mn | January 1, 2020 | Purchases | Settlements & sales | Transfers to Level 3 | Transfers from Level 3 | Gains (+) and losses (–) through profit or loss1 | Gains (+) and losses (–) in Other comprehensive income | Exchange-rate differences | December 31, 2020 | |||||||||||||||||||
Debt securities issued | -43,752 | -10,584 | 16,285 | -10,649 | 6,534 | -1,345 | 44 | 2,269 | -41,198 | |||||||||||||||||||
Derivatives, net | 22 | 7 | -400 | - | -1,259 | -1,597 | - | 2,964 | -263 | |||||||||||||||||||
Net assets and liabilities | -43,730 | -10,577 | 15,885 | -10,649 | 5,275 | -2,942 | 44 | 5,233 | -41,461 |
1 | Gains and losses through profit or loss, including the impact of exchange-rates, is reported as net interest income and net results of financial transactions. The unrealized fair value changes for assets and liabilities, including the impact of exchange-rates, held as of March 31, 2021 amounted to a Skr 223 million gain (year-end 2020: Skr 36 million gain) and are reported as net results of financial transactions. |
Uncertainty of valuation of Level 3 instruments
As the estimation of parameters included in the models used to calculate the market value of Level 3 instruments is associated with subjectivity and uncertainty, SEK has conducted an analysis of the difference in fair value of Level 3 instruments using other established parameter values. Option models and discounted cash flows are used to value the Level 3 instruments. For the Level 3 instruments that are significantly affected by different types of correlations, which are not based on observable market data, a revaluation has been made by shifting the correlations. The correlation is expressed as a value between 1 and –1, where 0 indicates no relationship, 1 indicates a maximum positive relationship and -1 indicates a maximum negative relationship. The maximum correlation in the range of unobservable inputs can thus be from 1 to –1. In the analysis, the correlations have been adjusted by +/– 0.12, which represents the level SEK uses within its prudent valuation framework. For Level 3 instruments
that are significantly affected by non-observable market data in the form of SEK’s own creditworthiness, a revaluation has been made by shifting the credit curve. The revaluation is made by shifting the credit spreads by +/- 10 basis points, which has been assessed as a reasonable change in SEK’s credit spread. The analysis shows the impact of the non-observable market data on the market value. In addition, the market value will be affected by observable market data. The result of the analysis corresponds with SEK’s business model where issued securities are linked with a matched hedging derivative. The underlying market data is used to evaluate the issued security as well as to evaluate the fair value in the derivative. This means that a change in fair value of the issued security, excluding SEK’s own credit spread, is offset by an equally large change in fair value in the derivative.
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Sensitivity analysis – level 3 assets and liabilities
Assets and liabilities | March 31, 2021 | |||||||||||||||||
Skr mn | Fair Value | Unobservable input | Range of estimates for unobservable input | Valuation method | Sensitivity max | Sensitivity min | ||||||||||||
Equity | -552 | Correlation | 0.12 – (0.12) | Option Model | -7 | 7 | ||||||||||||
Interest rate | 3 | Correlation | 0.12 – (0.12) | Option Model | 0 | 0 | ||||||||||||
FX | -959 | Correlation | 0.12 – (0.12) | Option Model | -49 | 49 | ||||||||||||
Other | -137 | Correlation | 0.12 – (0.12) | Option Model | 0 | 0 | ||||||||||||
Sum derivatives, net | -1,645 | -56 | 56 | |||||||||||||||
Equity | -5,984 | Correlation | 0.12 – (0.12) | Option Model | 6 | -6 | ||||||||||||
Credit spreads | 10BP – (10BP) | Discounted cash flow | 5 | -5 | ||||||||||||||
Interest rate | -13,345 | Correlation | 0.12 – (0.12) | Option Model | 0 | 0 | ||||||||||||
Credit spreads | 10BP – (10BP) | Discounted cash flow | 71 | -71 | ||||||||||||||
FX | -11,298 | Correlation | 0.12 – (0.12) | Option Model | 52 | -52 | ||||||||||||
Credit spreads | 10BP – (10BP) | Discounted cash flow | 53 | -53 | ||||||||||||||
Other | -123 | Correlation | 0.12 – (0.12) | Option Model | 0 | 0 | ||||||||||||
Credit spreads | 10BP – (10BP) | Discounted cash flow | 1 | -1 | ||||||||||||||
Sum debt securities issued | -30,750 | 188 | -188 | |||||||||||||||
Total effect on total comprehensive income | 132 | -132 | ||||||||||||||||
Derivatives, net, December 31, 2020 | -263 | -59 | 59 | |||||||||||||||
Debt securities issued, December 31, 2020 | -41,198 | 196 | -196 | |||||||||||||||
Total effect on total comprehensive income, December 31, 2020 | 137 | -137 |
The sensitivity analysis shows the effect that a shift in correlations or SEK’s own credit spread has on Level 3 instruments. The table presents maximum positive and negative change in fair value when correlations or SEK’s own credit spread is shifted by +/– 0.12 and +/- 10 basis points, respectively. When determining the total maximum/minimum effect on total comprehensive income the most adverse/favorable shift is chosen, considering the net exposure arising from
the issued securities and the derivatives, for each correlation. The resulting effect related to correlation sensitivity is Skr +/- 2 million. The impact from SEK’s own credit spread amounts to Skr 130 million (year-end 2020: Skr 137 million) under a maximum scenario and Skr -130 million (year-end 2020: Skr -137 million) under a minimum scenario.
