RNS Number:8088R
Skandinaviska Enskilda Banken
21 February 2002
1
Report 2001
Fourth quarter better than the second and third
• Stronger income in the fourth quarter
• Cost efficiency measures started yielding results
• Activities to reach our Cost efficiency targets now fully committed
• Operating result* decreased by 10 per cent on comparable basis to SEK 7,153 M.
• Total costs decreased 7 per cent on comparable basis to SEK 22,679 M.
• Net interest income rose 5 per cent on comparable basis to SEK 13,053 M.
• Net commission income decreased by 20 per cent on comparable basis to
SEK 11,576 M.
• Credit losses amounted to SEK 547 M (815).
• Return on equity was 11.9 per cent (16.9).
• Earnings per share amounted to SEK 7.17 (9.43).
• A dividend of SEK 4:00 (4:00) is proposed.
• Operating result in the fourth quarter, excl. restructuring costs, was
SEK 1,860 M (1,694 in the third quarter 2001 and 1,729 in the fourth quarter
of 2000).
PRESIDENT'S COMMENT
2001 was a turbulent year. The stock markets were weak and the economies in most
countries experienced a sharp downturn reinforced by the terror attacks of
September 11.
SEB has a strong position in equity related products. The sharp downturn in
equity markets thus affected SEB more than many of its competitors.
In February last year we announced a proposed merger with ForeningsSparbanken
with the idea of creating a Nordic bank that could actively participate in the
restructuring of the European financial industry. However, EU Merger Task Force
put such demands on us that we in September mutually decided to withdraw our
application.
We therefore decided to realise our own potential by launching a restart
programme implying
• a renewal of our management team
• a cost efficiency program to reduce costs by SEK 2.5 billion, net, over the
next 18 months
• a culture change programme called "3 C", which stands for Customer
satisfaction, Cross-servicing and Cost efficiency.
The "3 C" programme is a change process being initiated in the entire group to
ensure long term profitability. Customer satisfaction is key to long-term
success. In many parts of the Group customer satisfaction is high compared to
our peers, for example in SEB Germany and in Merchant Banking.
*Operating result includes pension settlements/provisions. Excluding pension
provisions of SEK 1,002 M (943), the statutory operating result amounted to SEK
6,151 M (8,800).
2
However, external studies have shown that customer satisfaction has decreased
amongst our retail customers in Sweden. This is an area that we now address,
partly by focusing on our local branches, reinforcing their customer
responsibility.
Cross-servicing offers an important potential to enhance our revenues, by
increasing our market share with existing customers. Further strengthening the
co-operation between the units within the Group will achieve this target and
improve service to our customers at the same time.
The Cost-efficiency projects that are now under way in most parts of the bank
reflect the need for adapting to weaker markets but also for creating a long
term cost efficiency culture in the Group. The total cost reduction programme,
which focuses on support and administrative functions, amounts to SEK 3 billion,
gross, and will give an annual net effect of SEK 2.5 billion as from the first
quarter of 2003 - all other things equal.
We have already made decisions that will achieve annual cost savings of SEK 1
billion. Furthermore, we have identified, in specified projects, another SEK 2
billion in annual cost savings. Our business units are firmly committed to these
projects which are well reflected in their own plans.
The fourth quarter result was better than that of previous quarters in 2001,
partly due to stronger stock markets. The improvement was due to lower operating
costs and a stronger equity market. However, we have chosen to take an up-front
restructuring charge for the initial costs of the change programme. Most of the
charge has been taken in 2001 but some will also be affecting 2002.
A large contribution was made from Corporate & Institutions where Merchant
Banking reported strong income due to good performance in customer-driven
business. Enskilda Securities' result was weaker, as for most investment banks,
and cost reduction measures have been taken.
SEB Germany's income decreased due to the weak German economy. However, this
was to a large extent offset by further cost savings in the restructuring
programme.
The Baltic banks continue to grow, showing strong results.
Nordic Retail & Private Banking was affected by the declining stock markets but
managed to keep costs under control. In the international part of private
banking some major steps were taken to reduce costs and adapt to the market
environment.
The number of e-banking customers totalled 1,128,000 at year-end (800,000). The
increases continued both in Sweden, Germany and in the Baltic countries.
Our credit volumes remained at stable levels overall. We saw expansion in the
Nordic corporate segment, the Baltic and in mortgage lending to Swedish
households. Credit losses were at a low level and doubtful claims, gross,
declined somewhat. However, a number of companies have been downgraded by the
rating institutes and it is not unreasonable to expect an increase in the
general credit loss level in the banking industry.
All in all, in terms of result, we can conclude that 2001 was a tough year.
However under the circumstances I feel comfortable given the measures now under
way.
Since stock markets and the general economy still do not show any clear signs of
a forthcoming recovery, our cost efficiency programmes are of utmost importance
for our future. These programmes have top priority within all parts of the
group!
3
THE GROUP
Change, Change on
Profit and loss account, SEK M 2001 2000 per cent comparable
basis, per cent
Net interest income 13,053 11,616 12 5
Net commission income 11,576 13,846 -16 -20
Net result of financial transactions 2,964 3,552 -17 -16
Other operating income 2,627 3,644 -28 4
Total income 30,220 32,658 -7 -8
Staff costs -12,353 -12,761 -3 -8
Pension compensation 1,002 943 6 6
Other operating costs -8,763 -8,751 0 -4
Merger and restructuring costs -716 0
Depreciation -1,849 -1,763 +5 +1
Total costs -22,679 -22,332 2 -7
Net credit losses and write-downs -616 -890 -31 -51
Net result from associated companies -29 95 -131
Non-life insurance 257 212 21
Operating result 7,153 9,743 -27 -10
Fourth quarter results
Total income in the fourth quarter was SEK 7,701 M, 8 per cent higher than in
the third quarter of 2001 but lower than in the last quarter of 2000.
Costs in the fourth quarter, excluding restructuring costs, amounted to SEK
5,559 M compared with SEK 5,331 M in the third quarter, SEK 5,611 M in the
second quarter and SEK 6,519 M in the fourth quarter of 2000. The last two
quarters show a positive trend in terms of cost-savings.
Total merger and restructuring costs in the fourth quarter amounted to 413 M.
Credit losses, net, were SEK 181 M compared with SEK 112 M in the last quarter
of 2000.
The result for the fourth quarter before restructuring costs was SEK 1,860 M,
which was better than for the second and third quarters 2001 and even better
than for the fourth quarter of 2000. After restructuring costs the operating
result totalled SEK 1,447 M.
Full year results
Comparisons with the preceding year have been affected by one-off items and the
consolidation of Vilniaus Bankas in the fourth quarter of 2000. Furthermore,
comparisons have been affected by the currency translation difference due to the
weak Swedish krona as well as merger and restructuring costs.
Income
Total income for the full year 2001 decreased by 7 per cent to SEK 30,220 M
(32,658). Adjusted for items affecting comparability, total income dropped by 8
per cent.
4
Net interest income showed a steady increase quarter by quarter and rose by 12
per cent to SEK 13,053 M (11,616) for the full year. The cost for the
governmental deposit guarantee declined by SEK 207 M. Adjusted for item
affecting comparability, net interest income increased by 5 per cent, mainly due
to increased volumes and higher margins.
Net commission income decreased by 16 per cent to SEK 11,576 M (13,846), despite
a recovery during the fourth quarter. Commission income from credit and charge
cards rose by 17 per cent, while equity related commission income fell by 23 per
cent compared with 2000. Adjusted for items affecting comparability, net
commission income for the full year 2001 declined by 20 per cent. Net commission
income is strongly related to stock market trends both in terms of value and
business activity. (See further note on page 20.)
Net result of financial transactions was down 17 per cent to SEK 2,964 M
(3,552). Adjusted for items affecting comparability, net result of financial
transactions decreased by 16 per cent. (See further note on page 20.)
Other income amounted to SEK 2,627 M (3,644), of which capital gains and one-off
items accounted for SEK 1,024 M (1,277). Of the capital gains, SEK 512 M
referred to the sale of OM shares and SEK 248 M to the sales of shares in
Deutsche Borse - both regarded as one-off items in the first quarter of 2001.
Remaining capital gains are regarded as part of normal business activity.
Adjusted for one-off items, exchange rate fluctuations and other items affecting
comparability Other income was up 4 per cent.
Costs
Costs including restructuring costs of SEK 716 M, amounted to SEK 22,679 M
(22,332). Adjusted for restructuring costs and other items affecting
comparability, including exchange rate changes, total costs decreased by 7 per
cent.
Staff costs, gross, dropped by 3 per cent to SEK 12,353 M (12,761). Staff costs,
net, decreased by 4 per cent to SEK 11,351 M (11,818). Compensation for the
pension costs, which is included in the staff costs, gross, increased to SEK
1,002 M (943), including the pension insurance scheme that has replaced the
earlier profit-sharing system.
Adjusted for items affecting comparability, staff costs declined by 8 per cent.
This was achieved through efficiency improvement measures, primarily within
Nordic Retail & Private Banking and SEB Germany, which have also offset the
general pay cost increase. In addition, decreased income has led to lower
performance-related compensation (SEK 646 M less compared with 2000).
As of 31 December 2001 the number of employees decreased by 584 to 20,696.
At year-end 2001, total assets in the pension funds amounted to SEK 18.5 billion
(23.2), while commitments were SEK 9.1 billion (8.0). Accordingly the surplus
value at year-end 2001 amounted to SEK 9.4 billion (15.2).
In line with the promise in the annual report for 2000 total IT costs were kept
level with 2000: SEK 4.7 billion (4.8). IT costs are here defined as a
calculated cost for all IT-related activities including costs for own personnel
etc. Of these calculated costs SEK 2,221 M (2,338) represented external costs.
Deprecation amounted to SEK 1,849 M (1,763), of which goodwill accounted for SEK
733 M (671).
Merger and restructuring costs
Total merger and restructuring costs amounted to SEK 716 M. Of the total, SEK
225 M was attributable to costs for integration planning work in connection with
the planned and discontinued merger with ForeningsSparbanken (Swedbank). SEK 491
M was restructuring costs and thereof SEK 358 M is a reserve for actions taking
place during 2002.
5
Further actions have been and will be decided upon in order to create an
extensive cost cutting programme. The restructuring charge for this programme is
estimated to amount to an additional SEK 200 M, which will be accounted for in
2002.
The acquisition of BfG in January 2000 resulted in a difference between equity
and purchase price. Of the restructuring reserve for the acquisition of Trygg
Hansa in 1997, SEK 29 M was left at year-end after having used SEK 227 M during
2001.
Credit losses and doubtful claims
The Group's credit losses, including changes in the value of assets taken over,
amounted to SEK 547 M, net (815), of which SEK 480 M, net (781), in SEB Germany.
The improvement was mainly due to lower credit losses and to some extent higher
recoveries during 2001. The level of credit losses was 0.09 per cent (0.12).
The Estonian subsidiary bank Eesti Uhispank made write-downs of SEK 69 M in its
investment portfolio.
Doubtful claims, gross, amounted to SEK 15,822 M, (16,437). SEK 8,161 M (9,368)
of the doubtful claims are non-performing loans and SEK 7,661 M (7,069) are
performing loans (loans where interest and amortisation are current). Doubtful
claims net after deducting general reserves amounted to SEK 7,769 M (7,280). The
provision ratio for doubtful claims including general reserves was 50.9 per cent
(55.7). The provision ratio for non-performing loans was 54.7 per cent and for
performing loans 33.7 percent (see further page 37. The level of doubtful claims,
net, was 1.37 (1.35).
The volume of pledges taken over amounted to SEK 265 M (213).
Non-life insurance and run-off
Operating result for non-life insurance, mainly run-off, amounted to SEK 257 M
(212). The increase was mainly due to capital gains of SEK 126 M from bond
portfolio sales in the first quarter. SEB's non-life insurance operations were
not affected by the terror attacks in September.
One-off items
Total one-off income items in 2001 amounted to SEK 886 M. Non-recurring costs
for merger and restructuring amounted to SEK 716 M, of which SEK 413 M refers to
the fourth quarter. The net effect of one-off items was thus a gain of SEK 170
M. In 2000, the result was positively affected by a total of SEK 2,306 M of a
non-recurring nature.
