The Swedish Covered Bond Corporation, SCBC Summary Jan-Dec 2010 Jan-Dec 2009 Net interest income, SEK million 1,440 813 Operating profit/loss, SEK million 1,147 -295 Net profit/loss for the period, SEK million 846 -217 Lending, SEK billion 209.7 173.3 Capital adequacy ratio, % 10.3 11.1 Tier 1 capital ratio, % 10.3 11.1 Core Tier 1 capital ratio, % 10.3 11.1 Rating, long-term funding Standard & Poor's AAA AAA Moody's Aaa Aaa All profit and loss figures in parentheses pertain to the year-earlier period. Organisation The Swedish Covered Bond Corporation, SCBC, is a wholly owned subsidiary of The Swedish Housing Finance Corporation, SBAB. SCBC conducts its operations in accordance with the requirements specified in the Covered Bonds Act (2003:1223) and the Swedish Financial Supervisory Authority's regulations FFFS 2004:11. Operating profit SCBC's operating profit in 2010 amounted to SEK 1,147 million (loss: 295). Net interest income was significantly higher than in 2009 at SEK 1,440 million (813). Net income from financial instruments measured at fair value also improved. During the year, hedgeaccounted items and loan receivables were the primary contributors to the favourable trend. During the year, SCBC developed and during the second half of the year introduced a method that better reflects the hedging relationship of the underlying hedged item. This method had a favourable impact of SEK 115 million before tax. SCBC's total operating income increased year-on-year to SEK 1,621 million (175). The stability fee totalled SEK 31 million (28). Expenses for the year amounted to SEK 464 million (445). Net loan losses amounted to SEK 10 million (loss: 25). Lending SCBC does Note conduct any new lending activities itself, but acquires loans from SBAB on an ongoing basis or as required. The aim of securing these loans is that they be included in full or in part in the cover pool that serves as collateral for SCBC's covered bond investors. SCBC's portfolio mainly comprises loans for residential mortgages, with the retail market as the largest segment. The portfolio contains no loans for purely commercial properties. Information regarding SCBC's cover pool is published monthly at the websitewww.scbc.se. Funding SCBC's operations are primarily focused on issuing covered bonds in the Swedish and international capital markets. For this purpose, the company uses two funding programmes: the Swedish mortgage bond programme for the issuance of covered bonds and SCBC's EUR 10 billion Euro Medium Term Covered Notee Programme. Both programmes have received the highest possible long-term ratings of Aaa and AAA from the rating agencies Moody's and Standard & Poor's. SCBC's funding is conducted through the issuance of covered bonds, and to a certain extent through repo transactions. In addition, SCBC receives funding in the form of a subordinated loan from SBAB. The value of debt securities in issue totalled SEK 155.3 billion (140.0). Programme utilisation at 31 December 2010 was as follows: Swedish covered bonds SEK 95.4 billion (83.9) and the Euro Medium Term Covered Notee Programme EUR 6.7 billion (5.2). The Swedish and international markets continued to stabilise in 2010. The average maturity of the debt portfolio has been extended through continuous issuances and repurchases in the international and Swedish covered bond markets. Covered bonds are still the SBAB Group's principal source of funding. Capital adequacy SCBC primarily reports credit risk pursuant to the internal ratingsbased approach (IRB approach) and operational and market risk in accordance with the standardised approach. Without taking the transitional regulations into account, the capital quotient was 3.83 (4.14), while the capital adequacy ratio and Tier 1 capital ratio amounted to 30.6% (33.1) Taking into account the transitional regulations, the capital quotient was 1.29 (1.39) and the capital adequacy ratio and Tier 1 capital ratio amounted to 10.3% (11.1). The calculation of Tier 1 capital and total capital includes profit for the year and the proposed dividend. Accounting policies SCBC applies statutory IFRS, which means that the year-end report has been prepared in compliance with IFRS subject to the additions and exceptions that ensue from the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities, the Swedish Financial Supervisory Authority's regulations and general guidelines on annual reports in credit institutions and securities companies undertakings (FFFS 2008:25) and the Annual Accounts (Credit Institutions and Securities Companies) Act. This year-end report complies with the requirements specified in IAS 34 Interim Financial Reporting and IAS 1 Presentation of Financial Statements. The accounting policies and calculation methods remain unchanged compared with the 2009 Annual Report. Dividend Distributable equity in SCBC amounted to SEK 10,411 million. Dividends are proposed by the Board under the provisions of the Companies Act and are resolved on by the Annual General Meeting. All shares are held by the Parent Company, the Swedish Housing Finance Corporation, SBAB (publ), Corporate Registration Number 556253-7513. The proposed, as yet unpaid, dividend for 2010 amounts to SEK 100 million. Significant events after the balance-sheet date * No events of material importance to assessments of the company's financial position have occurred after the close of the reporting period. Financial information The next financial report scheduled for publication is the Annual Report for 2010. Stockholm, 2 February 2010 Johanna Clason Managing Director [HUG#1485370]
Year-end report 2010
| Source: AB Sveriges Säkerställda Obligationer