Financial targets

Return on equity

• The return on equity shall amount to 15 per cent.

The profitability goal is adapted to Swedbank’s market position, risk profile and conditions in our home markets. To reach its profitability goal, the bank has to increase revenue and be more effective. The return on equity is also affected by the bank’s capitalisation. The profitability goal is calculated on a core Tier 1 capital ratio of 13 per cent and refer to the return on equity at the end of 2013.

The return on equity for the full year 2011 was 12.2 per cent (8.1).

Capitalisation target withdrawn

The Board o Directors has decided to withdraw its capital target as regards the long-term core Tier 1 capital ratio of at least 10 per cent and at least 13 per cent until 2013. The Board of Directos will decide on a new target once the regulatory situation is deemed more stable. Swedbank's executive management currently believes that in the long term we will require a core Tier 1 capital ratio of 13.5 to 14.5 per cent, including our own risk tolerance buffer, because of the proposed Swedish capital requirements. New legal requirements related to Basel 3 and IAS19 that will come into force are currently estimated to negatively affect the future core Tier 1 capital ratio by around 1.4 percentage points. In addition, new risk weights on mortgages in Sweden may have a negative effect at the same time as our internal work with capital efficiency is expected to have a positive impact. We currently already fulfil Basel 3 capital requirements.

Dividend
 

• The dividend will correspond to 50 per cent of after-tax profit, provided that the bank meets its capitalisation goals.

In early 2011 the Board of Directors changed its dividend policy to amount to 50 per cent of profit for the year from 40 per cent previously. The policy was changed against the backdrop of Swedbank’s strong capitalisation, expectations of modest credit demand and a continued focus on capital efficiency.