Skandinaviska - 4th Qtr & Final Rslts - Pt. 2

RNS Number:8911F
Skandinaviska Enskilda Banken
15 February 2000


PART TWO

Appendix

SEB Trygg Liv
SEB Trygg Liv focuses on the sale and administration of unit-linked insurance
products and their equivalent for account of the traditional mutual life
insurance business. From an accounting point of view, its activities are
separate from traditional banking activities. SEB Trygg Liv's accounts are
presented in this Appendix according to generally accepted accounting standards
for the insurance companies.

SEB Trygg Liv's sales, that is, new premiums and additional payments under
existing insurance contracts, increased by SEK 1,594 M, or 22.0 per cent, to SEK
8,847 M (SEK 7,253 M). The share of insurance contracts with current premiums
was 17.6 per cent (26.4 per cent), which is a consequence of the fact that the
growth of the life insurance market during the year primarily consisted of
single premium endowment assurance, mostly unit-linked. Premium income (premiums
paid) rose by 20.2 per cent, to SEK 15,100 M (SEK 12,563 M). In total, assets
under management increased by 21.3 per cent during the twelve-month period,
whereas the corresponding increase for unit-linked insurance was 56.1 per cent.

Income increased by 13.8 per cent, primarily as a result of a higher premium
volume and favourable growth in assets under management, particularly within
unit-linked insurance. Operating costs and other costs increased by 3.6 per cent
(21.5 per cent). However, due to lower direct sales costs the deduction for
deferred acquisition costs declined to SEK 248 M (SEK 278 M), which resulted in
a net cost increase of 6.9 per cent (13.7 per cent).

The operating result improved by 35 per cent, to SEK - 116 M (SEK - 177 M).

The total result, which includes the change in surplus values, increased
by 141 per cent, to SEK 1,386 M (SEK 575 M). This improvement was mainly due to
strongly increased sales combined with a positive development on the capital
market, compared with 1998, which resulted in favourable growth in managed
funds.

The  surplus  value in life insurance operations is the  present  value  of
expected  future gains from signed insurance contracts. The surplus  values
comprise unit-linked operations as well as commissioning agreements with
traditional life insurance companies.

                                                      1999       1998
Volumes, SEK M
Sales volume
Traditional life insurance, current share 23 (31)%   1,450      1,326
Unit-linked insurance, current share 17 (25)%        7,397      5,927
                                                     8,847      7,253
     
Premium income
Traditional life insurance                           5,323      5,145
Unit-linked insurance                                9,777      7,418
                                                    15,100     12,563
     
Savings stock                                       31 Dec     31 Dec
Traditional life insurance                         172,572    152,869
Unit-linked insurance                               57,851     37,065
                                                   230,423    189,934


Profit and loss account, SEK M
                                                      1999       1998
Commissioning agreements, 
 traditional life insurance                            338        341
Unit-linked insurance                                  762        577
Risk operations and other                               84        122
TOTAL INCOME                                         1,184      1,040
Operating expenses                                  -1,387     -1,279
Capitalisation of acquisition costs                    248        278
Goodwill and other                                    -161       -216
TOTAL COSTS                                          1,300      1,217
OPERATING RESULT                                      -116       -177

Change in surplus values 1)                          1,502        752
TOTAL RESULT                                         1,386        575

Return on allocated capital, per cent 2)             30.7%      12.7%
Expense ratio per cent 3)                             9.2%      10.2%

1) After deduction for change in capitalised acquisition costs
2) After standard tax. SEK 3,250 M allocated for each year
3) Operating expenses expressed as percentage of premiums earned


Calculation of surplus values and changes in surplus values

Surplus values in life insurance operations are calculated on the basis of
assumptions regarding the future development of signed insurance contracts and a
risk-adjusted discount rate. The most important assumptions are the following:

Discount rate                                                11%
Return on capital, nominal assets                             4%
Return on capital, real assets                                8%
Cancellations of contracts                                    5%
Cancellations of current premiums                             5%
Administrative expenses                SEK 250/contract per year
Mortality rates                    According to trade experience


Surplus accounting

Deferred acquisition costs are capitalised in the accounts and depreciated
according to plan. The reported change in surplus values is therefore adjusted
by the net result of the capitalisation and depreciation during the period.

