STOCKHOLM, Sweden, Aug. 31, 2005 (PRIMEZONE) -- Svensk Exportkredit AB (SEK):
BUSINESS ACTIVITIES
The market continued to be characterized by high liquidity and strong price competition. Even so, SEK reached its highest level of new lending transactions ever during the first six-month period of 2005. Increased volumes were reached in the financial sector and the public sector, as well as for infrastructure credits. The corporate sector had overall low borrowing activities and a low level of investments which, combined with fierce competition within the international banking system, resulted in a lower number of transactions than expected. The margins were lower than previously in all sectors.
SEK's total volume of new customer financial transactions during the first six months of 2005 amounted to Skr 25.5 billion (11.2).
The aggregate amount of outstanding offers for new credits has continued to increase during the period and reached Skr 47.8 billion at period-end (y-e: 39.1).
The total amount of credits outstanding and credits committed though not yet disbursed also increased during the period and amounted to Skr 89.3 billion at period-end (y-e: 73.4), of which Skr 72.4 billion (y-e: 57.9) represented credits outstanding.
In August, SEK expanded its financial consulting services through an acquisition, which gives SEK a strengthened strategic position within the segment.
Borrowings
During the period the volume of new long-term borrowings, i.e., borrowings with original maturities exceeding one year, reached the equivalent of Skr 29.2 billion (23.8) or USD 4.1 billion (3.3).
SEK has proceeded the year 2005 with high activity in the capital markets. SEK's borrowing operations continues to stand on a stable and well-diversified foundation. In June, a EUR 50 million non-perpetual subordinated debt maturing in 2010 was redeemed and replaced by a similar structure maturing in 2015. SEK has continued to issue global bonds. In July, SEK's fourth global USD-denominated bond issue, which amounted to USD 1 billion with a five-year maturity, was launched.
INCOME STATEMENT Return on Equity Return on equity was 14.1 percent (20.9) before taxes, and 10.1 percent (15.0) after taxes, respectively.
Results
Operating profit was Skr 238.3 million (307.8).
Net interest earnings totaled Skr 369.2 million (418.0). The decrease in net interest earnings was due mainly to a decline in earnings from the investment portfolio (see below).
The contribution to net interest earnings from debt-financed assets was Skr 276.1 million (279.5). Lower margins on debt-financed assets were mainly compensated by higher volumes. Average volume of debt-financed assets totaled Skr 155.5 billion (136.2), and the average margin of such volume was 0.36 percent p.a. (0.41).
The contribution to net interest earnings from the investment portfolio, which represents the investment of SEK's equity, decreased substantially to Skr 93.1 million (138.5). The decline was due to a significant lower average yield in the portfolio where some long-term, fixed-rate assets with high interest rates have matured and been reinvested at substantially lower interest rates.
Administrative expenses totaled Skr 119.4 million (113.2), not including any expected costs related to the general incentive system (9.1). The increase in administrative expenses was due mainly to costs related to new regulations regarding capital adequacy, financial reporting, and corporate governance. Some of these costs are also included in commissions incurred.
Depreciations of non-financial assets amounted to Skr 15.0 million (12.3).
No credit losses were incurred.
BALANCE SHEET Total Assets and Liquidity SEK's total assets at period-end increased to Skr 199.4 billion (y-e: 162.1). The increase was due to high volumes of new transactions but also to currency exchange effects related to a weaker Swedish krona.
The aggregate volume of funds borrowed and shareholders' funds exceeded the aggregate volume of credits outstanding and credits committed though not yet disbursed at all maturities. This means that SEK has funded all its outstanding commitments through maturity.
There have been no major shifts in the break-down of SEK's counterparty risk exposures. Of the total risk exposures, 71 percent (y-e: 70) were against banks, mortgage institutions and other financial institutions; 15 percent (y-e: 15) were against highly rated OECD states; 8 percent (y-e: 9) were against corporations; and 6 percent (y-e: 6) were against local and regional authorities.
Capital Adequacy
SEK has a capital adequacy ratio well above the minimum required by law. At period-end, SEK's adjusted total capital adequacy ratio was 17.3 percent (y-e: 17.9), of which 11.0 percent (y-e: 11.9) represented adjusted Tier-1. The adjusted capital adequacy ratios are calculated with inclusion in the Tier-1 capital base of SEK's guarantee capital of Skr 600 million in addition to the regulatory capital base. The regulatory total capital adequacy ratio (which does not take into account the guarantee capital) was 15.9 percent at period-end (y-e: 16.3), of which 9.6 percent (y-e: 10.2) represented Tier-1.
In July, SEK submitted an application to the Swedish Financial Supervisory Authority related to the use of the Internal Ratings Based Approach when calculating risk-weighted claims under Basel II. The new capital adequacy regulations are expected to be effective by January 1, 2007.
Stockholm, August 31, 2005 AB SVENSK EXPORTKREDIT Swedish Export Credit Corporation Peter Yngwe President
The full report including tables can be downloaded from the enclosed link: http://hugin.info/132909/R/1009166/156187.pdf