Restatement of net interest income and net gains and losses on financial items at fair value

When implementing reporting according to IFRS in 2005, Swedbank choose to report all interest income and interest expenses from trading assets and liabilities and derivatives as net gains and losses on financial items at fair value, together with market value changes on these instruments. The motive was to report all income from the trading book under the line item net gains and losses on financial items at fair value.

For Swedbank Markets this reporting standard has worked well, giving a low volatility in reported net interest income. For the Swedbank Group, however, this created volatility in reported net interest income at the group level.

Interest income and interest expenses from internal funds transfer pricing are used in all business areas but not at the group level. The effects of using internal funds transfer pricing at business area level but not at group level has been reported as Eliminations, where net interest income from the trading book derived from the use of internal funds transfer pricing has been re-classified to net interest income from net gains and losses or vice versa.

As of the first quarter 2007, all interest income and interest expenses will be reported as net interest income. This was they way Swedbank reported prior to 2005. Going forward, net interest income on group level will become more transparent and easier to analyse and no re-classifications from net gains and losses on financial items at fair value to net interest income in Eliminations on business area level will be needed.

Restated net interest income and net gains and losses are available on www.swedbank.com/ir.