Change in surplus values                           1,750
Deferred acquisition costs              -450
Depreciation                            +211
                                                    -248
Reported change in surplus values                  1,502

Balance
OPENING BALANCE, 1 January 1999                              2,259
Current change in surplus values consists of present
 value of new contracts 1)                                     902
Present value of new contracts
 + Return on existing contracts                   +349
 - Realised surplus value in existing contracts   -435
 = Change in present value of contracts signed
   before the current period                                   -86
Actual outcome compared with operative
 assumptions made 2)                                           186
Change in operative assumptions                                  0
Capital return in excess of undertakings                       748
Total change in surplus values 3)                            1,750
CLOSING BALANCE 31 December, 1999 4)                         4,009

1) Sales defined as new contracts and extra premiums on existing contracts 
2) The reported actual outcome of contracts signed can be put in relation to the
operative assumptions that were made. Thus, the value of the deviations can be
estimated. The most important components consist of growth in underlying assets,
increased sales, particularly in the form of extra premiums and extensions of
contracts as well as cancellations.  However, the actual result of income and
administrative expenses is included in full in the operating result. 
3) Before deduction for capitalised acquisition costs of SEK 248 M. See above. 
4) Estimated surplus value according to the above is not included in the
published balance sheet.


The SEB Group Profit and loss accounts

                                                         Change
SEK M                                 1999       1998    per cent
INCOME
Interest receivable                 26,155     31,470       -17
Interest payable                   -19,242    -24,763       -22
Net interest earnings                6,913      6,707         3
Dividends received                     219        227        -4
Commission receivable                9,525      8,019        19
Commission payable                  -1,208     -1,400       -14
Net commission income 1)             8,317      6,619        26
Net result of financial 
 transactions 2)                     2,269      1,757        29
Other operating income               2,040      2,218        -8

TOTAL OPERATING INCOME              19,758     17,528        13

COSTS
Staff costs                         -8,419     -6,816        24
Other administrative costs          -4,092     -3,974         3
Depreciation and write-down of 
 tangible and intangible fixed 
 assets                             -1,182     -1,073        10
Other operating costs               -1,405     -1,110        27
TOTAL COSTS                        -15,098    -12,973        16

RESULT BEFORE LENDING LOSSES         4,660      4,555         2

Lending losses and provisions, net 3)  207     -2,237      -109
Change in value of assets taken over   111        -10
Write-down of financial fixed asset    -29         -4
Net result from associated companies   116
OPERATING RESULT, EXCL. NON-LIFE
 OPERATIONS                          5,065      2,304       120

Result, non-life operations 4)          57      2,497       -98
OPERATING RESULT                     5,122      4,801         7

Pension provision                      873        531        64
Taxes                               -1,355     -1,000        36
Minority interests                     -56         -6
RESULT FOR THE YEAR                  4,584      4,326         6

OPERATING RESULT, EXCL. NON-LIFE
 OPERATIONS                          5,065      2,304       120

Change in surplus values in life 
 insurance operations                1,502        752       100   
Pension provision                      873        531        64

TOTAL RESULT, EXCL. NON-LIFE
 OPERATIONS                          7,440      3,587       107

Result, non-life operations             57      2,497       -98

TOTAL RESULT                         7,497      6,084        23

Tax and minority interests          -1,411     -1,006        40
Tax on change in surplus values       -421       -211       100

TOTAL RESULT AFTER TAX               5,665      4,867        16


1) Net commission Income                                 Change
                                      1999       1998    per cent
Payment commissions                  1,863      1,585        18
Securities commissions               5,066      3,654        39
Other commissions                    1,388      1,380         1
TOTAL                                8,317      6,619        26


