Aditstedshareholders' equitv per share Definitions 70 per centof untaxed interestmargin Taxedsharehoiders' e{uity. plus Auuall divided by the number of ordi- Net interestearnin-gs as a pertentageof averagetoial assets' reserveswirere they exist, nary sharesat year-end. Aueragetotal assels Total assetson a daily-averagebasis' Corecapitnl ratio ftt;;?;i.,* of risk-weighted balancesheet Average of eachmon&'s closing figqe; Core capital as a Pelcentage The Group:^ Core capital consistsof taxed the paient Bank's total assetsorr a daily- and off-balancesheet voiume. 70 per cent of untaxed-reserves averagebasis are included. sharehoiders'equity plus where they exi:i, pius minority interest in shareholders' minusgoodwili. Returnon equityafter statzdard tax equif Operating ptoiit ifter 30 per cent tax as a percentageof capitalratio eq'uitv- d"eiinedas taxed shareholders'equity at the opening Total Total shareholders'equity as a percentageof risk-weighted of th6 year minus the dividends paid during the year plus and off-balancesheet volume. Total capital u.t ,rJ- share issueplus 70 per ient of all untaxed reserve$ balancesheet capital and supplementary capital minus wl{ere they exist (inciuding the valuation adjustmentleserve consistsof core in unconsolidatedcompanies. Suppiement- for bondsiplus minority inlerestsin shareholders'equity' shareholdings arv capital iiciudes subordinateddebenture loans plus and capital contribution, approved by-the Govern- Earninssper share afler stnndnrd tnx ruserues capital may not exceedthe amount of Profit Sxcludit g cupitul gains divided by the number of ordi- ment. Supplementary gains core capital. nary sharesat feariend, where-profii exciuding capital is defined as operating profit plus extraordinary items lossleael excludingcapilal gains minus 30 per cenItax minus minoritv Lendinp loss level is defined as lending lossesdivided interestsln piofit plus shareoJ prblit in associaiedcorn- The leiding loans outstanding (to the pubiic and financial paniesin eicessof dividends received. by year-end institulions) plus loan guaranlees. Eantingsper share at'ter ftrll tax The sainedefinitioir as aboveexcePa that the year's tax cost is calculatedas the sum <lftax paid and 30 per cent of a1l appropriations. "The refers to Sweden's "The Bank" refers to Skandi:raviskaEnskilda Banken thousand miliion. Riksbank" "The the Swedish (S-I-Banken),parent comPany in the S-E-BankCroup' centrai bank. Riksdag" refers to "Goteborg" lor Goihenblrg' Unlessotheiwise stated, figures in parenthesesrefer to Parliarnent. isSrvedish , reports can be ordered 1991.A1l percentage figures relatingto.the business of the Annual reports andinterim Skandinaviska S-E-Bank'Gro,rp,ihe Bink and its subsidiariesare basedon frr:m Cortorate Cornmunications, 40 3tockholm, Sweden' exactamol:.nts. Per cent changesrefer to comparisonswith Enskilda 8anken,5-106 1991,unless otherwise stated" SEK refers to Swedish kronor. For other eurrencycodes, seepage 38. Million(-s) is abbreviatedM. Billion rllean$one SkandinaviskaEnskilda Banken AnnualRePort for 1992 2 1992in brief Contents ResultsandkeY figures 3 Important events and decisions 4 Statementof the Group Chief Executive 3i$iiiil.i?,ffi'f;l3fio" Banken 8 Deposits and lending 10 Retail banking 16 Corporate banking 20 The S-E-BankGrouP staff 21 S-E-Banken'sbranch offices in Sweden Reportof the Directors 22 Result and ProfitabilitY 27 Lending Poiiciesand lending Iosses 29 Treasury 32 S-E-Bankenshares 34 Accounting PrinciPles 36 Profit and loss accounts, balancesheets and notes 52 Proposal for the distribution of profit 52 Auditors'rePort 53 Long-termstatistics 54 Board of Directors 55 GrouP ManagementCommittee 55 Auditors 56 Stockholm,Goteborg and Malmo Boards of Directors 56 Addresses 1992in brief Key figures fsr the S,'E-BmikGroup* 7992 Operatingprofit/loss,SEKM ^,:: ^,?; 3,312 2,326 -5,370 Operating profitbefore losses,SEK M 5,080 5,005 5,461 7,086 5,813 Total assets,SEKbillion 289 366 452 451. 485 Return on equity after 30Vostandard tax, Vo 23.5 18.1 11.8 7.6 - 77j "t0.7 Total capital ratio, To 8.8 9.'t 8.4 Core capital ratio, 7o 7.3 6.0 6.7 5.1 Operatingincome/costs, excl. lending losses 1.99 i.85 1.74 1.88 1.74 '1.84 Operating income/costs, incl. lending losses 7.69 1.35 1.18 0.72 Earningsper shareafter30Vo standard tax, SEK 12.61 11.56 7.61. 