Periodic data Q3 JAN-SEP 2017

Transcription

1 Periodic data Q3 JAN-SEP

2 Periodic data Collector Bank AB, , is a bank and a wholly owned subsidiary of Collector AB, The business consists of financial services and is divided into two segments: Corporate and Retail. Financial services to companies comprise factoring, company credits, real estate credits, debt collection services and acquisitions of portfolios. In the retail market, personal loans, savings, cards and financing to e-commerce traders and retail chains are offered, as well as related debt collection services. Legally, all the savings accounts and lending are operated by Collector Bank AB, a wholly owned subsidiary which is under the supervision of the Swedish Financial Supervisory Authority. Collector Bank AB has branches in Norway and Finland. Commissioned business in debt collection services is operated primarily in the wholly owned subsidiary Colligent Inkasso AB. The Norwegian subsidiary, Colligent Inkasso AS, is active in debt collection. The business is run from the head office in Gothenburg as well as the offices in Stockholm, Helsinki and Oslo. Collector Bank AB forms part of a consolidated situation (referred to below as the corporate group) consisting of Collector AB (Publ) (Parent Company), Collector Bank AB, Collector Ventures 1 KB and Colligent Norge AS. All companies are fully consolidated. The entire financial group of companies is under the supervision of the Swedish Financial Supervisory Authority and is covered by the Swedish Financial Supervisory Authority s rules for capital adequacy and large exposures. Although Colligent Inkasso AB, , is a wholly owned subsidiary of Collector AB, it does not form part of the consolidated situation with regard to supervision. Subsidiary / Corp. ID No. / Domicile Holding, % Consolidation method Collector Bank AB, , Gothenburg 100% Acquisition method Colligent Norge AS, , Oslo 100% Acquisition method Collector Ventures 1 KB, , Stockholm 100% Acquisition method Regulations applied The calculation of the capital requirement has been made in accordance with the European Parliament and Council s Regulation (EU) No. 575/2013 on supervisory requirements for credit institutions and securities companies. The calculation of buffer requirements has been made in accordance with the Capital Buffers Act (2014:966), the Special Supervision and Capital Buffers Ordinance (2014:993) and FI s (Swedish Financial Supervisory Authority) regulation (FFFS 2014:12) regarding prudential requirements and capital buffers. Description of periodic information for disclosure is provided in accordance with FI s regulation (FFFS 2014:12) regarding regulatory requirements and capital buffers and the European Commission s Implementation Regulation (EU) No. 1423/2013 on technical standards for implementation with respect to the disclosure requirements for capital base. Information about liquidity risks is provided in accordance with FI s regulation (FFFS 2010:7) regarding management and disclosure of liquidity risks for credit institutions and securities companies. The information is published on Collector s website at least four times a year through the Periodic Information report or Collector s Annual Report.

3 Method and calculation Collector Bank and the corporate group apply the standardized method for calculating capital requirements associated with credit risk. The exposure is calculated by allocating the company s asset items on and off the balance sheet to different risk classes. For each risk class, there is a number of risk weights. How the allocation is made between risk classes and the underlying risk weights depends on the type of exposure and the counterparty. For operational risk, the base method is applied (15 percent of average operating income for the past three years) and for market risk, the standard method is used to calculate the capital requirement for currency risk and credit rating adjustment risk. The capital requirement means that the total capital base must amount to at least 8 percent of the risk weighted exposure amount for credit risk, market risk and operational risk. In addition, there are capital requirements for a capital conservation buffer of 2.5 percent of the risk-weighted exposure amount. In addition to the capital conservation buffer, there are capital requirements for an institution-specific countercyclical buffer of 1.5 percent of the risk-weighted exposure amount. Beyond that, additional capital is allocated for the internally assessed capital requirement in Pillar 2. Capital base (SEK million) Common Equity Tier 1 capital: instruments and reserves Share capital Share issue premium 1,313 5 Retained earnings 1,240 1,909 Accumulated other comprehensive income 0 0 Equity portion of untaxed reserves Other funds Verified earnings following deduction of proposed profit allocation and predictable expenses Common Equity Tier 1 capital before legislative adjustments Common Equity Tier 1 capital: legislative adjustments ,948 2,876 Intangible assets Deferred tax assets dependent on future profitability 0 0 Total legislative adjustments of Common Equity Tier 1 capital Common Equity Tier 1 capital 2,725 2,707 Tier 1 capital contributions: Trading Act Capital instruments and associated premium funds 0 0 Tier 1 capital (Common Equity Tier 1 capital contributions) 2,725 2,707 Tier 2 capital: instruments and provisions Subordinated debenture loan Total capital base (Tier 1 capital + Tier 2 capital) 3,224 3,206