Fair value related to credit risk
Fair value originating from credit risk (- liabilities increase/ + liabilities decrease) | The period’s change in fair value originating from credit risk (+ income/ - loss) | ||||||||||||
Skr mn | March 31, 2021 | 31 December 2020 | Jan–Mar 2021 | Jan–Mar 2020 | |||||||||
CVA/DVA, net1 | -17 | -17 | 0 | -18 | |||||||||
OCA2 | -126 | -108 | -18 | 111 |
1 | Credit value adjustment (CVA) and Debt value adjustment (DVA) reflects how the counterparties’ credit risk as well as SEK’s own credit rating affects the fair value of derivatives. |
2 | Own credit adjustment (OCA) reflects how the changes in SEK’s credit rating affects the fair value of financial liabilities measured at fair value through profit and loss. |
Page 18 of 28
Note 6. Derivatives
Derivatives by category
March 31, 2021 | December 31, 2020 | |||||||||||||||||||||||
Skr mn | Assets Fair value | Liabilities Fair value | Nominal amounts | Assets Fair value | Liabilities Fair value | Nominal amounts | ||||||||||||||||||
Interest rate-related contracts | 3,429 | 9,102 | 359,802 | 3,846 | 11,774 | 323,664 | ||||||||||||||||||
Currency-related contracts | 4,934 | 4,951 | 170,877 | 3,249 | 11,236 | 153,838 | ||||||||||||||||||
Equity-related contracts | 22 | 573 | 6,086 | 457 | 620 | 15,598 | ||||||||||||||||||
Contracts related to commodities, credit risk, etc. | 175 | 1,796 | 8,546 | 11 | 1,765 | 7,513 | ||||||||||||||||||
Total derivatives | 8,560 | 16,422 | 545,311 | 7,563 | 25,395 | 500,613 |
In accordance with SEK’s policies with regard to counterparty, interest rate, currency exchange, and other exposures, SEK uses, and is a party to, different kinds of derivative instruments, mostly various interest rate-related and currency exchange-related contracts,
primarily to hedge risk exposure inherent in financial assets and liabilities. These contracts are carried at fair value in the statements of financial position on a contract-by-contract basis.
Note 7. CIRR-system
Pursuant to the company’s assignment as stated in its owner instruction issued by the Swedish government, SEK administers credit granting in the Swedish system for officially supported export credits (CIRR-system). SEK receives compensation from the Swedish government in the form of an administrative compensation, which is calculated based on the principal amount outstanding.
The administrative compensation paid by the state to SEK as compensation is recognized in the CIRR-system as administrative compensation to SEK. Refer to the following tables of the statement of comprehensive income and statement of financial positions for the CIRR-system, presented as reported to the owner. Interest expenses includes interest expenses for loans between SEK and the CIRR-system which reflects the borrowing cost for the CIRR-system. Interest expenses for derivatives hedging CIRR-loans are also recog
nized as interest expenses, which differs from SEK’s accounting principles. Arrangement fees to SEK are recognized together with other arrangement fees as interest expenses.
In addition to the CIRR-system, SEK administers the Swedish government’s previous concessionary credit program according to the same principles as the CIRR-system. No new lending is being offered under the concessionary credit program. As of March 31, 2021, concessionary loans outstanding amounted to Skr 407 million (year-end 2020: Skr 382 million) and operating profit for the program amounted to Skr -6 million (3M20: Skr -8 million) for the period January-March 2021. SEK’s administrative compensation for administrating the concessionary credit program amounted to Skr 255 thousand (3M20: Skr 372 thousand).