Operating result
Operating result decreased by 27 per cent to SEK 7,153 M (9,743). Adjusted for
items affecting comparability, mainly the above one-off items, the operating
result fell by 10 per cent.
Changes in surplus value of the life insurance operations are not included in
the operational and statutory accounts. Life insurance operations should be
evaluated based on the value created by the ongoing operations and its future
long-term implications. Thus, a detailed report on SEB Trygg Liv's operations,
including changes in surplus values, is stated in Appendix)
Taxes
The Group's operating result before tax was SEK 7,153 M (9,743). The tax on the
profit for 2001 was SEK 1,990 M (2,710). Of this, SEK 1,161 M (1,730)
represented taxes paid and SEK 829 M (980) deferred tax. The weighted tax rate
is 27,8 per cent (27.8), taxes paid represents a tax rate of 16,2% (17,8%).
Furthermore, the result is charged with taxes of SEK 68 M (146) for previous
years.
6
Assets under management
At year-end 2001, the SEB Group's assets under management totalled SEK 871
billion (910). The rise in stock market values during the fourth quarter
explains the increase of 7 per cent from the third quarter. Of this, SEK 567
billion (591) are managed by SEB Asset Management, SEK 113 billion (110) by SEB
Germany and the rest by Private Banking.
Credit portfolio
As per 31 December 2001, SEB 's loan and leasing volume, excluding repos,
amounted to SEK 718 billion (690).
The total credit portfolio also includes contingent liabilities, such as letters
of credits, guarantees and credit commitments, as well as credit exposures
related to derivatives contracts. The total credit portfolio increased by
approximately SEK 29 billion during 2001 and amounted to SEK 955 billion (926)
at year-end. A significant factor for the increased credit exposure has been the
deterioration of the Swedish krona during the year. From a sector perspective
the portfolio has been stable. Within the household sector Swedish mortgage
lending accounts for the majority of the increase. Corporate credit volumes have
also increased somewhat, particularly within Merchant Banking.
SEB AG's credit exposure, measured in euro, declined by approximately EUR 1.5
billion, while it increased by approximately SEK 4 billion measured in SEK. The
three Baltic subsidiary banks have increased their credit exposure to SEK 30
billion (24) during the year, of which the major part was related to the
corporate sector.
Exposure on the telecommunication industry (operators and manufacturing
companies) increased somewhat during the year, totalling approximately SEK 15
billion, 1.5 per cent of the Group's total portfolio. Exposure on the IT sector
declined somewhat during the year, totalling approximately SEK 4 billion. (See
further in Appendix 3.)
The net exposure on emerging markets at the year-end amounted to SEK 9. 7
billion (11.5) after deduction of provisions for possible lending losses.
Risk and capital management
In order to ensure the best possible use of the capital of the Group and to
evaluate profitability in the various business areas with more precision SEB
uses a control model that is based upon economic capital. Capital at Risk (CAR).
CAR represents an assessment of the risk for unexpected losses that the
operations of the Group imply at each given point in time. It is based upon
statistical probability calculations of the Bank's various types of risk; i.e.
credit, market, insurance, operational and business risks. CAR is well in line
with the forthcoming changes of the capital adequacy rules. When allocating
capital to the divisions, CAR, like the capital requirement for risk-weighted
assets, are important parameters. When calculating the return on capital of the
divisions their respective results, after an assumed tax rate of 28 per cent,
are put in relation to the allocated capital.
The risk level for each type of risk, without considering diversification
effects, as well as the Group's total CAR, are summarised in the following table
(SEK billion):
31 Dec. 2001 31 Dec. 2000
Market risk 5 3
Credit risk 34 32
Insurance risk 6 5
Operational and business risk 8 9
Diversification -14 36
Total CAR 39 36
7
The Group's risk taking in trading operations (so-called value at risk, VaR)
averaged SEK 133 M during 2001. This means that the Group, with 99 per cent
certainty, could not expect to lose more than a maximum of SEK 133 M during a
ten-day period. During the year this risk varied between SEK 80 M and SEK 165 M.
Following table shows the risk by risk type (SEK M).
Min Max Average 31 Dec 2001 31 Dec 2000
Interest risk 66 168 126 146 98
Currency risk 12 58 26 14 19
Equity risk 4 24 15 12 30
Diversification -34 -29 -61
Total 80 165 133 143 86
An increase of market interest rates by one percentage point as per 31 December
2001, would result in a reduction in the market value of the Group's all
interest-bearing assets and liabilities, including derivatives, by SEK 2,200 M
(1,600).
Capital base and capital adequacy
On the 31 December 2001, the capital base for the financial group of
undertakings (excluding the insurance companies) amounted to SEK 54.4 billion
(53.3). Core capital was SEK 38.7 billion (36.5), of which SEK 1.9 billion
constituted so-called core capital contribution. The risk-weighted assets
amounted to SEK 501 billion (496).
The rise in risk-weighted assets due to increased lending and a weaker Swedish
krona have been counteracted with continued capital rationalisation,
particularly within SEB Germany. In addition, the Financial Supervisory
Authority's approval of SEB's internal Value-at-Risk model last December has
contributed to reducing risk-weighted assets by a little more than SEK 5 billion.
The core capital ratio was 7.71 per cent (7.37) and the total capital ratio was
10.84 per cent (10.76). The Group's long-term goals to maintain a core capital
ratio of at least 7 per cent and a total capital ratio of not less than 10.5 per
cent have thus been met.
During the year SEB has taken an active part in the work evaluating and
responding to the proposed new capital adequacy rules of the Basle Committee and
the EU commission. The Bank participated in the two Quantitative Impact Studies
that the Basle Committee carried out for the purpose of evaluating the effects
of the new rules. This work has provided good insight into the changes that can
be expected. The Group will continue to monitor the development of the new rules
on a regular basis and will as part of this consider the Group's capital
situation in order to be prepared when the new rules become effective.
Rating
SEB's credit ratings are unchanged. The long-term rating with Moody's is A2,
with Standard & Poor's A- and with Fitch A+. SEB's mortgage subsidiary's (SEB
BoLan) debt issues were given a long-term rating of A+ by Fitch in December 2001.
8
Employee stock options programme
The Board of Directors approved an incentive programme based on a maximum of
7,000,000 employee stock options, under similar terms and conditions as the
preceding year's programme, for approximately 1,000 senior officers and key
individuals. At allotment, the Management Committee will receive 1,500,000
options, approximately 400 other senior officers will receive 3,700,000 options
and about 600 key personnel and experts 1,800,000 employee stock options. Each
option carries entitlement to the acquisition of one Series A share at a price
corresponding to 110 per cent of the average of the price at the close of the
Stock Exchange during the period February 21 - March 6, 2002. The employee stock
options may be exercised between three and seven years following allotment.
Including this year's approved options programme, the number of outstanding
employee stock options (1999-2002) totals approximately 19 million,
corresponding to 2.6 per cent of the number of shares outstanding.
Existing employee stock options programmes are hedged through swap agreements
for both the options price increase and the accompanying social cost component.
It is proposed that the employee stock options programme for 2002 is initially
hedged in the same manner. The cost of the hedging arrangement for both the
employee stock options and the social costs are calculated as the difference
between the dividend level of the SEB share and the current financing cost for
the number of underlying shares. If the price of the SEB share increases by SEK
10, the social costs will amount to approximately SEK 15 M. The hedging
arrangement means that shareholders' equity will be fully compensated and remain
intact.
Repurchase of own shares
The Board of SEB has decided to propose that the Annual General Meeting
authorise the Board to decide on the repurchase of the Company's shares via the
Stock Exchange during the period prior to the Annual General Meeting of
shareholders in 2003 in order to protect the bank against the cost of the 2002
employee stock options programme. The repurchased shares will replace the swap
contract for the price increase in the employee stock options approved by the
Board. This authorisation comprises the acquisition of a maximum of seven
million Series A shares, corresponding to approximately 1 per cent of the total
number of shares in the Bank. It is proposed that the Annual General Meeting's
decision also include the possibility to transfer the repurchased shares to the
employee stock options holders under the 2002 programme, in accordance with the
terms and conditions of the programme and a mandate for the Board to transfer
the repurchased shares that are not used for delivery to the options holders via
the Stock Exchange prior to the 2003 Annual General Meeting. The acquisition and
transfer of shares via the Stock Exchange can only be effected at a price within
the registered price interval at any given time on the Stockholm Exchange, which
means the interval between the highest bid price and the lowest ask price.
In addition, the Board decided, as in prior years and in accordance with Ch.4
Sub Section 5 of the Securities Business Act (1991:981), to propose to the
Annual General Meeting that, during the time prior to the next Annual General
Meeting, it be permitted to acquire within its own securities business the
Group's own Series A and Series C shares in a number that at any time means that
the holding of such shares does not exceed 5 per cent of the total number of
shares in the Bank. The price of the acquired shares must correspond to the
applicable market price at the time.
The proposals for the repurchase of the Group's own shares falls within the
maximum 10 per cent of outstanding share volume permitted by applicable
legislation.
9
Dividend
The size of the dividend in SEB is determined by the financial position and
growth possibilities of the Group. SEB strives to achieve long-term growth based
upon a capital base for the financial group of undertakings that must not be
inferior to a core capital ratio of 7 per cent. The dividend per share shall,
over a business cycle, correspond to around 40 per cent of earnings per share,
calculated on the basis of operating result after tax.
Earnings per share was SEK 7.17 (9.43). The Board of Directors proposes a
dividend of SEK 4.00 (SEK 4.00) per Series A and Series C shares. This proposal
corresponds to 56 per cent (40.9) of earnings per share. The total dividend
amounts to SEK 2,818 M (2,818). The SEB share will be traded ex dividend as from
11 April 2002.
Stockholm, 21 February, 2002
Lars H. Thunell
President and Group Chief Executive
Financial information during 2002
7 May Interim report January-March
22 August Interim report January-June
7 November Interim report January-September
The Annual General Meeting will be held on Wednesday 10 April, 2002 at 12.30 p.m.
(Swedish time) at Cirkus, Djurgardsslatten, Stockholm.
Reports are also found on the Internet (www.seb.net).
Additional information is available from:
Gunilla Wikman, Head of Group Communications, +46 8 763 81 25
Per Anders Fasth, Head of Group Investor Relations, +46 8 763 95 66
Annika Halldin, Responsible for financial information, +46 8 763 85 60
Laurence Westerlund, Investor Relations, +46 8 763 86 27
10
THE DIVISIONS AND BUSINESS AREAS
SEB's operations are as from December 2001 organised into six divisions: Nordic
Retail & Private Banking, Corporate & Institutions, SEB Germany, SEB Asset
Management, SEB Trygg Liv and The Baltic & Poland.
Summary of operating result per division and business area
SEK M 2001 2000 Change
per cent
Nordic Retail & Private Banking 2 226 2 920 -24
Retail Banking 1 266 1 338 -5
Private Banking 497 1 112 -55
SEB Kort 463 470 -1
Corporate & Institutions 4 675 5 382 -13
Merchant Banking (incl. Mid 4 306 4 288 0
Corporate and Securities
Services)
Enskilda Securities 369 1 094 -66
SEB Germany 895 787 14
SEB Asset Management 593 809 -27
SEB Trygg Liv -79 86 -192
The Baltic & Poland 547 370 48
Total all divisions 8 857 10 354 -14
Joint Group incl. capital gain -1 704 -611 179
and elimination
Operating result 7 153 9 743 -27
Nordic Retail & Private Banking
The division was formed in December 2001 through combining the Personal Banking
Sweden and Personal Banking International divisions and including parts of the
Mid Corporate business area.
The aim is to further increase customer orientation and strengthen SEB's local
presence in Sweden. Moreover, the intention is to secure and develop the leading
position in the private banking sector as well as improve co-operation between
units in Sweden, units in the Nordic region and between the various sales and
service channels.
In specific terms, this resulted in a reinstatement of collective customer and
profit responsibility at the slightly more than 200 branch offices.
Concurrently, the telephone and Internet units were combined into a new business
area.
