Annual Report 1998 98 ANNUAL REPORT 1998 We shall benfit our customers by providing leading competence and maintaining long-term relations. Contents Financial information via the Internet: Purpose, business concept and vision 1 www.seb.se 1998 in brief 2 1998 in figures 4 Chairman’s statement 6 To the shareholders 8 SEB’s web service offers financial information on the Group in the form of annual The SEB share 10 reports, interim reports, etc. and the possibility to subscribe for the Group’s press releases via e-mail. Creation of intangible values 12 SEB and the world around it 18 Environmental aspects 23 Financial Information during 1999 Publication of annual results 15 February A presentation of SEB 24 Publication of Annual Report early April Annual General Meeting 29 April Business areas Report January – March 29 April Retail 28 Report January – June 17 August Trygg-Hansa 34 Report January – September 25 October SEB Asset Management 38 SEB Trygg Liv 42 SEB Merchant Banking 46 Enskilda Securities 50 Annual Reports and quarterly reports may be ordered from: Skandinaviska Enskilda Banken SEB in the Baltic States 54 Group Communications S-106 40 Stockholm Financial review of the Group 56 Telephone: +46 8 763 81 30, 763 85 85 Risk management 64 Internet: www.seb.se Report of the Directors 68 For further information Boo Ehlin Accounting principles 69 please contact: Press Officer Definitions 72 Gunilla Wikman Telephone: +46 8 763 85 77 Profit and loss accounts 73 Head of Group Communications E-mail: [email protected] Balance sheets 74 Telephone: +46 8 763 81 25 Notes 76 E-mail: [email protected] Annika Halldin Five-year summary 104 Responsible for Financial Proposal for the distribution of profit 106 Lotta Treschow Information/Shareholder contacts Auditors’ report 107 Head of Investor Relations Telephone: +46 8 763 85 60 Board of Directors 108 Telephone: +46 8 763 95 59 E-mail: [email protected] Management Committee and Auditors 110 E-mail: [email protected] Advisory Regional Boards of Directors and Addresses 112 Our aim: To be of great benefit to our customers and shareholders. Our business concept: To benefit our customers by providing leading competence and maintaining long-term relationships. Our vision: To become the leading provider of financial services in Northern Europe. Stockholm Endowment assurance can be an excellent alternative when it comes to safe- guarding the future of the next generation. Read more on page 45. Malmö Hong Kong Trygg-Hansa’s call-centre received Mutual fund activities in the Far East are 2.8 million calls last year.This makes founded upon 30 years’ experience. Our efficient staff-planning essential. Far East specialists speak all major local Read more on page 37. languages. Read more on page 49. The Baltic Region Copenhagen Through part-ownership of three Baltic Computer-based research tools serve as banks, SEB is able to offer clients a wider sales support and provide an additional means range of services. Through the transfer of of competition in the Danish mortgage bond knowledge these banks will rapidly develop. market. Read more on page 49. Read more on page 55. The Nordic Area/Europe Oslo SEB offers flexible liquidity manage- Via the Internet, clients of Diners Club ment, in euro, to its internationally will soon be able to obtain information active Nordic corporate clients. and offers based upon their individual Read more on page 21. interests. Read more on page 33. New York M&A activities involving Nordic and U.S. companies accelerate as a result of globalisation. Read more on page 53. SEB ANNUAL REPORT 1 1998 IN BRIEF A high level of activity characterized the whole Group • The Bank starts to test direct payment traffic via the Internet, as the first JAN. Swedish bank to do so. • Integration of S-E-Banken Försäkring’s and Trygg-Hansa’s life sales forces starts. MAR. • It is decided to incorporate Enskilda Securities as a separate company. • The Bank sells 44 office properties to Vasakronan. APR. • Trygg-Hansa and Statoil start a joint call-centre in Denmark. • The Bank starts the installation of a total of 50 new cash deposit machines. • Trygg-Hansa sells the Industrial & Marine business area to the Zurich Group JUN. • Enskilda Securities launches new indices for Nordic sector research. • Euromoney ranks S-E-Banken the best bank in Sweden. JUL. • The Bank introduces five mutual funds denominated in euro. • SEK 10.5 billion is allocated to the policyholders in the former Trygg-Hansa Liv AB, in addition to an average bonus of 12.25 per cent. • The Trygg-Finans and FinansSkandic finance companies are merged into AUG. SEB Finans. • Trygg-Hansa forms a non-life insurance company together with the Danish company Nykredit. • ABB Investment Management is acquired. • Co-operation initiated with three non-Swedish asset managers: Fidelity, Mercury and Fleming. 