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Definitions

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Updated:  May 2014 

A

Additional Tier 1 capital
Additional Tier 1 capital according to article 51 after the deductions in article 56 and after application of article 79 in CRR.

B

C

Capital adequacy ratio

The capital base in relation to risk exposure amount.

Capital base

The sum of Tier 1 (primary) and Tier 2 (supplementary) capital according to article 72 in CRR.

Capital requirement

Regulation on how much capital a company must hold in order to pursue business.

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 (CET1 capital)

Common Equity Tier 1 capital according to article 26 after applicable adjustments specified in article 32-35, deductions according to article 36 and the exemptions and alternatives in articles 48, 49 and 79 in CRR.

Common equity Tier 1 capital ratio (CET 1 capital ratio)

Common Equity Tier 1 capital in relation to risk exposure amount

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 for 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 the 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

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. 

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

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 specific 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.

J

K

L

Liquidity coverage ratio (LCR)

LCR metric, as well as NSFR metric in below, are proposed to be introduced and used to define quantitative regulatory requirements on European banks liquidity risk through the Capital Requirements Regulation. The LCR metric is in force in Sweden since 2012 through national legislation. A LCR ratio above 100% implies that the bank has enough of liquid assets to cover its liquidity needs over 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)

This metric aims to establish a minimum acceptable amount of stable funding based on the liquidity characteristics of an institution's asset and activities over a one year horizon. The NSFR metric is calculated according to the definition in the Capital Requirements Regulation as well as according to the Basel Committee definition of the metric.

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.

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 equity per share at year-end.

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. 

Provision ratio for  impaired loans (incl. portfolio provisions)

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

Q

R

Restructured loan

A loan where the terms have been modified to more favourable for the borrower, due to the borrower’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 exposure amount (REA)

Capital requirement for credit risk, market risk, settlement risk and operational risk according 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

The sum of Common Equity Tier 1 capital and additional tier 1 capital according to article 25 in CRR.

Tier 1 capital ratio

Tier 1 capital in relation to the risk exposure amount

Tier 2 capital

Tier 2 capital according to article 62 after deductions in article 66 and after applications of article 79 in CRR.

Total capital ratio

The capital base in relation to the risk exposure amount

Total provision ratio for impaired loans

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

Total return

Share price development during the year including the actual dividend, in relation to the share price at the beginning of the year. 

VW

VaR

Value at Risk (VaR) is a statistical measure used to quantify market risk. VaR is defined as the expected maximum loss in value of a portfolio with a given probability over a certain time horizon.

XYZ

Yield

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

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