RNS Number:9268J
Skandinaviska Enskilda Banken
3 May 2000
Part 2
SEB Group
Operational Profit & Loss Accounts
Jan-Mar Jan-Mar Change Full year
SEK M 2000 1999 per cent 1999
Net interest earnings 2,883 1,689 71 6,858
Net commission income 3,702 1,812 104 8,317
Net result of financial transactions 900 842 7 2,034
Other operating income 1,285 812 58 2,327
Change in surplus value in life insurance 473 268 76 1,502
operations
Total income 9,243 5,423 70 21,038
Staff costs -3,211 -1,907 68 -8,419
Pension compensation 171 125 37 873
Other operating costs -1,918 -1,388 38 -5,743
Depreciations -427 -292 46 -1,175
Total costs -5,385 -3,462 56 -14,464
Lending losses etc -281 -124 127 289
Net result from associated companies 30 42 -29 116
Result from non-life insurance operations 52 157 -67 518
Total result 3,659 2,036 80 7,497
Taxes -638 -485 32 -1,355
Taxes on change in surplus values -132 -75 76 -421
Minority interests -124 -2 -56
Total result after tax 2,765 1,474 88 5665
Key figures for the SEB Group
Jan-Mar Jan-Mar Full year
2000 1999 1999
Return on equity, % 25.3 16.5 14.6
Return incl. change in surplus values, % 27.2 18.2 17.2
Return on equity, 12 months moving average, % 15.0 12.3 14.6
Return on equity, incl. change in surplus
values, 12 month moving average, % 17.1 13.5 17.2
Earnings per share, SEK 1) 3.44 1.95 6.96
Total result after tax per share, SEK 1) 3.92 2.25 8.60
Income/cost ratio, banking operations 1.72 1.57 1.45
Income/cost ratio, SEB Group 1.60 1.48 1.30
Cost/Income ratio, banking operations 0.58 0.64 0.69
Cost/Income ratio, SEB Group 0.62 0.67 0.77
Lending loss level, % 0.16 0.14 -0.09
Provision ratio for doubtful claims, % 51.7 59.0 59.6
Level of doubtful claims, % 1.09 0.78 0.82
Total capital ratio, % 9.90 10.76 14.62
Core capital ratio, % 6.73 8.00 10,80
Profit & Loss Accounts per main group
January-March 2000, SEK
Nordic Asset Bfg Other Joint Group SEB
Banking Management Activities Activities Group
& Life & eliminations
Net interest earnings 1,771 104 1,086 127 -205 2,883
Net commission income 1,031 1,073 564 1,163 -129 3,702
Net result of financial
transactions 405 25 172 336 -38 900
Other income 106 210 109 41 819 1,285
Change in surplus values
in life insurance
operations 473 473
Total income 3,313 1,885 1,931 1,667 447 9,243
Staff costs -1,028 -408 -717 -739 -319 -3,211
Pension compensation 107 20 8 36 171
Other costs -862 -467 -501 -300 212 -1,918
Depreciation -29 -23 -91 -72 -212 -427
Total costs -1,812 -878 -1,309 -1,103 -283 -5,385
Lending losses etc -45 -312 -3 79 -281
Net result from associated
companies -2 2 18 12 30
Result from non-life
insurance operations 52 52
Total result 1,456 1,005 312 579 307 3,659
SEB Group's quarterly performance
Operational Profit & Loss Accounts
SEK M 2000:1 1999:4 1999:3 1999:2 1999:1
Net interest earnings 2,883 1,769 1,735 1,665 1,689
Net commission income 3,702 2,562 1,940 2,003 1,812
Net result of financial transactions 900 865 100 227 842
Other operating income 1,285 517 310 688 812
Change in surplus values in life
insurance operations 473 856 210 168 268
Total income 9,243 6,569 4,295 4,751 5,423
Staff costs -3,211 -2,599 -1,956 -1,957 -1,907
Pension compensation 171 452 141 155 125
Other costs -1,918 -1,578 -1,478 -1,299 -1,388
Depreciation -427 -332 -288 -263 -292
Total costs -5,385 -4,057 -3,581 -3,364 -3,462
Lending losses, etc. -281 58 13 342 -124