2) Net result of financial transactions                  Change
                                      1999       1998    per cent
Shares/participations                1,024        207
Interest-bearing securities           -276        113
Other financial instruments            819        549        49
REALISED RESULT                      1,567        869        80

Shares/participations                  462        -63
Interest-bearing securities            142       -226      -163
Other financial instruments         -1,039        200
UNREALISED VALUE CHANGES              -435        -89

EXCHANGE RATE FLUCTUATIONS           1,142        984        16
REDEMPTION OF BONDS, SEB Bolan          -5         -7       -29

TOTAL                                2,269      1,757        29

3) Lending Losses and provisions, net
A.INDIVIDUALLY APPRAISED RECEIVABLES:
Reported write-down, incurred losses  -448       -926       -52
Reversal of previous provisions for 
 possible losses, reported as incurred 
 losses in current period's accounts  
                                       339        544       -38
Reported provision for possible 
 losses                               -854       -904        -6
Recovered from losses incurred in 
 previous years                        200        185         8
Reversal of previous provisions for 
 possible losses                       483        227       113

REPORTED NET COST FOR INDIVIDUALLY  
 APPRAISED RECEIVABLES                -280      -874        -68

B)RECEIVABLES APPRAISED BY CATEGORY:
Reported write-down, incurred losses   -86       -98        -12
Reported provision for possible losses -31       -33         -6
Recovered from losses incurred in 
 previous years                         35        52        -33
Withdrawal from reserve for lending 
 losses                                 31        49        -37

REPORTED NET COST FOR RECEIVABLES 
 APPRAISED BY CATEGORY                 -51       -30         70

C)Allocation to/withdrawal from
 reserve for political risks abroad    440    -1,343       -133

D)Contingent liabilities                98        10
TOTAL                                  207    -2,237       -109

4) RESULT, NON-LIFE OPERATIONS
Net interest earnings                  176        70        151
Dividends received                               104       -100
Net result of financial transactions  -548     1,710       -132
Other operating income, incl. 
 Net insurance income                  647     1,685        -62
TOTAL INCOME                           275     3,569        -92

Staff costs                            -34      -631        -95
Other administrative costs              -6      -184        -97
Depreciation and write-down of 
 tangible and intangible fixed assets  -96        -7
Other operating costs                  -82      -250        -67

TOTAL COSTS                           -218     -1,072       -80

TOTAL                                   57      2,497       -98



Result per main group and business area (SEK M)

MAIN GROUPS
                          Nordic Banking    Asset Management  Other companies
                                                & Life            & units 
SEK M                      1999      1998     1999     1998     1999    1998

Income                   11,632    11,550    4,219    3,389    4,114   2,577
Costs                    -7,701    -7,207   -3,211   -2,583   -2,901  -1,962
Lending losses              254    -2,207       -1              -100     -54
     
Operating result          4,185     2,136    1,007      806    1,113     581
Pension provision           459       327       88       36       34      22
Change in surplus values                     1,502      752

Total result              4,644     2,463    2,597    1,594    1,147     583


Nordic Banking
                      Retail Distribution  Financial Services MerchantBanking
SEK M                      1999      1998     1999     1998     1999    1998

Income                    5,360     5,358    2,687    2,444    4,914   4,988
Costs                    -4,075    -3,902   -1,559   -1,418   -2,990  -2,758
Lending losses             -142      -171     -100      -51      441  -2,010

Operating result          1,143     1,285    1,028      975    2,365     220
Pension provision           338       246       50       32      105      71
Change in surplus values
 
Total result              1,481     1,531    1,078    1,007    2,470     291

Allocated capital         7,100     7,100    1,300    1,300    9,500  10,400
Return, %                 15.0       15.5     59.7     55.8     18.7     2.0


Asset Management and Life Insurance
                        Asset Management    SEB Trygg Liv
SEK M                     1999       1998    1999      1998

Income                   3,035      2,349   1,184     1,040
Costs                   -1,911     -1,366  -1,300    -1,217
Lending losses              -1

Operating result         1,123        983    -116      -177
Pension provision           88         36
Change in surplus values                    1,502       752

