Kommuninvest i Sverige AB interim report 2018: High municipal investment pace drive credit demand

The Swedish local government debt office, Kommuninvest i Sverige AB, increased its lending volumes by 7 (7) percent during the first six months, according to its interim report. Operating profit was SEK 391.3 (523.7) million and the leverage ratio was 1.70 (1.78) percent. 

1 January – 30 June 2018 in review

The Swedish local government sector’s investment and borrowing needs continue to increase, due to strong population growth, urbanisation and demographic change. Kommuninvest expects sector borrowing to have increased to SEK 618 (600) billion during the period, corresponding to 12.9 (13.0) percent of GDP.

Kommuninvest’s lending increased to SEK 331,404.9 (310,147.3) million. Kommuninvest strengthened its position as the largest lender to Swedish municipalities and county councils/regions, with an estimated market share of 53 (51) percent of the local government sector’s total borrowing. The volume of committed Green Loans grew to SEK 31,352.3 (26,933.7) million, with reference to 179 (149) investment projects and 86 (81) municipalities and county councils/regions.

During the period, equity increased by SEK 298.1 million to SEK 7,908.9 million (7,610.8).

Operating profit amounted to SEK 391.3 million (523.7), with the variance mainly due to changes in unrealized market value changes. Excluding market value changes, operating profit amounted to SEK 305.0 (293.6) million.

The balance sheet total was SEK 430,756.9 (356,942.6) million, mainly due to a larger liquidity reserve and increased lending. Net interest income amounted to SEK 453,7 million (424,4).

Kommuninvest meets all requirements regarding risk-weighted capital. The capital base consists exclusively of core Tier 1 capital, with the effect that both the core Tier 1 capital ratio, the Tier 1 capital ratio and the total capital ratio amounted to 161.3 (212.4) percent.

The leverage ratio, calculated according to the EU Capital Requirement Regulation CRR, was 1.70 (1.78) percent. Kommuninvest believes it will comfortably comply with the leverage ratio requirement to be introduced, for further information see section "Future regulatory requirements - leverage ratio" in the interim report. Following the conversion of subordinated debt to share capital, the alternative key ratio Leverage ratio including debenture loan has been eliminated.

Kommuninvest Cooperative Society had a total of 288 (288) members at the end of the year, of which 277 (277) municipalities and 11 (11) county councils/regions. There were no new members during the period.

Comments by Tomas Werngren, President and CEO

- The continuously increasing investment volumes highlights the significance for municipal borrowers to safeguard a sustainable financial position. However, we estimate that municipal debt will continue to be manageable and limited in relation to GDP. More than 50% of the sector's borrowing is via Kommuninvest and the share is increasing. This is gratifying, given that customer and member benefit is our top priority.

The complete interim report is available for download here

This release contains such information that Kommuninvest is required to disclose pursuant to the Swedish Securities Markets Ac and/or the Swedish Financial Instruments Trading Act. The information was submitted for disclosure on 29 August 2018 at 08:00 a.m.

Comparative earnings figures relate to the same twelve-month period previous year (1 January–30 June 2017). Comparative balance sheet figures relate to 31 December 2017.

Contact persons for enquiries

President & CEO Tomas Werngren, tel. +46 70 645 06 69

CFO Patrick Nimander, tel +46 72 254 94 60

Head of Media Relations Björn Bergstrand, tel. +46 70 886 94 76 or bjorn.bergstrand@kommuninvest.se