Net result from associated companies 30 33 29 12 42
Result from non-life insurance
operations 52 32 633 -304 157
Total result 3,659 2,635 1,389 1,437 2,036
Taxes -638 -259 -364 -247 -485
Taxes on change in surplus values -132 -240 -59 -47 -75
Minority interests -124 -32 -19 -3 -2
Total result after tax 2,765 2,104 947 1,140 1,474
Balance sheet of the SEB Group (abbreviated)
31 March 31 March 31 December
SEK M 2000 1999 1999
Lending to credit institutions 197,250 89,631 103,521
Lending to the general public 582,512 342,672 342,907
Interest-bearing securities 133,716 99,194 93,769
- Financial fixed assets 7,705 3,857 3,396
- Financial current assets 126,011 95,337 90,373
Shares and participations 21,700 5,310 9,303
Assets in insurance operations 74,669 64,548 66,111
Other assets 130,706 119,266 94,644
Total assets 1,140,553 720,621 710,255
Liabilities to credit institutions 229,938 145,564 117,774
Deposits and funding from the general public 407,093 208,640 229,534
Securities issued, etc. 205,685 122,471 122,143
Liabilities in insurance operations 71,133 58,560 63,271
Other liabilities and provisions 155,526 130,092 118,645
Subordinated liabilities 31,682 23,579 25,882
Shareholders' equity 39,496 31,715 33,006
Total liabilities and shareholders' equity 1,140,553 720,621 710,255
Problem loans and assets taken over for the protection of claims
31 March 31 March 31 December
SEK M 2000 1999 1998
Doubtful claims 15,398 6,586 6,988
Provision for possible lending losses -7,964 -3,883 -4,164
Doubtful claims, net 7,434 2,703 2,824
Claims subject to interest reduction 321 1,243 352
Total volume of problem loans 7,755 3,946 3,176
Level of doubtful claims 1,09 0,78 0,82
(Doubtful claims (net) in relation to
lending and leasing (net) at end of
period, per cent)
Provision ratio for doubtful claims 51,7 59,0 59,6
Reserve for possible lending losses in
relation to doubtful claims (gross),
per cent)
Pledges taken over
Buildings and land 94 149 82
Shares and participations 516 1,336 544
Total volume of pledges taken over 610 1,485 626
The soft loans of the Group are included among claims subject to interest
reduction.
The shortfall in income due to interest deferments was SEK 2 M (SEK 13 M),
while unpaid interest on non-performing loans amounted to SEK 129 M (SEK 61 M).
On 31 March 2000, the Group had SEK 169 M (SEK 439 M) in non-performing loans in
Sweden on which interest income was reported. These loans are not included among
the problem loans, since the corresponding collateral covers both interest and
principal.
Derivatives contracts
31 March 1999 Contracts on the asset side Contracts on the
liability side
SEK M Book value Market value Book value Market value
Interest-related 16,204 16,204 17,160 17,160
Currency-related 29,688 31,493 24,072 27,091
Equity-related 2,432 2,432 2,968 2,968
Other 30 30 29 29
Total 48,354 50,159 44,229 47,248
On 31 March 2000 the notional value of the Group's derivatives contracts
amounted to SEK 3,878 billion (SEK 3,691 billion on 31 December 1999).
The book value of derivatives instruments forming part of trading
operations is identical with the market value.
Those deviations between actual and book values that are reported in the
above table are matched by opposite deviations between market and book
values in the part of the Group's operations that is subject to hedge
accounting.
