Interim Report 2019-06
IKANO BANK AB (publ), corporate ID no. 516406-0922
Ikano Bank AB (publ) Interim Report 30 June 2019 Results for the first half-year 2019 (comparative figures in brackets are as of 30 June 2018 unless otherwise stated)
Business volume amounted to SEK 63,622 m (69,272), adjusted for intermediated mortgage volumes that ceased during 2018 (5,340 mSEK) the business volume decreased marginally Lending, including leasing, amounted to SEK 37,369 m (37,621) Deposits from the public amounted to SEK 26,253 m (26,311) Operating profit before loan losses increased to 431 mSEK (398) Net interest income decreased marginally, totalling SEK 971 m (978) The common equity Tier 1 capital ratio was 15.3 percent (14.5) and the total capital ratio was 17.6 percent (16.7) The liquidity reserve was SEK 2,352 m (2,404) and the total liquidity portfolio amounted to SEK 5,463 m (5,583)
Outlook for the remainder of 2019 We see positive effects from the improvement work and continue to work together according to plan to streamline and invest in our business. This includes further investments in our offering and especially its digitalisation, as well as regulatory compliance. We are continuing to invest in our IT platform to secure long-term profitable growth and customer benefits. At the same time, management has a strong focus on cost control. The Bank’s strategy to act and grow in the UK market as a branch also after Brexit remains.
Key ratios
30 Jun 2019
30 Jun 2018
31 Dec 2018
Total Capital ratio
17.6%
16.7%
17.2%
Common equity Tier 1 Capital ratio
15.3% 4.3%
14.5% 4.4%
14.9% 4.4%
2.6%
6.5%
4.9%
Leverage ratio
12.2%
11.4%
11.8%
C/I-ratio before loan losses
70.6%
72.0%
71.1%
1.8%
0.9%
1.3%
Investment margin Return on adjusted equity
Loan loss ratio
For definitions of alternative performance measures used to describe the Bank's operations see the Bank's Annual Report for 2018, available on the Bank's website: www.ikanobank.se/om-banken/ekonomisk-information.
Lending including leasing, SEK m
Deposits from the public, SEK m
Ikano Bank’s Interim Report is available on the Bank’s website: www.ikanobank.se/om-banken/ekonomisk-information.
INTERIM REPORT JUNE 2019
1
IKANO BANK AB (publ), corporate ID no. 516406-0922
Statement by the CEO Work continues as planned The half-year result is in line with our expectations. The underlying business is stable but our ambition is to improve the key ratios. We have accelerated the improvement work where a number of activities are underway and we are already beginning to see the effects of this proactive work. Profit before loan losses increased compared to the previous period. The growth in the period came mainly from the Swedish operations where the Corporate segment is growing. Loan losses increased slightly compared to previous period when excluding a portfolio sale which impacted the result in 2018 positively. Also after loan losses the result increases in most markets. We are firmly rooted in the vision and values characteristic for our company and to deliver on our promise; on fair terms. We are focusing more on the commercial area and improved customer experience and together with our partners we continue to deliver simple and fair solutions for the many people. Our organisation is now gaining a clearer distribution of responsibilities as well as increased focus on entrepreneurship and decision making. We have an almost completely new management team in place to drive the improvement work in the Bank and look forward to getting a new CFO and a new CRO 1 September. The local and central credit risk organisations have been strengthened during the period. Investments in the IT platform continue, now with an increased focus on digitalisation and improving the customer experience. We generally see increased execution power throughout the company. We are continuing to streamline our way of working; by automating simple but time-consuming processes we can have more time to help our customers, improve quality and lower costs in our ongoing operations. Investment in Robotic Process Automation (RPA) technology is an example of how we work with this in the Bank. A number of processes are already underway and we continue to improve efficiency in our markets and functions. During the period we have implemented initiatives to lower our costs and at the same time become a more competitive Bank with an increased focus on business creation activities, and revenues are now growing faster than costs. We have many ongoing activities to further improve growth and profitability. In June, a new invoicing solution was launched in Norway and Finland as part of increasing our growth.
2
Preparations for Brexit are made in close cooperation with both the British and Swedish authorities. We are committed to the UK market. Ikano Bank continues to have high customer satisfaction and we are proud to once again be named one of Sweden's top 100 Career Companies in 2019. The fact that we also have a strong confidence in the capital market was evidenced by the three MTN issuances that were oversubscribed in the spring. We see positive effects from the improvement work and the work continues as planned to further strengthen the Bank's position as the entrepreneur-driven Bank in the spirit of Ingvar Kamprad; a Bank where we with simple and fair solutions create opportunities for a better everyday life for the many people. Henrik Eklund
About Ikano Bank Ikano Bank has three business lines: Consumer, Sales Finance and Corporate. The Consumer business line conducts traditional banking operations that focus on private individuals by offering simple and attractive savings and loan services. Sales Finance administers and markets finance solutions for partners, and Corporate offers leasing solutions as well as factoring services to businesses. Ikano Bank has operations in Sweden, the UK, Norway, Denmark, Finland, Germany, Austria and Poland. Sweden is the largest market, where the Bank also has the broadest offering for all target groups. Ikano Bank offers a selection of the Bank’s services in the other geographical markets. Ikano Bank has no physical offices for customers, but delivers its services digitally.
INTERIM REPORT JUNE 2019
IKANO BANK AB (publ), corporate ID no. 516406-0922
The Bank’s results for the first halfyear 2019 compared to the corresponding period of 2018
The Bank’s position as of 30 June 2019 compared to 31 December 2018
Operating results before loan losses increased
Deposits from the public are an important part of the Bank's funding and have shown stable growth for several years. Deposits from the public rose by 0.2 percent to SEK 26.3 bn (26.2). In the Swedish market, deposit volumes and margins are somewhat lower while both volumes and margins grew in the international markets. The average interest rate margin remains unchanged.
Operating results for the first half of 2019 decreased by 58.2 percent to SEK 98 m (235), but the result before credit losses increased with 8.2 percent to SEK 431 m (398). During the comparison period, a portfolio sale in Germany resulted in a net income of SEK 128 m. The portfolio sale is also the main reason to the difference in the loan loss levels between the periods. Net interest income decreased with 0.7 percent to SEK 971 m (978) while the ne leasing income was up by 9.9 percent to SEK 243 m (222). Net commission income increased by 21.4 percent to SEK 189 m (156). Total income was up 5.4 percent while total costs increased 5.0 percent, with IT costs accounting for the largest increase together with higher depreciation of leasing assets due to growth in the Corporate segment. Marginally lower net interest income and higher net commission income Net interest income developed differently in the markets. Overall it decreased marginally by SEK 7 m or 0.7 percent to SEK 971 m (978). In Sweden, UK and Poland, net interest income increased, mainly as a result of better margins. Net commission income increased by 21.4 percent to SEK 189 m (156). This is a result of lower lending related commission costs as well as an increase in commission income from insurance. Increased net leasing income Net leasing income increased by 9.9 percent compared to the same period last year and amounted to SEK 243 m (221). Both leasing volumes and margins increased, mainly driven by growth in Sweden. Increased operating expenses due to volume growth leasing Operating expenses increased by 5.0 percent to SEK 2,772 m (2,639). The increase is partly due to the volume growth in the Corporate segment, the related higher depreciation of leasing assets and partly due to higher IT costs. The growth rate for costs is down from the previous period. Higher loan losses Overall, net loan losses increased by SEK 170 m to SEK 332 m (163). This increase is mainly due to the portfolio sale of non-performing loans which affected loan losses positively by SEK 155 m during the same period 2018. Loan losses measured as a percentage of average total lending increased to 1.8 percent (1.3), also as a result of the portfolio sale during the same period last year. This is marginally higher than the Bank’s historic loan loss level.