The division has about 1.5 million private customers and 120,000 small and
mid-size corporate customers, of which about 25,000 previously were included
in the Mid Corporate business area.
Operations are divided into three main business areas: Retail Banking, including
branch office operations, telephone and Internet banking in Sweden and Denmark;
Private Banking, with Enskilda Banken in Sweden and private banking activities
in Luxembourg, Norway, the UK and Switzerland; and SEB Kort, with operations in
four Nordic countries.
11
For full-year 2001, Nordic Retail & Private Banking reported a result of SEK
2,226 M, a decline of 24 per cent compared with a year earlier.
Return on allocated capital, SEK 7,000 M, was 22.9 per cent. Risk-weighted
assets amounted to SEK 100 billion.
The decline in earnings is attributable mainly to a 22 per cent decrease in
commission income, related to the decline in the stock market. However, net
interest income developed positively, due mainly to improved margins.
In the lending sector, the pressure on margins continued. However, this trend
was partly offset by increased volumes. In the housing loans sector, SEB
continued to grow, in volume as well as market shares.
Several extensive restructuring measures were implemented during 2001 in the
former Personal Banking International operations:
The e-banking venture in Norway was discontinued. In this market, the division
will focus on asset management and mutual funds activities.
SEB closed its e-banking operations in the UK during the third quarter.
Retail Banking
The retail banking operations include the branch office activities and the
combined telephone and Internet units. The area posted a result in 2001 of SEK
1,266 M (1,338).
The savings market is decisive, not only for the private banking operations, but
also in the retail area. SEB strengthened its position in the Swedish savings
market during 2001. In terms of total savings, SEB has the largest share, 16.8
per cent (September 2001). SEB also posted an increase in bank deposits, with a
current share of 13.8 per cent.
The steady increase in new Internet customers continued in Sweden, actually
exceeding the Bank's own goal. At year-end, the division had about 660,000
e-banking customers in Sweden. Nearly every second customer who personally cites
SEB as his or her main bank is now also an Internet customer.
In Denmark, SEB has about 25,000 customers.
Private Banking
Private Banking serves private individuals with investable assets as well as
foundations. The result, SEK 497 M (1 112), was heavily affected by the stock
exchange decline during 2001 - although the trend began to turn during the
autumn. In SEB Enskilda Banken, the response to the weakening market was
increased activity toward customers, which partly offset the general trend.
Assets managed within Private Banking declined 6 per cent during the year to SEK
252 billion, while at the same time the stock exchange index fell 16 per cent.
Expertise is a decisive factor, particularly in private banking. An illustration
of SEB's efforts is that nearly 800 new Swedish securities advisor licences were
granted at year-end solely within Enskilda Banken. SEB was granted a total of
about 1 500 licenses during 2001 - the decidedly largest portion on the Swedish
market.
An e-banking service was launched in Luxembourg and was well received by
existing private banking customers.
12
SEB Kort
The operating result declined 1 per cent to SEK 463 M. Income rose by 5 per
cent, mainly due to increased card and redemption volumes. Costs rose by 4 per
cent, largely as a result of increased volumes. However, in 2001 certain items
have been accounted for on a gross basis, which have affected both income and
costs (income up 9 per cent, costs up 12 per cent). Credit losses rose by 57 per
cent to SEK 108 M, mainly attributable to confirmed losses and frauds. The
credit loss level is however low in an international perspective.
Diners Club Denmark was again this year awarded first prize in the
Teleperformance Grand Prix for best call centre. Diners Club Norway was awarded
third prize.
Cost-savings programme
During 2001, Nordic Retail & Private Banking reduced costs by 3 per cent, from
SEK 6,216 M to SEK 6,000 M. The efficiency enhancement work continues. The
division's portion of the Group's cost-reduction programme through 2003 is about
SEK 1,000 M.
During the same period, the personnel reduction was about 300 positions. During
2001, Nordic Retail & Private Banking reduced its personnel by 5 per cent to
4,898 (5 144). The division restructuring costs in 2001 amounted to SEK 184 M.
Corporate & Institutions
The Corporate & Institutions division is focused on large and medium sized
companies as well as financial institutions, and consists of Merchant Banking
(since December 2001 also comprising the business areas Securities Services and
Mid Corporate) and Enskilda Securities.
The operating result for 2001 amounted to SEK 4,675 M (5,382). The "old"
Merchant Banking showed a result in line with the record result in 2000, while
the results for Enskilda Securities and Securities Services were negatively
affected by the market conditions during 2001.
Return on allocated capital, SEK 15,500 M, was 21.7 per cent. Risk-weighted
assets amounted to SEK 208 billion.
Capital efficiency remains in focus of the division and the cost efficiency
process has been intensified. Some projects to increase efficiency is in
progress and further activities will be initiated during 2002. Enskilda
Securities has for example launched a programme aiming at reducing costs by 15
per cent. Other examples are the continuing development of internet solutions
with the objective to rationalise processes both for customers and the Bank, as
well as a number of ongoing projects for outsourcing of relevant processes
within Merchant Banking. The gross cost reduction from these measures is
estimated to SEK 325 M in annual effect as from the first quarter of 2003.
Merchant Banking - Continued strong performance with high profitability
The result for Merchant Banking, including Securities Services and Mid Corporate
amounted to SEK 4,306 M (4,288).
Since the end of 2001 Merchant Banking consists of the business areas Merchant
Banking, Securities Services and Mid Corporate. In connection with the
reorganisation the responsibility for a large number of customers moved from Mid
Corporate to the Nordic Retail and Private Banking division. This implies that
Mid Corporate is now responsible for the relationship with 3 450 customer and as
previously SEB Finans.
Merchant Banking, excluding the added entities, showed a continued strong
performance in the fourth quarter but not as good as the fourth quarter in 2000
which showed an exceptional result due to very strong performance in Trading and
Treasury and income from a number of very large structured Finance transactions.
The result for 2001 is in line with the record result for 2000, SEK 3,052 M
(3,036). The growth in customer related income continued and was up 9 per cent
compared with 2000, while income from treasury related activities decreased by
20 per cent. The increase in customer related income was partly attributable to
a continued good performance from trading activities and expansion within growth
areas such as Structured Finance.
For a number of years Merchant Banking has actively focused on cost efficiency
to enable investments in selected growth areas. Despite large investments in
these areas the underlying cost level, i.e. costs excluding performance related
remuneration and exchange rate effects, decreased by 4 per cent compared with
last year. This means that the underlying costs decreased for the fourth
consecutive year.
13
During 2001 a number of customer surveys have confirmed Merchant Banking's
leading position in its key markets.
Securities Services' result amounts to SEK 517 M (661), which is 22 per cent
lower than the record year 2000 but 7 per cent better than 1999. Securities
Services is highly affected by the development of the global securities markets,
which was negative during 2001. This is in sharp contrast to the past years'
considerable growth in terms of volume as well as in value. Securities Services'
strong market position remains firm with a market share of 30 to 75 per cent
within the different segments.
Mid Corporates' result for year 2001, including SEB Finans amounted to SEK 758 M
(605), an increase of 25 per cent compared to 2000.
Mid Corporates' result/ excluding SEB Finans, amounted to SEK 521 M (279). The
increase is mainly explained by higher revenues and considerably lower credit
losses.
The result for SEB Finans amounted to SEK 237 M (326). The decrease is due to a
combination of lower commission revenues and higher lending losses. At the same
time, however, the company has increased its volumes and reports favourable
sales volumes with the core business in focus.
Enskilda Securities - improved position in difficult market
Total market value as well as volume of trading declined on all Nordic stock
exchanges compared with 2000. Activities on the stock markets were the lowest
since autumn 1999 and there were few IPOs during the year.
Enskilda Securities managed to maintain its strong position in the Nordic stock
markets and kept its No. 1 position in Sweden and Norway; in Finland and Denmark
it was ranked No. 2 and 3, respectively. Enskilda Securities' turnover in the
secondary market for equities remained unchanged compared with 2000, although it
slackened towards the end of the year.
Enskilda Securities' income during 2001 dropped by 34 per cent. Income declined
in all product areas. Revenues from mainly IPOS and issues, M&A and trading were
affected by the unfavourable and uncertain market climate. Brokerage income,
which is the single most important income source/ also declined in the third
quarter as a result of lower volumes, but rebounded during the last quarter of
the year.
Total costs declined 20 per cent, which was mainly an effect of lower bonus
provisions due to the lower result. Costs before bonuses rose 10 per cent, most
of which as a result of higher IT expenses. A cost-reduction programme is under
way. This programme also includes downsizing of personnel and the goal is for
cost to decline by 15 per cent during 2003. Result for the year was charged with
restructuring costs of SEK 24 M.
After a loss in the third quarter of SEK 17 M, operating result in the fourth
quarter was a profit of SEK 81 M. For the full year, Enskilda Securities
reported a result of SEK 369 M (1,094).
14
SEB Germany
SEB Germany's result amounted to SEK 895 M (787). The result for the fourth
quarter, SEK 202 M, is better than the average operational profit for the first
three quarters due to lower costs in the last quarter.
The weakened Swedish krona has affected the profit and loss account. Total
income for SEB Germany fell by 10 per cent in EUR and by 2 per cent in SEK.
Total cost declined by 9 per cent in EUR and by 1 per cent in SEK.
Net interest income, SEK 4,119 M, has remained stable considering that the
reduction in risk weighted assets made it possible to reduce allocated
shareholders' equity for 2001 by EUR 400 (or approximately SEK 3,700 M). This in
turn has reduced net interest income on allocated equity by over SEK 100 M as
compared to the previous year.
Commission income fell by 20 per cent to SEK 1,365 M as a result of the weak
market development.
During the first quarter SEB AG sold its shares in Deutsche Borse, which
resulted in a capital gain of EUR 26,8 M (about SEK 248 M).
During the fourth quarter the SEB Invest and SEB ImmoInvest funds generated
increased positive net inflows amounting to SEK 2,3 billion as compared to SEK
3.7 billion during the first nine months. Assets under Management, which
decreased during the first nine months, has now increased again to SEK 112
billion, which is 3 per cent above the level at year-end 2000.
Return on allocated capital, SEK 10 800 M, was 6.0 per cent. Risk-weighted
assets amounted to SEK 146 billion. Since SEB's acquisition, risk-weighted
assets have been reduced by nearly 65 SEK billion (almost - 30 per cent), of
which SEK 17 billion in 2001.
The number of e-banking customers has during the year increased by 62 per cent
up to a total of 236 000 at year-end. Also, the activity among the Internet
customers has increased. Today, 23 per cent of all payments, 38 per cent of the
share transactions and 45 per cent of all account inquiries are taking place
over the Internet.
The restructuring activities continued according to plan and resulted in the
reduction of risk-weighted assets, the number of full time employees and costs.
Under the prevailing market conditions, the focus in restructuring work remains
on continued cost reductions. Hence, the number of full time employees, 3 852 as
per end of December, is more than 200 full time employees below the year-end
target. During 2002, the restructuring focus gradually will be more and more
aimed at increasing income.
The previous SEB unit in Germany, Skandinaviska Enskilda Banken AG, has been
merged with SEB AG in November (this unit is included in the Merchant Banking
division of SEB AG and is thus not reported as part of the SEB Germany
division). In conjunction with this merger, additional restructuring of central
support functions have taken place, thus further reducing SEB's costs in
Germany.
The SEB Germany division does not include those units (corporate customers/
trading and the old Skandinaviska Enskilda Banken AG) that are internally
included in the Merchant Banking division. Appendix 1 therefore provides
supplementary information consisting of the entire SEB AG Group's accounts
stated in EUR. The figures for 2000, as for SEB Germany above were adjusted for
internal purchases and sales by Skandinaviska Enskilda Banken in Germany and BfG
in Luxemburg. However, adjustment was not made for the external company sales
completed by SEB AG during 2000.
15
SEB Asset Management (SEB Invest)
As from 21 February 2002 the SEB Invest division will reinstate the name SEB
Asset Management to strengthen its market profile as a leading supplier of
management expertise and services to companies, institutions and private
individuals. SEB Asset Management holds strong market positions in Sweden as
well as in Denmark and Finland. More than 100 portfolio managers and analysts
work within the division in the Nordic region and in the US.