4 Summary of capital Total risk-weighted exposure amount 18,538 18,447 Capital ratios and buffers Common Equity Tier 1 capital ratio 14.7% 14.7% Tier 1 capital ratio 14.7% 14.7% Capital ratio 17.4% 17.4% Buffer requirements 4.0% 4.0% Of which, capital conservation buffer 2.5% 2.5% Of which institution-specific countercyclical buffer 1.5% 1.5% Common Equity Tier 1 capital available for use as buffer 10.2% 10.2% Risk-weighted exposure amount and capital requirements (SEK million) Credit risk according to standard method Risk-weighted exposure amount Capital requirement 8% Risk-weighted exposure amount Capital requirement 8% Covered bonds Institution exposures Corporate exposures 7, , Household exposures 6, , Past-due exposures 1, , Items associated with particularly high risk Other exposures Total credit risk 16,707 1,337 16,747 1,340 Market risk according to standard method Foreign currency risk Credit rating adjustment risk Total market risk Operational risk as per basic method Operational risk 1, , Total operational risk 1, , Total risk weighted exposure amounts and capital requirements 18,538 1,483 18,447 1,476

5 Credit risks (Pillar 1) Acquired receivables In this segment, the risk is in the valuing of purchased credit portfolios as well as the price paid for each individual stock in relation to future results connected with repayment and settlement of the credits. Depending on the age and quality of the acquired portfolio, the term runs between 10 and 20 years. Risk management covering the entire portfolio takes place regularly by carrying out an analysis of the cash flow and an updated valuation of all credit portfolios. Historically, the credit risk has been low. Private loans and cards Private loans are loans to private individuals in amounts of up to SEK 500,000. Through effective credit scoring templates and large bodies of statistical data, the risk of loss can be calculated in advance. Provisions for feared losses are incurred on an ongoing basis. Payment solutions This business includes all types of retail-related credits to consumers, such as instalment payments, partial financing, accounts and invoices. Credit scoring templates are produced for each sector and target group. A very large number of small credits means that the total credit losses are kept at a low level. Factoring The credit risk primarily consists of assessing invoices acquired and the end customers ability to pay, but also includes the risk of objections and disputes regarding the supplier. Valuation and credit models have been developed to expose future risks at an early stage. Company credits Company credits consist of shorter operating credits and what is known as bridge financing where the credit is usually linked to one of Collector s other operations, such as the factoring business. Real estate credits Since 2013, Collector offers property financing, mainly in Sweden, but also in Norway and Finland. Loans are provided in the range of approximately SEK 25 million to approximately SEK 300 million with typical maturities of between six months and two years, although maturities of up to approximately six years do occur. The company focuses on metropolitan areas such as Stockholm, Gothenburg, Öresund, Oslo and Helsinki, as well as others growth areas. The target group for Collector s property financing comprises commercial property owners. Market risk and operational risk (Pillar 1) The company s and the Group s market risk from currency risks arising from reported assets are in currencies other than Swedish kronor. The goal is to maintain the lowest possible net exposure, which is achieved by matching receivables with liabilities and/or derivatives in the same currency. In addition, there are capital requirements for credit worthiness adjustment risk for those derivative contracts held with the purpose of minimizing currency and interest rate risks. Collector defines the operational risk as the risk of losses due to inappropriate/failed internal processes, human errors, shortcomings in various systems or external events. The definition also includes legal risk. Collector applies various policies and governance documents, guidelines and regulations to minimize these types of risks. These documents are continuously reviewed and adjusted.

6 Other risks (Pillar 2) In addition to the risks listed in Pillar 1, credit, market and operational risks, and the risks specified specifically for the above-mentioned portfolios, the company has primarily identified the following risks: Interest rate risk, that is, the risk of future losses at a changed market interest rate Liquidity risk, that is, the risk that Collector will lack sufficient liquidity to pay overdue liabilities The rumour risk, that is, the risk of inaccurate rumours spreading in the market and the media, which, in turn, leads to reduced business opportunities and worsening financing opportunities through both deposits and bank financing Financing risk, that is, the risk of Collector finding it more difficult, for various reasons, to finance its operations. Concentration risk, that is, the risk of Collector becoming substantially dependent on a limited number of customers, a particular sector or geographical area in its provision of credit or other operations. Collector s assessment is that there is currently no need to allocate additional capital under Pillar 2 regarding credit risks, market risks or operational risks beyond the statutory capital requirements under Pillar 1. Concentration risk Concentration risk refers to the risk resulting from individual exposures or as a result of significant exposures to groups of counterparties for which the probability of default is driven by reliance on a common underlying factor, such as an industry or geographic area. Concentration risks have not been taken into account when assessing and calculating the capital requirement for credit risk. Accordingly, possible concentrations in the credit portfolio increase the likelihood that losses may exceed the levels on which capital provisions under Pillar 1 are based. It is very difficult to achieve a theoretically accurate method of determining the capital requirement for credit-related concentration risks. For this reason, a model developed by FI for the assessment of concentration risk is used to assess the capital requirement with regard to Collector s concentration risks. The model estimates the capital requirement for concentration risk using a Herfindahl Index (HI). HI calculations have been made regarding name concentration, sector concentration and geographical concentration in the credit portfolio. In Collector s assessment, there is a certain degree of concentration in the credit portfolio. A simple summary of estimated capital requirements could overestimate the capital requirement regarding concentration risks. This is because concentration risks overlap one another and assessed capital requirements for name concentration also include, to some extent, sector concentration and geographical concentration, and vice versa. Due to the difficulties in assessing a theoretically accurate capital requirement for concentration risks, Collector takes a conservative attitude and allocates a total of SEK 149 million to both the financial group and Collector Bank AB under Pillar 2 with regard to credit-related concentration risks. Interest rate risk Collector has relatively good matching of assets and liabilities with regard to periods of fixed-interest. As a result, interest rate risk is also limited and by seeking to offer variable lending and deposit rates to the public, considerable flexibility is maintained in being able to adjust interest rates based on the prevailing market situation. The adopted financial and liquidity policy states that Collector shall, insofar as possible, match the fixed-interest terms with regard to lending, deposits and funding. Collector s treasury function is responsible for continuous management and follow-up of the interest rate risks and reporting takes place regularly to senior management. When assessing the capital requirement regarding interest rate risk, poor matching between periods of fixed-interest (curve risk) and maturities (credit spread risk) is taken into account. The calculation of curve and credit spread risks takes into account parallel displacements of 200 and 150 basis points respectively in the market quotations on which the credit curve is based, which is in line with the simplified method FI intends to apply in calculating interest rate risks for smaller companies with limited sensitivity to interest rates.