Total result             1,211      1,019   1,386       575

Allocated capital        3,750      3,750   3,250     3,250
Return, %                 23.3       19.6    30.7      12.7


Other companies and units
                       Enskilda Securities   Baltic states   Baltic states(2)
SEK M                     1999       1998    1999      1998     1999    1998

Income                   2,279      1,337     387              1,484
Costs                   -1,694     -1,091    -284             -1,007
Lending losses               7        -29     -52               -132
Net result from 
  associated companies                        119
Majority                                                        -175

Operating result           592        217     170                170
Pension provision
Change in surplus values

Total result               592        217     170                170

Allocated capital          650        650     980
Return, %                 65.6       24.0    12.5


                              Other(3)                       The SEB Group
SEK M                     1999       1998                    1999      1998

Income                     -88         12                  19,758    17,528
Costs                   -1,285     -1,221                 -15,098   -12,973
Lending losses             136         10                     289    -2,251
Net result from 
  associated companies      -3                                116
Non-life operations         57      2,497                      57     2,497

Operating result        -1,183      1,298                   5,122     4,801
Pension provision          292        146                     873       531
Change in surplus values                                    1,502       752

Total result              -891      1,444                   7,497     6,084


(1) SEB Kort will become a new business area in 2000 and is therefore excluded.
(2) Pro forma, all three banks fully consolidated. 
(3) Refers to income/costs that cannot be attributed to individual business
areas.  Return on capital that cannot be attributed to individual business
areas, depreciation of goodwill in connection with the purchase of Trygg-Hansa
and central costs, are included as well.


KEY FIGURES FOR THE SEB GROUP                       1999       1998             
                                                                    
Return on equity, %                                 14.6       14.8
Return incl. change in surplus values, %            17.2       16.1
Earnings per share, SEK                             7.77       7.35
Total result after tax per share, SEK               9.60       8.25
Income/cost ratio, before lending losses            1.31       1.35
Income/cost ratio, after lending losses             1.34       1.15
Lending loss level, %                              -0.09       0.65
Provision ratio for doubtful claims, %              59.6       52.0
Level of doubtful claims, %                         0.82       1.08
Total capital ratio, %                             14.61      10.85
Core capital ratio, %                              10.79       8.12


CASH FLOW ANALYSIS
                                                                     Change
SEK M                                               1999       1998  per cent

Cash flow, current operations                      4,711     10,298       -54
Changes in assets, current operations            -35,495    -38,256        -7
Changes in liabilities, current operations        37,385      6,392         0

Cash flow, current operations                      6,601    -21,566      -131

Cash flow, Investment activities                   8,161     -1,294         0

Cash flow, financing activities                  -10,326     20,905      -149

Cash flow                                          4,436    -1,955


Liquid funds at beginning of year                  4,638     6,593       -30
Cash flow                                          4,436    -1,955         0

Liquid fund at end of year                         9,074     4,638        96



BALANCE SHEET OF THE SEB GROUP (abbreviated)
                                          31 December   31 December  Change
SEK M                                            1999          1998  per cent
                                
Lending to credit institutions                103,670        84,710        22
Lending to the general public                 342,907       324,433         6
Interest-bearing securities                    94,415       110,718       -15
  - Financial fixed assets                      3,396        14,564       -77
  - Financial current assets                   91,628        96,154        -5
Shares and participations                      67,339        41,040        64
  - For account of policyholders               57,852        37,454        54
  - Other assets                                9,487         3,586       165
Assets in non-life operations                   4,870        35,900       -86
Other assets                                   97,054        92,856         5

Total assets                                  710,255       689,657         3

Liabilities to credit institutions            117,774       149,659       -21
Deposits and funding from the general public  229,534       187,901        22
Securities issued, etc.                       122,143       133,052        -8
Provisions for account of policyholders        58,141        37,378        56
Liabilities in non-life operations              3,085        19,086       -84
Other liabilities and provisions              120,690       108,137        12
Subordinated liabilities                       25,882        24,010         8
Shareholders' equity                           33,006        30,434         8