The division reported an operating result of SEK 593 M (809), down 27 per cent.
Income declined 15 per cent to SEK 1,631 M (1,868), mainly due to the negative
stock market trend. Costs were reduced 2 per cent to SEK 1,038 M (1,059).
The underlying costs declined significantly more, however, since they were
affected by the weak Swedish krona (SEK 47 M) and by restructuring costs (SEK 54
M). During the year, the operations in Hong Kong, Tokyo and Oslo were
discontinued and it was decided to transfer the operations in London to
Stockholm. The total cost savings is estimated to amount to slightly more than
SEK 100 M annually as from the first quarter of 2003.
Return on allocated capital, SEK 1,700 M, was 25.1 per cent.
At 31 December 2001, SEB Asset Management had SEK 567 billion (591) under
management, of which SEK 181 billion (197) in funds. Total managed capital
declined 4 per cent since year-end.
Market shares for the division on the Nordic fund markets remained strong. The
share of the total fund assets in Sweden is 18.4 per cent (19.6), in Finland 8.2
per cent (9.1) and Denmark 1.0 per cent (0.6). The division is also the market
leader in institutional management in the Nordic region.
In 2001, the net inflow to the mutual fund companies in Sweden totalled SEK 57.3
billion, of which SEB accounted for SEK 3.6 billion or 6.4 per cent (8.9). These
figures do not include the Group's sales of external funds, which began during
the latter part of 2000.
In October, SEB was the first in the Nordic markets to start fixed-income funds
focused on corporate bonds, which invest in both the US and the EU: SEB
Corporate Bonds Euro - SEB Corporate Bonds - SEK.
SEB Trygg Liv
Total result from ongoing business was SEK 1,162 M (1,317). This corresponds to
a return on allocated capital of 21.5 per cent. However, total result was
affected by short-term market fluctuations and changes in assumptions. This led
to a total result net of SEK 583 M (423).
Operating result, i.e. before changes in surplus value, amounted to SHK -79 M
(86). A detailed report on SEB Trygg Liv is stated in Appendix 3.
Lower market values on funds assets resulted in a decline in income of 10 per
cent. Operating and other expenses declined 5 per cent, excluding restructuring
costs of SEK 55 M. Measures to reduce costs include closing the sales operations
in Finland and Norway, discontinuing own telephone sales and a review of
staffing in all functions. Total costs savings are estimated at more than SEK
100 M annually as from the first quarter of 2003.
Sales, i.e. new premiums and extra premiums under existing insurance contracts,
measured as weighted sales, declined by 9 per cent. Most of the decline occurred
during the first quarter and is attributable to single-payment endowment
insurance, which is sensitive to the prevailing market situation. Premium income
(total paid-in premiums) declined by 16 per cent to SEK 15,528 M (18,532).
16
According to the Insurance Association's statistics, SEB Trygg Liv's market
share on the total life insurance market amounted to 13,0 (14,9) per cent.
The market for single premium endowment insurance has had a significant decline,
which has negatively affected all bank-owned insurance companies. The fact that
SEB Trygg Liv's product mix also contains occupational pension insurance, has
made SBB Trygg Liv better off in protecting its market position compared to
other bank-owned insurance companies.
SEB Trygg Liv's ambition is to continue to develop in the occupational pension
segment and other services and products procured by the employer and to secure
positions in the private sector. The focus is on unit-linked insurance, which
accounts for most sales.
At the end of 2001, the Welfare Analysis unit was formed to follow developments
in the Swedish welfare system and determine what role and what need SEB Trygg
Liv as a life insurance company can fill in this area.
The Baltic & Poland
Growth in the Baltic has continued to be very strong and the countries have not
been affected appreciably by the economic instability and reduced demand that
affected large parts of the world. Domestic demand and larger exports, as well
as increased demand for loans, leasing products and savings products, are
contributing to the growth.
Through its subsidiaries, Eesti Uhispank, Latvijas Unibanka and Vilniaus Bankas,
SEB has a strong base, with large market shares, in the Baltic States. The trend
of earnings for the banks continues to be highly favourable. Adjusted for
Vilniaus Bankas, which was consolidated in the last quarter of 2001, income
increased by 24 per cent, compared with the preceding year. The cost/income
ratio declined to 0.64.
The focus of operations during the year has been on developing the banks in
terms of expertise, products and efficiency. All three banks are now offering
private advisory services and are today selling some SEB funds and insurance
policies. The co-operation between the local banks and with other SEB units has
been productive, resulting in many transactions as well as increased customer
satisfaction.
The number of customers has increased by more than 15 per cent and the three
banks now have a total of nearly 1.2 million customers. More than 220 000
customers, an increase of 100 per cent since the preceding year, are today using
the Internet to conduct their bank transactions. In October, for the second year
in a row, Unibanka in Latvia and Vilniaus Bankas in Lithuania were named the
best banks in their countries.
The strong growth has also implied a need of development for new products and
services as well as an increased level of activities. Through ongoing
effectiveness and co-ordination, the cost for this can be effected with only a
few per cent increased cost level.
The result for SEB's operations in the Baltic States increased by 54 per cent to
SEK 570 M (370). Pro forma, with Vilniaus Bankas consolidated during all of
2000, the increase was 26 per cent.
During 2001 SEB acquired additional shares in the Polish bank Bank Ochrony
Srodowiska (BOS). Today, SEB owns 47 per cent of BOS and is thereby the largest
single owner.
Economic growth in Poland declined from 6 per cent to 2 per cent during the year.
Exports have not been affected to the same degree, however; it is primarily
domestic demand that has decreased, dampening growth.
17
The focus on Scandinavian Clients Department, an operation that is directed
primarily to Scandinavian companies, has been highly successful and attracted
more clients than had been expected in its first year.
The result of BOS is not consolidated in SEB. However, costs of SEK 23 M for BOS
are accounted for in the total result of The Baltic & Poland division, SEK 547 M.
Return on allocated capital for the division, SEK 2,750 M, was 14,3 per cent.
Risk-weighted assets amounted to SEK 35 billion.
18
SEB Group
Operational Profit and Loss Account
Change
2001 2000 per cent
Net interest income 13 053 11 616 12
Net commission income 11 576 13 846 -16
Net result of financial transactions 2 964 3 552 -17
Other income 2 627 3 644 -28
Total income 30 220 32 658 -7
Staff costs -12 353 -12 761 -3
Pension compensation 1 002 943 6
Other operating costs -8 763 -8 751 0
Amortisation of goodwill -733 -671 9
Depreciations -1 116 -1 092 2
Merger & Restructuring costs -716
Total costs -22 679 -22 332 2
Net credit losses etc* -547 -815 -33
Write-downs -69 -75
Net result from associated companies -29 95 -131
Operating result from non-life insurance 257 212 21
Operating result 7 153 9 743 -27
Current tax -1 229 -1 876 -34
Deferred tax -829 -980 -15
Minority interests -44 -245 -82
Net profit for the year 5 051 6 642 -24
* including change in value of seized assets and write-down of financial
fixed assets
Profit and loss items, average currency rates
2001 2000
SEK 1,000 1,000
EUR 9,252 8,446
USD 10,331 9,161
Balance sheet items, actual currency rates
2001 2000
SEK 1,000 1,000
EUR 9,304 8,829
USD 10,567 9,499
Key figures
2001 2000
Return on equity, % 11,9 16,9
Earnings per share, SEK 7,17 9,43
Income/cost ratio, SEB Group 1,33 1,46
Income/cost ratio, banking operations 1,30 1,42
Cost/income ratio, SEB Group 0,75 0,68
Cost/income ratio, banking operations 0,77 0,70
Lending loss level, % 0,09 0,12
Provision ratio for doubtful claims, % 44,6 49,1
Level of doubtful claims, % 1,37 1,35
Total capital ratio, % 10,84 10,76
Core capital ratio, % 7,71 7,37
19
Operational Profit & Loss Account, quarterly performance
SEK M 2001:4 2001:3 2001:2 2001:1 2000:4
Net interest income 3 507 3 312 3 164 3 070 2 898
Net commission income 2 996 2 622 2 965 2 993 3 507
Net result of financial transactions 693 762 534 975 1 294
Other income 505 446 521 1 155 598
Total income 7 701 7 142 7 184 8 193 8 297
Staff costs -3 096 -3 021 -3 200 -3 036 -3 391
Pension compensation 236 237 231 298 227
Other operating costs -2 233 -2 080 -2 181 -2 269 -2 847
Goodwill amortisations -196 -180 -179 -178 -184
Depreciations -270 -287 -282 -277 -324
Merger & Restructuring costs -413 -233 -70
Total costs -5 972 -5 564 -5 681 -5 462 -6 519
Net credit losses etc* -181 -135 -52 -179 -112
Write-downs -45 -7 -14 -3
Net result from associated companies -34 -11 17 -1 20
Operating profit from non-life insurance -22 36 2 241 43
Operating result 1 447 1 461 1 456 2 789 1 729
*including change in value of seized assets and write-down of financial fixed
assets
20
Net commission income
SEK M 2001:4 2001:3 2001:2 2001:1 2000:4
Payments 282 270 259 283 286
Cards 471 445 479 445 426
Issue of securities 1) 108 145 130 49 114
Custody and mutual fund 820 762 853 931 1 170
Courtage shares 513 419 541 662 659
Courtage other 68 39 34 47 47
Lending 74 96 116 105 116
Deposits 19 15 17 16 1
Guarantees 33 31 40 31 35
Advisory 1) 144 52 207 89 241
Derivatives 55 36 10 79 32
Other 271 89 71 166 91
SEB AG and The Baltic 616 636 658 602 756
Commission income 3 474 3 035 3 415 3 505 3 974
Payments - 250 - 252 - 233 - 246 - 209
Securities - 59 - 38 - 26 - 102 - 59
Other - 126 - 63 - 88 - 58 - 69
SEB AG and The Baltic - 43 - 60 - 103 - 106 - 130
Commission costs - 478 - 413 - 450 - 512 - 467
Payments 503 463 505 482 503
Securities 1 450 1 327 1 532 1 587 1 931
Other 470 256 373 428 447
SEB AG and The Baltic 573 576 555 496 626
Net commission income 2 996 2 622 2 965 2 993 3 507
1) A reclassification of Q2 has been done by SEK 47 M.
