Swedbank Year-end Report 1999

Preliminary year-end report for FöreningsSparbanken (Swedbank) for 1999 February 10, 2000 Merger work completed - fourth quarter developed positively *Operating profit rose to SEK 6,454 M (6,326) *Net commission income rose to SEK 4,903 M (4,280) *Loan losses declined to SEK 636 M (1,002) *Problem loans, net, declined to SEK 890 M (4,556) *Earnings per share amounted to SEK 8.70 (8.75) *A dividend of SEK 5.00 per share (4.67) is recommended *Savings volumes rose to SEK 534 billion *Lending rose to SEK 568 billion *Approximately 500,000 Internet banking users as of year-end *Problem-free Year 2000 transition *FIH and Hansapank consolidated in the Group *Resource Bank concluded at year-end Group profits The Group's operating profit for 1999 amounted to SEK 6,454 M, an increase of 2 percent compared with 1998, when operating profit amounted to SEK 6,326 M. Excluding items affecting comparability, operating profit rose by 17 percent compared with the previous year. The return on equity amounted to 15.7 percent (16.9) and earnings per share were SEK 8.70 (8.75). On November 1, 1999 FöreningsSparbanken, via FI-Holding A/S, acquired approximately 60 percent of the shares in Denmark's FIH, which is part of the Group as of that date. In addition, FöreningsSparbanken acquired 2.66 percent of the shares in Estonia's Hansapank on December 28, 1999; accordingly, FöreningsSparbanken holds a total of 52.64 percent of the votes in Hansapank as of year-end. Hansapank is reported according to the equity method in FöreningsSparbanken's profit and loss account for all of 1999 and according to the purchase method in FöreningsSparbanken's balance sheet as of December 31, 1999. Net interest income stable The Group's net interest income amounted to SEK 11,343 M (11,364). Improved net interest income from Swedbank Markets, a contribution from FIH and higher deposit and lending volumes were offset by lower deposit and lending margins, branch sales to independent savings banks and jointly owned banks in 1998 and a lower return on the bond portfolio. Substantial increase in net commission income Net commission income rose by SEK 623 M or 15 percent to SEK 4,903 M (4,280). The improvement is attributable primarily to fund and insurance savings. Net profit on financial operations Net profit on financial operations amounted to SEK 579 M (827). Excluding items affecting comparability, net profit was SEK 509 (569). Other income Other income amounted to SEK 2,252 M in 1999, compared with SEK 2,728 M in 1998. Both periods included items affecting comparability (approximately SEK 1,350 M in 1999 and SEK 1,800 M in 1998) attributable to real estate sales. Expenses Expenses for 1999 amounted to SEK 12,146 M (12,026), an increase of 120 M or less than 1 percent compared with 1998. The increase is attributable to the addition of FIH of Denmark to the Group and to expenses for the workforce reduction. Total IT expenses in 1999, after the deduction of income from independent savings banks and jointly owned banks, amounted to approximately SEK 1.9 billion. Resource Bank concluded Expenses associated with the Resource Bank amounted to SEK 94 M in the fourth quarter, or a total of SEK 575 M in 1999. This includes all expenses for the 1,080 employees (calculated as full-time positions) who left the Resource Bank during the year. The last Resource Bank employees left the Bank by year-end. Those employees who reached agreement on early retirement in connection with the merger also left the Bank no later than year-end. The expenses for these early retirements have been charged to previous financial years. Continued decline in loan losses and problem loans Loan losses declined to SEK 636 M (1,002). The loan loss level was 0.1 percent (0.2). The Group's problem loans, net, declined substantially to SEK 890 M (4,556) as of December 31, 1999. Excluding FIH and Hansapank, problem loans, net, amounted to SEK 1,775 M (4,556). A specification of loan losses and problem loans is provided in Notes 3 and 4. Continued low international risk exposure and interest rate risk FöreningsSparbanken's international risk exposure is affected to only a limited extent by FIH and Hansapank and remains low. An increase in market interest rates of one percentage point as of December 31, 1999 would have reduced the value of the Group's interest- bearing assets and