4.50 -17.07 Dividend per share,SEK 2.55' 3.00 3.30 3.35 0 * For definitions, seethe inside front cover. Earnings situation in brief The Group The Bank Change Change SEKM per cent SEKM percent Net interest earnings 6,637 - 30 4,770 - 36 Commissions,fees and foreign exchangeearnings 6,084 + 25 4,936 +32 Other operating income 986 +'16 501 +0 Total operating income 13,707 -L0 10,107 - 13 Staff costs 4,152 -1 3,158 +4 Other operating costs 3,186 -4 2,709 +4 Depreciation 556 ft 201. -8 Total operating costs 7,894 -2 6 068 +3 Profit before losses 5,813 -L8 4,039 -30 'n,1.67 Lending losses 9,587 Provisions for political risks abroad 1,6 Operating loss - 5,370 - 5,548 In view of these negative earnings, the Board of Directors proposes that no dividend be paid to the shareholders for 7992. For facts about S-E-Banken shares, see page 32. Impurtfint&vents and decininnn in size' and The Board of Directors was sharply reduced BjornSvedberg was appointed the new Managing Director Enskilda Banken' and Group Chief Executive of skandinaviska * TheBankformedarealestatecomPanytomanagetheproperties thattheGrouptakesovertoprotectitsclaims. + from its mortgage The Bank took over loans of nearly SEKz4billion subsidiarySvensk Fastighetskredit' * swedish authorities glanted a licence for the establishment of a new life insurance company' which was company combined with the Bank's existing unit-linked insurance underthecommonnameS-E-BankenForsdkring. + and 1,600emPloyees The new bank building in Rissnewas completed, moved there from central Stockholm' * under the terms of Preliminary talks began with the Ministry of Finance thenewGovernmentSuPportsystemforSwedishbanks. + which only A law passed.by the Riksdag eliminated restricted shares, became swedish citizens could buy. All sharesin s-E-Banken unrestricted effective from January 1" 1'993' + new organisational structufe' At the beginning of 19g3,theBank introduced a grouping its operations into two customer-orientated loans and divisions supplemented by a seParateunit for nonPerfolming pledgestakenoverinconnectionwithloanforeclosures. At the sametime, the Bank's credit organisation was strengthened' x onFebruary2S,lggs,theBanksubmittedaformalapplication for GovernmentsuPPort' Statementof theGroup Chief Executive n L,ln Tuesday,Septemb er 7,1,992-with great At the sametime,I would like to emphasise humility and respectfor tle task ahead- I assumed that most of our operationsremain sound. The the post of Managing Direptor and Group Chief greater part of our lossesemanates from a small Executiveof SkandinaviskhEnskilda Banken. number of company clients. Our businesswith the The subsequentperiod $as been very eventful, vast majority of the two million private individuals to say the least:The Riksb{nk's 500 per cent call and more than 100,000companies that are Group money rate in September{nd its decision in customersshows good profitability. November to float the Swddish krona were, of Another important positive observation is that course,among the most remarkableevents of an our commission income has risen sharply. Today otherwise dramatic autumn. it representsnearly 45 per cent of total operating The recessionrefuses to easeits grip on Sweden, income. the general economiccrisis is deepening- and the difficulties plaguing many of our customers continue to grow. Wrn the aid of the American investment bank Morgan Stanley and our own Enskilda, last /-tr autumn we began an in-depth analysis of the Lrlur 1992financial statementsshow an operating financial situation of our Group, in which we also loss of more than SEK 5 billion, or worse than we tried to assessthe probability and consequencesof foresaw when we published our Interim Report for various scenariosover the next few years. the first eight months of the year. Lending losses According to this analysis,there is a risk of have risen more than anticipated, and the volume continued sizeablelending lossesduring 1993and of problem loans has grown faster than expected. 1994.We therefore also consider it highly prob- The growing volume of nonperforming loans is able that the Group will fall below the 8 per cent a seriousproblem. The absenceof interest pay- capital adequacyminimum during 1993. ments on theseloans is the main reasonwhy our Our projection of future lossesand of a gradual operating profit before lossesalso deteriorated undermining of Group shareholders'equity natu- between 1991.and7992. rally implies that the capital baseof Skandinaviska At year-end 1992,Skandinaviska Enskilda Enskilda Banken must be strengthenedas soon as Banken'scapital ratio was 8.4 per cent. One factor possible. behind the sharp decline in this ratio, aside from On February77,7993, the Bank'sBoard of the operating loss,was that the weaknessof the Directors therefore made a formal decision to krona pushed up the value of our foreign currency apply for support under the guaranteescheme for denominatedassets by over SEK35 billion as of the banking system that the Riksdag approved December31. This is a seriousconsequence in a late in 1992(Government Bill7992/93:135 on "Measures situation where it is extremely important that we for strengtheningthe financial system"). shrink our balancesheet to improve capital