7 The calculations indicate an interest rate sensitivity in shareholders equity, as of, of SEK 156 million for both the group and Collector Bank AB. Accordingly, Collector estimates that the capital requirement for interest rate risks in other operations amounts to SEK 156 million. Collector s assessment is that there is currently no need to allocate additional capital for risks identified under Pillar 2 other than the provisions mentioned above. Summary In summary, the capital base in the group amounts to SEK 3,224 million and in Collector Bank AB to SEK 3,206 million. Provisions for risk under Pillar 1 amount to SEK 1,483 million and in Collector Bank AB to SEK 1,475 million. In addition, provisions are made for the capital conservation buffer and an institution-specific countercyclical buffer, which amounts to SEK 734 million for the group and to SEK 730 million for Collector Bank AB. This means there is a surplus of capital to cover, for example, risks in Pillar 2, buffers and expansion, amounting to SEK 1,007 million in the group and to SEK 1,001 million in Collector Bank AB. Leverage The Basel Committee has formulated a leverage requirement, expressed as the ratio between capital and assets and is calculated in accordance with European Parliament and Council Regulation (EU) No. 575/2013 (CRR), article 429. Presented below is a summary of the main leverage items. Leverage (SEK million) Financial group of companies Tier 1 capital 2,725 2,707 Assets 21,203 21,141 Leverage ratio 13% 13% At, Collector s leverage ratio amounted to 13 percent. Liquidity risk To ensure preparedness in situations where Collector is in need of liquidity, there is a liquidity reserve. The liquidity reserve consists of liquid assets in the form of cash and bank balances, and investments in various securities. In addition to the liquidity reserve, there are also unutilized credits*. Limits to regulate the size of the liquidity reserve are determined by the Board of Directors. On, the liquidity reserve amounted to SEK 2,412 million in the corporate group and to SEK 2,285 million in Collector Bank AB. Liquidity reserve (SEK million) Cash and bank balances 1, , Securities issued or guaranteed by municipalities or sovereign states Securities issued or guaranteed by financial companies

8 Securities issued or guaranteed by non-financial companies Total liquidity reserve 2,412 1,117 2,285 1,093 *Unutilized credits 800

9 Sources of financing Collector s principal source of financing consists of deposits from the public. It is also financed by issuing commercial papers and non-covered bonds. According to agreements, deposits from the public are regarded as short-term, although they often behave as though they are long term. In the fourth quarter of 2015, Collector s Board of Directors adopted a SEK 3,000 million commercial paper programme. Commercial papers issued amounted to SEK 1,475 million at the end of the period. In February, Collector also established a MTN program with a loan framework of SEK 5,000 million. The first issue of SEK 800 million was completed in the first quarter of. As per, the issued value of the bond amounted to SEK 798 million. In June, a Tier 2 bond of SEK 500 million was issued within the existing MTN programme with a maturity of ten years with the possibility of early redemption after five years. On, its value totalled SEK 498 million. In addition to this, there are granted bank facilities of SEK 800 million. As per, these were completely unutilized for both the corporate group and for Collector Bank AB. Sources of financing (SEK million) Deposits from the public 15,085 9,735 15,084 9,734 Commercial papers 1, , Bonds Tier 2 bond Unutilized credits Collector s structural liquidity is measured and managed on a monthly and quarterly basis through various measures. On, the ratio between deposits and lending was 83 percent for the corporate group and 82 percent for Collector Bank AB. Collector s liquidity coverage ratio (LCR) amounted to 150 percent. Relation deposits/lending, % LCR, %