Press Release 17 July 2020
New lending at all-time high in Q2
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During the quarter, SBAB has had a very strong focus on supporting and
helping residential mortgage-, corporate- and tenant-owners' association
customers. This includes increased accessibility, amortisation exemption,
lowering the stressed interest rate used in the housing cost calculation for
residential mortgages to 6.0% and increased disclosure of preventative
information. It is very pleasing to note that this resulted in the second
quarter of 2020 being a record quarter for SBAB, with total new lending of
approximately SEK 26 billion. Net interest income and operating profit for
the second quarter were also the highest ever for SBAB.
SBAB's Interim Report January-June 2020 is now available for download on
sbab.se/IR [1].
Q2 2020 (Q1 2020)
? Continued uncertainty regarding socio-economic development in the wake
of the coronavirus pandemic. However, the housing market is exhibiting
resilience with a stable price trend and turnover
? Strong growth in total lending, which increased 3.1% to SEK 401.5
billion (389.3). Total deposits increased 2.1% to SEK 131.3 billion
(128.7)
? Record highs set for operating profit and net interest income. Operating
profit grew 28.0% to SEK 621 million (485). Net interest income increased
2.5% to SEK 907 million (885). Credit losses totalled SEK 11 million
(loss: 27) and mainly pertained to provisions for possible credit losses
linked to the effects of the coronavirus pandemic
? On 10 June, SBAB signed the UN Principles for Responsible Banking
? Issue of another green bond, SBAB's first denominated in EUR. At the end
of the quarter, the volume of green bonds outstanding amounted to SEK 18
billion
Financial information
2020 2020 2020 2019
Q2 Q1 Jan-Jun Jan-Jun
Total lending, SEK bn 401.5 389.3 401.5 372.3
Total deposits, SEK bn 131.3 128.7 131.3 127.3
Net interest income, SEK million 907 885 1,792 1,735
Expenses, SEK million -312 -311 -623 -580
Net result of financial 17 -55 -38 28
transactions, SEK million
Credit losses, SEK million -11 -27 -38 -16
Operating profit, SEK million 621 485 1,106 1,167
Return on equity, % 11.6 9.2 10.4 12.2
C/L ratio, % 0.32 0.32 0.32 0.32
C/I ratio, % 33.1 37.7 35.3 32.9
CET1 capital ratio, % 12.7 12.7 12.7 12.2
CEO statement from Klas Danielsson:
The coronavirus pandemic has caused great human suffering all around the
world. Measures to reduce its spread, in the form of shutting down societal
functions, has led to increased unemployment in many countries and created
major disruptions to the economy. The Swedish strategy of limited shutdowns
has helped mitigate economic disruption compared with many other countries.
Different business sectors are affected differently by the coronavirus
pandemic. The Swedish strategy of limited shutdowns of societal functions,
together with the fiscal, monetary and regulatory measures taken by the
government and authorities to support the economy, means that the housing
market in Sweden has been able to function more or less as usual.
When we compare this year's second quarter housing market data from Booli
with the equivalent 2018 and 2019 data for houses and tenant-owner
apartments, overall we see no material differences. Data on availability,
bidding, advertising period and turnover were similar across the years in
the market for existing housing stock. For new production there were some
differences, such as lower availability last year. The largest difference
that can be noted between the years is in actual selling prices, where the
price per square metre in June 2020 is significantly higher than in 2019 and
2018. In the rental housing market, we noted stable levels for investment
yields and considerable interest from existing and new customers in
financing from SBAB for acquisitions or refinancing.
SBAB, as a key financier of housing, has a major societal responsibility to
contribute to a functioning housing market, especially now during the
ongoing coronavirus crisis. Many households are feeling uncertain about
their household finances in these difficult times. During the quarter, we've
had a very strong focus on supporting and helping our residential mortgage-,
corporate- and tenant-owners' association customers. This includes increased
accessibility, amortisation exemption (Read more on page 6), lowering the
stressed interest rate used in the housing cost calculation for residential
mortgages to 6.0% (Read more on page 7) and increased disclosure of
preventative information. It is very pleasing to note that this resulted in
the second quarter of 2020 being a record quarter for SBAB, with total new
lending of approximately SEK 26 billion. We also noted record high levels of
customer satisfaction among our residential mortgage customers in our daily
CSI (customer satisfaction index) measurements.