liabilities, including derivatives, by SEK 849 M (490), of which SEK 562 M (440) relates to positions in SEK and SEK 287 M (50) to positions predominantly in foreign currency. The increase in the Group's interest rate risk is largely attributable to foreign currency and is due primarily to the acquisitions of Hansapank and FIH. An increase in interest rates of one percentage point would have reduced the Group's net profit on financial operations by SEK 431 M (194) as of December 31, 1999. The Group also holds positions in real rate related instruments, predominantly in SEK, which a one-percent increase in real interest rates would have reduced in value by SEK 42 M (4) as of December 31, 1999, of which SEK 9 M would affect reported net profit on financial operations. Capital adequacy ratio 10.4 percent The capital adequacy ratio amounted to 10.4 percent on December 31, 1999 (11.6), of which the primary capital ratio was 6.0 percent (6.1). Market risks as a share of the total capital adequacy ratio amounted to 0.5 percentage points (0.5). Specification of capital adequacy SEK M Dec. 31 Dec. 31 1999 1998 Primary capital 26,785 23,625 Supplementary capital 22,486 23,266 Less shares, etc. -3,650 -1,970 Augmented part of the capital base 854 - Capital base 46,475 44,921 Risk-weighted amount for credit risks 429,972 371,374 Risk-weighted amount for market risks 17,316 15,057 Total risk-weighted amount 447,288 386,431 Capital adequacy ratio, % 10.4 11.6 Primary capital ratio, % 6.0 6.1 As of December 31, 1999 the FöreningsSparbanken financial companies group includes the FöreningsSparbanken Group, Eskilstuna Rekarne Sparbank AB, Färs och Frosta Sparbank AB, FöreningsSparbanken Sjuhärad AB, FöreningsSparbanken Söderhamn AB, Aktia Sparbank Ab in Finland and Sparebank 1 Group in Norway. The Group's insurance companies are not included. Business volumes Savings grow Customer savings in FöreningsSparbanken amounted to SEK 534 billion (including SEK 11 billion in Hansapank and FIH) as of December 31, 1999. A year earlier the corresponding figure for FöreningsSparbanken was SEK 429 billion. Household deposits Household deposits amounted to SEK 122 billion as of year-end, of which Hansapank accounted for SEK 5 billion. Excluding Hansapank, household deposits declined by SEK 2 billion, from SEK 119 to 117 billion. The decrease is partly due to SEK 3 billion in higher than normal withdrawals in December and partly to nearly SEK 2 billion from branch sales. Other deposits rose to SEK 72 billion (59), of which Hansapank och FIH accounted for SEK 6 billion. Robur's fund assets increase Net contributions to Robur's funds during the year totaled SEK 13 billion (15), of which SEK 9 billion (7) was attributable to insurance savings in SparFond. Robur's share of net savings in the fund market was 23 percent. Assets under management in Robur's funds amounted to SEK 291 billion (193) as of year-end 1999, the highest level ever and an increase of SEK 98 billion or 51 percent since December 31, 1998. Robur's market share for assets under management in the fund market was 34 percent (34) on December 31, 1999. In addition to fund management, Robur includes SEK 24 billion (29) in discretionary asset management, of which SEK 22 billion is handled by the subsidiary FöreningsSparbanken Kapitalförvaltning. Continued high demand for unit-linked insurance Sales of unit-linked insurance continued to rise. As of December 31, 1999 SparFond's assets under management amounted to SEK 40 billion, an increase of SEK 21 billion or 114 percent since December 31, 1998. On a moving 12-month basis, SparFond's market share for new unit-linked insurance policies was 30 percent as of December 31, 1999, making it the leader in the Swedish market. At year-end SparFond had around 360,000 (182,000) policies. In addition, it has around 950,000 group life insurance policyholders. Savings and investments, the Group SEK billion Dec. 31 Dec. 31 1999 1998 Deposits from the public Households, SEK 116.9 119.1 Other, SEK 71.9 59.2 Households, foreign currency (1) 5.4 Other, foreign currency (2) 11.7 9.1 Total 205.9 187.4 Discretionary management 24.4 29.1 Fund management 290.5 192.6 Retail bonds, interest-bearing 6.0 13.0 Retail bonds, stock index 5.1 6.0 Unit-linked insurance 39.6 18.5 Of which in own companies -37.9 - 18.1 Total 533.6 428.5 (1) Of which Hansapank SEK 5.4 billion in 1999 (2) Of which FIH SEK 