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Definitions

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Updated:  September 2010
 

A

B

C

Capital adequacy ratio

The capital base in relation to risk-weighted assets.

Capital base

The sum of Tier 1 (primary) and Tier 2 (supplementary) capital. To obtain the capital base for capital adequacy purposes, deduction is made for capital contributions in insurance companies.

Capital quotient

The capital base in relation to the capital requirement.

Cash flow per share

Cash flow for the period in relation to the weighted average number of shares outstanding during the period.

Common equity tier 1 capital

Tier 1 capital excluding hybrid capital.

Common equity tier 1 ratio

Core Tier 1 capital in relation to risk-weighted assets.

Cost/income ratio

Expenses in relation to income.

Credit impairment

Established losses and provisions for the year less recoveries related to loans as well as the year’s net expenses guarantees and other contingent liabilities.

Credit Impairment ratio

Credit impairment on loans and other credit risk provisions, net, in relation to the opening balance of loans to credit institutions and loans to public.

D

Default

Credit exposures are regarded to be in default if there has been an assessment indicating that the counterpart is unlikely to pay its credit obligations as agreed or if the counterpart is past due more than 90 days.

Duration

The average weighted maturity of payment flows calculated at present value and expressed in number of years. 

E

Expected loss (EL)

Expected loss shall provide an indication of the mean value of the credit losses that Swedbank may reasonably be expected to incur. The expected loss (EL) is the product of the three risk dimensions PD, LGD and EAD.

Exposure at default (EAD)

Exposure at default (EAD) measures the utilised exposure at default. For on-balance sheet exposures, EAD is the gross value of the exposure without provisions being taken into account. For off-balance sheet exposures, EAD is calculated by using a credit conversion factor (CCF) estimating the future utilization level of unutilised amounts.

Earnings per share after dilution

Profit for the period allocated to shareholders in relation to the weighted average number of shares outstanding during the period, rights issue adjustment factor included, adjusted for the dilution effect of potential shares.

Earnings per share before dilution

Profit for the period allocated to shareholders in relation to the weighted average number of shares outstanding during the period, rights issue adjustment factor included.

Equity per share

Shareholders’ equity in relation to the number of shares outstanding. 

F

G

H

I

Impaired loans

Loans where there is, on individual level, objective evidence of a loss event, and where this loss event has an impact on the cash flow of the exposure. Impaired loans, gross, less individual provisions for loans assessed individually constitute impaired loans, net.

Individual provisions

Provisions for individual exposures classified as impaired.

Interest fixing period

Contracted period during which interest on an asset or liability is fixed.

Net interest margin

Net interest income in relation to average total assets.

J

K

L

Liquidity coverage ratio (LCR)

The LCR metric is used to define quantitative regulatory requirements on banks liquidity risk. A LCR ratio above 100% implies that the bank has enough of liquid assets to cover its liquidity needs over a 30 calendar day time horizon under a significantly severe liquidity stress scenario.

Loan/Deposit ratio

Lending to the public excluding Swedish National Debt Office and repurchase agreements, in relation to, deposit from the public excluding Swedish National Debt Office and repurchase agreements.

Loss given default (LGD) 

Loss given default (LGD) measures how large a proportion of the exposure amount is lost in the event of default. Capital requirements are based on LGD values representative for a severe economic downturn. 

M

Maturity

The time remaining until an asset or liability’s terms change or its maturity date. 

N

Net asset value per share

Shareholders’ equity according to the balance sheet and the equity portion of the difference between the book value and fair value of the assets and liabilities divided by the number of shares outstanding at year-end.

Net interest margin

Net interest income in relation to average total assets. 

Net Stable Funding Ratio (NSFR)

The NSFR metric is proposed to be introduced and used to define quantitative regulatory requirements on banks liquidity risk in the future. It aims to establish a minimum acceptable amount of stable funding based on the liquidity characteristics of an institution's assets and activities over a one year horizon. A NSFR ratio above 100% implies that the bank has enough stable funding. The NSFR metric is calculated according to Swedbank's best understanding of the coming regulatory definition.

Number of employees 

The number of employees at year-end, exluding long-term absences, in relation to the number of hours worked expressed in terms of full-time positions.

O 

P

P/E ratio

Market capitalisation at year-end in relation to Profit for the financial year allocated to shareholders.

Price/equity

The share price at year-end in relation to the closing-day equity per share.

Portfolio provisions

An interim step to individual provisions. The provisions are related to a loss event within a group of exposures with similar credit risk characteristics. A loss event has taken place but the impact can not yet be connected to an individual exposure. The impact of the loss event can be reliably calculated on a group of exposures.

Probability of default (PD)

The probability of default (PD) indicates the risk that a counterparty or contract will default within a 12-month period. Swedbank uses a Through-the-Cycle (TtC) perspective producing PD values that indicates the average 12-month default frequency across a full business cycle.

Provision ratio for individually identified impaired loans

Provisions for impaired loans assessed individually in relation to impaired loans, gross. 

Q

R

Restructured loan

A loan where the terms have been modified to more favourable for the debtor, due to the debtor’s financial difficulties.

Return on equity

Profit for the period allocated to shareholders in relation to average shareholders’ equity.

Return on total assets

Profit for the period in relation to average total assets.

Risk-weighted assets (RWA)

Capital requirement for credit risk, market risk and operational risk accordning to the capital adequacy rules multiplied by 12.5. 

S

Share of impaired loans, gross

Carrying amount of impaired loans, gross, in relation to the carrying amount of loans to credit institutions and the public excluding provisions.

Share of impaired loans, net

Carrying amount of impaired loans, net, in relation to the carrying amount of loans to credit institutions and the public. 

T

Tier 1 capital

Shareholders' equity less proposed dividend, deduction for intangible assets, deferred tax assets and certain other adjustments. Hybrid capital (equity contribution and reserves) may be included in the capital base as Tier 1 capital with an approval from the supervisory authority.

Tier 1 capital ratio

Tier 1 capital in relation to the risk-weighted assets.

Tier 2 capital

Fixed-term subordinated liabilities, less a certain reduction if their remaining maturity is less than five years, and undated subordinated liabilities.

Total provision ratio for impaired loans

All provisions for loans in relation to impaired loans, gross.
 

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XYZ

Yield

Dividend per share in relation to the share price at end of period.

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