Net result financial transactions
Mkr 2001:4 2001:3 2001:2 2001:1 2000:4
Skandinaviska Enskilda Banken 246 323 83 419 621
Enskilda Securities 85 - 12 32 121 145
SEB AG - 34 42 19 49 64
Other 1 9 37 12
Realised and unrealised 298 353 143 626 842
Exchange rate fluctuations 387 409 391 349 448
Redemptions of bonds 8 4
Net result financial transactions 693 762 534 975 1 294
21
Operational Profit and Loss Account by division
2001, SEK M Nordic
Retail &
Private SEB Corporate & SEB Asset SEB The Baltic & Other incl SEB
Banking Germany Institutions Management Trygg Liv Poland eliminations Group
Net interest income 4 328 4 119 4 007 100 94 1 183 - 778 13 053
Net commission income 3 645 1 365 4 431 1 506 47 596 - 14 11 576
Net result of
financial transactions 184 101 2 165 14 - 23 197 326 2 964
Other income 202 551 168 11 1 375 157 163 2 627
Total income 8 359 6 136 10 771 1 631 1 493 2 133 - 303 30 220
Staff costs -2 955 -2 651 -3 762 - 567 - 571 - 673 -1 174 -12 353
Pension compensation 461 218 46 2 275 1 002
Other operating costs -3 239 -1 816 -2 450 - 432 - 872 - 451 497 -8 763
Amortisation of goodwill - 56 - 8 - 32 - 49 - 588 - 733
Depreciations - 83 - 369 - 160 - 23 - 33 - 217 - 231 -1 116
Merger &
Restructuring costs - 184 - 35 - 54 - 55 - 388 - 716
Total costs -6 000 -4 836 -6 245 -1 038 -1 563 -1 388 -1 609 -22 679
Net credit losses etc* - 69 - 479 149 - 133 - 15 - 547
Write-downs - 1 - 67 - 1 - 69
Net result from
associated companies - 64 75 - 9 2 - 33 - 29
Operating result
from non-life insurance 257 257
Operating result 2 226 -5 241 4 674 593 - 79 547 -1 704 7 153
including change in value of seized assets
23
Nordic Retail & Private Banking
SEK M Q 4 Q 4 Change Jan-Dec Jan-Dec Change
2001 2000 per cent 2001 2000 per cent
Net interest income 1 088 1 039 5 4 328 4 072 6
Net commission income 956 1 097 -13 3 645 4 684 -22
Net result of
financial transactions 38 37 3 184 204 -10
Other income 50 121 -59 202 214 -6
Total income 2 132 2 294 -7 8 359 9 174 -9
Staff costs -744 -849 -12 -2 955 -3 180 -7
Pension compensation 81 117 -31 461 459 0
Other operating costs -839 -1 095 -23 -3 239 -3 393 -5
Merger & Restructuring costs -89 -184
Amortisation of goodwill -1 -100 -2 -100
Depreciations -17 -32 -47 -83 -100 -17
Total costs -1 608 -1 860 -14 -6 000 -6 216 -3
Net credit losses etc* -6 323 -102 -69 151 -146
Net result from
associated companies -26 -53 -51 -64 -189 -66
Operating result from
non-life insurance
Operating result 492 704 -30 2 226 2 920 -24
*including change in value of seized assets and write-down of financial fixed assets
Private Banking
SEK M Q 4 Q 4 Change Jan-Dec Jan-Dec Change
2001 2000 per cent 2001 2000 per cent
Net interest income 152 146 4 508 526 -3
Net commission income 332 408 -19 1 338 1 816 -26
Net result of
financial transactions 30 39 -23 101 171 -41
Other income 4 102 -96 25 106 -76
Total income 518 695 -25 1 972 2 619 -25
Staff costs -184 -194 -5 -718 -717 0
Pension compensation 13 -15 -187 83 71 17
Other operating costs -234 -254 -8 -697 -693 1
Merger & Restructuring costs 4 -42
Amortisation of goodwill -1 -100 -2 -100
Depreciations 2 -10 -120 -25 -29 -14
Total costs -399 -474 -16 -1 399 -1 370 2
Net credit losses etc* -1 26 -104 -12 52 -123
Net result from
associated companies -26 -53 -51 -64 -189 -66
Operating result from
non-life insurance
Operating result 92 194 -53 497 1 112 -55
*including change in value of seized assets and write-down of financial fixed assets
24
Retail Banking
SEK M Q 4 Q 4 Change Jan-Dec Jan-Dec Change
2001 2000 per cent 2001 2000 per cent
Net interest income 900 864 4 3 682 3 415 8
Net commission income 307 358 -14 1 107 1 699 -35
Net result of
financial transactions 8 -2 83 32 159
Other income 17 18 -6 83 100 -17
Total income 1 232 1 238 0 4 955 5 246 -6
Staff costs -454 -562 -19 -1 858 -2 115 -12
Pension compensation 57 122 -53 338 349 -3
Other operating costs -487 -718 -32 -2 031 -2 256 -10
Merger & Restructuring costs -93 -142
Amortisation of goodwill
Depreciations -17 -17 -47 -54 -13
Total costs -994 -1 175 -15 -3 740 -4 076 -8
Net credit losses etc* 28 317 -91 51 168 -70
Net result from
associated companies
Operating result from
non-life insurance
Operating result 266 380 -30 1 266 1 338 -5
*including change in value of seized assets and write-down of financial fixed assets
SEB Kort
SEK M Q 4 Q 4 Change Jan-Dec Jan-Dec Change
2001 2000 per cent 2001 2000 per cent
Net interest income 36 29 24 138 131 5
Net commission income 317 331 -4 1 200 1 169 3
Net result of
financial transactions 1 -100
Other income 29 1 94 8
Total income 382 361 6 1 432 1 309 9
Staff costs -106 -93 14 -379 -348 9
Pension compensation 11 10 10 40 39 3
Other operating costs -118 -123 -4 -511 -444 15
Merger & Restructuring costs
Amortisation of goodwill
Depreciations -2 -5 -60 -11 -17 -35
Total costs -215 -211 2 -861 -770 12
Net credit losses etc* -33 -20 65 -108 -69 57
Net result from
associated companies
Operating result from
non-life insurance
Operating result 134 130 3 463 470 -1
*including change in value of seized assets and write-down of financial fixed assets
25
Corporate & Institutitions
SEK M Q 4 Q 4 Change Jan-Dec Jan-Dec Change
2001 2000 per cent 2001 2000 per cent
Net interest income 1 076 954 13 4 007 3 983 1
Net commission income 1 245 1 190 5 4 431 5 058 -12
Net result of
financial transactions 474 1 034 -54 2 165 2 724 -21
Other income 49 207 -76 168 565 -70
Total income 2 844 3 385 -16 10 771 12 330 -13
Staff costs -1 027 -1 096 -6 -3 762 -4 292 -12
Pension compensation 41 48 -15 218 198 10
Other operating costs -638 -744 -14 -2 450 -2 305 6
Merger & Restructuring costs -35 -35
Amortisation of goodwill -14 -14 -56 -51 10
Depreciations -43 -48 -10 -160 -154 4
Total costs -1 716 -1 854 -7 -6 245 -6 604 -5
Net credit losses etc* 8 -326 -102 149 -344 -143
Net result from
associated companies
Operating result from
non-life insurance
Operating result 1 136 1 205 -6 4 675 5 382 -13
*including change in value of seized assets and write-down of financial fixed assets
Merchant Banking including Mid Corporate and Securities Services
SEK M Q 4 Q 4 Change Jan-Dec Jan-Dec Change
2001 2000 per cent 2001 2000 per cent
Net interest income 1 075 994 8 4 023 4 149 -3
Net commission income 675 493 37 2 282 2 081 10
Net result of
financial transactions 394 881 -55 1 941 2 049 -5
Other income 54 208 -74 156 452 -65
Total income 2 198 2 576 -15 8 402 8 731 -4
Staff costs -695 -678 3 -2 562 -2 448 5
Pension compensation 41 48 -15 218 198 10
Other operating costs -463 -519 -11 -1 793 -1 725 4
Merger & Restructuring costs -11 -11
Amortisation of goodwill -1 -100
Depreciations -23 -36 -36 -91 -112 -19
Total costs -1 151 -1 186 -3 -4 239 -4 087 4
Net credit losses etc* 8 -360 -102 143 -357 -140
Net result from
associated companies
Operating result from
non-life insurance
Operating result 1 055 1 030 2 4 306 4 287 0
*including change in value of seized assets and write-down of financial fixed assets
26
Merchant Banking excluding Mid Corporate and Securities Services
SEK M Q 4 Q 4 Change Jan-Dec Jan-Dec Change
2001 2000 per cent 2001 2000 per cent
Net interest income 740 671 10 2 673 2 750 -3
Net commission income 491 287 71 1 469 1 183 24
Net result of
financial transactions 321 831 -61 1 803 1 941 -7
Other income 29 182 -84 99 390 -75
Total income 1 581 1 971 -20 6 044 6 264 -4
Staff costs -577 -554 4 -2 095 -2 001 5
Pension compensation 30 39 -23 166 155 7
Other operating costs -335 -355 -6 -1 253 -1 235 1
Merger & Restructuring costs -7 -7
Amortisation of goodwill
Depreciations -21 -33 -36 -82 -103 -20
Total costs -910 -903 1 -3 271 -3 184 3
Net credit losses etc * 87 -62 279 -44
Net result from
associated companies
Operating result from
non-life insurance
Operating result 758 1 006 -25 3 052 3 036 1
* including change in value of seized assets and write-down of financial fixed assets
Enskilda Securities
SEK M Q 4 Q 4 Change Jan-Dec Jan-Dec Change
2001 2000 per cent 2001 2000 per cent
Net interest income 1 -40 -103 -16 -166 -90
Net commission income 570 696 -18 2 149 2 976 -28
Net result of
financial transactions 80 153 -48 224 675 -67
Other income -5 -1 12 113 -89
Total income 646 808 -20 2 369 3 598 -34
Staff costs -332 -418 -21 -1 200 -1 844 -35
Pension compensation
Other operating costs -175 -225 -22 -657 -580 13
Merger & Restructuring costs -24 -24
Amortisation of goodwill -14 -13 8 -56 -51 10
Depreciations -20 -12 67 -69 -42 64
Total costs -565 -668 -15 -2 006 -2 517 -20
Net credit losses etc* 6 13 -54
Net result from associated companies
Operating result from
non-life insurance
Operating result 81 140 -42 369 1 094 -66
*including change in value of seized assets and write-down of financial fixed assets
27
SEB Germany
SEK M Q 4 Q 4 Change Jan-Dec Jan-Dec Change
2001 2000 per cent 2001 2000 per cent
Net interest income 1 103 966 14 4 119 4 068 1
Net commission income 308 449 -31 1 365 1 705 -20
Net result of
financial transactions -8 54 -115 101 227 -56
Other income 103 -45 551 236 133
Total income 1 506 1 424 6 6 136 6 236 -2
Staff costs -606 -620 -2 -2 651 -2 645 0
Pension compensation
Other operating costs -502 -488 3 -1 816 -1 861 -2
Merger & Restructuring costs
Amortisation of goodwill
Depreciations -91 -111 -18 -369 -362 2
Total costs -1 199 -1 219 -2 -4 836 -4 868 -1
Net credit losses etc* -132 -182 -27 -480 -781 -39
Net result from
associated companies 27 58 -53 75 200 -63
Operating result
from non-life insurance
Operating result 202 81 149 895 787 14
*including change in value of seized assets and write-down of financial fixed assets
SEB Asset Management
SEK M Q 4 Q 4 Change Jan-Dec Jan-Dec Change
2001 2000 per cent 2001 2000 per cent
Net interest income 23 30 -23 100 102 -2
Net commission income 383 550 -30 1 506 1 754 -14
Net result of
financial transactions 6 4 50 14 7 100
Other income 2 11 5 120
Total income 414 584 -29 1 631 1 868 -13
Staff costs -129 -179 -28 -567 -592 -4
Pension compensation 6 11 -45 46 43 7
Other operating costs -113 -165 -32 -432 -481 -10
Merger & Restructuring costs -35 -54
Amortisation of goodwill 13 -2 -8 -7 14
Depreciations -4 -8 -50 -23 -22 5
Total costs -262 -343 -24 -1 038 -1 059 -2
Net credit losses etc*
Net result from
associated companies
Operating result from
non-life insurance
Operating result 152 241 -37 593 809 -27