Stable deposits from the public
Decreased loans to the public and increased leasing The Bank's loans to the public decreased by 0.9 percent to SEK 27.0 bn (27.3) after provisions for loan losses. The decrease is mainly due to lower utilisation of credit cards. Volumes of private loans increased somewhat. Leasing assets held on behalf of customers increased by 4.3 percent to SEK 10.3 bn (9.9) as a result of continued strong demand for financing with our partners. Growth in total business volumes The total business volume rose by 0.4 percent to SEK 63.6 bn (63.4). Increased leasing volumes, mainly in the Swedish market, are the main contributor to the total increase in business volume. Good liquidity and strong demand for the Bank’s certificates and bonds The Bank's liquidity portfolio remained largely at the same level on 30 June 2019 as at year-end and amounted to SEK 5.5 bn (5.6), which equals 21 percent of the Bank's total deposits from the public. The Bank continuously obtains funding in the Swedish capital market and demand for the Bank's short certificate programme continues to be good. In addition to ongoing issuance of commercial papers, three new MTN bonds were issued during the first half of the year with a total nominal amount of SEK 1,300 m. The maturities were between two and four years and the issues were met with strong interest from the market. In addition to the new issues, a repurchase to the nominal amount of SEK 680 m was also made; repurchases are made to proactively manage future debt maturities and to extend the maturity profile. The own funds amounted to SEK 6.6 bn per 30 June 2019, compared to the capital requirement of SEK 3.0 bn. The total capital ratio amounted to 17.6 percent (17.2) and the Common Equity Tier 1 ratio was 15.3 percent (14.9).
INTERIM REPORT JUNE 2019
3
IKANO BANK AB (publ), corporate ID no. 516406-0922
Other information
Post balance sheet events
Ikano Bank AB (publ), corporate identity number 516406-0922, is an incorporated bank with its registered office in Älmhult and its head office in Malmö, Sweden. Ikano Bank is owned by Ikano S.A. with its registered office in Luxembourg. Originally part of IKEA, Ikano S.A. (the “Ikano Group”) became a separate group in 1988. Ikano Group conducts business within banking, real estate, production, insurance and retail. Ikano Bank has operated its business under a banking license since 1995.
No significant events have occurred after the end of the reporting period that affected the financial statements for the first half-year 2019.
Operations Ikano Bank AB (publ) conducts banking operations regulated by the financial supervisory authorities of Sweden, the UK, Norway, Denmark, Finland, Germany, Austria and Poland. There are three business lines: Corporate, Sales Finance and Consumer. The operations in Denmark, Norway, Finland, the UK, Germany and Poland are operated as branches, while Austria is serviced under cross-border operations.
Board of Directors and management During the year Olle Claesson has resigned as a member of the Board of Directors. Viveka Strangert and Lars Ljungälv have been appointed to the Bank’s Board of Directors. After a period as interim CEO, the Board of Directors has appointed Henrik Eklund as CEO on a permanent basis.
4
Outlook We see positive effects from the improvement work and continue to work together according to plan to streamline and invest in our business. This includes further investments in our offering and especially its digitalisation, as well as regulatory compliance. We are continuing to invest in our IT platform to secure long-term profitable growth and customer benefits. At the same time, management has a strong focus on cost control. The Bank’s strategy to act and grow in the UK market as a branch also after Brexit remains.
Next reporting date Ikano Bank reports its results half-yearly. The Year-end Report for 2019 will be available on the Bank’s website at the end of February 2020. Ikano Bank publishes information on capital adequacy and liquidity on a quarterly basis on its website. This Interim Report has not been reviewed by the Bank’s auditors.
INTERIM REPORT JUNE 2019
IKANO BANK AB (publ), corporate ID no. 516406-0922
Income statement Note
SEK 000
Jan-Jun 2019 Jan-Jun 2018 Jan-Dec 2018
Interest income
3
1 171 429
1 180 590
Interest expense
3
-200 025
-202 636
-402 997
971 404
977 954
1 935 129 3 790 090
Net interest income
2 338 126
Leasing income
4
1 981 703
1 839 412
Commission income
5
342 528
334 406
689 518
Commission expense
5
-153 686
-178 830
-336 354
188 842
155 576
353 164
13 568
10 433
-462
46 918
53 879
151 913
3 202 435
3 037 254
6 229 834
-894 282
-856 655
-1 749 367
-1 784 783 -92 581 -2 771 646
-1 663 823 -118 801 -2 639 279
-3 436 676 -209 344 -5 395 387
430 789
397 975
834 447
-332 400
-162 553
-475 938
98 389
235 422
358 510
Net commission income Net gains and losses on financial transactions Other operating income
6
Total income General administrative expenses Depreciation/amortisation and impairments of tangible and intangible assets
4
Other operating expenses Total expenses before loan losses Profit before loan losses Loan losses, net
7
Operating result Appropriations
8
Tax expense Net result for the period
-
-
320 000
14 402
-113 446
-137 302
112 791
121 976
541 208
Report on total comprehensive income SEK 000 Net profit for the period
Jan-Jun 2019 Jan-Jun 2018 Jan-Dec 2018 112 791
121 976
541 208
122 957
189 669
86 933
8 255
-599
-6 630
-9 667
-9 744
5 315
Tax related to changes in translation differences for the year Tax related to changes in fair value through other comprehensive income
-39 487
-
-34 716
-2 207
132
1 725
Tax related to changes in fair value of cash flow hedges Other comprehensive income for the period, net of tax
2 060 81 911
2 144 181 602
-1 137 51 490
Total comprehensive income for the period, net of tax
194 702
303 578
592 698
Other comprehensive income Items that can be reclassified to net profit for the period Translation difference for the period, foreign branches Changes in fair value through other comprehensive income Fair value changes for cash flow hedges
INTERIM REPORT JUNE 2019
5
IKANO BANK AB (publ), corporate ID no. 516406-0922
Balance sheet SE K 000
Note
30 J u n 2019 30 J u n 2018
31 D ec 2018
A s s ets Cash Treasury bills Loans to credit institutions Loans to the public
9
Bonds and other interest-bearing securities Shares and participations Intangible assets Tangible assets
- Leasing assets - Equipment Other assets Deferred tax assets Prepaid expenses and accrued income To ta l a s s ets
18 771 1 392 905 1 692 677
2 013 1 132 105 2 139 134
35 735 1 282 293 2 150 846
27 047 365
27 650 741
27 289 123
2 441 595
2 349 522
2 231 935
39 775
23 594
29 299
342 675 10 338 902
403 341 9 997 762
378 747 9 916 416
10 321 672
9 970 022
9 898 120
17 229
27 740
18 296
1 094 460
976 540
1 019 595
116 158 302 426 44 827 710
129 151 304 037 45 107 940
115 452 281 869 44 731 310
L ia b il it ies , p ro v is io n s a n d eq u it y Liabilities to credit institutions
1 830 499
2 139 247
2 250 366
26 311 038
26 206 463
Deposits from the public
10
26 253 174
Issued securities
11
7 486 696
7 484 189
7 138 497
829 972 1 353 965
902 115 1 378 012
1 000 226 1 292 919
191 029
179 778
181 123
35 680 100 859
34 388 90 554