0.2 billion and Hansapank SEK 5.4 billion in 1999 Lending rose The Group's loans, net to the public and credit institutions other than banks, excluding lending to the National Debt Office and repurchase agreements (repos), amounted to approximately SEK 568 billion as of year- end, including a total of approximately SEK 58 billion from Hansapank and FIH. This means that the remaining part of the Group increased its lending by approximately SEK 15 billion or 3.1 percent. Loans to the household sector amounted to approximately SEK 254 billion (236). Excluding FIH and Hansapank, household lending rose by approximately SEK 16 billion or 6.8 percent compared with December 31, 1998. Lending, the Group SEK billion Dec. 31 Dec. 31 1999 1998 Households (1) 254.1 236.0 Of which Spintab 198.2 184.7 Real estate management 130.3 122.1 Retail, hotels, restaurants 21.2 16.3 Construction 8.2 8.6 Manufacturing 39.5 13.6 Transportation 9.1 4.2 Forestry and agriculture 23.1 20.6 Other service businesses 14.0 12.2 Other business lending, 38.6 31.7 incl. credit institutions Municipalities (2) 16.7 16.4 Other 12.8 12.4 Total 567.6 494.1 Repurchase agreements (repos) 5.9 10.1 Total lending (3) 573.5 504.2 (1) Of which Hansapank SEK 2.1 billion in 1999 (2) Municipal companies not included (3) Of which FIH SEK 48.0 billion and Hansapank SEK 10.3 billion in 1999 Payments increased Internet payments The number of Internet payments more than doubled to 15.0 million in 1999, compared with approximately 6.5 million in 1998. e-billing The use of electronic billing (e-billing) by the Bank's business customers continues to develop well. To date 18 business customers offer e-billing to the Bank's Internet banking customers. Cards FöreningsSparbanken's card operations continued to report high growth. At year-end 1999 there were 2.4 million bank cards in issue, an increase of approximately 310,000 or 15 percent during the year. The number of card transactions cleared also rose, to approximately 135 million (105 million), up 29 percent compared with 1998. The number of CASH card users amounted to around 362,000 (150,000) as of year-end, an increase of approximately 212,000 since December 31, 1998. The number of cards in issue with the CASH function, including bank cards with an integrated CASH function, rose by 2 million during the same period to 2.4 million, of which 2.1 million are bank cards with the integrated CASH function. During the fourth quarter of 1999 FöreningsSparbanken handled approximately 820,000 (360,000) CASH transactions. As of December 31, 1999 there were approximately 38,000 points of sale that accept the CASH card, an increase of slightly over 13,000 since December 31, 1998. New bank taking shape Problem-free Year 2000 transition FöreningsSparbanken's IT systems handled the Year 2000 transition without any problems. New sales support systems installed Since May 1999 the Bank has been working on a shared IT system while at the same time introducing new sales support systems. This is facilitating efficient customer service by giving the Bank's employees access to all customer and product information in one system. Productivity is rising as employees become familiar with the new systems. Disruptions in the systems during the summer and autumn have since been largely remedied. Change in the number of full-time positions since 1996 Dec. 31 Sep. 30 June 30 March Dec. Sep. Dec. 31 31 30 31 1999 1999 1999 1999 1998 1998 1996 Permanent employees 9,002 8,950 8,978 9,075 9,146 8,895 12,350 Resource Bank 0 300 383 1,025 1,080 1,050 0 Early retirement, 0 307 333 425 450 630 0 etc. Temporary employees 820 954 1,052 1,014 1,058 588 399 Subtotal 9,822 10,511 10,746 11,539 11,734 11,163 12,749 Hansapank 2,825 FIH 144 Total 12,791 Fund and insurance savings consolidated in Robur In December 1999 FöreningsSparbanken decided to consolidate its fund and insurance savings operations in a single company, Robur AB. This means, among other things, that the Bank's unit-linked insurance company, SparFond, will be incorporated in Robur under the name Robur Försäkring. In the future, Robur's fund business will operate under the name Robur Kapitalförvaltning. The consolidation, which will be implemented during the first half of 2000, will strengthen sales in the savings area while still maintaining the quality of the fund management operations. FöreningsSparbanken by Telephone