Year-end report 2019: Increased demand for financing contributes to robust growth for Kommuninvest

Kommuninvest increased its share of local government borrowings from 54 to 56 percent during 2019, according to its year-end report. Kommuninvest’s lending increased by 15 percent to SEK 407 (356) billion. Operating profit decreased to SEK 392.1 (752.5) ​​million, explained partly by the members’ decision to reduce lending margins and partly as a result of lower earnings from unrealized market value changes. The leverage ratio was 1.58 (1.75).

2019 in review

The Swedish local government sector’s investment and borrowing needs continue to be impacted by population growth, urbanisation and demographic change. Kommuninvest estimates that the sector’s borrowing in 2019 increased by 10 (6) percent to SEK 721 (656) billion, corresponding to 14.4 (13.4) percent of GDP.

Kommuninvest’s lending increased to SEK 406,511.1 (353,946.1) million[1]. Kommuninvest strengthened its position as the largest lender to Swedish municipalities and county councils/regions, with an estimated market share of 56 (54) percent of the local government sector’s total borrowing.

Operating profit amounted to SEK 392.1 (752.5) million, where the decrease is partly explained by a lower margin in lending, in accordance with AGM resolutions among Kommuninvest’s members, and partly as a result of lower earnings from unrealized market value changes. Excluding market value changes, operating profit amounted to SEK 586.0 (588.1) million.

The balance sheet total was SEK 471,320.7 (417,202.1) million and net interest income amounted to SEK 827.5 (885.5) million.

Kommuninvest meets all requirements regarding risk-weighted capital. The capital base consists solely of core Tier 1 capital, which is why the core Tier 1 capital ratio, the Tier 1 ratio and the total capital ratio all amounted to 126.8 (188.4) percent.

On June 7, 2019, the EU published its final legislative package in which the leverage ratio requirement has been set at 3 percent of gross exposures. The new rules will enter into force as of June 28, 2021. Calculated in accordance with the Capital Requirements Regulation CRR, Kommuninvest’s leverage ratio was 1.58 (1.75) percent. Calculated according to the regulation’s special conditions for so-called Public Development Credit Institutions (PDCI), where all lending to Kommuninvest members and their companies can be excluded from the exposure amount, the leverage ratio was 12.29 (11.30) percent.

Kommuninvest Cooperative Society had a total of 290 (288) members at the end of the year, of which 278 (277) municipalities and 12 (11) county councils/regions. During the year, Region Blekinge and Municipality of Ekerö joined as members.

 [1] Nominal amount. The recognized value of lending, including market value component and accrued interest, was SEK 408 218,1 (355,710.0) million.

Comments by Tomas Werngren, President and CEO

– The economic outlook for the municipal sector weakened during the year. At the same time, the sector’s balance sheet stands strong, perhaps stronger than ever before. Weaker results in combination with large investments point to a continued increase in loan debt.

– Lending growth is the ultimate proof that the tool Kommuninvest works, and that municipalities and regions together can obtain better and more efficient borrowing than each one individually.

 

Download the Year-end report 2019

 

 

 

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 11 February 2019 at 16:00 p.m.

Comparative earnings figures relate to the same twelve-month period previous year (1 January–31 December 2018). Comparative balance sheet figures relate to 31 December 2018.

 

Contact persons for enquiries

Tomas Werngren
President & CEO
Tel. +46 70 645 06 69

Patrick Nimander
CFO
Tel +46 72 254 94 60

Björn Bergstrand
Head of Media Relations
Tel. +46 70 886 94 76
or bjorn.bergstrand@kommuninvest.se