Financial performance

Total new financing volume in 2010 amounted to SEK 35 billion (29). Adjusted for changes in exchange rates, new business volume increased by 26% compared to 2009 as a result of increased sales volumes of the Volvo Group products and good penetration levels.  In total, 34,522 new vehicles and machines (25,782) were financed during the year. In the markets where financing is offered, the average penetration rate was 25% (25).

At December 31, 2010 total assets amounted to SEK 89 billion (99). During 2010 the credit portfolio decreased by 4.4% (decrease: 15.6), adjusted for exchange-rate movements, to gross credit portfolio SEK 84,550 M (94,988). The funding of the credit portfolio is matched in terms of maturity, interest rates and currencies in accordance with Volvo Group policy. For further information, see note 36.

The operating income for the year amounted to SEK 167 M compared to operating loss of SEK 680 M in the previous year. Return on shareholders’ equity was 0.4% (neg: 6.2). The equity ratio at the end of the year was 9.0% (8.7).  The income is driven mainly by lower credit provisions.  During the year, credit provision expenses amounted to SEK 1,438 M (2,327), while write-offs of SEK 1,460 M (2,223) were recorded. The write-off ratio for 2010 was 1.65% (2.09). At December 31, 2010, credit reserves were 1.69% (1.67%) of the credit portfolio.

As a consequence of the strong volume growth in Brazil, it was decided to syndicate approximately SEK 4 billion of the Brazilian credit portfolio as a risk mitigation measure and to free up capital for reinvestment in the country. The transaction generated a positive impact on operating income of SEK 38 M.

In May, VFS successfully completed its first asset-backed securitization in many years. Under the terms of the transaction, USD 616 M of securities tied to U.S.-based loans on trucking and construction equipment assets were issued.