At year-end 1999 approximately 834,000 customers (600,000) used FöreningsSparbanken by Telephone with personal assistance, an increase of 234,000 or 39 percent from a year earlier. The number of visitors to the Telephone Bank using personal assistance rose by 41 percent in 1999. The number of telephone banking customers who use the self-service option totaled approximately 1.8 million (1.5). The number of self-service visits to the Telephone Bank rose by 32 percent during the same period. Internet for telephone bank users In September FöreningsSparbanken launched a new, simplified Internet banking service designed for telephone bank customers. During the period through January 2000, approximately 100,000 customers had been using the service. Approximately 500,000 use FöreningsSparbanken by Internet At year-end 1999 FöreningsSparbanken by Internet had approximately 487,000 users, of whom around 100,000 were telephone banking customers with the simplified service. Of the users with full Internet banking accounts, around 361,000 were retail customers and 26,000 business customers. The rate of increase improved during the year and is now between 5,000 and 6,000 customers a week, compared with an average of slightly over 2,000 a week in 1998. The number of Internet payments more than doubled during the past 12-month period, from 6.5 million to 15 million. During the fourth quarter there were approximately 185,000 online fund purchases and sales, an increase of around 125,000 compared with the fourth quarter of 1998. Continued strong growth for NetTrade At year-end 1999 FöreningsSparbanken's online equity trading service, NetTrade, had around 24,000 customers, an increase of about 14,000 or 140 percent since December 31, 1998. In November NetTrade accounted for approximately 25 percent of the number of stock trades and approximately 24 percent of the value of trades through local banks. The large number of new customers and the substantial increase in trading activity caused capacity problems during the fourth quarter. In order to maintain satisfactory service, the changeover to a new technical platform, NetTrade 3, has been pushed up to March. At that point, new customers will also be able to sign up for NetTrade. New jointly owned bank established in Skåne As agreed in December 1998, Färs & Frosta Sparbank acquired FöreningsSparbanken's branch operations in Lund and Svalöv in the spring of 1999. In December Färs & Frosta Sparbank was reorganized as a banking corporation with the name Färs & Frosta Sparbank AB. In connection with the change, FöreningsSparbanken, in accordance with the above agreement, became a part-owner of the new bank with a 30-percent stake. The purchase price was SEK 257 M. Nordic/Baltic alliances FIH acquisition completed The acquisition of FIH of Denmark received the necessary government approval in October. FöreningsSparbanken owns 59.7 percent of FI-Holding, which in turn owns nearly 100 percent of FIH. FI-holding is included in FöreningsSparbanken's accounts as of November 1, 1999. Work is under way to start an Internet bank in the Danish retail market, with a launch hoped for in the autumn of 2000. Hansapank option exercised On December 28 FöreningsSparbanken exercised its option to acquire an additional 2.66 percent of the shares in Hansapank. Following the acquisition, FöreningsSparbanken's stake in Hansapank totals 52.64 percent of the votes. Hansapank's balance sheet is consolidated by FöreningsSparbanken as of December 31, 1999 according to the purchase method, while its profit and loss account was consolidated according to the equity method in 1999. Norway In November 1999 SpareBank 1 Group signed a framework agreement to acquire the shares of VÅR Gruppen ASA. VÅR Gruppen's owners include the Norwegian Trade Union Confederation, with slightly over a 60-percent stake. If the necessary authorization is obtained, the new SpareBank 1 alliance will become the fourth largest financial group in Norway, with total assets of nearly SEK 180 billion. The acquisition will give the Norwegian Trade Union Confederation a 10-percent stake in SpareBank 1 Group. FöreningsSparbanken's ownership interest will amount to 25 percent, with the remainder owned by the SpareBank 1 banks. Sale of Robur's funds in Finland During the year Aktia began selling Robur's funds in Finland. In all, 12 of Robur's funds can now be purchased