34 663 91 362
Other liabilities Accrued expenses and deferred income Provisions
- Provisions for pensions - Deferred tax liabilities - Other provisions
54 490
54 836
55 098
865 289
860 294
839 330
38 810 623
39 254 673
38 908 924
378 157
698 157
378 157
Share capital
537 517 78 994
545 949 78 994
548 965 78 994
Statutory reserve
193 655
193 655
193 655
264 868
273 300
276 316
Fund for fair value
5 101 414 286 016
4 609 161 334 218
4 895 264 204 105
Retained earnings
4 702 607
4 152 967
4 149 951
112 791
121 976
541 208
5 638 931 44 827 710
5 155 110 45 107 940
5 444 229 44 731 310
Subordinated liabilities To ta l l ia b il ities a n d p ro v is io n s Un ta xed res erv es E q u ity Res t ricted eq u it y
Fund for development expenses No n - res t ricted eq u ity
Net result for the period To ta l eq u it y To ta l l ia b il ities , p ro v is io n s a n d eq u it y
6
INTERIM REPORT JUNE 2019
IKANO BANK AB (publ), corporate ID no. 516406-0922
Statement of changes in equity Restricted equity
Non-restricted equity Fund for fair value Fund for develop-
SE K 000 O p en in g b a l a n ce 2018- 01- 01 IFRS 9 transition effect
Share capital
Statutory reserve
ment expenses
Fair value reserve
Cash flow
Retained
Net result
hedge reserve
earnings or losses
for the period
Translation reserve
To ta l eq u ity
78 994 -
193 655 -
243 021 -
26 919 -13 522
130 774 -
8 444 -
4 104 642 -205 257
283 861 -
5 070 310 -218 779
78 994
193 655
243 021
13 397
130 774
8 444
3 899 385
283 861
4 851 531
Appropriation of profits Change in fund for development expenses
-
-
33 295
-
-
-
283 861 -33 295
-283 861 -
-
Net result for the year Other comprehensive income for the year To ta l co mp reh en s iv e in co me fo r th e yea r
-
-
-
-
-
-
52 217
4 178
-
541 208 -
541 208
-4 905
-
-
-
-4 905
52 217
4 178
-
541 208
592 698
Adju s ted o p en in g b a l a n ce 2018- 01- 01
51 490
Shareholders contribution Cl o s in g b a l a n ce 2018- 12- 31
-
-
-
-
-
-
-
-
-
78 994
193 655
276 316
8 492
182 991
12 622
4 149 951
541 208
5 444 229
O p en in g b a l a n ce 2019 - 01- 01
78 994
193 655
276 316
8 492
182 991
12 622
4 149 951
541 208
5 444 229
Appropriation of profits Change in fund for development expenses
-
-
-
-
-11 448
-
-
-
541 208 11 448
-541 208 -
-
Net result for the period Other comprehensive income for the period
-
-
-
-
-
-
83 470
-7 607
-
112 791 -
112 791
6 048
To ta l co mp reh en s iv e in co me fo r th e p erio d
-
-
-
6 048
83 470
-7 607
-
112 791
194 702
78 994
193 655
264 868
14 540
266 462
5 014
4 702 607
112 791
5 638 931
Cl o s in g b a l a n ce 2019 - 06 - 30
81 911
Cash flow statement Jan-Jun 2019
Jan-Jun 2018
J a n - D ec 2018
+98 389 +2 002 210
+235 422 +1 381 964
+358 510 +3 404 402
b efo re ch a n g es in w o rkin g ca p ita l
+2 100 599
+1 617 386
+3 762 912
Cash flows from changes in working capital Ca s h fl o w s fro m o p era tin g a ctiv ities
-2 528 895 -428 297
-1 528 894 +88 492
-3 434 521 +328 391
Ca s h fl o w s fro m in v es tin g a ctiv ities
-8 813
-46 397
-58 102
Ca s h fl o w s fro m fin a n cin g a ctiv ities
-112 711
+245 477
+76 870
-549 821 +2 169 819
+287 572 +1 808 435
+347 159 +1 808 435
+78 592
+32 043
+14 225
+1 698 590
+2 128 050
+2 169 819
SE K 000 O p era tin g a ctiv ities Operating profit Adjustment for non-cash items Ca s h fl o w s fro m o p era tin g a ctiv ities
Ca s h fl o w fo r th e p erio d Cash and cash equivalents at beginning of the year Exchange rate difference in cash and cash equivalents Ca s h a n d ca s h eq u iv a l en ts a t th e en d o f th e p erio d
The cash flow statement has been prepared using the indirect method. Reported cash flow includes only transactions that involve incoming or outgoing payments. Cash and cash equivalents are defined as cash and bank
balances with central banks and lending to credit institutions, of SEK 1,712 m (2,141) less deductions for current liabilities to credit institutions of SEK 12 m (13).
INTERIM REPORT JUNE 2019
7
IKANO BANK AB (publ), corporate ID no. 516406-0922
Notes 1 Accounting principles This Interim Report has been prepared in accordance with IAS 34 and also complies with the Swedish Annual Accounts Act for Credit Institutions and Securities Companies (ÅRKL), the Swedish Financial Supervisory Authority’s regulations and general guidelines regarding annual reporting for credit institutions and securities companies in accordance with the applicable transitional rules (FFFS 2008:25), as well as the Swedish Financial Reporting Board’s recommendation, RFR 2 Accounting for Legal Entities. Accordingly, the Bank applies statutory IFRS. Per 1 January 2019 IFRS 16 Leasing Standards came into effect, replacing IAS 17 Leasing Standards. IFRS 16 implies changes for the lessee's lease accounting, while the lessor is expected to report consistent with current rules in IAS 17. As Ikano Bank applies the exemption in
RFR 2 for legal entities, IFRS 16 does not affect Ikano Bank's financial reports significantly, since the exemption continues to apply for IFRS 16 in 2019. RFR 2 allows for legal entities to report financial lease agreements as operational leases in the income statement and balance sheet. No other new standards are expected to have any significant impact on the Bank's financial reports 2019 or later in addition to the ones outlined here. In other respects, the applied accounting policies and assessments in the Interim Report coincide with those applied in the Annual Report for 2018. This Interim Report is presented in Swedish kronor (SEK), rounded to the nearest thousand (SEK 000) unless otherwise stated.
2 Operating segments Jan-Jun 201 9 S EK m Interest income Interest expense T otal net interest inc om e Payment service commissions Lending commissions Compensation, mediated insurance Other commissions C om m ission inc om e Commission expenses C om m ission, net Leasing income Depreciation on leasing assets Leasing inc ome, net N et interest, fee and leasing inc om e
Other income Other direct expenses O perating m argin before net loan
Sweden
Denmark
Norway
Finland
United
Germany/
Kingdom
Austria
Poland
Shared
Total before
functions
eliminations
305
35
-41 264
-8 27 -
38 -26 12
6 10 24 0 40 -15 25
1 1 0 2 -3 0
0 0 -8 -8
-
-
-
-
218
289
27
3 -4 33
12 -11 219
0 -13 277
2
-34 0 0
-238 -4 -23
-
-
46 -18
392 -132 260
159 -40 119
100 -45 55
14 -6 8
301 -95 206
5 84 67 3 160 -66 93
1 20 14 2 36 -7 29
-
-
29 19 5 53 -23 30
0 11 2 0 14 -3 11
1 003 -887 116 470
532 -467 65 213
311 -265 47 132
136 -120 16 34
13 -19 464
11 -5 218
4 -9 128
-444 -5 15
-186 -2 31
-108 -1 18
73 554 -210
21 249 -74
204 -92
-
-7 24
-
-
18
0
Eliminations
Total
269 -237 32
1 575 -603 971
-403 403
-
12 190 128 12 343 -150 192
-
-
24
1 982 -1 739 243 1 407
-1 27
386 0 410
431 -62 1 776
-371
61 -62 1 405
-234 -5 38
-26 0 2
-391 0 19
-1 661 -16 98
372 -1 -
-1 289 -18 98
0 0 0
-
0 0
39 -15
633 78 -123
726 1 170 -532
-726 -
0 -23
-10 27
-1 1
32 51
14 113
36 1 1
-
-
-371 -
1 171 -200 971 12 190 128 12 343 -150 192 1 982 -1 739 243 1 407
losses and operational expenses Other expenses Allocated overhead expenses O perating result Of which:
Total internal income Total external income Total internal expenses Tax Net res u l t fo r th e p erio d
15
532 -
For more information on segment reporting see note 2 Accounting principles in the Annual Report 2018.