Statement of Comprehensive Income for the CIRR-system
Skr mn | Jan-Mar 2021 | Oct-Dec 2020 | Jan-Mar 2020 | Jan-Dec 2020 | ||||||||||||
Interest income | 487 | 509 | 539 | 2,170 | ||||||||||||
Interest expenses | -520 | -535 | -512 | -2,087 | ||||||||||||
Interest compensation | - | - | 3 | 14 | ||||||||||||
Exchange-rate differences | -1 | 2 | 3 | 4 | ||||||||||||
Profit before compensation to SEK | -34 | -24 | 33 | 101 | ||||||||||||
Administrative remuneration to SEK | -45 | -46 | -50 | -196 | ||||||||||||
Operating profit CIRR-system | -79 | -70 | -17 | -95 | ||||||||||||
Reimbursement to (–) / from (+) the State | 79 | 70 | 17 | 95 |
Page 19 of 28
Statement of Financial Position for the CIRR-system
Skr mn | March 31, 2021 | December 31, 2020 | ||||||
Cash and cash equivalents | 2 | 2 | ||||||
Loans | 77,407 | 69,163 | ||||||
Other assets | 9,275 | 12,528 | ||||||
Prepaid expenses and accrued revenues | 649 | 407 | ||||||
Total assets | 87,333 | 82,100 | ||||||
Liabilities | 77,934 | 69,289 | ||||||
Derivatives | 8,905 | 12,232 | ||||||
Accrued expenses and prepaid revenues | 494 | 579 | ||||||
Total liabilities | 87,333 | 82,100 | ||||||
Commitments | ||||||||
Committed undisbursed loans | 47,783 | 51,463 | ||||||
Binding offers | 2,708 | 1,322 |
Note 8. Pledged assets and contingent liabilities
Skr mn | March 31, 2021 | December 31, 2020 | ||||||
Collateral provided | ||||||||
Cash collateral under the security agreements for derivative contracts | 10,653 | 21,979 | ||||||
Contingent liabilities1 | ||||||||
Guarantee commitments | 4,191 | 3,969 | ||||||
Commitments1 | ||||||||
Committed undisbursed loans | 54,365 | 57,213 | ||||||
Binding offers | 2,708 | 1,322 | ||||||
Leases committed but not yet commenced | 156 | - |
1 | For expected credit losses in guarantee commitments, committed undisbursed loans and binding offers, see Note 4. |
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Note 9. Capital adequacy
The capital adequacy analysis relates to the parent company AB Svensk Exportkredit. The information is disclosed according to FFFS 2014:12. For further information on capital adequacy and risks, see Note 30 to the annual financial statements included in SEK’s 2020 Annual Report on Form 20-F and see SEK’s 2020 Capital Adequacy and Risk Management (Pillar 3) Report.
Capital Adequacy Analysis
March 31, 2021 | December 31, 2020 | |||||||
Capital ratios | percent1 | percent1 | ||||||
Common Equity Tier 1 capital ratio | 21.8 | 21.8 | ||||||
Tier 1 capital ratio | 21.8 | 21.8 | ||||||
Total capital ratio | 21.8 | 21.8 |
1 | Capital ratios excl. of buffer requirements are the quotients of the relevant capital measure and the total risk exposure amount. See tables Own funds – adjusting items and Minimum capital requirements exclusive of buffer. |
March 31, 2021 | December 31, 2020 | |||||||||||||||
Buffers requirement | Skr mn | percent1 | Skr mn | percent1 | ||||||||||||
Institution specific Common Equity Tier 1 capital requirement incl. of buffers | 6,309 | 7.0 | 6,271 | 7.0 | ||||||||||||
of which minimum Common Equity Tier 1 requirements2 | 4,038 | 4.5 | 4,014 | 4.5 | ||||||||||||
of which Capital conservation buffer | 2,244 | 2.5 | 2,230 | 2.5 | ||||||||||||
of which Countercyclical buffer | 27 | 0.0 | 27 | 0.0 | ||||||||||||
of which Systemic risk buffer | - | - | - | - | ||||||||||||
Common Equity Tier 1 capital available as a buffer3 | 12,385 | 13.8 | 12,310 | 13.8 |
1 | Expressed as a percentage of total risk exposure amount. |
2 | The minimum requirements according to CRR (Regulation (EU) No 575/2013 of the European Parliament and of the Council of June 26, 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012) have fully come into force in Sweden without regard to the transitional period. The minimum requirements are 4.5 percent, 6.0 percent and 8.0 percent related to Common Equity Tier 1 capital, Tier 1 capital and total Own Funds respectively. |
3 | Common Equity Tier 1 capital ratio as reported less the minimum requirement of 4.5 percent and less 3.5 percent, consisting of Common Equity Tier 1 capital used to meet the Tier 1 and Tier 2 requirements, since SEK do not have any Additional Tier 1 or Tier 2 capital. |
March 31, 2021 | December 31, 2020 | |||||||||||||||
Total capital requirement including buffers | Skr mn | percent1 | Skr mn | percent1 | ||||||||||||
Total CRR capital requirement2 | 9,450 | 10.5 | 9,393 | 10.5 | ||||||||||||
Total FSA capital requirement3 | 13,316 | 14.9 | 13,773 | 14.7 |
1 | Expressed as a percentage of total risk exposure amount. |
2 | The requirement includes the minimum requirement of 8 percent, the capital conservation buffer and the countercyclical buffer. Expressed as a percentage of total risk exposure amount. |
3 | The requirement includes the minimum requirement of 8 percent, the capital conservation buffer and the countercyclical buffer and an additional capital requirement according to the Swedish FSA. See the additional capital requirement in the table below. Figures are calculated with one quarter lag. |
March 31, 2021 | December 31, 2020 | |||||||||||||||