Cash flow analysis
Jan-Mar Jan-Mar Full year
SEK M 2000 1999 1999
Cash flow, current operations 3,819 4,606 4,711
Changes in assets, current operations -55,276 -43,561 -35,495
Changes in liabilities, current operations 68,292 40,526 37,385
Cash flow, current operations 16,835 1,571 6,601
Cash flow, investment activities -1,540 8,325 8,161
Cash flow, financing activities -8,516 -11,011 -10,326
Cash flow 6,779 -1,115 4,436
Liquid funds at beginning of year 9,074 4,638 4,638
Cash flow 6,779 -1,115 4,436
Liquid fund at end of year 15,853 3,523 9,074
The acquisition of BfG Bank increased liquid funds by SEK 3,165 M. In
addition, adjustment has been made for BfG's balance sheet items.
The SEB Group Profit and loss accounts
Statutory Profit & Loss Accounts
Jan-Mar Jan-Mar Change Full year
SEK 2000 1999 per cent 1999
Income
Interest receivable 12,350 6,957 78 26,124
Interest payable -9,482 -5,271 80 -19,299
Net interest earnings 2,868 1,686 70 6,825
Dividends received 18 11 64 211
Commission receivable 4,066 1,973 106 9,283
Commission payable -426 -251 70 -1,208
Net commission income 1) 3,640 1,722 111 8,075
Net result of financial transactions 2) 895 825 8 2,025
Other operating income 1,145 740 55 1,662
Income from banking operations 8,566 4,984 72 18,798
Costs
Staff costs -3,092 -1,801 72 -7,969
Other administrative costs -1,390 -940 48 -3,913
Depreciation and write-downs of
tangible and intangible fixed assets -412 -278 48 -1,120
Other operating costs -445 -341 30 -1,487
Costs from banking operations -5,339 -3,360 59 -14,489
Result from banking operations before lending
losses 3,227 1,624 99 4,309
Lending losses and provisions, net 3) -332 -131 153 207
Change in value of assets taken over 54 7 111
Write-down of financial fixed assets -3 -29
Net result from associated companies 32 42 -24 116
Operating result from banking operations 2,978 1,542 93 4,714
Result from insurance operations 4) 37 101 -63 408
Operating result 3,015 1,643 84 5,122
Pension compensation 171 125 37 873
Taxes -638 -485 32 -1,355
Minority interests -124 -2 -56
Result for the period 2,424 1,281 89 4,584
1) Net commission Income
Jan-Mar Jan-Mar Change Full year
2000 1999 percent 1999
Payment commissions 493 431 14 1,863
Securities commissions 1,968 1,100 79 5,066
Other commissions 1,179 191 1,146
Total 3,640 1,722 111 8,075
2) Net result of financial actions
Shares/participations 420 218 93 963
Interest-bearing securities 190 30 -276
Other financial instruments 216 -153 819
Realised result 826 95 1,506
Jan-Mar Jan-Mar Change Full year
2000 1999 per cent 1999
Shares/participations -72 4 291
Interest-bearing securities -123 182 -168 142
Other financial instruments -96 167 -157 -1,039
Unrealised value changes -291 353 -182 -606
Exchange rate fluctuations 363 382 -5 1,130
Redemption of bonds, SEB BoLan -3 -5 -40 -5
Total 895 825 8 2,025
3) Leading losses and provisions, net
A. Individually appraised receivables:
Reported write-down,
incurred losses -217 -80 171 -448
Reversal of previous provisions
for possible losses, reported as
incurred losses in current
period's accounts 67 69 -3 339
Reported provision for possible
losses -426 -159 168 -854
Recovered from losses incurred
in previous years 83 29 186 200
Reversal of previous provisions
for possible losses 131 31 483
Reported net cost for individually
appraised receivables -362 -110 -280
B. Receivables appraised by category:
Reported write-down incurred
losses -18 -19 -5 -86
Reported provision for possible
losses -1 -9 -89 -31
Recovered from losses incurred in
previous years 9 11 -18 35
Withdrawal from reserve for lending
losses 12 -100 31