2 SEB ANNUAL REPORT 1998 IN BRIEF • The Group introduces a new trademark: SEB. Trygg-Hansa continues as a trademark for non-life insurance; the life insurance activities are SEPT. co-ordinated under the trademark SEB Trygg Liv; the investment banking activities continued as Enskilda Securities. • The Telephone Banks Trygg-Banken and Sesam merged under the name Sesam. • The mutual fund assortment of SEB Fonder and Trygg Fonder is co-ordinated. • The call-centre and back-office activities of the Group are co-ordinated in Göteborg, which means that the Bank has one of the largest call-centres for financial services in Northern Europe. • In order to reduce waiting times at the liveliest branch offices, 100 new positions are created. • A deposit account in euro is introduced. • Euromoney ranks Enskilda Securities the best securities company in Sweden. • SEB becomes a part-owner of Adacra, a management and IT-consultant OCT. company. • A new Internet service introduced for medium-sized companies: Trading Station, offering foreign exchange trading. • The Internet Office counts its customer number 200,000 (230,000 by year-end 1998). • SEB invests in the Baltic States by entering into co-operation agreements with Eesti Ühispank in Estonia, Latvijas Unibanka in Latvia and Vilniaus NOV. Bankas in Lithuania. At year-end, SEB becomes a part-owner of these three banks. • SEB launches a new Internet service, Fondmarknaden, or the “Mutual Fund Market”, comparing 1,100 mutual funds. DEC. • The former life insurance companies of S-E-Banken and Trygg-Hansa are amalgamated into a new sub-group, with SEB Trygg Liv Holding as parent company. Also the unit-linked insurance companies are merged. • Trygg-Hansa sells its holding in Förenade Trygg to Förenade Liv. • SEB forms a new Executive Committee. • An application for the incorporation of SEB Kort is submitted. • The sale of the non-life business of Trygg-Hansa is being considered. • SEB Asset Management starts activities in Denmark. JAN. • SEB’s Baltic engagements assembled in SEB Baltic Holding AB. • Enskilda Securities incorporated. SEB ANNUAL REPORT 3 1998 IN FIGURES Total result increased by 30 per cent Comments on some of the financial key ratios of importance for any analysis of SEB are found on the two following pages. More detailed information is primarily found in the Financial review of the Group on pages 56–63. Result Earnings per share Result Return on equity 10 The result for the year after tax amounted The Group’s total result, i.e. oper- Return on equity in 1998 was to SEK 4,326 M, which distributed on ating result, pension provision and 14.8 per cent, by traditional 588,246,062 shares was equal to SEK 7.35 change in surplus values in life measuring methods. If the 8 per share. Earnings per share on the basis of Total result after tax were SEK 8.27 per insurance operations, increased by change in surplus values in life share. 30 per cent. This was mainly due insurance operations is included 6 to a 26 per cent improvement in return on equity was 16.1 per the operating result and a 70 per cent. SEB’s goal is to achieve cent higher change in surplus val- a minimum long-term return on 4 ues compared with 1997. equity of 15 per cent after tax. 2 8,000 20 Result for the year per share, SEK 0 Earnings per share, SEK 16 1997 1998 6,000 12 Credit quality 4,000 1.6 After some years of steady decline in lending 8 losses, provisions increased during 1998, chiefly as a result of the Group’s exposure on Russia. During the year, the Group’s exposure 2,000 1.2 4 on emerging markets was reduced from SEK 47 billion to a little over SEK 18 billion, net. The level of doubtful claims dropped to 1.09 0 0 0.8 per cent, whereas the provision ratio rose 1997 1998 1997 1998 from 47.6 to 52.0 per cent. Total result, SEK M Return on equity, % Return, incl. change in 0.4 surplus values, % Goal, % Lending loss level, % 0.0 Level of doubtful claims, % Income 1997 1998 25,000 During 1998, net commission income’s share of Group income increased. The item Other Credit portfolio income includes capital gains from the sale Credit portfolio by industry sector, 1998 (1997) 20,000 of properties and the Industrial & Marine busi- ness area. The net result of financial items SEK 525 billion (SEK 535 billion) was affected by the fact that the rise in value 15,000 Service and other sectors 34.9 % (34.2) of the Group’s investment portfolios did not Public administration 8.3 % (8.8) match that achieved during the strong stock Industry 15.2 % (14.1) 10,000 market year of 1997.