Important events during the year
Lending surpassed SEK 400 billion
In 2019, Kommuninvest’s lending passed SEK 400 billion. Lending increased to both larger and smaller municipalities, as well as to municipalities both with and without their own market programmes. The increase is greatest among the municipalities with their own market programmes, which can be interpreted as implying that Kommuninvest’s pricing has been attractive. In 2019, sector debt was expected to rise 9.9 percent, exceeding the average of 7.1 percent for the past ten years. This increased funding is attributable to extensive investment being required, stemming from population growth and maintenance needs. Alongside the economy slowing down and the municipalities’ expenses increasing, this requires that investments be financed through loans.
KI Finans being developed
Over the year, Kommuninvest continued its efforts to simplify matters for our customers by further developing, for example, the signing application in KI Finans, allowing our customers to sign loan agreements with mobilt BankID. The service is now offered to all municipalities, regions and wholly-owned companies. Over the year, KI Offert, with which the customer can request a digital quotation request from Kommuninvest, was further developed in consultation with customers and has been extended with requests now being automatically registered in our internal systems and a quotation is compiled on the basis of the customer’s wishes. Several functions will be developed and launched in 2020, including an opportunity to sign transactions directly in KI Finans.
Higher ESG rating from two institutes
Over the year, Kommuninvest raised its ESG ratings from the ISS-Oekom and Sustainalytics institutes. The rating from ISS-Oekom was raised in two steps to B–; while Sustainalytics gave an ESG rating of 9.1, in the category “negligible ESG risk”. The results show that Kommuninvest belongs to the group of financial institutions whose operations are considered least exposed to sustainability risks.
Green Loans reach 10 percent of lending
The strong demand for Green Loans continued in 2019. At the end of the year, the volume of Green Loans granted had increased to SEK 63.1 (39.5) billion, relating to 346 (232) investment projects in 150 (109) municipalities and regions. The volume of Green Loans disbursed increased to SEK 41.0 (26.2) billion, corresponding to 10.1 (7.4) percent of the Company’s total lending.
How Kommuninvest helps build welfare
Kommuninvest finances more than half of the Swedish local government sector’s investments in new housing, schools, homes for the elderly, swimming baths and other infrastructure investments.
How we generate sustainable values
Through lending to municipalities and regions, Kommuninvest establishes conditions for the expansion of Swedish welfare, increases the stability of local government finances and contributes to a more sustainable Sweden.
Sustainability Report 2019
Kommuninvest’s basic concept and vision includes encouraging social development that is sustainable in the long term. By offering sustainable financing solutions, we foster the efficient use of tax revenues, financial stability and the local government sector’s work with the Sustainable Development Goals.
Three perspectives in sustainability work
Kommuninvest finances the development of Sweden’s local and regional sectors, as well as investments for a sound and sustainable society. The operations contribute to citizens’ tax funds being used as efficiently as possible and help improve the stability of the financial system. Financing at the lowest possible cost is central.
A clear division of responsibilities and a focus on ownership control, corporate governance and ethics shall help the Group to comply with the laws, regulations and rules applicable to the operations. The Code of Conduct highlights the importance of professionalism and good business practices.
Having a sustainable organisation is crucial to Kommuninvest living up to its mission and vision, as well as to the expectations of our stakeholders. Our high level of ambition and the insight that each employee can make a difference are what guide us in this work. Communicative leadership and committed employee collaboration are essential for success.
Effective financing and accessible knowledge
Major investment needs remain among Sweden’s municipalities and regions, with escalating welfare challenges demanding that resources be used more efficiently. Kommuninvest plays an important role in both of these areas. Competitive lending provides cost-effective financing and financial expertise, while web-based analysis tools provide opportunities to save time and, accordingly, to manage debt efficiently.
Effective financing and accessible knowledge
Kommuninvest strengthens its position
Major investments in the Swedish local government sector increase external loan financing needs. In 2019, the local government borrowing grew by SEK 65 billion to SEK 721 (656) billion. Kommuninvest continues to strengthen its position, with the Company financing 56 (54) percent of the local government sector’s total debt.