Reported net cost for receivables
appraised by category -10 -5 100 -51
C. Allocation to/withdrawal from
reserve for political risks abroad 61 3 440
D. Contingent liabilities -21 -19 11 98
Total -332 -131 153 207
4) Result insurance operations
Non-life operations 52 157 -67 518
Life operations -15 -56 -73 -110
Total income 37 101 -63 408
SEB Group - Bridge between Statutory and operational accounts
Statutory Profit Operational
& Loss Accounts Profit
& Loss Accounts
Internal
Transactions
Jan-Mar SEB bank- Reclas- Jan-Mar
SEK M 2000 Trygg Liv insurance sification 2000 SEK M
Net interest Net interest
earnings 2,868 15 2,883 earnings
Dividends
Received 18 -18
Net commission Net commission
income 3,640 62 3,702 income
Net result of Net result
financial of financial
transactions 895 900 transactions
Other operating
income 1,145 356 -234 18 1,285 Other
operating income
473 Change in
surplus value
in life
insurance
473 operations
Income from
banking
operations 8,566 376 -172 473 9,243 Total income
Staff costs -3,092 -123 4 -3,211 Staff costs
171 171 Pension
compensation
Other
administrative
costs -1,390 -202 1,592
Depreciation and
write-downs of
tangible and
intangible fixed
assets -412 -14 -1 -427 Depreciations
Other operating
costs -445 -50 169 -1,592 -1,918 Other
operating
costs
Costs from
banking
operations -5,339 -389 172 171 5,385 Total costs
Result from banking
operations before
lending losses 3,227
Lending losses and -332 51 -281 Lending losses
provisions, net etc
Change in value of 54 -54
assets taken over
Write-down of -3 3
financial fixed
assets
Net result from 32 -2 30 Net result
associated companies from associated
companies
Operating result 2,978
from banking
operations
Result from 37 15 52 Result from
insurance non-life
Operations insurance
operations
Operating result 3,015 0 0 644 3,659 Total result
Pension
compensation 171 -171
Taxes -638 -638 Taxes
-132 -132 Taxes on
change in
surplus
values
Minority interests -124 -124 Minority
Interests
Result for the
period 2,424 0 0 341 2,765 Total result
after tax
Profit and Loss Account, Parent company
Jan-Mar Jan-Mar Change Full year
SEK M 2000 1999 per cent 1999
Income
Interest receivable 6,066 5,329 14 19,791
Leasing income 110 59 86 254
Interest payable -4,922 -4,118 20 -15,016
Net interest earnings 1)
Dividends received 22 42 -48 4,241
Commission receivable 1,874 1,327 41 5,752
Commission payable -256 -230 11 -987
Net commission income 2) 1,618 1,097 47 4,765
Net result of financial
transactions 3) 373 768 -51 1,343
Other operating income 838 705 19 1,541
Total income 4,105 3,882 6 16,919
Costs
Staff costs -1,544 -1,396 11 -5,875
Other administrative expenses -924 -1,015 -9 -4,384
Depreciation and write-downs
of tangible and intangible -75 -65 15 -266
fixed assets
Other operating costs -235 -290 -19 -1,487
Total costs -2,778 -2,766 0 -12,012
Result before lending losses 1,327 1,116 19 4,907
Lending losses and provisions, net 4) 31 -77 -140 415
Change in value of assets taken over -10
Write-down of financial fixed assets -3,057
Operating result 1,358 1,039 31 2,255
Pension provision 171 125 37 873
Other appropriations *) -539 -294 83 -1,863
Tax on result for the year *) -162 -147 10 -68
Result for the year 828 723 15 1,197
*) Group contributions reported directly against equity
1) Net interest
Jan-Mar Jan-Mar Change Full year
SEK M 2000 1999 per cent 1999
Interest receivable 6,066 5,329 14 19,791
Leasing income 110 59 86 254
Interest payable -4,922 -4,118 20 -15,016
Leasing depreciation -33 -19 74 -94
Total 1,221 1,251 -2 4,935
2) Net commission income
Payment commissions 356 323 10 1,332