8
INTERIM REPORT JUNE 2019
1 170 14 113
IKANO BANK AB (publ), corporate ID no. 516406-0922
Jan-Jun 201 8 S EK m Interest income Interest expense T otal net interest inc om e Payment service commissions Lending commissions Compensation, mediated insurance Other commissions C om m ission inc ome Commission expenses C om m ission, net Leasing income Depreciation on leasing assets Leasing inc ome, net N et interest, fee and leasing inc ome Other income Other direct expenses O perating m argin before net loan
Sweden
Denmark
Norway
Finland
United
Germany/
Kingdom
Austria
Poland
Shared
Total before
functions
eliminations
Eliminations
Total
377 -114 263
165 -41 124
111 -40 71
14 -6 9
285 -86 199
316 -42 274
33 -8 25
230 -217 13
1 531 -553 978
-350 350 -
1 182 -204 978
5 85 51 12 154 -66 87
1 18 15 1 35 -8 27
-
1 11 2 0 13 -4 9
39 0 0 39 -17 22
6 9 23 0 39 -14 25
-
30 16 6 52 -29 24
1 1 0 2 -2 0
0 0 0 0 0
13 194 108 19 334 -142 192
-
13 194 108 19 334 -142 192
907 -813 94 444
513 -449 64 214
301 -255 46 141
119 -102 17 35
-
-
-
221
299
25
13
1 839 -1 618 221 1 391
-
1 839 -1 618 221 1 391
10 -24 430
11 -6 219
3 -7 137
2 -3 34
13 -12 223
-4 -42 253
3 -1 27
495 -5 503
534 -100 1 825
-470 -470
64 -100 1 355
-432 -10 -13
-175 -6 39
-134 -3 0
-36 -1 -2
-244 -6 -27
-76 -5 171
-25 0 2
-437 0 66
-1 559 -31 235
454 16 -
-1 106 -14 235
60 575 -317
17 258 -67
-
-
-
-
-
213 -83
47 -15
0 0
0 0
38 -16
699 21 -84
775 1 151 -582
-775 -
-
-10 29
0
-
-1 -28
-57 114
0 2
-46 20
-113 122
losses and operational expenses Other expenses Allocated overhead expenses O perating result Of which:
Total internal income Total external income Total internal expenses Tax Net res u l t fo r th e p erio d
-13
-2
Jan-Dec 201 8 S EK m Interest income Interest expense T otal net interest inc om e Payment service commissions Lending commissions Compensation, mediated insurance Other commissions C om m ission inc om e Commission expenses C om m ission, net Leasing income Depreciation on leasing assets Leasing inc ome, net N et interest, fee and leasing inc om e Other income Other direct expenses O perating m argin before net loan
Sweden
Denmark
Norway
Finland
749 -229 520
329 -83 247
215 -82 133
29 -12 17
12 173 117 20 322 -136 186 1 880 -1 687 193 900
2 36 27 2 66 -17 50 1 043 -915 129 425
61 36 12 109 -60 48 610 -517 93 274
1 22 4 0 27 -9 18 257 -223 33 68
77 -39 938
22 -10 438
8 -13 269
-870 -3 65
-362 -4 72
-248 -1 20
119 1 236 -602
35 514 -142
424 -168
-
-
-
-11 61
-7 13
-
United
Germany/
Kingdom
Austria
Poland
Shared
Total before
functions
eliminations
582 -
Eliminations
1 151 -113 122
Total
566 -177 389
627 -81 546
67 -16 52
472 -441 31
3 055 -1 120 1 935
-717 717 -
2 338 -403 1 935
-
2 1 1 4 -5 -1 51
0 0 0 -1 -1 30
27 394 233 35 690 -298 392 3 790 -3 342 448 2 775
-
79 -37 43 432
13 20 49 1 82 -33 49 595
27 394 233 35 690 -298 392 3 790 -3 342 448 2 775
4 -6 66
22 -26 428
-4 -50 541
4 -2 54
874 -5 899
1 006 -150 3 631
-858
149 -150 2 774
-71 1 -4
-472 -4 -48
-298 -6 237
-50 1 5
-886 -1 13
-3 256 -16 359
875 -17 -
-2 382 -33 359
-
0 0
0 0 0
-
93 -29
76 -28
1 327 0 -145
1 482 2 343 -1 114
-1 482 -
-
-
-
320
320
-10 -58
-87 151
0 5
-23 310
-137 541
-
80 -1 0
-858 -
losses and operational expenses Other expenses Allocated overhead expenses O perating result Of which:
Total internal income Total external income Total internal expenses Appropriations Tax Net res u l t fo r th e y ea r
65
-4
1 114
-
2 343 320 -137 541
External income SE K m
J a n - J u n 2019
J a n - J u n 2018
J a n - D ec 2018
411 864 495 48 1 818
376 917 499 9 1 801
761 1 773 962 132 3 628
Corporate Sales Finance Consumer Other To ta l extern a l in co me
Ikano Bank, or each segment individually, has no single customer representing 10 percent or more of total revenues.
INTERIM REPORT JUNE 2019
9
IKANO BANK AB (publ), corporate ID no. 516406-0922
Balance sheet Balance sheet 30 Jun 2019 SEK m Fixed assets other than financial instruments
Sweden
351 88 33 117 33 556 30 692
Deferred tax assets Other assets Total assets Liabilities and provisions 30 Jun 2018 SEK m Fixed assets other than financial instruments
Sweden
409 99 32 885 33 394 30 574
Deferred tax assets Other assets Total assets Liabilities and provisions 31 Dec 2018 SEK m Fixed assets other than financial instruments
Sweden
Deferred tax assets Other assets Total assets Liabilities and provisions
385 88 32 961 33 434 30 594
Denmark
Norway
4 6 436 6 440 5 094
Denmark
Denmark
5 5 961 5 967 4 695
Finland
1 3 648 3 648 3 331
Norway
United Kingdom
0 1 131 1 132 1 210
0 3 400 3 401 3 054
Norway
13 5 657 5 670 4 392
Finland
0 4 6 077 6 081 6 013 United Kingdom
0 1 187 1 187 1 261
Finland
0 3 294 3 294 2 985
2 8 6 077 6 086 5 965 United Kingdom
0 1 127 1 127 1 202
1 4 5 932 5 937 5 849
Germany/ Austria
4 25 7 845 7 874 6 294 Germany/ Austria
6 22 7 719 7 747 6 247 Germany/ Austria
5 24 7 890 7 918 6 423
Poland
Eliminations
-14 243 -14 243 -14 243
1 587 588 697
Poland
Eliminations
-13 282 -13 282 -13 282
1 657 658 767
Poland
Eliminations
-13 685 -13 685 -13 685
1 739 740 845
Total
360 116 44 352 44 828 38 811
Total
431 129 44 548 45 108 39 255
Total
397 115 44 219 44 731 38 909
3 Net interest Jan-Jun 2019
SEK 000
Jan-Jun 2018
Jan-Dec 2018
Interest income Loans to credit institutions Loans to the public Interest bearing securities
0
750
-1 642
1 164 680
1 179 117
2 337 836
6 749
723
1 932
Total
1 171 429
1 180 590
2 338 126
Of which: interest income from financial assets not measured at fair value through profit or loss interest income from non-performing loans
1 164 680 34 310
1 179 867 40 029
2 336 193 67 515
Interest expense Liabilities to credit institutions Deposits from the public
-17 412
-20 197
-40 078
-102 336
-103 980
-203 773
Of which: deposit guarantee fee
-18 823
-19 448
-34 218
Issued securities
-21 071
-12 902
-27 638
Derivatives
-37 231
-42 627
-85 693
- hedge accounting - not hedge accounting
-2 636
-4 720
-8 037
-34 595
-37 907
-77 656
Subordinated liabilities
-12 055
-11 550
-23 303
Other interest expenses
-9 919
-11 380
-22 512
Of which: resolution fee
-8 929
-10 600
-18 834
-200 025
-202 636
-402 997
-162 793 971 404
-160 009 977 954
-317 304 1 935 129
Total
Of which: interest income from financial assets not measured at fair value through profit or loss Total net interest income
10
INTERIM REPORT JUNE 2019
IKANO BANK AB (publ), corporate ID no. 516406-0922