*including change in value of seized assets and write-down of financial fixed assets
28
SEB Trygg Liv
SEK M Q 4 Q 4 Change Jan-Dec Jan-Dec Change
2001 2000 per cent 2001 2000 per cent
Net interest income 19 26 -27 94 119 -21
Net commission income 12 -5 47 45 4
Net result of financial
transactions -4 7 -157 -23 9
Other income 354 410 -14 1 375 1 479 -7
Total income 381 438 -13 1 493 1 652 -10
Staff costs -138 -154 -10 -571 -542 5
Pension compensation
Other operating costs -154 -291 -47 -872 -954 -9
Merger & Restructuring costs -55 -55
Amortisation of goodwill -8 -8 -32 -33 -3
Depreciations -9 -8 13 -33 -28 18
Total costs -364 -461 -21 -1 563 -1 557 0
Net credit losses etc*
Net result from
associated companies 4 -2 -9 -9
Operating result from
non-life insurance
Operating result 21 -25 -184 -79 86 -192
*including change in value of seized assets and write-down of financial fixed assets
The Baltic & Poland
SEK M Q 4 Q 4 Change Jan-Dec Jan-Dec Change
2001 2000 per cent 2001 2000 per cent
Net interest income 352 280 26 1 183 653 81
Net commission income 161 133 21 596 334 78
Net result of
financial transactions 57 70 -19 197 163 21
Other income 31 31 157 81 94
Total income 601 514 17 2 133 1 231 73
Staff costs -176 -151 17 -673 -368 83
Pension compensation 1 -100 2 3 -33
Other operating costs -132 -132 -451 -309 46
Merger & Restructuring costs
Amortisation of goodwill -13 -19 -32 -49 -39 26
Depreciations -56 -61 -8 -217 -136 60
Total costs -377 -362 4 -1 388 -849 63
Net credit losses etc* -49 1 -200 -64
Net result from
associated companies -23 3 2 52 -96
Operating result from
non-life insurance
Operating result 152 156 -3 547 370 48
*including change in value of seized assets and write-down of financial fixed assets
29
Statutory Profit and Loss Account
SEK M Q 4 Q 4 Change Change
2001 2000 per cent 2001 2000 per cent
Income
Interest income 12 423 13 144 -5 53 616 51 196 5
Interest costs -8 925 -10 257 -13 -40 605 -39 640 2
Net interest income 3 498 2 887 21 13 011 11 556 13
Dividends received 10 13 -23 95 877 -89
Commission income 3 379 4 077 -17 13 039 15 132 -14
Commission costs - 478 - 670 -29 -1 853 -1 669 11
Net commission income 1) 2 901 3 407 -15 11 186 13 463 -17
Net result of
financial transactions 2) 691 1 288 -46 2 987 3 544 -16
Other operating income 318 409 -22 1 920 2 208 -13
Income from banking operations 7 418 8 004 -7 29 199 31 648 -8
Costs
Staff costs -2 963 -3 242 -9 -11 796 -12 234 -4
Other administrative and
operating costs -2 176 -2 688 -19 -8 282 -8 345 -1
Depreciation and
write-downs of tangible and
intangible fixed assets - 449 - 492 -9 -1 784 -1 703 5
Merger & Restructuring costs - 358 - 661
Costs from banking operations -5 946 -6 422 -7 -22 523 -22 282 1
Profit/loss from
banking operations
before credit losses 1 472 1 582 -7 6 676 9 366 -29
Net credit losses 3) - 206 - 61 - 549 - 858 -36
Change in value of seized assets 2 43 -95
Write-downs of
financial fixed assets - 20 - 51 -61 - 69 - 75 -8
Net result from
associated companies - 38 22 - 20 104 -119
Operating profit from
banking operations 1 208 1 492 -19 6 040 8 580 -30
Operating profit from
insurance operations 4) 3 10 -70 111 220 -50
Operating profit 1 211 1 502 -19 6 151 8 800 -30
Pension compensation 236 227 4 1 002 943 6
Profit before tax and
minority interests 1 447 1 729 -16 7 153 9 743 -27
Current tax *) - 73 - 461 -84 -1 229 -1 876 -34
Deferred tax - 165 - 152 9 - 829 - 980 -15
Minority interests 12 - 36 -133 - 44 - 245 -82
Net profit for the period **) 1 221 1 080 13 5 051 6 642 -24
*) Of which tax on previous
years income -40 -193 -68 -146
**) Earnings per share, SEK 1,73 1,54 7,17 9,43
Number of shares 704 557 680 704 557 680 704 557 680 704 557 680
30
1) Net commission income
SEK M Q 4 Q 4 Change Change
2001 2000 per cent 2001 2000 per cent
Payment commissions 681 912 -25 2 638 2 424 9
Securities commissions 1 552 1 461 6 6 152 8 137 -24
Other commissions 668 1 034 -35 2 396 2 902 -17
Net commission income 2 901 3 407 -15 11 186 13 463 -17
2) Net result of financial transactions
SEK M Q 4 Q 4 Change Change
2001 2000 per cent 2001 2000 per cent
Shares/participations 69 - 169 -141 1 728 - 44
Interest-bearing
securities 238 183 30 975 413 136
Other financial instruments - 343 738 -146 -1 155 1 693 -168
Realised result - 36 752 -105 1 548 2 062 -25
Shares/participations 526 - 62 411 - 451 -191
Interest-bearing securities - 243 12 - 322 105
Other financial instruments 52 140 -63 - 194 493 -139
Unrealised value changes 335 90 - 105 147 -171
Exchange rate fluctuations 385 442 -13 1 536 1 360 13
Redemption of bonds 7 4 75 8 - 25 -132
Net result of
financial transactions 691 1 288 -46 2 987 3 544 -16
3) Net credit losses
SEK M Q 4 Q 4 Change Change
2001 2000 per cent 2001 2000 per cent
Individually appraised
receivables
Reported write-down,
incurred losses - 923 -1 982 -53 -2 691 -3 496 -23
Reversal of previous
provisions for possible losses,
reported as incurred losses
in current years accounts 648 1 651 -61 2 014 2 569 -22
Reported provision for
possible losses - 573 - 526 9 -1 411 -1 552 -9
Recovered from losses
incurred in previous years 210 381 -45 573 612 -6
Reversal of previous
provisions for possible losses 447 291 54 949 638 49
Reported net cost for
individually appraised
receivables - 191 - 185 3 - 566 -1 229 -54
Receivables appraised
by category
Reported write-down,
incurred losses - 35 9 - 114 - 57 100
Reported provision
for possible losses - 5 2 - 22 - 8 175
Recovered from losses
incurred in previous years 7 - 4 28 24 17
Withdrawal from
reserve for lending losses
Reported net cost for
receivables appraised by
category - 33 7 - 108 - 41 163
Allocation to/withdrawal
from reserve for political
risks abroad - 7 69 -110 74 363 -80
Contingent liabilities 25 48 -48 51 49 4
Net credit losses - 206 - 61 - 549 - 858 -36
4) Operating profit from insurance operations
SEK M Q 4 Q 4 Change Change
2001 2000 per cent 2001 2000 per cent
Non-life operations - 22 43 -151 257 212 21
Life operations 25 - 33 -176 - 146 8
Operating profit from
insurance operations 3 10 -70 111 220 -50
31
Cash flow analysis
SEK M 2001 2000
Cash flow before changes in lending and deposits -4 225 10 795
Increase in lending to the public -30 571 -36 262
Increase in deposits from the public 45 356 27 113
Cash flow, current operations 10 560 1 646
Cash flow, investment activities -2 201 41 291
Cash flow, financing activities -11 321 -20 630
Cash flow for the period -2 962 22 307
Liquid funds at beginning of year 46 532 24 225
Cash flow for the period -2 962 22 307
Liquid funds at end of period 43 570 46 532
Balance sheet
SEK M
31 December 31 December Change
2001 2000 per cent
Lending to credit institutions 175 380 164 673 7
Lending to the public 634 995 605 759 5
Interest-bearing securities 153 033 158 047 -3
- Financial fixed assets 4 094 4 736 -14
- Financial current assets 148 939 153 311 -3
Shares and participations 10 227 8 688 18
Assets used in the insurance operations 66 459 71 749 -7
Other assets 123 221 113 894 8
Total assets 1 163 315 1 122 810 4
Liabilities to credit institutions 221 686 217 364 2
Deposits and borrowing from the public 465 243 419 887 11
Securities issued, etc. 194 682 199 103 -2
Liabilities of the insurance operations 64 111 66 932 -4
Other liabilities and provisions 143 293 146 505 -2
Subordinated liabilities 30 008 31 410 -4
Shareholders' equity 1) 44 292 41 609 6
Total liabilities and shareholders' equity 1 163 315 1 122 810 4
1) Change in shareholders' equity
SEK M
31 December 31 December Change
2001 2000 per cent
Opening balance 41 609 33 006 26
New share issue 4 067 -100
Dividend to shareholders -2 818 -2 466 14
Result, holding of own shares - 1 21 -105
Merger difference 194 0
Translation difference 257 339 -24
Net profit for the period 5 051 6 642 -24
Closing balance 44 292 41 609 6
32
Derivative contracts
31 December 2001 Contracts on the asset side Contracts on the liability side
SEK M Book value Market value Book value Market value
Interest-related 18 114 19 786 18 152 20 950
Currency-related 33 570 34 268 32 007 32 056
Equity-related 1 771 1 771 1 321 1 321
Other 6 6 6 6
Total 53 461 55 831 51 486 54 333
On 31 December 2001 the notional value of the Group's derivatives contracts
amounted to SEK 5 217 billion (SEK 4 285 billion on 31 December 2000).
The book value of derivatives instruments forming part of trading operations is
identical with the market value.
Those deviations between actual and book values which are reported in the above
table are matched by opposite deviations between market and book values in the
part of the Group's operations which is the object of hedge accounting.
33
Problem loans and seized assets
SEK M 31 December 31 December
2001 2000
Non-performing loans 8 161 9 368
Performing loans 7 661 7 069
Doubtful claims 15 822 16 437
Provision for possible lending losses 1) -7 049 -8 072
of which provision for non-performing loans -4 464
of which provision for performing loans -2 585
Doubtful claims, net 2) 8 773 8 365
Claims subject to interest reduction 42 308
Total volume of problem loans 8 815 8 673
1) General provisions not included in the above -1 004 -1 085
2) In case loans are believed to involve a lending loss risk, a corresponding
provision for a possible loss has been made. Doubtful claims net is equivalent
to the volume in where loss is not considered to occur taking into consideration
collateral and the borrower's repayment capacity.
Level of doubtful claims 1,37 1,35
(Doubtful claims (net) in relation to lending
and leasing (net) at end of period, per cent)
Provision ratio for doubtful claims 44,6 49,1
(Reserve for possible lending losses in
relation to doubtful claims (gross), per cent)
Provision ratio for non-performing loans 54,7
Provision ratio for performing loans 33,7
Provision ratio for doubtful claims
considering general provisions 50,9 55,7
Pledges taken over
Buildings and land 87 104
Shares and participations 178 109
Total volume of pledges taken over 265 213
The soft loans of the Group are included among claims subject to interest
reduction.
The shortfall in income due to interest deferments was SEK 6 M (9), while unpaid
interest on non-performing loans amounted to SEK 208 M (271).
On 31 December 2001, the Group had SEK 55 M (107) 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.