Securities commissions 1,009 600 68 2,695
Other commissions 253 174 45 738
Total 1,618 1,097 47 4,765
3) Net of result of financial transactions
Jan-Mar Jan-Mar Change Full year
2000 1999 per cent 1999
Shares/participations 179 -100 4
Interest-bearing securities 74 14 -256
Other financial instruments 186 -148 1,009
Realised result 260 45 757
Shares/participations -106 -2 -23
Interest-bearing securities -77 189 -141 105
Other financial instruments -4 169 -102 -539
Unrealised value changes -187 356 -153 -457
Exchange rate fluctuations 300 367 -18 1,043
Redemption of bonds
Total 373 768 -51 1,343
4) Lending losses and provisions, net
A. Individually appraised receivables
Reported write-down, incurred losses -42 -56 -25 -289
Reversal of previous provisions
for possible losses reported as
incurred losses in current period's
accounts 34 52 -35 257
Reported provision for
possible losses -138 -101 37 -577
Recovered from losses incurred
in previous years 36 26 38 116
Reversal of previous provisions for
possible losses 83 20 394
Reported net cost for individually
appraised receivables -27 -59 -54 -99
B. Receivables appraised by category
Reported wide-down incurred losses -8 -11 -27 -52
Reported provision for possible
losses -2 -100 -12
Recovered from losses incurred
in previous years 6 7 -14 26
Withdrawal from provision for
lending losses 4 -100 14
Reported net cost for receivables
appraised by category -2 -2 -24
C. Allocation to/withdrawal from
reserve for political risks abroad 60 3 440
D. Contingent liabilities -19 -100 98
Total 31 -77 -140 415
Appendix 1
SEB Trygg Liv
SEB Trygg Liv focuses on the sale and administration of unit-linked
insurance products and their equivalent for account of the traditional
mutual life insurance business. From an accounting point of view, its
activities are separate from traditional banking activities. SEB Trygg
Liv's accounts are presented in this Appendix according to generally
accepted accounting standards within the insurance business.
SEB Trygg Liv reported a strong sales growth during the first quarter,
attributable primarily to single-premium endowment assurance, mostly
unit-linked. Sales, i.e. new premiums and extra payments under existing
insurance contracts, increased by SEK 1,763 M, or 70 per cent to SEK 4,290
M (SEK 2,527 M). The share of insurance contracts with current premiums was
14.5 per cent (16.3 per cent). Premium income (premiums paid) rose 50 per
cent to SEK 5,747 M (SEK 3,835 M). In total, assets under management
increased by SEK 54 billion or 27 per cent to SEK 252 billion (SEK 198
billion) during the twelve-month period, whereas the corresponding increase
for unit-linked insurance was 60 per cent.
Revenues increased by 49 per cent, primarily as a result of a higher
premium volume and favourable growth in assets under management within
unit-linked insurance. Operating costs and other costs increased by
SEK 110 M or 30 per cent, of which most, SEK 74 M, was attributable to
volume related sales costs.
The operating loss improved by 67 per cent, to SEK 19 M (SEK 511 M).
The total result, which includes the change in surplus values, increased by
109 per cent to SEK 454 M (SEK 217 M) compared with the year-earlier
period. This improvement was mainly due to strongly increased sales
combined with a positive development on the capital market.
The surplus value in life insurance operations is the present value of
expected future gains from signed insurance contracts. The surplus values
comprise unit-linked operations as well as commissioning agreements with
traditional life insurance companies.