through the distribution network used by Aktia and the savings bank as well as the branches of some local cooperatively owned banks. Highlights after December 31, 1999 Birgitta Johansson-Hedberg new President and CEO of FöreningsSparbanken The FöreningsSparbanken Board of Directors at a board meeting Februari th 10 appointed Birgitta Johansson-Hedberg as new President and CEO of FöreningsSparbanken. Birgitta Johansson-Hedberg will assume her new position in conjunction with the Bank´s Annual General Meeting, April th 12 . Issue of primary capital certificates The Bank intends to issue primary capital certificates during 2000 in the amount of 200 million euro, corresponding to SEK 1.7 billion. Such an issue improves opportunities for continued higher lending, while at the same time strengthening the primary capital ratio in a cost-effective manner. Other conditions being the same, an issue of this amount will raise the FöreningsSparbanken financial companies group´s capital adequacy ratio to 10.8 percent and the primary capital ratio to 6.4 percent. Other Annual General Meeting FöreningsSparbanken's Annual General Meeting will be held at 1:00 p.m. on April 12, 2000 at the Concert Hall in Malmö. Shareholders who wish to attend must be directly recorded in their own names in the Bank's share register by March 31. Dividend The Bank's Board of Directors is recommending that the Annual General Meeting, as previously announced, approve a cash dividend of SEK 5.00 per share (4.67). The proposed record day for the right to the 1999 dividend is Monday, April 17, 2000. The last day for trading in the Bank's share with the right to the dividend is Wednesday, April 12, 2000. If the Annual General Meeting adopts the Board of Directors' recommendation, the cash dividend is expected to be paid by VPC (the Swedish Securities Register Center) on Wednesday, April 20, 2000. Stockholm, February 10, 2000 FöreningsSparbanken AB (publ) Göran Ahlström President and CEO For further information, please contact: Nils-Fredrik Nyblæus, Executive Vice President, phone +46-8-5859 2532 Staffan Salén, Investor Relations, phone +46-8-5859 2779 Key ratios for the Group 1999 1998 January - December Return on equity, % 15.7 16.9 Earnings per share, SEK 8.70 8.75 Operating profit per share, 8.74 8.63 SEK Equity per share, SEK 58.75 54.64 I/E ratio before loan losses 1.58 1.61 I/E ratio after loan losses 1.50 1.49 Capital adequacy ratio, % 10.4 11.6 Primary capital ratio, % 6.0 6.1 Loan loss ratio, net, % 0.1 0.2 7 (16) A bonus issue during the second quarter of 1999 raised the number of shares to 527,808,843. Comparative per share figures for 1998 have been recalculated. BUSINESS AREA REPORT Retail Swedbank Asset Mgmt. Other Group banking Markets incl. insurance SEK M 1999 1998 1999 1998 1999 1998 1999 1998 1999 1998 Incom 11,969 12,656 2,100 1,945 2,678 2,095 2,489 2,658 19,236 19,354 e Inter nal sales Commi 1,683 1,336 - 270 - 262 -1,413 -1,074 - - - - ssion s Expen -8,203 -8,416 -1,082 -1,058 -682 -533 -2,179 -2,019 -12,146 - ses 12,026 Profi t befor e Loan 5,449 5,576 748 625 583 488 310 639 7,090 7,328 losse s Loan - 607 -1,032 -11 - 8 - - - 18 38 - 636 -1,002 losse s Profi t after Loan 4,842 4,544 737 617 583 488 292 677 6,454 6,326 losse s Estim ated Share 18,156 17,391 4,786 4,837 2,146 2,370 4,252 2,671 29,340 27,269 holde rs' equit y Retur n on equit y after 19.2% 18.8% 11.1% 9.2% 19.6% 14.8% - - 15.7% 16.9% tax The reported profit per business area includes both external and internal income and expenses. Internal sales commissions refer to market-based compensation paid to customer service units for brokered transactions. Shareholders' equity has been distributed according to capital adequacy regulations with the addition of unamortized goodwill in each business area. The comparative shareholders' equity figure for 1998 has been modified to the 1999 computations. The return on equity for the business areas is calculated after standard tax and for the Group after reported tax. 8 (16) Retail Banking Retail Banking comprises Local banks, FöreningsSparbanken by Internet, FöreningsSparbanken by Telephone, Spintab, FöreningsSparbanken Cards, FöreningsSparbanken Finans and jointly owned banks in Sweden. Income declined by SEK 687 M or 5 percent compared with 1998, of which approximately SEK 240 M was attributable to the branch sales to independent savings banks and