Note 18 – Acquired loan portfolios

For additional information see Accounting principles section 15 ”Income and expenses” and Note 33 ”Risk management”.

Acquired credit-impaired loan portfolios, 31 Dec 2021

Acquired credit-impaired loan portfolios, 31 Dec 2020

Undiscounted acquired loss allowances

As at 31 December 2021, the undiscounted acquired loss allowances at initial recognition totalled SEK 25,841m (12,231) for credit-impaired loan portfolios acquired by the Group during January to December, of which SEK 3,198m (5,455) is attributable to Parent Company acquisitions. 

Acquired performing loan portfolios, 31 Dec 2021

Acquired performing loan portfolios

Acquired performing loan portfolios, 31 Dec 2020

Acquired performing loan portfolios

Portfolio overview

The portfolios comprise a large number of loans. The debtors have varying characteristics, such as payers, partial payers and non-payers. There is some degree of mobility between debtor categories, with non-payers becoming payers and vice versa. The Group divides its portfolios into different categories, such as countries, age, asset class as the time of initial valuation and potential subsequent revaluations, ensuring the most up-to-date portfolio composition is reflected. 

Collection forecast

The Group evaluates portfolios by estimating future cash flows for the next 15 years. Cash flow forecasts are regularly monitored during the year and updated based on factors such as achieved collection results and instalment plan agreements with debtors. A new carrying amount is calculated for the loan portfolios based on the updated forecasts and based on the principals set forth by the Effective Interest Rate method. 

Revaluations

The Group evaluates actual collections in relation to the forecast that served as the basis for portfolio valuation during the same period. Deviations may in some cases result in an adjustment to future forecasts, ecpecially if operational efforts have not had, or are not expected to have, the intended effect or in times of economics downturn e.g Covid-19. 

Forecast revisions are managed by the internal Revaluation Committee, which reports to the Board’s Investment Committee. Decisions are duly taken by the Revaluation Committee pursuant to instructions issued by the Board Investment Committee within the scope of the Revaluation Policy issued by the Board of Directors. Forecast adjustments and their impact on earnings are disclosed internally and externally. The portfolio valuation is independently audited by the Risk Control function.