4 Leasing income SE K 000 Leasing income, gross Less: Depreciation according to plan L ea s in g in co me, n et Leasing income from financial lease agreements Depreciation according to plan for assets that are financial lease agreements, but are recognised as operating leases
Jan-Jun
Jan-Jun
J a n - D ec
2019 1 981 703 -1 738 562
2018 1 839 412 -1 618 115
2018 3 790 090 -3 341 934
243 142
221 297
448 156
1 981 703
1 839 412
3 790 090
-1 738 562
-1 618 115
-3 341 934
L ea s in g in co me, n et fo r fin a n cia l l ea s e a g reemen t s
243 142
221 297
448 156
Interest income Interest expenses
5 501 -65 251
4 705 -54 420
9 531 -112 991
L ea s in g , n et
183 391
171 582
344 696
Jan-Jun
Jan-Jun
J a n - D ec
2019
2018
2018
12 484 189 627
12 829 194 236
26 922 394 184
140 417
127 341
268 412
342 528
334 406
689 518
Other commissions To ta l
-3 755 -119 856 -30 074
-1 326 -150 300 -27 204
-3 127 -280 605 -52 622
-153 686
-178 830
-336 354
Co mmis s io n , n et
188 842
155 576
353 164
Jan-Jun 2019 16 306 -
Jan-Jun 2018 12 234 -
30 611
41 645
J a n - D ec 2018 29 262 57 133 65 518
46 918
53 879
151 913
5 Net commission SE K 000 Co mmis s io n in co me Payment service commissions Lending commissions Other commissions To ta l Co mmis s io n exp en s es Payment service commissions Lending commissions
6 Other operating income SE K 000 Realised gain arising from the disposal of tangible assets One-off revenue SBAB Other operating income To ta l
INTERIM REPORT JUNE 2019
11
IKANO BANK AB (publ), corporate ID no. 516406-0922
7 Loan losses, net SE K 000 Sta g e 1 - A s s ets w ith o u t s ig n ifica n t in crea s e in cred it ris k s in ce in itia l reco g n it io n Change in provisions of receivables from stage 1 Net co s t fo r th e p erio d fo r l o a n l o s s es - s ta g e 1
Jan-Jun
Jan-Jun
J a n - D ec
2019
2018
2018
-14 198
6 428
28 020
-14 198
6 428
28 020
Sta g e 2 - As s ets w ith s ig n ifica n t in crea s e in cred it ris k s in ce in itia l reco g n it io n b u t n o t cred it- imp a ired Change in provisions of receivables from stage 2 Write-off and removal of receivables from stage 2 Recoveries from previously determined loan losses for stage 2 Net co s t fo r th e p erio d fo r l o a n l o s s es - s ta g e 2
33 957
2 861
16 963
-291 422 178 828
-92 407 27 380
-227 416 61 502
-78 637
-62 166
-148 952
-25 999
120 850
182 830
Sta g e 3 - Cred it - imp a ired a s s ets Change in provisions of receivables from stage 3 Write-off and removal of receivables from stage 3 Recoveries from previously determined loan losses for stage 3 Net co s t fo r th e p erio d fo r l o a n l o s s es - s ta g e 3
-304 537 90 970
-469 857 242 192
-984 609 446 773
-239 566
-106 815
-355 006
Net co s t fo r th e p erio d fo r l o a n l o s s es - To t a l
-332 400
-162 553
-475 938
8 Tax expense for the period SEK 000
30 Jun 201 9
3 0 Jun 201 8
31 Dec 201 8
Current tax expense
19 645
-52 526
-56 594
Prior year's tax expense
-2 029
-1 525
-4 320
Changes in deferred tax
-3 214
-59 395
-76 388
T otal tax expense for the period
14 402
-113 446
-137 302
1) Tax liabilities/claims related to foreign exchange rate effects for branches that initially has been recognised through OCI in the balance sheet, have been recognised in the tax expense for the period due to being offset against current refundable foreign tax expenses or tax losses.
12
INTERIM REPORT JUNE 2019
IKANO BANK AB (publ), corporate ID no. 516406-0922
9 Loans to the public SE K 000
30 J u n 2019
30 J u n 2018
31 D ec 2018
9 262 841 18 681 825
9 585 270 19 053 310
9 567 734 18 581 041
27 944 666
28 638 580
28 148 775
23 637 531
23 753 798
23 273 351
3 511 393 795 740
3 944 743 940 039
4 080 083 795 342
27 944 664 795 740
28 638 580 940 039
28 148 775 795 342
-133 324 -282 963
-135 522 -308 534
-111 610 -286 305
-481 014
-543 783
-461 737
-897 300
-987 839
-859 652
23 504 207 3 228 430
23 618 276 3 636 209
23 161 741 3 793 778
O u t s ta n d in g receiv a b l es , g ro s s - Swedish currency - Foreign currency To ta l O u t s ta n d in g receiv a b l es p er s t a g e, g ro s s - stage 1 - stage 2 - stage 3 To ta l o u ts ta n d in g receiv a b l es p er s ta g e, g ro s s
Of which: non-performing loans P ro v is io n s Provisions for assets in stage 1 Provisions for assets in stage 2 Provisions for assets in stage 3 To ta l p ro v is io n s Ca rryin g a mo u n t, n et - stage 1 - stage 2 - stage 3 To ta l ca rryin g a mo u n t, n et
314 727
396 256
333 605
27 047 365
27 650 741
27 289 123
10 Deposits from the public SE K 000
30 J u n 2019
30 J u n 2018
31 D ec 2018
P u b l ic Swedish currency Foreign currency
12 364 291 13 888 883
13 101 139 13 209 899
12 757 321 13 449 142
To ta l
26 253 174
26 311 038
26 206 463
D ep o s its s p ecified b y ca teg o ry o f b o rro w er Corporate sector Household sector
1 314 471
1 039 897
1 373 023
24 938 702
25 271 141
24 833 440
To ta l
26 253 174
26 311 038
26 206 463
30 J u n 2019 2 088 688
30 J u n 2018 2 184 981
31 D ec 2018 1 989 784
5 398 008
5 299 208
5 148 713
7 486 696
7 484 189
7 138 497
11 Issued securities SE K 000 Certificates of deposits Bonds To ta l
INTERIM REPORT JUNE 2019
13
IKANO BANK AB (publ), corporate ID no. 516406-0922
12 Related parties The Bank has related party relationships with companies within the Ikano Group. Transactions with these companies are stated below. Consolidated financial statements are prepared by Ikano S.A., Luxembourg.
Transactions with related parties are priced on commercial market-based terms. No nonperforming loans are attributable to the outstanding receivables from related parties.
SE K 000
Period
Ikano S.A. Ikano S.A.
30 J u n 2019 30 J u n 2018
Income -
Ikano S.A.
31 D ec 2018
-
Other Group companies
30 J u n 2019
Other Group companies Other Group companies
30 J u n 2018 31 D ec 2018
Expenses -15 089
Receivables
Liabilities
with related
with related
parties -
parties 13 837
-14 460 -29 711
15 513 -
22 405 2 350
200
-26 632
3 172
874 623
-
-23 919
7 135
873 827
268
-50 605
7 240
851 273
13 Memorandum items SE K 000 Pledged assets
30 J u n 2019 none
30 J u n 2018 none
31 D ec 2018 none
693 2 958 889
669 2 965 120
693 1 802 242
35 697 908
39 234 098
37 028 758
Contingent liabilities Loan commitments, irrevocable Unused credit limits
Unused credit limits means card limits and loan commitments arranged externally. Commitments consisting of granted unused credit can be
terminated effective immediately to the extent this is permitted under the Swedish Consumer Credit Act. The Bank has no pledged assets.
