December marked the fourth consecutive month of net growth in the customer finance portfolio when adjusted for exchange-rate movements. In addition to the continued growth in Asia-Pacific and Latin America, portfolio increases were also seen in North America and Western Europe during the quarter as these economies continued to recover and as customer credit profiles continued to improve.
Portfolio quality continued to improve in North America, Western Europe and Asia-Pacific during the quarter as overall levels of delinquencies, inventories of repossessed vehicles and default activity in these regions decreased. Eastern Europe, while still at high levels of delinquency, also showed good improvement in portfolio performance despite the relatively slower economic recovery in this part of the world.
Operating income in the fourth quarter amounted to SEK 98 M compared to SEK 15 M in the previous year. The improvement compared to the previous year is driven mainly by lower credit provisions.
During the quarter, credit provisions amounted to SEK 311 M (466) while write-offs of SEK 333 M (593) were recorded. This resulted in a decrease in credit reserves from 1.79% to 1.69% of the credit portfolio at September 30, 2010 and December 31, 2010, respectively. The annualized write-off ratio through December 31, 2010 was 1.65% (2.09).
New financing volume in the fourth quarter of 2010 amounted to SEK 10.7 billion (7.0). Adjusted for changes in exchange rates, new business volume increased by 59% compared to the fourth quarter of 2009 due to higher deliveries from the Industrial Operations as well as stronger finance penetration. In total, 11,439 new Volvo Group units (6,522) were financed during the quarter. In the markets where financing is offered, the average penetration rate in the fourth quarter was 25% (22%).
At December 31, 2010 total assets amounted to SEK 89 billion (99). The credit portfolio decreased by 4.4% over the year, adjusted for exchange-rate movements. The syndication of assets in Brazil in the second quarter comprises 3.3 percentage points of this decrease. During the quarter, the portfolio increased by 4.2%, adjusted for exchange-rate movements, as new volume outpaced portfolio amortization for the period.