Additional Capital requirement according to Swedish FSA11 | Skr mn | percent2 | Skr mn | percent1 | ||||||||||||
Credit-related concentration risk | 2,089 | 2.3 | 2,089 | 2.2 | ||||||||||||
Interest rate and other market risk | 1,780 | 2.0 | 1,780 | 1.9 | ||||||||||||
Pension risk | 11 | 0.0 | 11 | 0.0 | ||||||||||||
Capital planning buffer | 41 | 0.0 | - | - | ||||||||||||
Total Additional Capital requirement according to Swedish FSA | 3,921 | 4.3 | 3,880 | 4.1 |
1 | Figures are calculated with one quarter lag. |
2 | Expressed as a percentage of total risk exposure amount. |
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Own funds – Adjusting items
Skr mn | March 31, 2021 | December 31, 2020 | ||||||
Share capital | 3,990 | 3,990 | ||||||
Retained earnings | 15,533 | 14,856 | ||||||
Accumulated other comprehensive income and other reserves1 | 308 | 292 | ||||||
Independently reviewed profit net of any foreseeable charge or dividend | 125 | 694 | ||||||
Common Equity Tier 1 (CET1) capital before regulatory adjustments | 19,956 | 19,832 | ||||||
Additional value adjustments due to prudent valuation | -343 | -306 | ||||||
Intangible assets1 | -87 | -98 | ||||||
Gains or losses on liabilities valued at fair value resulting from changes in own credit standing | 93 | 77 | ||||||
Negative amounts resulting from the calculation of expected loss amounts | -46 | -55 | ||||||
Total regulatory adjustments to Common Equity Tier 1 capital | -383 | -382 | ||||||
Total Common Equity Tier 1 capital | 19,573 | 19,450 | ||||||
Total Own funds | 19,573 | 19,450 |
1 | From December 31, 2020, SEK applies the amendments to Delegated Regulation (EU) No 241/2014 regarding deduction of software assets from Common Equity Tier 1 (CET1). The amendments introduce an exemption from the deduction of intangible assets from CET1 for prudently valued software assets the value of which is not negatively affected by resolution, insolvency or liquidation of the institution. |
Minimum capital requirements exclusive of buffer
March 31, 2021 | December 31, 2020 | |||||||||||||||||||||||
Skr mn | EAD1 | Risk exposure amount | Minimum capital requirement | EAD1 | Risk exposure amount | Minimum capital requirement | ||||||||||||||||||
Credit risk standardized method | ||||||||||||||||||||||||
Corporates | 2,493 | 2,493 | 199 | 2,245 | 2,245 | 180 | ||||||||||||||||||
Total credit risk standardized method | 2,493 | 2,493 | 199 | 2,245 | 2,245 | 180 | ||||||||||||||||||
Credit risk IRB method | ||||||||||||||||||||||||
Central Governments | 215,454 | 10,632 | 851 | 192,077 | 9,684 | 775 | ||||||||||||||||||
Financial institutions2 | 39,696 | 9,025 | 722 | 30,661 | 6,764 | 541 | ||||||||||||||||||
Corporates3 | 115,278 | 61,368 | 4,909 | 117,415 | 63,766 | 5,101 | ||||||||||||||||||
Assets without counterparty | 175 | 175 | 14 | 163 | 163 | 13 | ||||||||||||||||||
Total credit risk IRB method | 370,603 | 81,200 | 6,496 | 340,316 | 80,377 | 6,430 | ||||||||||||||||||
Credit valuation adjustment risk | n.a. | 1,739 | 140 | n.a. | 2,284 | 183 | ||||||||||||||||||
Foreign exchange risk | n.a. | 681 | 55 | n.a. | 664 | 52 | ||||||||||||||||||
Commodities risk | n.a. | 6 | 0 | n.a. | 7 | 1 | ||||||||||||||||||
Operational risk | n.a. | 3,625 | 290 | n.a. | 3,625 | 290 | ||||||||||||||||||
Total | 373,096 | 89,744 | 7,180 | 342,561 | 89,202 | 7,136 |
1 | Exposure at default (EAD) shows the size of the outstanding exposure at default. |
2 | Of which counterparty risk in derivatives: EAD Skr 4,703 million (year-end 2020: Skr 5,535 million), Risk exposure amount of Skr 1,588 million (year-end 2020: Skr 1,908 million) and Capital requirement of Skr 125 million (year-end 2020: Skr 153 million). |
3 | Of which related to specialized lending: EAD Skr 4,939 million (year-end 2020: 3,847 million), Risk exposure amount of Skr 3,462 million (year -end 2020: Skr 2,739 million and Capital requirement of Skr 277 million (year-end 2020: Skr 219 million). |
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Credit risk
For classification and quantification of credit risk, SEK uses the IRB approach. Specifically, SEK applies the Foundation Approach. Under the Foundation Approach, the company determines the probability of default within one year (PD) for each of its counterparties, while the remaining parameters are established in accordance with CRR. Application of the IRB approach requires the Swedish FSA’s permission and is subject to ongoing supervision. Certain exposures are, by permission from the Swedish FSA, exempted from application of the IRB approach, and, instead, the standardized approach is applied. In 2020 SEK reviewed its credit risk processes in order to comply with new regulatory requirements, EBA Guidelines EBA/GL/2016/07 and Commission Delegated Regulation (EU) 2018/171, on the definition of default. As a result, SEK established a new internal definition of default, which was subsequently approved by the Swedish FSA and later, on January 1, 2021, implemented in the IRB approach for own funds requirements calculation. Counterparty risk exposure amounts in derivatives are calculated in accordance with the mark-to-market method.