During the quarter, we signed the UN Principles for Responsible Banking.
This means that we have clarified our intent, in partnership with other
banks, to meet the global sustainability challenges and to work together
toward the goals set in the Paris Agreement and the UN Sustainable
Development Goals (SDGs). It is an important step in clarifying our efforts
and our reporting on progress within sustainability. SBAB prioritises four
of the SDGs - Goals 8, 11, 12 and 13 - that we believe have a clear
connection to our operations and which are thus the SDGs to which we can
contribute the most.
During the quarter we issued another green bond (our first in EUR), whose
funds are intended to be used exclusively to finance residential properties
that meet a number of energy-efficiency criteria or hold certain
environmental certification. It is encouraging that investor demand for
green bonds is growing. The volume of green bonds outstanding for SBAB at
the end of the quarter amounted to nearly SEK 18 billion, and the volume of
green financing of residential properties outstanding in the form of green
residential mortgages and green loans amounted to approximately SEK 25
billion.
Sustainability is fully integrated into operations and our operations are
driven toward three sustainability target areas: Responsibility and
transparency, Attractive workplace and Sound finances. It is very pleasing
to note that the second quarter was another strong quarter overall for
target attainment. Examples of this include our high ranking in Kantar
Sifo's Reputation Index, that SBAB is Sweden's fourth best workplace
according to Great Place to Work and our record high operating profit of SEK
621 million.
Focus as a strength
SBAB's focus on housing and household finances is a strength, not least in
times of crisis when the financial market is under stress. Housing is
important for us which is why we prioritise paying our housing expenses in
the form of interest, amortisation and rent. Our business - housing
financing - is therefore associated with lower risk than other lending
segments. The credit quality of our lending is healthy. SBAB has no credit
exposure to business sectors that are particularly vulnerable during the
coronavirus crisis, and very limited credit exposure to commercial
properties (offices, warehouses, etc.) or unsecured lending.
In the wake of the coronavirus pandemic during the second quarter, we
revised the forward-looking information applied in the impairment model,
resulting in an effect of SEK 9 million in increased provisions for future
expected credit losses. Confirmed credit losses remained low and totalled
SEK 4 million. There is still a great deal of uncertainty around the future
and we have probably not yet seen the true extent of what the consequences
of the coronavirus pandemic will be for society and the economy.
Inclusion, respect and equality
The second quarter was also characterised by the efforts of the American
human rights movement "Black Lives Matter" for global support against
racism, after the suspected serious police abuses, which led to
demonstrations around the world. This was the basis for launching the
campaign "Stop Hate For Profit" by six American civil rights organisations
on 17 June. The objective is to encourage companies to stand up to racism,
polarisation and exclusion - and to stand for freedom, democracy, justice
and equality - through an advertising boycott where they temporarily suspend
their advertising campaigns on Facebook, in order to encourage Facebook to
take measures on its platforms.
Over 300 American companies are participating in the Facebook advertising
boycott. A smaller number of Swedish companies have also joined. We follow
developments closely and evaluate the situation. During the first half of
the year, SBAB's social media marketing costs amounted to SEK 180,000 per
month, the majority of which was on Facebook. SBAB is a values-driven
company. Inclusion, respect and equality are at the heart of our values. We
help make a difference and create change through our tool for more inclusive
workplaces, Respekttrappan.se. Respekttrappan.se is free of cost and free to
use for all companies and organisations.
A strong position
SBAB is still doing well, thanks to a well-functioning housing market, our
focus and commitment. We are growing, capturing market shares and have just
presented our highest net interest income and operating profit ever. We are
continuing to invest in our operations to strengthen our long-term
competitiveness. Our balance sheet is strong and our liquidity and capital
buffers are robust. From our perspective, functionality in the financial
markets gradually improved during the second quarter and is now good. During
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