Kommuninvest i Sverige AB annual accounts 2017: Large municipal investment needs drive increased lending

The Swedish local government debt office, Kommuninvest i Sverige AB, continued to grow in 2017, due to major investment needs among municipalities and county councils/regions. The annual accounts for 2017 shows that lending increased by 12 percent during the year, to SEK 310 (277) billion. Operating profit was SEK 1,123.8 (398.2) million and the leverage ratio was 1.78 (1.56).

2017 in review
The Swedish local government sector’s investment and borrowing needs continue to increase, due to strong population growth, urbanisation and demographic change. Kommuninvest expects sector borrowing to have increased by SEK 40 billion in 2017 to SEK 616 (576) billion, corresponding to 13.2 (13.1) percent of GDP.

Kommuninvest’s lending increased to SEK 310 147.3 (276 982.1) million. Kommuninvest strengthened its position as the largest lender to Swedish municipalities and county councils/regions, with an estimated market share of 50 (48) percent of the local government sector’s total borrowing.

During the year, equity increased by SEK 1,096.8 million to SEK 7,610.8 million (6,514.0). The increase was mainly due to a subordinated loan from Kommuninvest Cooperative Society to Kommuninvest in Sweden AB being converted into new share capital.

Operating profit amounted to SEK 1,123.8 million (398.2), with the variance mainly due to changes in unrealized market value changes. Excluding market value changes, operating profit amounted to SEK 697.8 (593.7) million.

The balance sheet total was SEK 356,942.6 (361,725.4) million and net interest income amounted to SEK 881.3 million (762.0).

Kommuninvest meets all requirements regarding risk-weighted capital. The core Tier 1 capital ratio was 212.4 (103.7) percent, the Tier 1 capital ratio was 212.4 (103.7) percent and the total capital ratio 212.4 (103.7) percent.

The leverage ratio, calculated according to the EU Capital Requirement Regulation CRR, was 1.78 (1.56) percent. Kommuninvest believes it will comfortably comply with the leverage ratio requirement to be introduced, for further information see section ”Leverage ratio requirement – Kommuninvest’s plan and preparations” in the annual accounts. Following the conversion of subordinated debt to share capital, the alternative key ratio Leverage ratio including debenture loan has been eliminated.

Kommuninvest Cooperative Society had a total of 288 (286) members at the end of the year, of which 277 (275) municipalities and 11 (11) county councils/regions. During the year, 2 (6) new members joined: Linköping Municipality and City of Mölndal.

Comments by Tomas Werngren, President and CEO
– Kommuninvest is basically a not-for-profit institution, last year’s unusually good result was significantly impacted by accounting adjustments. Looking ahead, we expect to see reduced lending margins and Kommuninvest’s economies of scale to directly benefit members and customers through lower interest rates.

– Being able to meet the high pace of investments in a sustainable way remains a key issue for the municipal sector. However, we still expect that municipal leverage will be manageable and limited in relation to GDP.

The complete annual accounts are available for download here.

This release contains such information that Kommuninvest is required to disclose pursuant to the Swedish Securities Markets Act and/or the Swedish Financial Instruments Trading Act. The information was submitted for disclosure on 14 February 2018 at 08:00 a.m.

Comparative earnings figures relate to the same twelve-month period previous year (1 January–31 December 2016). Comparative balance sheet figures relate to 31 December 2016.

About Kommuninvest
Kommuninvest is a municipal cooperation for efficient and sustainable financing of housing, infrastructure, schools, hospitals etc. Together, we get better loan terms than each one individually. Since its inception in 1986, the Kommuninvest collaboration has helped lower the local government sector’s borrowing costs by many billion kronor. Currently, 288 municipalities and counties/regions are members of this voluntary cooperation. With total assets of around SEK 360 billion (USD ~40 billion), Kommuninvest is the largest lender to the local government sector and the sixth largest credit institution in Sweden. The head office is located in Örebro.

Contact persons for enquiries
President & CEO Tomas Werngren, tel. +46 70 645 06 69
Head of Media Relations Björn Bergstrand, tel. +46 70 886 94 76 or bjorn.bergstrand@kommuninvest.se