Credit valuation adjustment risk
Credit valuation adjustment risk is calculated for all over-the-counter derivative contracts, except for credit derivatives used as credit protection and transactions with a qualifying central counterparty. SEK calculates this capital requirement according to the standardized method.
Foreign exchange risk
Foreign exchange risk is calculated according to the standardized approach, whereas the scenario approach is used for calculating the gamma and volatility risks.
Commodities risk
Capital requirements for commodity risk are calculated in accordance with the simplified approach under the standardized approach. The scenario approach is used for calculating the gamma and volatility risks.
Operational risk
Capital requirement for operational risk is calculated according to the standardized approach. The company’s operations are divided into business areas as defined in the CRR. The capital requirement for each area is calculated by multiplying a factor depending on the business area by an income indicator. The factors applicable for SEK are 15 percent and 18 percent. The income indicators consist of the average operating income for the past three financial years for each business area.
Transitional rules
The capital adequacy ratios reflect the full impact of IFRS 9 as no transitional rules for IFRS 9 were utilized.
Capital buffer requirements
SEK expects to meet capital buffer requirements with Common Equity Tier 1 capital. The mandatory capital conservation buffer is 2.5
percent. The countercyclical buffer rate that is applied to exposures located in Sweden was lowered from 2.5 percent to 0 percent as of March 16, 2020. The reduction is made for preventive purposes, in order to counteract credit tightening due to the development and spread of COVID-19 and its effects on the economy. As of March 31, 2020, the capital requirement related to relevant exposures in Sweden was 67 percent (year-end 2020: 70 percent) of the total relevant capital requirement regardless of location; this fraction is also the weight applied on the Swedish buffer rate when calculating SEK’s countercyclical capital buffer. The countercyclical capital buffer as of March 31, 2021 for Sweden has been dissolved due to the reduction of the countercyclical buffer value to 0 percent. Buffer rates applicable in other countries may have effects on SEK, but as most capital requirements for SEK’s relevant credit exposures are related to Sweden, the potential effect is limited. As of March 31, 2021, the contribution to SEK’s countercyclical buffer from buffer rates in other countries was 0.03 percentage points (year-end 2020: 0.03 percentage points). SEK has not been classified as a systemically important institution by any financial regulatory authority. The capital buffer requirements for systemically important institutions that came into force January 1, 2016, therefore do not apply to SEK.
Leverage Ratio
Skr mn | March 31, 2021 | December 31, 2020 | ||||||
On-balance sheet exposures | 328,866 | 297,605 | ||||||
Off-balance sheet exposures | 35,256 | 37,162 | ||||||
Total exposure measure | 364,122 | 334,767 | ||||||
Leverage ratio | 5,4 | % | 5.8 | % |
The leverage ratio is defined by CRR as the quotient of the Tier 1 capital and an exposure measure. Currently there is no minimum requirement for the leverage ratio. The leverage ratio reflects the full impact of IFRS 9 as no transitional rules were utilized.
Internally assessed economic capital
Skr mn | March 31, 2021 | December 31, 2020 | ||||||
Credit risk | 6,084 | 6,121 | ||||||
Operational risk | 203 | 203 | ||||||
Market risk | 1,093 | 1,140 | ||||||
Other risks | 185 | 183 | ||||||
Capital planning buffer | 1,610 | 2,831 | ||||||
Total | 9,175 | 10,478 |
SEK regularly conducts an internal capital adequacy assessment process, during which the company determines how much capital is needed in order to cover its risks. The result of SEK’s assessment of capital adequacy is presented above. For more information regarding the internal capital adequacy assessment process and its methods, please see Note 30 to the annual financial statements included in SEK’s 2020 Annual Report on Form 20-F.