14 Financial assets and liabilities The following table provides information on the measurement of fair value of the financial instruments that are measured at fair value in the balance sheet (excluding items included in hedge accounting). The breakdown of how fair value is determined is based on the following three levels:
14
-
-
Level 1: according to prices listed on an active market for the same instrument Level 2: based on directly or indirectly observable market data that is not included in level 1 Level 3: based on input that is not observable in the market
INTERIM REPORT JUNE 2019
IKANO BANK AB (publ), corporate ID no. 516406-0922
Financial assets and liabilities As described in the section Accounting principles, the transition to IFRS 9 has resulted in a number 30 J u n 2019 SE K 000 Fin a n cia l a s s ets a t fa ir v a l u e th ro u g h p ro fit o r
of changes in the classification of financial assets and liabilities.
L ev el 1
loss Interest rate derivatives
L ev el 2
-
Currency derivatives Shares and participations
L ev el 3
To ta l
-
-
-
-
58 363
58 363
38 240
1 535
-
1 560 646 1 272 852
880 949 120 053
-
2 441 595 1 392 905
-
16 306
39 775
Fin a n cia l a s s ets a t fa ir v a l u e th ro u g h o th er co m p reh en s iv e in co me Bonds and other interest-bearing securities Treasury bills Fin a n cia l l ia b il ities a t fa ir v a l u e th ro u g h p ro fit or loss Interest rate derivatives Currency derivatives
-
10 811
16 306 10 811
30 J u n 2018 SE K 000
L ev el 1
L ev el 2
L ev el 3
To ta l
Fin a n cia l a s s ets a t fa ir v a l u e th ro u g h p ro fit o r loss Interest rate derivatives Currency derivatives
-
14 702
-
14 702
22 059
1 535
-
23 594
Bonds and other interest-bearing securities
1 388 866
2 349 522
1 132 105
960 656 -
-
Treasury bills
-
1 132 105
-
7 581 91 734
-
91 734
Shares and participations Fin a n cia l a s s ets a v a il a b l e fo r s a l e
Fin a n cia l l ia b il ities a t fa ir v a l u e th ro u g h p ro fit or loss Interest rate derivatives Currency derivatives
7 581
31 D ec 2018 SE K 000 Fin a n cia l a s s ets a t fa ir v a l u e th ro u g h p ro fit o r loss
L ev el 1
L ev el 2
L ev el 3
To ta l
Interest rate derivatives
-
Currency derivatives Shares and participations
-
169 161
-
27 764
1 535
Bonds and other interest-bearing securities
1 306 864
2 231 935
1 282 293
925 071 -
-
Treasury bills Fin a n cia l l ia b il ities a t fa ir v a l u e th ro u g h p ro fit or loss
-
1 282 293
-
7 715 -
-
7 715 -
-
169 161 29 299
Fin a n cia l a s s ets a t fa ir v a l u e th ro u g h o th er co m p reh en s iv e in co me
Interest rate derivatives Currency derivatives
INTERIM REPORT JUNE 2019
15
IKANO BANK AB (publ), corporate ID no. 516406-0922
Financial instruments that have been offset in the balance sheet or are subject to netting agreements Ikano Bank is party to derivative contracts under the International Swaps and Derivatives Association’s (ISDA) master agreement, which means that when a counterparty cannot fulfil its obligations, the agreement is cancelled and all outstanding dealings between the parties are settled with a net amount. ISDA agreements do not meet the criteria for offsetting in the balance sheet since offsetting is only permitted due to a
party’s inability to settle, and also where the intention to reach a net settlement exists. No amounts have been offset in the balance sheet in 2019. Ikano Bank receives and submits collateral for derivatives in the form of bank deposits in accordance with the standard terms in the ISDA Credit Support Annex.
Amounts not offset in balance sheet
30 J u n 2019 SE K 000 Derivatives
Offsetting in the Net in balance Gross value 58 363
balance sheet
Netting
Issued/Received
-
sheet 58 363
agreements -24 779
collateral -44 897
Net value -
To ta l fin a n cia l a s s ets
58 363
-
58 363
-24 779
-44 897
-
Derivatives
27 117
-
27 117
-24 779
-2 716
-378
To ta l fin a n cia l l ia b il ities
27 117
-
27 117
-24 779
-2 716
-378
Amounts not offset in balance sheet
Offsetting in the Net in balance
30 J u n 2018 SE K 000 Derivatives
Gross value 14 702
balance sheet
Netting
-
sheet 14 702
agreements -14 702
Issued/Received collateral
Net value -
-
To ta l fin a n cia l a s s ets
14 702
-
14 702
-14 702
-
-
Derivatives
99 315
-
99 315
-14 702
-92 240
-7 627
To ta l fin a n cia l l ia b il ities
99 315
-
99 315
-14 702
-92 240
-7 627
Amounts not offset in balance sheet
31 D ec 2018 SE K 000 Derivatives To ta l fin a n cia l a s s ets
Offsetting in the Net in balance balance sheet sheet 169 161 169 161 169 161
Gross value 169 161
Netting Issued/Received agreements collateral -7 715 -139 363
Net value 22 083
-7 715
-139 363
22 083
Derivatives
7 715
-
7 715
-7 715
-
-
To ta l fin a n cia l l ia b il ities
7 715
-
7 715
-7 715
-
-
15 Risks and uncertainty factors The Bank’s earnings are affected by external changes that the company has no control over. The Bank’s earnings performance is affected by factors including macroeconomic change such as unemployment, as well as fluctuations in interest and exchange rates. Risk management is an integrated component of the Bank’s daily operations. In its business operations, the Bank is exposed to several risks such as credit risk, operational risk and business risk, but it must also manage liquidity risk, foreign exchange risk and interest rate risk. The Board of Directors and CEO are ultimately responsible for risk management at Ikano Bank. Risk management is intended to
16
ensure that the risks do not exceed the risk mandates set by the Board. The Bank’s risks are controlled centrally, but the responsibility for risk management rests primarily with local business units. This means that operating businesses own and manage the risk in daily operations. The central risk control function is responsible for monitoring and evaluating risk management. Apart from what is stated in this Interim Report, more details are provided in Ikano Bank’s Annual Report for 2018 and Ikano Bank’s annual “Capital adequacy and risk management” report, available at www.ikanobank.se.
