Interim report for FöreningsSparbanken (Swedbank)

Interim report for FöreningsSparbanken (Swedbank) January - September 1999 October 20, 1999 Stable income - expenses develop according to plan * Operating profit amounted to SEK 4,849 M (5,040) * Net commission income rose to SEK 3,541 M (3,241) * Loan losses declined to SEK 364 M (976) * Problem loans, net, declined to SEK 2,398 M (5,447) * Earnings per share amounted to SEK 6.64 (6.81) * Dividend of SEK 5.00 per share (4.67) announced * Savings area increased by 15 percent * Lending rose by 3 percent * Growing number of customers use the Bank's electronic meeting places * FöreningsSparbanken launched the "Bankbook" * FöreningsSparbanken's offer for FIH of Denmark is accepted by the shareholders * Göran Ahlström appointed new President as of October 5, 1999 The number of employees amounted to 10,511 (12,749 on December 31, 1996) Group profits The Group's operating profit for the first three quarters of 1999 amounted to SEK 4,849 M (5,040). Excluding items affecting comparability, operating profit rose by 4 percent. The return on equity amounted to 16.2 percent (17.8) and earnings per share were SEK 6.64 (6.81). Net interest income stable The Group's net interest income amounted to SEK 8,291 M (8,536), which is SEK 245 M lower than the corresponding period of 1998. The decrease is due to the sale of branches to independent savings banks and jointly owned banks in 1998 and to lower deposit margins. Net interest income during the third quarter was unchanged compared with the second quarter. Continued increase in net commission income Net commission income rose by SEK 300 M or 9 percent to SEK 3,541 M (3,241). The improvement is attributable primarily to fund and insurance savings. As in previous years the third quarter was affected by seasonal fluctuation. Net profit on financial operations Net profit on financial operations amounted to SEK 312 M (501). The decrease mainly stems from the fact that this year the bond portfolio has not reported similar gains as in 1998. During the third quarter the Bank decided to sell its holding of primary capital certificates in Sparbanken Nor acquired in 1998. The holding has therefore been reclassified from fixed to current assets and a gradual sell-off has begun. Net profit on financial operations includes approximately SEK 70 M for the appreciation in the value of this holding. Other income Other income amounted to SEK 2,053 M during the first three quarters of 1999, compared with SEK 2,158 M during the corresponding period of 1998. Both periods included capital gains: SEK 1,373 M in 1999 and SEK 1,507 M in 1998. Lower third-quarter expenses Expenses for the first three quarters of 1999 amounted to SEK 9,141 M (8,575), an increase of 566 M or 7 percent from the corresponding period of 1998. The increase is mainly attributable to higher IT expenses, the launch of the Bankbook and the reduction in personnel, which is proceeding according to plan. Expenses for the third quarter of 1999 declined according to plan by approximately SEK 200 M compared with the second quarter. Expenses associated with the Resource Bank, which are written off directly, amounted to SEK 133 M during the third quarter, or a total of SEK 481 M during the period. This includes all expenses for the 780 employees who have left the Resource Bank thus far this year. The expenses associated with the Resource Bank during the fourth quarter of 1999 are estimated at approximately SEK 70 M. During the first three quarters of 1999 total IT expenses before the deduction of income from independent savings banks and jointly owned banks amounted to SEK 1,934 M. For the full-year 1999 the Group's IT expenses are expected to remain largely in line with 1998. The third quarter include expenses of approximately SEK 150 M for the Bank's new marketing campaign. Continued decline in loan losses and problem loans During the first three quarters of 1999 loan losses declined to SEK 364 M (976). The loan loss level was 0.1 percent (0.3). The Group's problem loans, net, declined substantially to SEK 2,398 M (5,447) as of September 30, 1999. 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, as indicated in previous reports, remains low. An increase in market interest rates of one percentage point as of September 30, 1999 would have reduced the value of the Group's interest-bearing assets and liabilities, including derivatives, by approximately SEK 431 M (670). The decrease in value for positions in SEK would have amounted to approximately SEK 469 M (650) as of September 30, 1999. Given a corresponding increase in interest rate levels, the value of the Group's positions in foreign currency would have risen by SEK 38 M. As of September 30, 1998 such an interest rate increase would have resulted in a decline of approximately SEK 20 M in the Group's positions in foreign currency. A one-percent increase in real interest rates would have also reduced the value of positions in real fixed income instruments, denominated in SEK, by approximately SEK 44 M (9). An increase in interest rates of one percentage point would have reduced the Group's net profit from financial operations by SEK 111 M (152) as of September 30, 1999. Capital adequacy ratio 11.7 percent The capital adequacy ratio amounted to 11.7 percent on September 30, 1999 (11.8), of which the primary capital ratio was 6.6 percent (6.3). Market risks as a share of the total capital adequacy ratio amounted to 0.4 percentage points (0.4). Only half-year profit is included in the capital base. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/10/20/19991020BIT00280/bit0001.DOC The full report http://www.bit.se/bitonline/1999/10/20/19991020BIT00280/bit0002.pdf The full report