Volumes, SEK M March 2000 March 1999
Sales volume
Traditional life insurance,
current share 24 (28) % 280 383
Unit-linked insurance,
current share 13 (14) % 4,010 2,144
4,290 2,527
Premium income
Traditional life insurance 1,097 1,136
Unit-linked insurance 4,650 2,689
5,747 3,825
Savings stock 31 March 31 March
Traditional life insurance 187,700 158,300
Unit-linked insurance 64,000 40,000
Profit and loss account, Jan-March, SEK M March 2000 March 1999
Commissioning agreements, traditional
life insurance 80 76
Unit-linked insurance 271 159
Risk operations and other 34 24
Total income 385 259
Operating expenses -437 -322
Capitalization of acquisition costs 69 53
Goodwill and other -36 -41
Total costs -404 -310
Operating result -19 -51
Change in surplus values 1) 473 268
Total result 454 217
Return on allocated capital, per cent 2) 30.0% 12.7%
Expense ratio per cent 3) 7.6 % 8.4%
Notes 1) After deduction for change in capitalised acquisition costs
2) Annual basis. Allocated capital 3,900 respective 3,250
3) Operating expenses expressed as percentage of premiums earned
Calculation of surplus values and changes in surplus values
Surplus values in life insurance operations are calculated on the basis of
assumptions regarding the future development of signed insurance contracts
and a risk-adjusted discount rate. The most important assumptions are the
following:
Discount rate 11 %
Return on capital, nominal assets 4 %
Return on capital, real assets 8 %
Cancellations of contracts 5 %
Cancellations of current premiums 5 %
administrative expenses SEK 250/contract per year
Mortality According to trade experience
Surplus accounting
Deferred acquisition costs are capitalized in the accounts and depreciated
according to plan. The reported change in surplus values is therefore
adjusted by the net result of the capitalisation and depreciation during
the period.
Result
Change in surplus values 542
Deferred acquisition costs -146
Depreciation + 77
-69
Reported change in surplus values 473
Balance
Surplus value at 1 January 2000 3,142
Current change of surplus values consists of
present values of new contracts 1) 386
+Return on existing contracts 129
-Realised surplus value in existing contracts -165
=Change in present value of contracts signed
before the current period -36
Actual outcome compared with operative
assumptions made 2) 12
Change in operative assumptions 3) -115
Capital return in excess of undertakings 295
Total change in surplus values 4) 542
Capitalised acquisition cost for the period -146
Depreciation of capitalised acquisition cost for the 77
period
Total reported change in surplus values 473
Closing balance 31 March 2000 5) 4,551
1) Sales defined as new contracts and extra premiums on existing contracts
2) The reported actual outcome of contracts signed can be placed in
relation to the operative assumptions that were made. Thus, the value of
the deviations can be estimated. The most important components consist of
growth in underlying assets, increased sales, particularly in the form of
extra premiums and extensions of contracts as well as cancellations.
However, the actual result of income and administrative expenses is
included in full in the operating result.
3) Subsidiary SEB Trygg Life (UK) is closed for new contracts and is being
divested as planned. The cancellation undertaking has been changed from 5
to 7.5 per cent, with a nonrecurring negative effect of SEK 115 M.
4) Before deduction for capitalised acquisition cost of SEK 248 M See
above.
5) Estimated surplus value according to the above is not included in the
published balance sheet.
Appendix 2
BfG adapted to Swedish Accounting Principles
Jan-March Jan-March 1999*
2000 1999*
MEUR MEUR MEUR
Profit and loss account
Net interest earnings 128 154 579
Dividend 1 3 5
Net Commission income 66 43 186
Net result of financial transactions 20 8 42
Other operating income 12 1 48
Total operating income 227 209 860
General administration expenses - 130 - 147 - 643
Depreciation - 11 - 16 - 56
Other operating costs - 13 - 2 - -
Total costs - 154 - 165 - 699
Lending losses - 26 - 23 - 101
TOTAL RESULT 47 21 60
*9906/2 *Normalised
END
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