jointly owned banks. Net interest income from deposits and lending in the local banks, including mortgage lending, declined by approximately SEK 700 M due to lower margins, but was affected positively by approximately SEK 150 M by higher volumes. Commissions improved mainly due to growth in fund and insurance savings. Expenses declined slightly due to the reduction in the number of employees and to some extent to the branch sales. Loan losses also declined, because of which profit after loan losses rose by SEK 298 M or 7 percent. The return on equity rose slightly to 19.2 percent. Swedbank Markets Swedbank Markets comprises the Bank's capital market, international and large corporate customer operations, as well as securities brokerage and corporate finance. Income rose during the year and exceeded 1998 by 8 percent, mainly due to the trading operations' positive development. The profit improvement compared with 1998 was SEK 120 M, an increase of 19 percent. The return on equity rose to 11.1 percent. Asset Management Asset Management comprises Robur, including the Group's discretionary asset management, and SparFond. Due to volume growth for fund and insurance savings, income rose by approximately SEK 583 M or 28 percent compared with 1998. Although internal sales commissions and expenses rose, profit improved by SEK 95 M or nearly 20 percent. The return on equity rose to 19.6 percent. Other Other comprises income and expenses that do not fall under any of the business areas. This includes the Nordic/Baltic alliances, FöreningsSparbanken Fastighetsbyrå (real estate brokerage) and computer services for independent savings banks and jointly owned banks. Income includes items affecting comparability of approximately SEK 1,420 M in 1999 and SEK 2,060 M in 1998. The expense level was affected by workforce reduction expenses for the Resource Bank of SEK 575 M (435). For quarterly profit trends by business area, see appendix. Profit and loss accounts Group Change The Bank 1999 1998 % 1999 1998 SEK M Interest receivable 40,197 44,304 -9 19,850 22,725 Interest payable - 28 854 - 32 940 -12 -13 018 -15 368 Net interest income Not 11,343 11,364 0 6,832 7,357 e 1 Dividends received 159 155 3 4,106 6,204 Commissions 6,119 5,364 14 4,473 4,035 receivable Commissions payable -1,216 - 1 084 12 -718 -672 Net commission income 4,903 4,280 15 3,755 3,363 Net profit on Not financial e 2 -30 operations 579 827 488 758 Other operating 2,252 2,728 -17 2,072 2,779 income Total income 19,236 19,354 -1 17,253 20,461 9 (16) General administrative expenses - Staff costs -5,792 -5,760 1 -5,167 -5,222 - Other -5,556 -5,598 -1 -4,981 -5,040 Depreciation and write-down of tangible fixed assets -439 -374 17 -399 -333 Amortization of -359 -294 22 -101 -101 goodwill Total expenses -12,146 -12,026 1 -10,648 -10,696 Profit before loan 7,090 7,328 -3 6,605 9,765 losses Loan losses, net Not -635 -987 -36 -533 -735 e 3 Change in value of Not property taken over e 3 -1 -15 -93 -2 -2 Write-downs of - - -53 -43 financial fixed assets Operating profit 6,454 6,326 2 6,017 8,985 Acquired loss - -32 - - Appropriations 70 44 59 -1,338 -933 Tax -1,904 -1,719 11 -1,259 -1,916 Minority interest -28 - - - Profit for the 4,592 4,619 - 1 3,420 6,136 financial year Note 1, Of which charge for -556 -594 -6 -543 -590 deposit guarantee. The charge is calculated based on account deposits as of December 31 of the year prior to the year in question and amounts to 0.499 percent (0.516). Note 2. Specification of net profit on financial operations Group The Bank 1999 1998 1999 1998 SEK M Capital gains Shares and participations 351 180 325 152 Interest-bearing -54 278 -63 236 securities Other financial -1 2 4 5 instruments Total 296 460 266 393 Unrealized changes in value Shares and participations -33 220 -84 207 Interest-bearing -5 - 86 -3 -72 securities Other financial 2 1 1 1 instruments Total -36 135 -86 136 Exchange rate fluctuations 319 232 308 229 Total 579 827 488 758 Note 3. Specification of loan losses, net, and change in the value of property taken over Group The Bank 1999 1998 1999 1998 SEK M Claims assessed individually The year's write-down for established loan losses 2,599 3,510 1,714 2,502 Reversal of provisions previously made for anticipated loan losses -1,174 -2,325 -803 -1,643 The year's provisions for anticipated loan losses 841 1,782 599 895 Recoveries from previous