Total liabilities and shareholders' equity    710,255       689,657         3


Derivatives contracts

31 Dec 1999      Contracts on the asset side Contracts on the liabilities side
SEK M             Book value     Market value     Book value    Market value

Interest-related      15,053           15,053         15,429         15,429
Currency-related      26,562           28,368         23,377         26,396
Equity-related         2,401            2,401          3,228          3,228
Other                     19               19             16             16

Total                 44,035           45,841         42,050         45,069


On 31 December 1999 the notional value of the Group's derivatives contracts
amounted to SEK 3,887 billion (SEK 4,412 billion on 31 December 1998).

The book value of derivatives instruments forming part of trading operations is
identical with the market value.

Those deviations between actual and book values which are reported in the above
table are matched by opposite deviations between market and book values in the
part of the Group's operations which is the object of hedge accounting.



The SEB Group's performance on a quarterly basis

SEK M                    1999:4  1999:3   1999:2   1999:1    1998:4
Income
 Interest receivable      6,675   6,092    6,421    6,967   7,923
 Interest payable        -4,899  -4,356   -4,718   -5,269  -6,182
Net interest earnings     1,776   1,736    1,703    1,698   1,741
Dividends received            6      10      192       11      15
 Commissions receivable   2,925   2,217    2,320    2,063   2,077
 Commissions payable       -363    -277     -317     -251    -412
Net commission income     2,562   1,940    2,003    1,812   1,665
Net result of financial 
 transactions               897     163      359      850     498
Other operating income      216     570      498      756     233

Total Income              5,457   4,419    4,755    5,127   4,152
     
Costs
Staff costs              -2,580  -1,975   -1,950   -1,914  -1,709
Other administrative 
 expenses                -1,095    -994   -1,022     -981  -1,112
Depreciation 
 and write-downs           -333    -290     -265     -294    -260
Other operating costs      -350    -383     -349     -323    -325
Total costs              -4,358  -3,642   -3,586   -3,512  -3,406

Result before lending 
 losses                   1,099     777    1,169    1,615     746

Lending losses, net          35     -37      340     -131    -218
Change in value of assets 
 taken over                  49      51        4        7       5
Write-down                  -26      -1       -2               -4
Net result from associated 
 companies                  116

Operating result excl. 
 non-life operations      1,273     790    1,511    1,491     529

Operating result, non-life 
 operations                  54     248     -397      152     633
Operating result          1,327   1,038    1,114    1,643   1,162

Pension provision           452     141      155      125     196
Taxes                      -259    -364     -247     -485     204
Minority interests          -32     -19       -3       -2       1

Total result              1,488     796    1,019    1,281   1,563

Operating result excl. non-life  
 operations as per above  1,273     790    1,511    1,491     529

Change in surplus values in 
 life insurance operations  856     210      168      268     357
Pension provision           452     141      155      125     196

Total result excl.
non-life operations       2,581   1,141    1,834    1,884   1,082

Operating result, non-life 
 operations                  54     248     -397      152     633
Total result before tax   2,635   1,389    1,437    2,036   1,715

Tax and minority interests -291    -383     -250     -487     205
Tax on change in surplus 
 values                    -240     -59      -47      -75    -100
Total result after tax    2,104     947    1,140    1,474   1,820



Problem loans and assets taken over for the protection of claims

                                  31 December    31 December
SEK M                                    1999           1998
Doubtful claims                         6,988          7,454
Provision for possible lending losses  -4,164         -3,877
Doubtful claims, net                    2,824          3,577

Claims subject to interest reduction      352          1,195
Total volume of problem loans           3,176          4,772

Level of doubtful claims                 0.82           1.08
(Doubtful claims (net) in relation to 
 lending and leasing (net) at end of 
 period, per cent)

Provision ratio for doubtful claims      59.6           52.0
(Reserve for possible lending losses 
 in relation to doubtful claims (gross), 
 per cent)

Pledges taken over
Buildings and land                         82            160
Shares and participations                 544            871
Total volume of pledges                   626          1,031
 taken over

The soft loans of the Group are included among claims subject to interest
reduction.