34
2) Net commission income
SEK M Q 4 Q 4 Change Change
2001 2000 per cent 2001 2000 per cent
Payment commissions 172 386 -55 676 1 416 -52
Securities commissions 679 844 -20 2 669 3 580 -25
Other commissions 329 208 58 1 011 962 5
Net commission income 1 180 1 438 -18 4 356 5 958 -27
3) Net result of financial transactions
SEK M Q 4 Q 4 Change Change
2001 2000 per cent 2001 2000 per cent
Shares/participations 363 59 1 648 65
Interest-bearing securities 196 182 8 795 394 102
Other financial instruments - 472 195 -1 242 725
Realised result 87 436 -80 1 201 1 184 1
Shares/participations - 10 - 3 - 23 - 15 53
Interest-bearing securities - 134 - 34 - 278 - 199 40
Other financial instruments 294 222 32 169 211 -20
Unrealised value changes 150 185 -19 - 132 - 3
Exchange rate fluctuations 332 331 0 1 272 1 117 14
Net result of
financial transactions 569 952 -40 2 341 2 298 2
4) Net credit losses
SEK M Q 4 Q 4 Change Change
2001 2000 per cent 2001 2000 per cent
Individually
appraised receivables
Reported write-down,
incurred losses - 251 -1 173 -79 -1 041 -1 420 -27
Reversal of previous
provisions for possible losses
reported as incurred losses
in current period's accounts 217 1 148 -81 959 1 295 -26
Reported provision for
possible losses - 159 - 239 -33 - 357 - 520 -31
Recovered from losses
incurred in previous years 94 289 -67 297 372 -20
Reversal of previous
provisions for possible losses 167 26 316 164 93
Reported net cost for
individually appraised
receivables 68 51 33 174 - 109
Receivables appraised
by category
Reported write-down,
incurred losses - 15 -100 - 52 -100
Reported provision for
possible losses - 2 -100 - 4 -100
Recovered from losses
incurred in previous years 4 -100 22 -100
Withdrawal from provision
for lending losses
Reported net cost for
receivables appraised by
category - 13 -100 - 34 -100
Allocation to/withdrawal from
reserve for political
risks abroad - 84 81 - 6 279 -102
Contingent liabilities 14 8 75 23 8 188
Total - 2 127 -102 191 144 33
35
Skandinaviska Enskilda Banken
Profit and Loss Account
SEK M Q 4 Q 4 Change Change
2001 2000 per cent 2001 2000 per cent
Income
Interest income 5 919 7 324 -19 27 156 27 250 0
Leasing income 149 114 31 595 459 30
Interest costs -4 706 -6 313 -25 -22 664 -22 879 -1
Net interest income 1)
Dividends received *) 253 1 270 -80 634 2 157 -71
Commission income 1 409 1 685 -16 5 192 6 958 -25
Commission costs - 229 - 247 -7 - 836 -1 000 -16
Net commission income 2) 1 180 1 438 -18 4 356 5 958 -27
Net result of
financial transactions 3) 569 952 -40 2 341 2 298 2
Other income 268 479 -44 1 504 1 990 -24
Total income 3 632 5 264 -31 13 922 17 233 -19
Costs
Staff costs -1 344 -1 756 -23 -5 408 -6 470 -16
Other administrative
and operating costs -1 095 -1 476 -26 -5 428 -5 267 3
Depreciation and
write-downs of tangible and
intangible fixed assets - 52 - 83 -37 - 311 - 317 -2
Merger & Restructuring costs - 575 - 575
Total costs -3 066 -3 315 -8 -11 722 -12 054 -3
Profit/loss before
credit losses 566 1 949 -71 2 200 5 179 -58
Net credit losses 4) - 2 127 -102 191 144 33
Change in value of seized assets - 5 - 8 -38
Write-downs of financial
fixed assets - 750 - 549 37 - 750 - 658 14
Operating profit - 186 1 527 -112 1 636 4 657 -65
Pension compensation 141 227 -38 848 943 -10
Profit before appropriations
and tax - 45 1 754 -103 2 484 5 600 -56
Other appropriations**) - 457 - 506 -9 -1 600 -2 307 -31
Current tax *) - 289 - 31 - 296 - 491 -40
Deferred tax 328 - 43 86 19
Net profit for the period - 463 1 174 -139 674 2 821 -76
*) Of which tax on previous
years income -18 27 -60 -155
**) Group contributions
reported directly against equity.
1) Net interest income
SEK M Q 4 Q 4 Change Change
2001 2000 per cent 2001 2000 per cent
Interest income 5 919 7 324 -19 27 156 27 250 0
Leasing income 149 114 31 595 459 30
Interest costs -4 706 -6 313 -25 -22 664 -22 879 -1
Leasing depreciation - 47 - 38 24 - 182 - 148 23
Net interest income 1 315 1 087 21 4 905 4 682 5
36
2) Net commission income
SEK M Q 4 Q 4 Change Change
2001 2000 per cent 2001 2000 per cent
Payment commissions 172 386 -55 676 1 416 -52
Securities commissions 679 844 -20 2 669 3 580 -25
Other commissions 329 208 58 1 011 962 5
Net commission income 1 180 1 438 -18 4 356 5 958 -27
3) Net result of
financial transactions
SEK M Q 4 Q 4 Change Change
2001 2000 per cent 2001 2000 per cent
Shares/participations 363 59 1 648 65
Interest-bearing securities 196 182 8 795 394 102
Other financial instruments - 472 195 -1 242 725
Realised result 87 436 -80 1 201 1 184 1
Shares/participations - 10 - 3 - 23 - 15 53
Interest-bearing securities - 134 - 34 - 278 - 199 40
Other financial instruments 294 222 32 169 211 -20
Unrealised value changes 150 185 -19 - 132 - 3
Exchange rate fluctuations 332 331 0 1 272 1 117 14
Net result of
financial transactions 569 952 -40 2 341 2 298 2
4) Net credit losses
SEK M Q 4 Q 4 Change Change
2001 2000 per cent 2001 2000 per cent
Individually
appraised receivables
Reported write-down,
incurred losses - 251 -1 173 -79 -1 041 -1 420 -27
Reversal of previous
provisions for possible losses
reported as incurred losses
in current period's accounts 217 1 148 -81 959 1 295 -26
Reported provision
for possible losses - 159 - 239 -33 - 357 - 520 -31
Recovered from losses
incurred in previous years 94 289 -67 297 372 -20
Reversal of previous
provisions for possible losses 167 26 316 164 93
Reported net cost for
individually appraised
receivables 68 51 33 174 - 109
Receivables appraised by category
Reported write-down,
incurred losses - 15 -100 - 52 -100
Reported provision
for possible losses - 2 -100 - 4 -100
Recovered from losses
incurred in previous years 4 -100 22 -100
Withdrawal from provision
for lending losses
Reported net cost for
receivables appraised by
category - 13 -100 - 34 -100
Allocation to/withdrawal
from reserve for political
risks abroad - 84 81 - 6 279 -102
Contingent liabilities 14 8 75 23 8 188
Total - 2 127 -102 191 144 33
37
Cash flow analysis
SEK M 2001 2000
Cash flow before changes in lending and deposits -9 382 7 813
Increase (-)/decrease (+) in lending to the public -2 407 -31 782
Increase (+)/decrease (-) in deposits from the public 37 088 15 923
Cash flow, current operations 25 299 -8 046
Cash flow, investment activities 3 442 -19 546
Cash flow, financing activities -5 076 -3 598
Cash flow for the period 23 665 -31 190
Liquid funds at beginning of year 45 261 76 451
Cash flow for the period 23 665 -31 190
Liquid funds at end of period 68 926 45 261
Balance sheet
SEK M
31 December 31 December Change
2001 2000 per cent
Lending to credit institutions 227 364 184 849 23
Lending to the public 223 357 220 493 1
Interest-bearing securities 113 355 118 418 -4
- Financial fixed assets 2 459 2 962 -17
- Financial current assets 110 896 115 456 -4
Shares and participations 44 352 44 485 0
Other assets 95 952 94 112 2
Total assets 704 380 662 357 6
Liabilities to credit institutions 203 701 198 618 3
Deposits and borrowing from the public 271 738 234 650 16
Securities issued, etc. 54 364 52 518 4
Other liabilities and provisions 120 175 120 194 0
Subordinated liabilities 26 832 28 207 -5
Shareholders' equity(1) 27 570 28 170 -2
Total liabilities and shareholders' equity 704 380 662 357 6
(1) Change in shareholders' equity
SEK M
31 December 31 December Change
2001 2000 per cent
Opening balance 28 170 22 294 26
New share issue 4 067 -100
Dividend to shareholders -2 818 -2 466 14
Group contributions, net 1 544 1 436 8
Result, holding of own shares 21 -100
Staff option programme
Translation difference - 1 - 3 -67
Net profit for the period 675 2 821 -76
Closing balance 27 570 28 170 - 2
38
Statutory Profit and Loss Account Operational Profit and Loss Account
January-December 2001, SEK M SEB Internal Reclassification
Trygg Liv transactions
bank
insurance
Net interest income 13 011 42 13 053 Net interest income
Dividends received 95 2 - 97
Net commission income 11 186 390 11 576 Net commission income
Net result of
financial transactions 2 987 - 23 2 964 Net result of financial
transactions
Other income 1 920 1 374 - 786 119 2 627 Other income
Income from banking operations 29 199 1 395 - 396 22 30 220 Total income
Staff costs -11 796 - 569 12 -12 353 Staff costs
1 002 1 002 Pension compensation
Other administrative and
operating costs -8 282 - 865 384 -8 763
intangible fixed assets - 32 - 701 - 733 Amortisation of goodwill
-1 784 - 33 701 -1 116 Depreciations
Merger & Restructuring costs - 661 - 55 - 716 Other operating costs
Costs from banking operations -22 523 -1 554 396 1 002 -22 679 Total costs
Profit/loss from banking
operations before
credit losses 6 676
Net credit losses etc* - 549 2 - 547 Net credit losses etc
Change in value of seized assets 2 - 2
Write-downs of financial
fixed assets - 69 - 69 Write-downs of financial
fixed assets
Net result from
associated companies - 20 - 9 - 29 Net result from associated
companies
Operating profit from
banking operations
Operating profit from
insurance operations 111 168 - 22 257 Operating profit from non-
life insurance
Operating profit 6 151 0 0 1 002 7 153 Operating result
Pension compensation 1 002 -1002
Profit before tax and
minority interests 7 153 0 0 0 7 153 Profit before tax and
minority int
Taxes -2 058 -2 058 Taxes
Minority interests - 44 - 44 Minority interests
Net profit for the year 5 051 0 0 0 5 051 Net profit for the year
39
Appendix 1
SEB AG in the SEB Group
Profit & Loss Account adapted to Swedish Accounting Principles
EUR M 2001:4 2001:3 2001:2 2001:1 2000:4
Net interest income 128 122 118 127 120
Net commission income 40 44 45 41 58
Net result of
financial transactions - 3 6 5 7 10
Other income 14 9 11 36 5
Total income 179 181 179 211 193
Staff costs - 69 - 77 - 80 - 82 - 77
Other operating costs - 70 - 66 - 62 - 65 - 81
Total costs - 139 - 143 - 142 - 147 - 158
Net credit losses etc* - 14 - 14 - 15 - 10 - 18
Net result from
associated companies 1 2
"External" Profit 26 25 22 54 19
One-off items - 27
"Normal" Profit 26 25 22 27 19
*including change in value of seized assets and write-down of financial fixed
assets
At the beginning of 2001 the reserves amounted to EUR 463,5 M. The allocation
and utilisation during 2001 is shown in the table below:
Allocation and utilisation of reserves
EUR M Reserve for Sozial Restructuring
credit losses plan reserves Total
Opening balance 2001 112,3 67,1 284,1 463,5
Utilised Q 1 -23,4 -26,7 -50,1
Utilised Q 2 -0,6 -6,9 -27,6 -35,1
Utilised Q 3 -6,8 -34,7 -41,5
Utilised Q 4 -8,0 -5,2 -42,5 -55,7
Closing balance 31 December 2001 103,7 24,8 152,6 281,1
Of the utilisation of the restructuring reserve (EUR 152,6 M)
EUR 50,7 M covers the change of brand name from BfG to SEB.
40
Appendix 2
SEB Trygg Liv
SEB Trygg Liv focuses on the sale and administration of unit-linked insurance
products as well as their equivalents for account of the traditional mutual life
insurance businesses in Nya Livforsakringsaktiebolaget SEB Trygg Liv and Gamla
Livforsakringsaktiebolaget SEB Trygg Liv. These two mutual entities are not
consolidated in the SEB Trygg Liv Holding group, which only receives a fee for
administrative and sales services provided. From an accounting point of view the
life business differs from that of traditional banking, why SEB Trygg Liv's
accounts are presented separately in this Appendix.
The market for individual life, pension and endowment products was negatively
affected by the turbulence on world stock markets. The downward trend since the
first quarter of 2000 reached a low point during September 2001, after which a
significant recovery has taken place. However, uncertainty still prevails. The
demand for single premium endowment policies has declined during the year as a
result of stock market trends and uncertainty in general business forecasts,
while the market for corporate pension plans is more stable.
SEB Trygg Liv sales, i.e. new premiums and extra payments under existing
insurance contracts, totalled SEK 28,645 M (31,467) measured as weighted volume
in accordance with Swedish standards (single premium plus regular premium times
ten). The decline was 9 per cent compared to premium income decrease of 16 per
cent. This was due to an increase in the corporate-paid regular premium
business. A significant portion of the decline occurred in the first quarter. In
accordance with the market trend, the decline in volume is in single premium
endowment policies for the private sector. Unit linked products accounted for
the main portion, 75 per cent (89), of the business written. The change from
last year was due to the unstable stock market conditions, which favour
traditional life products.
Premium income (premiums paid) decreased by 16 per cent, to SEK 15,528 M
(18,532). During the fourth quarter market values recovered, contributing to an
increase in assets under management by SEK 13 billion or 7 per cent. The full
year effect was a decrease of SEK 18 billion or 7 per cent, to SEK 227 billion
(245) as a result of declining market values.