INTERIM REPORT JUNE 2019
IKANO BANK AB (publ), corporate ID no. 516406-0922
16 Capital management and capital adequacy The below information is provided regarding own funds and own funds requirements in accordance with among others regulation (EU) No 575/2013 and the Swedish Financial Supervisory Authority’s (SFSA) regulations regarding prudential requirements and capital buffers (2014:12). The capital requirements regulations help to strengthen resilience against financial losses and thereby protect the Bank's customers. The regulations state that the Bank's own funds shall cover the minimum statutory own funds requirements, referred to as Pillar 1 requirements, which for Ikano Bank include the requirements for credit risk, credit valuation adjustment risk (CVA risk), operational risk and foreign exchange risk. In addition, the own funds requirements include further identified risks in the operation in accordance with the Bank's internal capital adequacy assessment process and the requirements stipulated by the Board of Directors, also referred to as Pillar 2 requirements and statutory requirements for capital buffers. Ikano Bank has quantified tolerance levels for the CET 1 ratio and total capital ratio above regulatory requirements. The margins represent buffers adapted to the Bank's risk profile in order to cover identified risks based on probability and financial impact. To meet the anticipated expansion of loans, maintain strategic freedom of action and also handle external changes, the Board of Directors has also expressed target levels for the Bank’s capital ratios as part of the risk appetite framework. To ensure that Ikano Bank's capital situation is satisfactory to cover the risks that the Bank is or may be exposed to, an internal capital and liquidity adequacy assessment (ICAAP/ILAAP) is conducted at least annually. The ICAAP/ILAAP is the Board's tool for assessing the need for changes in the own funds requirement. In the assessment process stress tests and scenario analyses are carried out to assess potential additional own funds requirements, including strategic decisions or external events that affect the business and its development. As a part of this process, a risk analysis is performed to ensure underlying risks are adequately addressed and mirror the Bank’s actual risk profile and capital requirements. The risk control function is responsible for monitoring the process of the Bank's capital adequacy assessment. Capital requirements
resulting from the ICAAP are regularly reported to the SFSA. As of 30 June 2019, the Bank had own funds of SEK 6.6 bn (6.4) of which SEK 5.8 bn are common equity Tier 1. The statutory own funds requirement for Pillar 1-risk amounted to SEK 3.0 bn (3.0). After a statutory minimum for common equity Tier 1 capital has been allocated to cover 75 percent of the total own funds requirement calculated in accordance with Pillar 1, a further SEK 3.5 bn remain available as common equity Tier 1 capital. The Internal own funds requirement in addition to Pillar 1 requirements totalled SEK 733 m and is covered by available capital. The total capital ratio was 17.6 percent with a Tier 1 capital ratio of 15.3 percent. The combined buffer requirement for Ikano Bank consists of the capital conservation buffer and the countercyclical capital buffer. According to the law (2014:966) regarding capital buffers the capital conservation buffer shall consist of a common equity Tier 1 capital equivalent to 2.5 percent of the Bank´s total risk exposure amounts. For Ikano Bank, the capital conservation buffer totals SEK 941 m and is covered by the available common equity Tier 1 capital. The institution-specific countercyclical buffer is determined by multiplying the total risk exposure amount with the weighted average of the countercyclical buffer rates applicable in those countries where the relevant credit exposures of the institution are located. The institution-specific countercyclical buffer for the Bank has been determined at 1.22 percent or SEK 460 m after weighting the applicable geographic requirements, which for the Bank mainly means Sweden, Norway and the UK. Ikano Bank’s combined buffer requirement is SEK 1,402 m. Per 1 January 2018, the new accounting standards IFRS 9 Financial Instruments entered into force. As mentioned in the Annual Report 2017, Ikano Bank has notified the SFSA of its decision to apply the transition rules introduced with article 473a capital requirements regulation (EU) No 575/2013 regarding the one-off effect. For the Bank, this effect was SEK 222 m after tax that will be gradually phased in into the capital adequacy over five years. The table on page 19 provides a comparison of Ikano Bank’s own funds as well as capital and leverage ratios with and without the application of transitional arrangements for IFRS 9.
INTERIM REPORT JUNE 2019
17
IKANO BANK AB (publ), corporate ID no. 516406-0922
Summary of own funds, risk exposure amount and own funds requirements SEK 000
30 Jun 2019
30 Jun 2018
31 Dec 2018
Tier 1 capital
5 773 319
5 506 488
5 555 103
Tier 2 capital
865 289
860 294
839 330
6 638 608
6 366 782
6 394 433
37 649 965
38 088 420
37 282 567
3 011 997
3 047 074
2 982 605
Total capital ratio
17.6%
16.7%
17.2%
Tier 1 capital ratio
15.3%
14.5%
14.9%
Common equity Tier 1 capital ratio
15.3%
14.5%
14.9%
3 514 322
3 221 183
3 318 149
Own funds Total risk exposure amount Total own funds requirements
Available common equity Tier 1 capital Available common equity Tier 1 capital in relation to Total risk exposure amount Capital conservation buffer Counter-cyclical capital buffer
9.3%
8.5%
8.9%
941 249
952 211
932 064
460 417
401 248
427 328
1 401 666
1 353 459
1 359 393
30 Jun 2019
30 Jun 2018
31 Dec 2018
5 638 931
5 155 110
5 444 229
78 994
78 994
78 994
Statutory reserve
193 655
193 655
193 655
Fund for development expenses
264 868
273 300
276 316
Fund for fair value
286 016
334 218
204 105
Retained earnings
4 702 607
4 152 967
4 149 951
Combined buffer requirement
Specification of own funds SEK 000 Equity reported in the balance sheet Share capital
Net result for the period
112 791
121 976
541 208
Untaxed reserves (78,6% of which)1)
297 231
544 562
294 962
5 936 162
5 699 673
5 739 191
Intangible assets
-342 675
-403 341
-378 747
Cash flow hedge
-5 014
-844
-12 622
Value adjustments due to the requirements for prudential valuation
-3 943
-
-3 720
188 790
211 001
211 001
Total common equity Tier 1 capital
5 773 319
5 506 488
5 555 103
Total Tier 1 capital
5 773 319
5 506 488
5 555 103
Subordinated liabilities
865 289
860 294
839 330
Total Tier 2 capital
865 289
860 294
839 330
6 638 608
6 366 782
6 394 433
CET1 capital before regulator y adjustments CET1 capital: regulatory adjustments
Adjustment for IFRS 9 one-off effect according to transitional arrangements
Tier 2 capital
Total own funds 1) Calculated according to each year’s applicable tax rate.
18
INTERIM REPORT JUNE 2019
IKANO BANK AB (publ), corporate ID no. 516406-0922
Specification of risk exposure amount and own funds requirements 30 J u n 2019 SE K 000
Risk e xposure a mount
30 J u n 2018
O wn funds re quire me nts
Risk e xposure a mount
31 D ec 2018
O wn funds re quire me nts
Risk e xposure a mount
O wn funds re quire me nts
Cred it ris k a cco rd in g to th e s ta n d a rd is ed a p p ro a ch Regional governments or local authorities Institutional exposures Corporate exposures Retail exposures Equity exposures Past due items
11 530
922
11 221
898
11 304
904
457 274
36 582
510 692
40 855
513 564
41 085
4 020 684
321 655
4 234 101
338 728
3 872 700
309 816
23 098 712
1 847 897
23 296 194
1 863 696
22 712 835
1 817 027
39 775
3 182
23 594
1 888
29 299
2 344
1 005 573
80 446
1 274 134
101 931
1 181 492
94 519
Covered bond exposures
109 405
8 752
111 136
8 891
107 746
8 620
Other items
434 366
34 749
514 494
41 160
428 674
34 294
29 177 318
2 334 185
29 975 566
2 398 046
28 857 614
2 308 609
O p era tio n a l ris k a cco rdin g to th e b a s ic in dica to r a p p ro a ch
5 071 525
405 722
5 056 084
404 487
5 056 084
404 487
Fo reign exch a n ge ris k a cco rdin g to th e s ta n d a rd is ed a p p ro a ch
3 382 332
270 587
3 043 256
243 460
3 328 850
266 308
18 789
1 503
13 514
1 081
40 019
3 202
37 649 965
3 011 997
38 088 420
3 047 074
37 282 567
2 982 605
To ta l cred it ris k
CV A a cco rdin g to th e s ta n d a rd is ed meth o d To ta l
Leverage ratio The Leverage ratio is a measure that provides an alternative to the risk-based capital requirement. The purpose is that it should be a clear and simple measure of capital strength. The measurement shows capital as a percentage of asset size, without considering the actual risk level of the assets. To date there is no legal minimum Leverage ratio. A minimum Leverage ratio of 3 per cent is introduced when the revised
Capital Requirements Regulation comes into effect 2021. The Leverage ratio is calculated using the Tier 1 capital as a percentage of total assets. For the Bank, the leverage ratio by 30 June 2019 is 12.2 percent (11.4) and thus above the future binding measure.