years' established loan losses -697 -411 -458 -208 Recovered provisions for anticipated loan losses -984 - 1,546 -527 -830 The year's net expense for individually assessed claims 585 1,010 525 716 Claims assessed collectively The year's established 109 94 107 93 loan losses Recoveries from previous years' established loan losses -13 -13 -12 -11 Allocations/withdrawals from loan loss reserve -46 -52 -45 -4 The year's net expense for collectively assessed 50 29 50 78 claims Contingent liabilities The year's net expense for discharged guarantees and other contingent 0 26 -42 19 liabilities The year's net loan loss 635 1,065 533 813 expense Change in the value of 1 15 2 2 property taken over Total 636 1,080 535 815 Less: applied to -78 -78 acquisition analysis Loan losses, net, and change in 636 1,002 535 737 value of property taken over Note 4. Problem loans Group The Bank SEK M 12/31 12/31 12/31 12/31 1999 1998 1999 1998 Doubtful claims, gross 4,544 8,060 2,129 4,115 Provisions for anticipated 3,879 3,942 1,600 2,312 loan losses Doubtful claims, net 665 4,118 529 1,803 Claims with interest 225 438 97 212 concessions Problem loans, net 890 4,556 626 2,015 Unsettled claims for which has been entered as income 1,517 1,885 668 583 Property taken over to protect claims: - Buildings and land 19 25 12 19 - Shares and 81 26 7 16 participations - Other 71 5 0 5 Total 171 56 19 40 Doubtful claims as % of 0.1% 0.8% 0.2% 0.8% total lending Provision ratio for 85% 49% 75% 56% doubtful claims Quarterly profit trend for the Group 1999 1999 1999 1999 1998 1998 SEK M 4Q 3Q 2Q 1Q 4Q 3Q Net interest income * 3,052 2,711 2,717 2,863 2,828 2,694 Commissions, net 1,362 1,202 1,258 1,081 1,039 1,127 Financial operations, net 267 184 23 105 326 62 Other income 201 243 349 1,618 570 378 Total income 4,882 4,340 4,347 5,667 4,763 4,261 Staff costs 1,360 1,449 1,564 1,419 1,555 1,390 Other expenses 1,645 1,546 1,631 1,532 1,896 1,431 Total expenses 3,005 2,995 3,195 2,951 3,451 2,821 Profit before loan losses 1,877 1,345 1,152 2,716 1,312 1,440 Loan losses, incl. changes - 272 - 104 - 2 - 258 - 26 - 266 in value Operating profit 1,605 1,241 1,150 2,458 1,286 1,174 * Of which deposit 138 138 137 143 146 146 guarantee fee Balance sheets Group The Bank SEK M 12/31 12/31 12/31 12/31 1999 1998 1999 1998 Loans to the public 569,409 516,909 191,162 209,758 Loans to credit 104,516 71,462 135,536 91,573 institutions Interest-bearing 58,427 60,222 44,256 66,885 securities - Financial fixed assets 6,135 5,307 6,035 6,687 - Financial current 52,292 54,915 38,221 60,198 assets Other assets 101,227 71,355 67,327 63,220 Total assets 833,579 719,948 438,281 431,436 Deposits and borrowings 210,537 190,355 197,539 187,308 from the public Amounts owed to credit 127,948 120,755 121,989 131,137 institutions Debt securities in issue 344,082 290,778 40,506 36,528 Subordinated liabilities 25,352 24,754 15,204 17,070 Other liabilities 94,653 64,468 40,604 37,873 Shareholders' equity 31,007 28,838 22,439 21,520 Total liabilities, provisions and shareholders' equity 833,579 719,948 438,281 431,436 Condensed statement of cash flows Group The Bank 1999 1998 1999 1998 SEK M Liquid assets at beginning of 54,486 40,785 54,819 39,921 period * Operating activities Operating profit 6,454 6,326 6,017 8,985 Adjustments for non-cash items including taxes paid -126 -3,967 2,302 -6,545 Increase in short-term 1,287 -16,577 -17,249 -23,900 investments Increase/decrease in loans to -11,662 -33,269 3,876 -15,732 the public Increase/decrease in holdings of securities -1,165 -894 -1,916 7,729 classified as current assets Increase/decrease in deposits and borrowings from the public, 886 -8,814 9,206 -8,318 including retail bonds Increase in amounts owed to 3,829 25,966 -398 29,355 credit institutions Change in other assets and -317 -4,904 -3,294 -4,286 liabilities, net Cash flow from operating -814 -36,133 -1,456 -12,712 activities Investing activities Purchase of fixed assets -8,073 -5,503 -7,850 -5,478 Sale of fixed assets 5,241 5,335 6,264 6,350 Branch sales 61 3,189 61 3,189 Cash flow from investing -2,771 3,021 -1,525 4,061 activities Financing activities Issuance of interest-bearing 93,773 103,639 8,450 2,863 securities Redemption of interest-bearing -108,172 -67,601 -4,583 -947 securities Increase/decrease in other 30,299 12,886 752 23,744 funding Dividend paid -2,463 -2,111 -2,463 -2,111 Cash flow from