Loans that meet customers’ needs
In 2019, Kommuninvest’s lending grew to SEK 406.5 (353.9) billion. This growth reflects increased investment and funding needs among Sweden’s municipalities and regions. The increase also demonstrates Kommuninvest’s increased competitiveness. At the end of 2019, Kommuninvest had a total of 964 (945) active borrowers.
Significant borrower with highest credit rating
Kommuninvest borrows money in capital markets in Sweden and internationally, which funds lending to municipalities and regions. Demand for secure issuers remained good during the year and Kommuninvest was able to meet its funding plans on competitive terms. At the end of the year, total funding amounted to SEK 450.8 (397.4) billion.mdkr.
Liquidity reserve to meet customer needs under all circumstances
To be able to continue providing customers with financing during periods of uncertainty in the financial markets, and to ensure that matured funding can be repaid in a timely manner, Kommuninvest has a liquidity reserve. At year-end, the reserve amounted to SEK 44.7 (47.3) billion, equivalent to 11 (13) percent of the lending volume.
Organisation and employees
Collaboration for greatest possible membership benefit
Kommuninvest fundamentally believes that its leaders and employees together perform the organisation’s mission and generate benefit for the members. The process of building a strong culture reflecting the Company’s local government values was further developed with the Employee Programme implemented in 2019.
Organisation and employees
At the end of 2019, equity in the Company amounted to SEK 7,602.0 (7,603.4) million, following Group contributions of SEK 393.5 (750.6) million paid to the Kommuninvest Cooperative Society. The total capital base was SEK 7,418.8 (7,425.2) million, which gave a total capital ratio of 126.8 (188.4) percent.
Market shares, local government loan financing1
|Funding via Kommuninvest 56 (54) %||56%|
|Bank funding 14 (15) %||14%|
|Funding through proprietary funding programmes 30 (31) %||30%|
1) Forecast regarding outstanding funding (figures in brackets refer to actual outstanding funding in accordance with members’ own annual reports as per 31 December 2018)
Lending portfolio by borrower category
|Municipalities² 43 (41) %||43%|
|Municipal housing companies 28 (30) %||28%|
|Other municipal companies 22 (22) %||22%|
|Municipal energy companies 5 (5) %||5%|
|Regions 2 (2) %||2%|
2) Some lending to municipalities is on-lent to municipal companies through municipal internal banks.
Funding portfolio by programme
|Swedish Benchmark Programme 52 (49) %||52%|
|Benchmark funding, other currencies 31 (35) %||31%|
|Green Bonds 8 (5) %||8%|
|Private Placements 2 (4) %||2%|
|ECP, Euro-Commercial Paper Programme 4 (3) %||4%|
|Uridashi 2 (3) %||2%|
|Swedish commercial paper programme 1 (1) %||1%|
|Bank loans 0 (0) %||0%|
|Total assets (left axis)||Lending (left axis)|||Equity (right axis)|
Operating profit before tax
|Mnkr||Operating profit before tax||Portion of profit attributable to unrealised changes in market value||Portion of profit attributable to credit losses, net|
Multi-year summary, Kommuninvest i Sverige AB
|Balance sheet total, SEK billion||471,3||417,2||356,9||361,7||340,6|
|Lending (recognised value), SEK, billion||408,2||355,7||310,1||277,0||254,4|
|Net profit, SEK, million||307,9||586,1||876,0||309,8||561,3|
|of which, municipalities||278||277||277||275||272|
|of which, regions||12||11||11||11||8|
|Core Tier I capital ratio1, %||126,8||188,4||212,4||103,7||44,6|
|Tier I capital ratio2, %||126,8||188,4||212,4||103,7||44,6|
|Total capital ratio3, %||126,8||188,4||212,4||122,1||59,8|
|Leverage ratio according to CRR4, %||1,58||1,75||1,78||1,56||0,87|
1) Core Tier I capital in relation to total risk exposure.
2) Tier I capital in relation to total risk exposure.
3) Total capital base in relation to total risk exposure.
4) Tier I capital in relation to total assets and commitments (exposures).