Highlights of Stadshypotek’s Annual Report January – December 2016

JANUARY – DECEMBER 2016 COMPARED WITH JANUARY – DECEMBER 2015
Stadshypotek’s operating profit increased by 6%, or SEK 650m, to SEK 11,366m (10,716). Net interest income grew by SEK 606m to SEK 12,362m (11,756). This increase was primarily due to higher lending volumes to the private market in Sweden. Of the net interest income, SEK 577m (875) was attributable to the branch in Norway, SEK 377m (417) to the branch in Finland and SEK 345m (276) to the branch in Denmark. The decrease in net interest income at the Norwegian branch was attributable to lower margins for both the private and corporate markets, although this was offset slightly by an increase in lending volumes. The decrease in net interest income at the Finnish branch can mainly be explained by lower margins, while net interest income at the Danish branch rose due to an increase in lending volumes to the private market. Excluding the branches, net interest income increased by SEK 875m. Net gains/losses on financial transactions increased to SEK 82m (29).

Expenses decreased by SEK 18m to SEK -1,047m (-1,065), mainly due to a lower level of sales compensation paid to the parent company for the services performed by the branch operations on behalf of Stadshypotek in relation to the sale and administration of mortgage loans.

Net loan losses totalled SEK -2m (2).

LENDING
Loans to the public increased by 6%, or SEK 68bn, to SEK 1,151bn (1,083). In Sweden, loans to the public increased by 5%, or SEK 46bn, to SEK 983bn (937). Loans to the private market in Sweden increased by 7%, or SEK 46bn, to SEK 670bn (624). The credit quality of lending operations remains very good. Impaired loans, before deduction of the provision for probable loan losses, decreased by SEK 6m and totalled SEK 103m (109). Of this amount, non-performing loans accounted for SEK 41m (66), while SEK 62m (43) related to loans on which the borrowers pay interest and amortisation, but which are nevertheless considered impaired. There were also non-performing loans of SEK 328m (338) that are not classed as being impaired loans. After deductions for specific provisions totalling SEK -32m (-32) and collective provisions of SEK -4m (-5) for probable loan losses, impaired loans totalled SEK 67m (72).

FUNDING
Issues made under Stadshypotek’s Swedish covered bond programme totalled SEK 112.7bn (112.8). During the year, a nominal volume totalling SEK 82.7bn (115.3) matured or was repurchased. In Norway, bonds to the value of NOK 10.2bn (1.5) were issued during the year and bonds to the value of NOK 200m were repurchased. Issues of covered bonds under the EMTCN programme totalled EUR 2.75bn (1.25), of which EUR 0.5bn related to the first issue using the cover pool that was established in Finland during the year as collateral. During the year, bonds to the value of EUR 1.5bn, CHF 225m, GBP 350m and SEK 4.7bn matured.

CAPITAL ADEQUACY

The total capital ratio according to CRD IV was 67.4% (67.8) while the common equity tier 1 ratio calculated according to CRD IV was 39.2% (40.2). Further information on capital adequacy is provided in the Own funds and capital requirement section on page 19.

RATING
During the year, Fitch upgraded Stadshypotek’s long-term rating from AA- to AA. Stadshypotek's other ratings remained unchanged during the year.

Stadshypotek Covered bonds Long-term Short-term
Moody’s Aaa - P-1
Standard & Poor’s AA- A-1+
Fitch AA F1+

Stockholm, 8 February 2017


Ulrica Stolt Kirkegaard
Chief Executive


Stadshypotek discloses the information provided herein pursuant to the Securities Markets Act.
Submitted for publication on 8 February 2017, at 11.00 CET.

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