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Note 10. Exposures
Net exposures are reported after taking into consideration effects of guarantees and credit default swaps. Amounts are calculated in accordance with capital adequacy calculations, but before the application of credit conversion factors.
Total net exposures by exposure class
Credits & interest-bearing securities | Committed undisbursed loans, derivatives, etc. | Total | ||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2021 | December 31, 2020 | March 31, 2021 | December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||
Skr bn | Amount | % | Amount | % | Amount | % | Amount | % | Amount | % | Amount | % | ||||||||||||||||||||||||||||||||||||
Central governments | 156.2 | 48.2 | 131.6 | 45.0 | 52.3 | 79.8 | 53.9 | 80.0 | 208.5 | 53.5 | 185.5 | 51.6 | ||||||||||||||||||||||||||||||||||||
Regional governments | 13.7 | 4.2 | 12.3 | 4.2 | - | - | - | - | 13.7 | 3.5 | 12.3 | 3.4 | ||||||||||||||||||||||||||||||||||||
Multilateral development banks | 3.6 | 1.1 | 3.5 | 1.2 | - | - | 0.0 | 0.0 | 3.6 | 0.9 | 3.5 | 1.0 | ||||||||||||||||||||||||||||||||||||
Public Sector Entity | 2.7 | 0.8 | 4.2 | 1.5 | - | - | - | - | 2.7 | 0.7 | 4.2 | 1.2 | ||||||||||||||||||||||||||||||||||||
Financial institutions | 34.3 | 10.6 | 24.5 | 8.4 | 5.6 | 8.6 | 6.4 | 9.5 | 39.9 | 10.3 | 30.9 | 8.6 | ||||||||||||||||||||||||||||||||||||
Corporates | 113.7 | 35.1 | 116.0 | 39.7 | 7.6 | 11.6 | 7.1 | 10.5 | 121.3 | 31.1 | 123.1 | 34.2 | ||||||||||||||||||||||||||||||||||||
Total | 324.2 | 100.0 | 292.1 | 100.0 | 65.5 | 100.0 | 67.4 | 100.0 | 389.7 | 100.0 | 359.5 | 100.0 |
Net exposure by region and exposure class, as of March 31, 2021
Skr bn | Middle East/ Africa | Asia excl. Japan | Japan | North America | Oceania | Latin America | Sweden | West European countries excl. Sweden | Central- and East European countries | Total | ||||||||||||||||||||||||||||||
Central governments | - | 0.5 | 2.8 | 1.6 | - | - | 182.4 | 18.4 | 2.8 | 208.5 | ||||||||||||||||||||||||||||||
Regional governments | - | - | - | - | - | - | 13.7 | 0.0 | - | 13.7 | ||||||||||||||||||||||||||||||
Multilateral development banks | - | - | - | - | - | - | - | 3.6 | - | 3.6 | ||||||||||||||||||||||||||||||
Public Sector Entity | - | - | - | - | - | - | - | 2.7 | - | 2.7 | ||||||||||||||||||||||||||||||
Financial institutions | 0.0 | 1.2 | 0.2 | 3.6 | 0.9 | - | 14.9 | 18.9 | 0.2 | 39.9 | ||||||||||||||||||||||||||||||
Corporates | 2.7 | 1.1 | 4.0 | 6.8 | - | 3.2 | 80.0 | 23.0 | 0.5 | 121.3 | ||||||||||||||||||||||||||||||
Total | 2.7 | 2.8 | 7.0 | 12.0 | 0.9 | 3.2 | 291.0 | 66.6 | 3.5 | 389.7 |
Net exposure by region and exposure class, as of December 31, 2020
Skr bn | Middle East/ Africa | Asia excl. Japan | Japan | North America | Oceania | Latin America | Sweden | West European countries excl. Sweden | Central- and East European countries | Total | ||||||||||||||||||||||||||||||
Central governments | 0.1 | 0.4 | 2.4 | 1.6 | - | - | 159.2 | 19.0 | 2.8 | 185.5 | ||||||||||||||||||||||||||||||
Regional governments | - | - | - | - | - | - | 12.2 | 0.1 | - | 12.3 | ||||||||||||||||||||||||||||||
Multilateral development banks | - | - | - | - | - | - | - | 3.5 | - | 3.5 | ||||||||||||||||||||||||||||||
Public Sector Entity | - | - | - | - | - | - | - | 4.2 | - | 4.2 | ||||||||||||||||||||||||||||||
Financial institutions | 0.0 | 1.2 | 0.6 | 1.7 | 0.8 | - | 11.4 | 15.0 | 0.2 | 30.9 | ||||||||||||||||||||||||||||||
Corporates | 2.6 | 1.1 | 3.9 | 5.7 | - | 3.3 | 85.2 | 20.9 | 0.4 | 123.1 | ||||||||||||||||||||||||||||||
Total | 2.7 | 2.7 | 6.9 | 9.0 | 0.8 | 3.3 | 268.0 | 62.7 | 3.4 | 359.5 |
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Net exposure to European countries, excluding Sweden
Skr bn | March 31, 2021 | December 31, 2020 | ||||||
Finland | 9.7 | 8.9 | ||||||
Denmark | 8.1 | 5.2 | ||||||
United Kingdom | 7.6 | 7.0 | ||||||
Germany | 7.8 | 8.6 | ||||||
France | 6.9 | 8.0 | ||||||
Norway | 6.7 | 4.8 | ||||||
Luxembourg | 5.4 | 4.6 | ||||||
Austria | 4.6 | 5.7 | ||||||
Poland | 3.0 | 2.9 | ||||||
