Annual Review 2020
Kommuninvest i Sverige AB
Chairman’s Statement
”Kommuninvest plays a key role in society’s resilience. During the first phase of the pandemic, we safeguarded the local government sector’s access to credit – even when the storm was at its fiercest. A solid capitalisation plan, strengthened digital capacity and active development of our sustainability work have equipped us well for whatever lies ahead.”
– Ellen Bramness Arvidsson, Chairman
President’s Statement
”With the support provided by the Swedish central government, the local government sector enjoyed a strong financial position at the end of 2020, despite the corona pandemic. Through the Kommuninvest partnership, access to loan financing remained favourable, even as market stress peaked. Key advances achieved in Kommuninvest’s operations included improved digital capacity, a solid capitalisation plan and developed sustainability efforts.”
– Tomas Werngren, President & CEO
The corona pandemic
In 2020, Kommuninvest did not encounter any significant problems in coping with the corona pandemic and its consequences. Access to the capital market remained favourable throughout. The liquidity and capital situation has been strong. The digital approach, applied fully or in part, has worked well. Should developments worsen ahead, this approach can be maintained.
Sustainability
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.
Sustainable financing is our mission
Kommuninvest’s basic concept and vision includes encouraging social development that is sustainable in the long term. Sustainable financing solutions foster efficient use of tax revenues, financial stability and the local government sector’s work with Agenda 2030. Despite the exceptional corona pandemic conditions, the operations were able to fulfil their mission during the year relatively unaffected.
Business focus
Sustainable financing and accessible knowledge
The global corona pandemic that impacted the world over the year presented new challenges for Sweden’s municipalities and regions. Although broad central government support has made a difference, the substantial investment needs and demographic challenges confronting the local government sector remain. The local government partnership that Kommuninvest represents, which enables competitive lending and access to financial expertise for efficient debt management, is more relevant than ever.
Strong sector surpluses
Generous central government allocations reduce needs for loan financing. In 2020, Swedish local government borrowing grew by SEK 40 billion to SEK 766 (726)¹ billion. Kommuninvest continues to strengthen its position, with the Company financing 58 (56) percent of the local government sector’s total debt.
Loans that meet customers’ needs
In 2020, Kommuninvest’s lending grew to SEK 442.8 (406.5) 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 2020, Kommuninvest had a total of 912 (964) 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. Despite considerable global concerns regarding the trend in the corona pandemic, the Company’s strategic funding markets have functioned well with a favourable demand for Kommuninvest’s bonds. Kommuninvest was able to fulfil its funding plans at competitive rates. At the end of the year, total funding amounted to SEK 492.9 (446.8) billion in nominal terms.
Liquidity reserve to meet customer needs under all circumstances
To safeguard the Company’s capacity to meet its commitments even in periods of stress in the financial markets, Kommuninvest maintains a liquidity reserve. Over the year, the Company demonstrated favourable liquidity preparedness, with all internal and statutory requirements being complied with by a good margin despite the market concerns associated with the corona pandemic. The reserve consists of short-term investments with high credit ratings. At year-end, the reserve amounted to SEK 59.6 (44.7) billion, equivalent to 14 (11) percent of the lending volume.
Organisation and employees
Digital maturity and continuous learning
During the corona pandemic, the Company’s digital maturity accelerated and the overall capacity for change strengthened. Once again, the Company’s ability to cope with crisis situations has proven strong. Another positive consequence is that the shift in behaviour to accommodate digital skills development occurred faster than would otherwise have been the case.
Financial position
At the end of 2020, equity in the Company amounted to SEK 8,704.2 (7,602.0) million, following Group contributions of SEK 225.9 (393.5) million paid to the Kommuninvest Cooperative Society. The total capital base was SEK 7,376.6 (7,418.8) million, which gave a total capital ratio of 302.5 (126.8) percent.
Market shares,
Local government loan financing
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| 2020 | |
| Funding via Kommuninvest 58 (56) % | 58% |
| Bank funding 13 (14) % | 13% |
| Funding through proprietary funding programmes 29 (30) % | 29% |
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Lending portfolio,
by borrower category
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| 2020 | |
| Municipalities² 43 (43) % | 43% |
| Municipal housing companies 27 (28) % | 27% |
| Other municipal companies 22 (22) % | 22% |
| Municipal energy companies 5 (5) % | 5% |
| Regions 3 (2) % | 3% |
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Funding portfolio,
by programme
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| 2020 | |
| Swedish benchmark programme 53 (53) % | 53% |
| Benchmark funding, other currencies 25 (31) % | 25% |
| Green Bonds 9 (8) % | 9% |
| Private Placements 2 (2) % | 2% |
| ECP, Euro-Commercial Paper Programme 8 (4) % | 8% |
| Uridashi 2 (2) % | 2% |
| Swedish commersial paper programme 1 (-) % | 1% |
| Bank loans 0 (0) % | 0% |
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Balance sheet
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| Total assets (left axis) | Lending (left axis) | |Equity (right axis) | |
| 2016 | 361.7254 | 276.9821 | 6.514 |
| 2017 | 356.9426 | 310.147 | 7.6108 |
| 2018 | 417.2021 | 355.71 | 7.6034 |
| 2019 | 471.3207 | 408.2181 | 7.6020 |
| 2020 | 527.3636 | 445.7888 | 8.7042 |
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Operating profit before tax
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| Mnkr | Operating profits before tax | Portion of profit attributable to unrealised changes in market value | Portion of profit attributable to credit losses, net |
| 2016 | 398,2 | -195,5 | 0 |
| 2017 | 1123,8 | 426 | 0 |
| 2018 | 752,5 | 164,4 | -24,3 |
| 2019 | 392,1 | -193,9 | 12,6 |
| 2020 | 228 | -247.7 | 11.1 |
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Multi-year summary, Kommuninvest i Sverige AB
| 2020 | 2019 | 2018 | 2017 | 2016 | |
| Balance sheet total, SEK billion | 527,4 | 471,3 | 417,2 | 356,9 | 361,7 |
| Lending (recognised value), SEK, billion | 445,8 | 408,2 | 355,7 | 310,1 | 277,0 |
| Net profit, SEK, million | 179,7 | 307,9 | 586,1 | 876,0 | 309,8 |
| Members, total | 292 | 290 | 288 | 288 | 286 |
| of which, municipalities | 278 | 278 | 277 | 277 | 275 |
| of which, regions | 14 | 12 | 11 | 11 | 11 |
| Core Tier I capital ratio1, % | 302,5 | 126,8 | 188,4 | 212,4 | 103,7 |
| Tier I capital ratio2, % | 302,5 | 126,8 | 188,4 | 212,4 | 103,7 |
| Total capital ratio3, % | 302,5 | 126,8 | 188,4 | 212,4 | 122,1 |
| Leverage ratio according to CRR4, % | 1,43 | 1,58 | 1,75 | 1,78 | 1,56 |
| 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). | |||||
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, 292 municipalities and regions are members of this voluntary cooperation. With total assets in excess of SEK 525 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.