Total income (administration fees, fund-related and other unit-linked charges
and interest) decreased by 10 per cent, mainly as a result of lower asset values
compared to last year. Operating expenses and other costs decreased by 5 per
cent, excluding restructuring costs of SEK 55 M. Actions taken include
discontinuing of sales activities in Norway and Finland, closing own telephone
sales operations in favour of existing telephone sales channels within the Bank
and critically reviewing personnel requirements within all functions, including
the use of consultants. Net of deferred acquisition costs, total costs remained
on the same level as last year.
Total result from ongoing business was SEK 1,162 M (1,317). This corresponds to
a return on allocated capital of 21.5 per cent. However, total result was
affected by short-term market fluctuations and changes in assumptions. This led
to a total result net of SEK 583 M (423). Operating result, i.e. before changes
in surplus value amounted to SEK -79 M (86).
An insurance company's costs for an insurance policy mainly arise when the
contract is written. On the other hand, income accrues regularly throughout the
duration of the policy. This means that in periods of rapid growth in the
insurance portfolio, actual costs exceed income, which thus has a negative
impact on the operating result. At the same time, surplus values in operations
increase. In order to provide a more true presentation of the life insurance
business, the total result is presented including the current period change in
surplus values being the present value of future profits from existing insurance
contracts (see page 3 for details). The calculation of surplus values includes
the unit linked business and, to a lesser extent, the assignment contracts with
the traditional life operation which is conducted on a mutual basis.
41
When determining the surplus values in the insurance portfolio an annual unit
fund value growth of 6 per cent, i.e. 1.5 per cent per quarter, is assumed. A
higher or lower actual growth rate due to short-term market fluctuations during
a given period will result in positive or negative financial effects. During
2001 the aggregate growth in unit funds was -14 per cent (-9) resulting in
negative financial effects of SEK -1,199 M.
Volumes, SEK M 2001 2000
Sales volume weighted (10 x regular + single)
Traditional life insurance 7,034 3,548
Unit-linked insurance 21,611 27,919
28,645 31,467
Premium income
Traditional life insurance 5,521 4,838
Unit-linked insurance 10,007 13,694
15,528 18,532
Assets under management Dec 31 Dec 31
Traditional life insurance 168,300 184,400
Unit-linked insurance 58,200 61,000
226,500 245,400
Surplus value assumptions
Surplus value in life insurance operations is 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 9 %
Surrender of contracts 5 %
Lapse rate of regular premiums 8 %
Growth in fund units 6 %
Inflation 2 %
Mortality According to industry experience
The discount rate has been adjusted from 11 per cent to 9 per cent effective
December 31, 2001. The adjusted discount rate is in line with industry practice.
The lapse rate for regular premium contracts has also been adjusted from 5 to 8
per cent. The net effect of adjustments made on the total stock of business
amounts to SEK 620 M and is shown as a separate item in the change analysis.
Sensitivity analysis
The calculation of surplus value is relatively sensitive to changes in
assumptions. Examples as of December 31, 2001:
Change in discount rate by 1 percentage point: an effect of SEK +/-580 M
Change in unit fund growth by 1 percentage point: an effect of SEK +/-500 M
42
New business margin
One way to analyse the result of the sales efforts is to determine the new
business margin. The sales result, i.e. present value of new sales less actual
selling expenses, is related to the weighted sales volume. The volume as well as
the present value will vary significantly with the product mix. For 2001 a lower
weighted volume is reported, but as the portion of regular premium business is
higher than last year, the impact on present value of sales is limited. The
margin has also improved due to lower sales costs.
SEK M 2001 2000
Sales volume weighted (regular + single/10
according to international standards) 2,865 3,147
Present value of new sales 1,222 1,307
Selling expenses (before deferred acquisition costs) -1,029 -1,126
New business profit 193 181
New business margin (11 % discount rate) 6.7 % 5.8 %
New business margin (9 % discount rate) 11.1 % 8.8 %
Profit and loss account, SEK M 2001 2000
Administration agreements, traditional life insurance 378 349
Unit-linked insurance 949 1,070
Risk operations and other 166 232
Total income 1,493 1,651
Operating expenses -1,703 -1,707
Capitalisation of acquisition costs 231 275
Goodwill and other -100 -133
Total costs -1,572 -1,565
Operating result -79 86
Change in surplus values(1) 1,241 1,231
Total result on-going business 1,162 1,317
Change in assumptions 620 -80
Financial effects due to short term fluctuations -1,199 -814
Total result net 583 423
Expense ratio per cent(2) 11.0% 9.2%
Return on allocated capital after tax, per cent(3)
Excluding change in assumptions and short term
fluctuations 21.5% 24.3%
Including change in assumptions and short term
fluctuations 10.8% 7.8%
Notes
(1) After deduction for change in capitalised acquisition costs
(2) Operating expenses as percentage of premiums earned
(3) Allocated capital SEK M 3,900
43
Change in surplus value by quarter
Deferred acquisition costs are capitalised 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.
From 2001 deferred acquisition costs are depreciated over a 10 year time period
(5 years until 2001). This is due to the relative increase in sales of corporate
pension schemes with longer duration.
Balance of surplus value
(after deduction of capitalised acquisition costs) 0112 0109 0106 0103 0012
Opening balance 3,112 3,592 3,228 3,479 3,748
Present value of new sales(1) 214 292 405 311 391
Return on existing policies 156 155 155 155 143
Realised surplus value in existing policies -177 -179 -196 -161 -188
Actual outcome compared to assumptions(2) 129 179 -113 147 213
Current change from operations 322 447 251 452 559
Change in assumptions 620 0 0 0 2
Financial effects from to short term fluctuations(3) 189 -903 159 -644 -753
Total change in surplus values before deduction
of capitalised acquisition costs 1,131 -456 410 -192 -192
Capitalisation of acquisition cost for the period -178 -125 -149 -164 -155
Amortisation of capitalised acquisition cost 76 101 103 105 78
Total change in surplus values(4) 1,029 -480 364 -251 -269
Closing balance(5) 4,141 3,112 3,592 3,228 3,479
(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 extensions of contracts
as well as cancellations. Also included is the estimated cost of solvency, which
increases with growth in fund values. However, the actual income and
administrative expenses are included in full in the operating result.
(3) Assumed unit growth is 6 per cent, i e 1.5 per cent per quarter.
Actual growth during the last quarter was - 14 per cent
(-9) resulting in negative financial effects of SEK -1,199 M (-814).
(4) Prepaid acquisition costs are capitalised in the accounts and amortised over
10 years. Effective 2001, amortisation has been extended to 10 years for
deferrals beginning 2001 as a result of the change in product mix towards
regular premium business. Accordingly, the reported change in surplus values is
adjusted by the net effect in the period.
(5) Estimated surplus value according to the above is not included in the
statutory balance sheet.
44
Appendix 3
Credit exposure* by industry
M SEK
31 Dec. 2001 % of which % 31 % of which %
SEB AG Dec. 2000 SEB AG
Corporate and banks
Banks(1) 181 918 19,1 68 389 19,2 171 707 18,4 69 546 19,9
Finance and insurance 48 835 5,1 7 255 2,0 44 330 4,8 8 664 2,5
Property management 116 575 12,2 71 261 20,0 113 888 12,3 62 896 17,9
Wholesale and
retailing, hotels and
restaurants 37 266 3,9 7 384 2,1 38 649 4,2 9 257 2,6
Transportation 33 318 3,5 1 475 0,4 35 195 3,8 1 203 0,3
Other service sector 42 400 4,4 12 831 3,6 24 977 2,7 91 0,0
Construction 10 909 1,1 2 903 0,8 10 110 1,1 3 541 1,0
Manufacturing 89 162 9,3 8 604 2,5 84 816 9,2 10 447 3,0
Other 81 344 8,6 25 932 7,4 87 829 9,5 36 964 10,5
641 727 67,2 206 034 58,0 611 501 66,0 202 609 57,7
Public administration
Swedish municipalities, 14 759 1,5 - - 16 235 1,8 - -
County Councils
Swedish municipality- 28 793 3,0 - - 26 993 2,9 - -
owned companies
German and Baltic
Municipalities and
Federal states 53 566 5,7 52 779 14,8 48 928 5,3 48 924 13,9
97 118 10,2 52 779 14,8 92 156 10,0 48 924 13,9
Households
First mortgage loans(2) 145 549 15,2 68 129 19,2 134 217 14,5 66 779 19,1
Other loans 70 471 7,4 28 546 8,0 73 431 7,9 32 666 9,3
216 020 22,6 96 675 27,2 207 648 22,4 99 445 28,4
Not distributed by
sector of industry 0 - - - 15 141 1,6 - -
Total credit portfolio 954 865 100,0 355 488 100,0 926 446 100,0 350 978 100,0
Repos(2)
Credit institutions 52 512 - 36 193 -
General public 52 552 - 53 159 -
105 064 - 89 352 -
*The total credit exposure includes in addition to the lending to the public
also exposure on credit institutions and both on and off balance sheet items.
(1) Including National Debt Office
(2) Excluding first mortgage loans through the Baltic subsidiaries of the bank
which are shown under Other loans Repo (repurchase agreement) refers to a
transaction through which one party sells a security at call, while at the same
time agreeing to repurchase the same type of security forward.
45
Geographical Distribution
The geographic composition of the credit portfolio has been stable during the
year with approximately 40 per cent of the credit exposure related to Sweden,
followed by Germany with approximately 35 per cent.
Exposure on emerging markets represents 1.2 per cent (1.5) of the total credit
portfolio. The exposure has decreased since the year-end 2000 by approximately
SEK 1.8 billion and amounted to net SEK 9.7 billion (11.5) after deduction of
provisions for possible lending losses. Asia accounted for a major part of the
decline.
Exposure on emerging markets, geographically distributed, SEK M
Total of which SEB AG
Asia(1) 3 340 293
Hong Kong 386 69
China 608 63
Other Specified Countries(2) 1 629 64
Latin America(3) 3 975 333
Brazil 2 180 15
Argentina 263 36
Eastern- and Central Europe (4),(6) 1 697 915
Russia 665 291
Africa and Middle East(5) 2 719 316
Turkey 751 1
Total, Gross 11 731 1 857
Provision 2 008 857
Total, Net 9 723 1 000
(1) e.g. Hong Kong, China, India, Pakistan, Taiwan and Macao and Note 2
(2) e.g. Philippines, Malaysia, Thailand, Korea and Indonesia
(3) e.g. Brazil, Argentina, Mexico and Peru
(4) e.g. Russia, Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia,
Romania, Hungary, Slovenia, Croatia, Kazakhstan and Ukraine
(5) e.g. Turkey, Iran, Saudi Arabia, Egypt, Israel, South Africa, Ethiopia and
Algeria
(6) Exposure through the Baltic subsidiaries of the bank is not included
46
Appendix 4
Capital base for the SEB Financial Group of Undertakings
December
2001
Shareholders' equity in the balance sheet 44 292
./. Proposed dividend to be decided by the Annual General Meeting -2 818
./. Deductions from the financial group of undertakings -1 139(1)
= Shareholders' equity in the capital adequacy 40 334
Core capital contribution 1 861
Minority interest 1 239
./. Goodwill -4 775(2)
= Core capital (tier 1) 38 660
Dated subordinated debt 11 146
./. Deductions for remaining maturity -3 150
Perpetual subordinated debt 16 869
= Supplementary capital (tier 2) 24 864
./. Deductions for investments in insurance companies -8 610(3)
./. Deductions for other investments outside the financial
group of undertakings -543
= Capital base 54 370
To note:
The deduction (1) from shareholders equity in the consolidated balance sheet
consists mainly of non-restricted equity in subsidiaries (insurance companies)
that are not consolidated in the financial group of undertakings.
The minority interest and goodwill that is included in the capital base differ
from the amounts stated in the balance sheet due to the inclusion of companies
in the capital adequacy calculation that are not consolidated in the Group's
balance sheet.
Goodwill in (2) includes only goodwill from acquisitions of companies in the
financial group of undertakings, i.e. not insurance companies. Goodwill from
acquisitions of insurance companies is deducted from the capital base (3).
This information is provided by RNS
The company news service from the London Stock Exchange
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