Belgium | 2.7 | 2.5 | ||||||
The Netherlands | 2.7 | 3.2 | ||||||
Spain | 2.4 | 1.9 | ||||||
Portugal | 0.7 | 0.7 | ||||||
Ireland | 0.6 | 0.6 | ||||||
Switzerland | 0.5 | 0.8 | ||||||
Latvia | 0.2 | 0.2 | ||||||
Serbia | 0.2 | 0.3 | ||||||
Iceland | 0.1 | 0.1 | ||||||
Italy | 0.1 | 0.1 | ||||||
Estonia | 0.1 | 0.1 | ||||||
Lithuania | 0.0 | - | ||||||
Russian Federation | 0.0 | - | ||||||
Total | 70.1 | 66.2 |
Note 11. Transactions with related parties
Transactions with related parties are described in Note 27 to the consolidated financial statements included in SEK’s 2020 Annual Report on Form 20-F. No material changes have taken place in relation to transactions with related parties compared to that description.
Note 12. Events after the reporting period
No events with significant impact on the information in this report have occurred after the end of the reporting period.
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The Board of Directors and the Chief Executive Officer confirm that this Interim report provides a fair overview of the Consolidated Group’s operations and financial position and result, and describes material risks and uncertainties facing the Consolidated Group.
Stockholm, April 29, 2021
AB SVENSK EXPORTKREDIT
SWEDISH EXPORT CREDIT CORPORATION
Lars Linder-Aronson | Anna Brandt | ||
Chairman of the Board | Director of the Board | ||
Reinhold Geijer | Lennart Jacobsen | Hanna Lagercrantz | |
Director of the Board | Director of the Board | Director of the Board | |
Hans Larsson | Eva Nilsagård | ||
Director of the Board | Director of the Board | ||
Catrin Fransson | |||
Chief Executive Officer | |||
SEK has established the following expected dates for the publication of financial information and
other related matters:
July 15, 2021 | Interim report for the period January 1, 2021 – June 30, 2021 |
October 25, 2021 | Interim report for the period January 1, 2021 – September 30, 2021 |
February 2, 2022 | Year-end report for the period January 1, 2021 – December 31, 2021 |
The report contains information that SEK will disclose pursuant to the Securities Markets Act and/or the Financial Instruments Trading Act. The information was submitted for publication on April 29, 2021, 15:00 (CEST).
Additional information about SEK, including investor presentations and SEK’s 2020 Annual Report on Form 20-F, is available at www.sek.se. Information available on or accessible through SEK’s website is not incorporated herein by reference.
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SEK | Definitions |
Alternative performance measures (see *)
Alternative performance measures (APMs) are key performance indicators that are not defined under IFRS or in the Capital Requirements Directive IV (CRD IV) or in regulation (EU) No. 575/2013 on prudential requirements for credit institutions and investment firms (CRR). SEK has presented these, either because they are in common use within the industry or because they comply with SEK’s assignment from the Swedish government. The APMs are used internally to monitor and manage operations, and are not considered to be directly comparable with similar key performance indicators presented by other companies. For additional information regarding the APMs, refer to www.sek.se.
* After-tax return on equity
Net profit, expressed as a percentage per annum of the current year’s average equity (calculated using the opening and closing balances for the report period).
* Average interest-bearing assets
The total of cash and cash equivalents, treasuries/government bonds, other interest-bearing securities except loans, loans in the form of interest-bearing securities, loans to credit institutions and loans to the public. Calculated using the opening and closing balances for the report period.
* Average interest-bearing liabilities
The total of outstanding senior debt and subordinated liabilities. Calculated using the opening and closing balances for the report period.
Basic and diluted earnings per share (Skr)
Net profit divided by the average number of shares, which amounted to 3,990,000 for each period.