Comparison of own funds and capital and leverage ratios with and without the application of transitional arrangements for IFRS 9 SEK m
30 Jun 2019
30 Jun 2018
31 Dec 2018
Common Equity Tier 1 (CET1) capital
5 773
5 506
5 555
Common Equity Tier 1 (CET1) capital as if IFRS 9 transitional arrangements had not been applied
5 585
5 295
5 344
Tier 1 capital
5 773
5 506
5 555
Tier 1 capital as if IFRS 9 transitional arrangements had not been applied
5 585
5 295
5 344
Total capital
6 639
6 367
6 394
Total capital as if IFRS 9 transitional arrangements had not been applied
6 450
6 156
6 183
Inphasing
37 650 104
38 088 164
37 283 126
Total risk-weighted assets as if IFRS 9 transitional arrangements had not been applied
37 546
37 925
37 157
Common Equity Tier 1 (as a percentage of risk exposure amount)
15.3%
14.5%
14.9%
Common Equity Tier 1 (as a percentage of risk exposure amount) as if IFRS 9 transitional arrangements had not been applied
14.9%
14.0%
14.4%
Tier 1 (as a percentage of risk exposure amount)
15.3%
14.5%
14.9%
Tier 1 (as a percentage of risk exposure amount) as if IFRS 9 transitional arrangements had not been applied
14.9%
14.0%
14.4%
Total capital (as a percentage of risk exposure amount)
17.6%
Total capital (as a percentage of risk exposure amount) as if IFRS 9 transitional arrangements had not been applied
17.2%
16.7% 16.2%
17.2% 16.6%
Available c apital
R isk-w eighted assets Total risk-weighted assets
Capital ratios
Leverage ratio Leverage ratio total exposure measure
47 514
Leverage ratio
12.2%
48 402 11.4%
47 259 11.8%
Leverage ratio as if IFRS 9 transitional arrangements had not been applied
11.8%
11.0%
11.4%
INTERIM REPORT JUNE 2019
19
IKANO BANK AB (publ), corporate ID no. 516406-0922
17 Liquidity Ikano Bank's liquidity is managed within the framework of the Bank's liquidity portfolio. The liquidity portfolio consists of deposits with banks, short-term lending to credit institutions and also investments in liquid interest-bearing securities, which can be sold and converted into cash on short notice. The Bank also has other liquidity creating measures at its disposal, such as immediately accessible overdraft facilities as well as committed credit facilities. The composition and size of the Bank's liquidity portfolio and liquidity reserve is regulated in the Bank’s steering documents, which are adopted by the Bank's Board of Directors. To ensure that the liquidity of Ikano Bank is adequate, an internal liquidity adequacy assessment (ILAAP) is performed at least annually. This process is a tool used by the Board of Directors to assess the need for changes in the liquidity requirement in the event of changed circumstances. The liquidity portfolio is divided into three categories: Intra-day liquidity, liquidity reserve and an operational portfolio. The Bank's liquidity reserve and operational portfolio shall always total at least 10 percent of deposits from the public. In addition to the liquidity reserve, the Bank shall maintain an intraday liquidity of at least 4 percent of deposits from the public. Consequently the liquidity portfolio shall always amount to at least 14 percent of deposits from the public. The liquidity reserve, together with other operating liquidity, is invested in interest-bearing securities in the markets where the Bank operates. Steering documents define that quality levels of securities included in the Bank's liquidity reserve are in line with the LCR Delegated Act. Intra-day liquidity manages the Bank’s daily payment commitments. The liquidity in this portfolio shall be available within one day, and
20
shall consist of funds in bank accounts, investments available the next banking day (overnight) and committed bank overdraft facilities in the Bank’s cash pool. The liquidity reserve shall constitute a separate reserve of high-quality liquid assets, which are to be quickly convertible in case of market stress situations that affect the Bank’s funding options. The liquidity reserve is invested in interest-bearing securities with a high credit rating in the Swedish market. The assets are to be available for realisation and conversion into cash at short notice. Unused bank overdraft facilities are not included in the liquidity portfolio. The Bank’s operating liquidity is managed in the investment portfolio. The assets in the portfolio consist of interest-bearing securities in the Swedish market. Investments in this portfolio are to have a minimum rating of BBB+ (rating according to Standard and Poor’s). The Bank's liquidity reserve amounts to SEK 2.4 bn and consists of high quality assets, liquid in private markets and eligible as collateral with the Swedish Central Bank. The liquidity portfolio as of 30 June 2019 totalled SEK 5.5 bn excluding overdraft facilities and constitutes 21 percent of deposits from the public. It includes cash and balances with banks, the liquidity reserve and other interest-bearing securities with a value of SEK 1.5 bn. None of the assets are being utilised as collateral and no non-performing loans exist. In addition to the liquidity portfolio, committed credit facilities for a total of SEK 2.7 bn are available. As of 30 June 2019, the Bank's liquidity coverage ratio (LCR) totalled 166 percent. This measure shows how the Bank's highly liquid assets relate to net outflows over a thirty-day period under strained market conditions. A statutory limit for the liquidity coverage ratio of 100 percent is applied since 1 January 2018.
INTERIM REPORT JUNE 2019
IKANO BANK AB (publ), corporate ID no. 516406-0922
Summary of liquidity reserve 30 J u n 2019 To ta l 1 277
SE K m Securities issued by regional governments and governments Securities issued by financial companies Covered bonds L iq u id ity res erv e
SE K
E UR
D KK
862
-
166 1 094
6 718
160 306
2 537
1 585
467
Operating liquidity invested in securities
1 305
1 305
Cash and balances with central banks and other banks
1 629
To ta l l iq u id ity p o rtfo l io Distribution accross currencies (%) O th er l iq u idity crea tin g mea s u res Unused committed credit facilities
O th er
70
376 -
-
109
376
-
-
-
-
-
418
73
879
106
152
5 471
3 309 60%
540 10%
988 18%
483 9%
152 3%
2 748
514
1 395
603
236
-
30 J u n 2018 To ta l 1 134 158 1 111
SE K m Securities issued by regional governments and governments Securities issued by financial companies Covered bonds L iq u id ity res erv e
GB P
SE K
E UR
39 -
D KK -
914 -
GB P 40 -
O th er -
181 -
704
158 159
2 404
1 618
318
Operating liquidity invested in securities
1 077
1 077
-
-
-
-
Cash and balances with central banks and other banks
2 101
1 394
25
260
126
296
To ta l l iq u id ity p o rtfo l io
5 582
Distribution accross currencies (%) O th er l iq u idity crea tin g mea s u res Unused committed credit facilities
4 089 73%
342 6%
370 7%
484 9%
296 5%
3 096
512
1 396
952
236
-
31 D ec 2018 To ta l 1 282 154 1 072
SE K m Securities issued by regional governments and governments Securities issued by financial companies Covered bonds L iq u id ity res erv e
SE K
E UR
70
178
110
359
D KK
O th er
644
68
170
-
2 508
1 612
344
105
447
-
Operating liquidity invested in securities
1 006
1 006
-
-
-
-
Cash and balances with central banks and other banks
2 126
593
245
788
140
359
To ta l l iq u id ity p o rtfo l io
5 640
Distribution accross currencies (%) O th er l iq u idity crea tin g mea s u res Unused committed credit facilities
3 211 57%
589 10%
893 16%
587 10%
359 6%
2 822
822
1 168
605
226
-
The Bank’s long-term funding plan aims at a welldiversified funding, taking into account the allocation of risks and financing costs. Deposits from the public are regarded as the main funding source and the Bank aims to maintain a minimum ratio of deposits to total assets of 50 percent. Additional information
-
GB P
154 190
968 -
38 -
277 -
about the Bank's capital adequacy and liquidity risk management can be found in the Annual Report for 2018 and the information on capital adequacy and risk management for 2018. The documents are published on the Bank's website www.ikanobank.se.
INTERIM REPORT JUNE 2019
21
IKANO BANK AB (publ), corporate ID no. 516406-0922
Malmö, Sweden, 27 August 2019 The Board of Directors and the CEO certify that this Interim Report gives a true and fair view of the Bank’s operations, financial position and results of operations, and describes significant risks and uncertainties faced by the Bank.
Mats Håkansson Chairman
Diederick van Thiel Board member
Lars Thorsén Board member
Yohann Adolphe Board member
Heather Jackson Board member
Viveka Strangert Board member
Lars Ljungälv Board member
Henrik Eklund CEO
22
INTERIM REPORT JUNE 2019