The shortfall in income due to interest deferments was SEK 56 M (SEK 74
M), while unpaid interest on non-performing loans amounted to SEK 227 M
(SEK 327 M) - combined an improvement of 29 per cent compared with 1998.

On 31 December 1999, the Group had SEK 249 M (SEK 257 M) in non-performing
loans on which interest income was reported. These loans are not included
among the problem loans, since the corresponding collateral covers both
interest and principal.



Profit and Loss Account, Parent company

                                                      Change
SEK M                              1999       1998   per cent
Income
Interest receivable              19,791     24,839        -20
Leasing income                      254         64
Interest payable                -15,016    -20,010        -25
Net interest earnings 1)
Dividends received                4,241      4,828        -12
Commission receivable             5,752      5,909         -3
Commission payable                 -987     -1,062         -7
Net commission income 2)          4,765      4,847         -2
Net result of financial 
 Transaction 3)                   1,343      1,752        -23
Other operating income            1,541        363
Total Income                     16,919     16,683          1

Costs
Staff costs                      -5,875     -5,488          7
Other administrative expenses    -4,384     -3,524         24
Depreciation and write-downs of
 tangible and intangible fixed 
 assets                            -266       -201         32
Other operating costs            -1,487     -1,212         23
Total costs                     -12,012    -10,425         15

Result before lending losses      4,907      6,258        -22
Lending losses and provisions, 
 net 4)                             415     -2,109       -120
Change in value of assets taken over-10        -23        -57
Write-downs of financial fixed 
 assets                          -3,057     -3,330         -8
Operating result                  2,255        796        183

Pension provision                   873        531         64
Other appropriations *)          -1,863     -1,145         63
Tax on result for the year *)       -68        819       -108
Result for the year               1,197      1,001         20
*) Group contributions reported directly against equity
 
1) Not Interest
                                                        Change
                                   1999         1998  per cent
Interest receivable              19,791       24,839       -20
Leasing income                      254           64
Interest payable                -15,016      -20,010       -25
Leasing depreciation                -94          -51        84
Total                             4,935        4,842         2

2) Net commission income
                                                        Change
                                   1999         1998  per cent
Payment commissions               1,332        1,163        15
Securities commissions            2,695        2,545         6
Other commissions                   738        1,139       -35
Total                             4,765        4,847        -2

3) Net result of financial transactions
                                                        Change
                                   1999         1998  per cent
Shares/participations                 4          201       -98
Interest-bearing securities        -256          114
Other financial instruments       1,009          573        76
Realised result                     757          888       -15

Shares/participations               -23          -36       -36
Interest-bearing securities         105         -183      -157
Other financial instruments        -539          188  
Unrealised value changes           -457          -31

Exchange rate fluctuations        1,043          895        17
Redemption of bonds  
Total                             1,343        1,752       -23

4) Lending losses and provisions, net
                                                        Change
                                   1999         1998  per cent
A. Individually appraised receivables:
Reported write-down, incurred 
 losses                            -289         -767       -62
Reversal of previous provisions 
 for possible losses reported as
 incurred losses in current period's
 accounts                           257          435       -41
Reported provision for possible 
 losses                            -577         -694       -17
Recovered from losses incurred in 
 previous years                     116          141       -18
Reversal of previous provisions
 for possible losses                394          198        99

Reported net cost for individually
 appraised receivables              -99         -687       -86

B. Receivables appraised by category:
Reported write-down, incurred losses-52          -47        11
Reported provision for possible 
 losses                             -12          -20       -40
Recovered from losses incurred in 
 previous years                      26           35       -26
Withdrawal from provision for lending
 losses                              14           23       -39
Reported net cost for receivables
 appraised by category              -24           -9       167

C. Allocation to/withdrawal from
reserve for political risks
abroad                              440       -1,423     -131

D. Contingent liabilities            98           10 
Total                               415       -2,109     -120
 
END

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