* CIRR loans as percentage of new lending
The proportion of officially supported export credits (CIRR) of new lending.
CIRR-system
The CIRR-system comprises of the system of officially supported export credits (CIRR).
Common Equity Tier 1 capital ratio
The capital ratio is the quotient of total common equity tier 1 capital and the total risk exposure amount.
Green bond
A green bond is a bond where the capital is earmarked for various forms of environmental projects.
Green lending and green loans
SEK’s green lending comprises green loans that promote the transition to a low-carbon economy. The classification is performed by sustainability analysts at SEK. The effects that the loan will give rise to, such as reduced emissions of greenhouse gases, are monitored and reported. The term green project is assigned the same meaning as the term green loan. Green loans are categorized under SEK’s framework for green bonds and green loans finance products or services that lead to significant and demonstrable progress toward the goal of sustainable development.
Leverage ratio
Tier 1 capital expressed as a percentage of the exposure measured under CRR (refer to Note 9).
Liquidity coverage ratio (LCR)
The liquidity coverage ratio is a liquidity metric that shows SEK’s highly liquid assets in relation to the company’s net cash outflows for the next 30 calendar days. An LCR of 100 percent means that the company’s liquidity reserve is of sufficient size to enable the company to manage stressed liquidity outflows over a period of 30 days. Unlike the Swedish FSA’s rules, the EU rules take into account the outflows that correspond to the need to pledge collateral for derivatives that would arise as a result of the effects of a negative market scenario.
Loans
Lending pertains to all credit facilities provided in the form of interest-bearing securities, and credit facilities granted by traditional documentation. SEK considers these amounts to be useful measurements of SEK’s lending volumes. Accordingly, comments on lending volumes in this report pertain to amounts based on this definition.
* Loans, outstanding and undisbursed
The total of loans in the form of interest-bearing securities, loans to credit institutions, loans to the public and loans, outstanding and undisbursed. Deduction is made for cash collateral under the security agreements for derivative contracts and deposits with time to maturity exceeding three months (see the Statement of Financial Position and Note 8).
Net stable funding ratio (NSFR)
This ratio measures stable funding in relation to the company’s illiquid assets over a one-year, stressed scenario in accordance with Basel III.
* New lending
New lending includes all new committed loans, irrespective of tenor. Not all new lending is reported in the Consolidated Statement of Financial Position and the Consolidated Statement of Cash Flows since certain portions comprise committed undisbursed loans (see Note 8). The amounts reported for committed undisbursed loans may change when presented in the Consolidated Statement of Financial Position due to changes in exchange rates, for example.
* New long-term borrowings
New borrowings with maturities exceeding one year, for which the amounts are based on the trade date.
* Outstanding senior debt
The total of borrowing from credit institutions, borrowing from the public and debt securities issued.
Own credit risk
Net fair value change due to credit risk on financial liabilities designated as at fair value through profit or loss.
Repurchase and redemption of own debt
The amounts are based on the trade date.
Swedish exporters
SEK’s clients that directly or indirectly promote Swedish export.
Tier 1 capital ratio
The capital ratio is the quotient of total tier 1 capital and the total risk exposure amount.
Total capital ratio
The capital ratio is the quotient of total Own funds and the total risk exposure amount.
Unless otherwise stated, amounts in this report are in millions (mn) of Swedish kronor (Skr), abbreviated “Skr mn” and relate to the group consisting of the Parent Company and its consolidated subsidiary (together, the “Group” or the “Consolidated Group”). AB Svensk Exportkredit (SEK), is a Swedish corporation with the identity number 556084-0315, and with its registered office in Stockholm, Sweden. SEK is a public limited liability company as defined in the Swedish Companies Act. In some instances, under Swedish law, a public company is obliged to add “(publ.)” to its company name.
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SEK | Definitions |
About Swedish Export Credit Corporation (SEK)
SEK is owned by the Swedish state, and since 1962 has enabled growth for thousands
of Swedish companies. To expand their production, make acquisitions, employ more people
and enable selling goods and services to customers worldwide.
SEK’s mission | Our mission is to ensure access to financial solutions for the Swedish export industry on commercial and sustainable terms. The mission includes making available fixed-interest export credits within the officially supported CIRR-system. |
SEK’s vision | Our vision is a sustainable world through increased Swedish exports. |
SEK’s core values | We are professionals, make the difficult easy and build sustainable relationships. |
SEK’s clients | We finance exporters, their subcontractors and foreign clients. The target group is companies with annual sales exceeding Skr 200 million and that are linked to Swedish interests and exports. |
SEK’s partnerships | Through Team Sweden, we have close partnerships with other export promotion agencies in Sweden such as Business Sweden and The Swedish Export Credit Agency (EKN). Our international network is substantial and we also work with numerous Swedish and international banks. |
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