financing 13,437 46,813 2,156 23,549 activities Cash flow for the period 9,852 13,701 -825 14,898 Acquired liquid assets 10,821 Liquid assets at end of period * 75,159 54,486 53,994 54,819 * of which securities pledged for OM, etc. at beginning of period 4,769 1,523 4,769 1,523 at end of period 4,657 4,769 4,657 4,769 Liquid assets include cash and balances with central banks, for net claims the net of demand loan receivables and demand loan liabilities with maturities up to five days, and Treasury bills, other bills and mortgage bonds eligible for refinancing with Sveriges Riksbank, taking into account repos and short-selling. Derivatives The Group uses derivatives in the normal course of business and for the purpose of hedging certain positions with regard to the value of equities, interest rates and currencies. The following specification is prepared in accordance with the directives of the Swedish Financial Supervisory Authority and includes all derivatives in the Group. Generally, derivatives are reported at fair value. Exceptions are made for derivatives that are accounted for as hedges. The deviations between book and fair value reported below correspond to opposing deviations for other positions that are included in the portion of the Group's operations covered by hedge accounting. Specification of derivatives in the Group as of December 31, 1999 Derivatives with positive fair values or nil value Interest-related Currency- Equity- Other related related SEK M Fair value Book Fair Book Fair Book Fair Book value value value valuevalue valuevalue Derivatives reported entirely 7,807 6,521 18,29613,805 3,0981,847 4 4 or in part on the balance sheet Derivatives not reported 88 99 on the balance sheet Derivatives with negative fair values Interest-related Currency- Equity- Other related related SEK M Fair value Book Fair Book Fair Book Fair Book value value value valuevalue valuevalue Derivatives reported entirely 8,258 7,829 9,174 9,197 3,6742,424 or in part on the balance sheet Derivatives not reported 13 6 on the balance sheet FöreningsSparbanken's ratings S&P Moody´s Bankwatch FitchIBCA Japan R/I Shor Long ShorLong BFSR*Short LongIssueShortLongLong t t r A-1 A P-1 Aa3 B TBW-1 AA- B/C F-1 A+ AA- *Bank Financial Strength Rating Spintab's ratings S&P Moody´s Short FitchIBCA Short Long Long Short Lon Issu Shor Long Sho g er t rt A-1 - P-1 Aa3 TBW-1 AA- B/C F-1+ AA- Financial information The Group's financial reports can be accessed on FöreningsSparbanken's home page on the Internet at http://www. foreningssparbanken.se/ir or at the nearest branch of FöreningsSparbanken. FöreningsSparbanken will preliminarily release earnings reports on the following dates: Interim report for January-March April 28, 2000 Interim report for January-June August 24, 2000 Interim report for January-September October 27, 2000 The Annual General Meeting will be held in Malmö at 1:00 p.m. on April 12, 2000. Appendix Quarterly profit trend by business area 1999 1999 1999 1999 1998 1998 SEK M 4Q 3Q 2Q 1Q 4Q 3Q Retail Banking Income 3,251 2,959 2,857 2,902 3,135 3,083 Internal sales 491 405 414 373 341 358 commissions Expenses - - - - - - 2,039 2,049 2,187 1,928 2,234 1,940 Profit before loan 1,703 1,315 1,084 1,347 1,242 1,501 losses Loan losses - 240 - 98 -1 - 268 - 56 - 263 Profit after loan 1,463 1,217 1,083 1,079 1,186 1,238 losses Swedbank Markets Income 567 375 574 584 539 340 Internal sales - 85 - 45 - 71 - 69 - 77 - 65 commissions Expenses - 299 - 230 - 276 - 277 - 284 - 250 Profit before loan 183 100 227 238 178 25 losses Loan losses - 4 - 2 - 4 - 1 - 6 - 2 Profit after loan 179 98 223 237 172 23 losses Asset Management Income 804 677 624 573 503 648 Internal sales -406 - 360 -343 - 304 - 264 - 293 commissions Expenses -216 - 158 -159 -149 - 149 - 159 Profit before loan 182 159 122 120 90 196 losses Loan losses Profit after loan 182 159 122 120 90 196 losses Other Income 260 329 292 1,608 586 190 Internal sales commissions Expenses - 451 - 558 - 573 - 597 - 784 - 472 Profit before loan - 191 - 229 - 281 1,011 - 198 - 282 losses Loan losses -28 - 4 3 11 36 - 1 Profit after loan - 219 - 233 - 278 1,022 - 162 - 283 losses ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/02/10/20000210BIT00310/bit0001.doc Full report http://www.bit.se/bitonline/2000/02/10/20000210BIT00310/bit0002.pdf Full report

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