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Definitions

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IJKLMNOP
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Updated:  February 2017

A

Additional Tier 1 capital

Capital instruments and related share premium accounts that fulfil certain regulatory conditions after considering regulatory adjustments.

Average risk weight

Total risk exposure amount divided by the total exposure value for a number of exposures.

B

C

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)

Capital consisting of capital instruments, related share premium accounts, retained earnings and other comprehensive income after considering regulatory adjustments.

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

Common Equity Tier 1 capital in relation to risk exposure amount

Cost/income ratio

Total expenses in relation to total income.

Credit impairments

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 public after provisions.

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

Earnings per share before dilution

Profit for the year allocated to shareholders in relation to the weighted average number of shares outstanding during the year, 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 parameters PD, LGD and exposure value.

Exposure at default (EAD)

Exposure at default (EAD) measures the utilised exposure at default. For off-balance sheet exposures, EAD is calculated by using a credit conversion factor (CCF) estimating the future utilisation level of unutilised amounts.

Exposure value IRB

The exposure after taking into account credit risk mitigation with substitution effects and credit conversion factors, the exposure value is the value to which the risk weight is applied when calculating the risk exposure amount.

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 is  a liquidity requirement on European banks. A ratio above 100 per cent implies that the bank has enough of liquid assets to cover its liquidity 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 deposits 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 that is expected to be lost in the event of default. 

M

Maturity

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

Minimum capital requirement

The minimum capital a bank must hold for its credit, market, credit value adjustment, settlement and operational risks according to Pillar I, i.e. per cent of total risk exposure amount.

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 (calculated on month-end figures) total assets. 

Net Stable Funding Ratio (NSFR)

NSFR matches a bank’s deposits and lending over one year. A ratio of over 100 per cent means that long-term illiquid assets are financed to a satisfactory degree with stable long-term funding. NSFR aims to have a sufficiently large proportion of stable funding in relation to long-term assets. The measure is governed by the EU’s Capital Requirements Regulation (CRR); however no calculation methods have yet been established..

Number of employees 

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

Own funds

The sum of Tier 1 and Tier 2 capital.

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. 

Provision ratio for 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 borrower, due to the borrower’s financial difficulties.

Return on equity

Profit for the financial year allocated to shareholders in relation to average (calculated on month-end figures) shareholders’ equity.

Return on total assets

Profit for the year in relation to average (calculated on month-end figures) total assets.

Risk exposure amount

Risk weighted exposure value i.e. the exposure value after considering the risk inherent in the asset.

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 total risk exposure amount

Tier 2 capital

Capital instruments and subordinated loans and related share premium accounts that fulfil certain regulatory conditions after considering regulatory adjustments.

Total capital ratio

Own funds in relation to the total risk exposure amount

Total provision ratio for impaired loans

All provisions (individually assessed and portfolio) 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 year-end.

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