Interim report for Sparbanken Sverige with Föreningsbanken

Interim report for Sparbanken Sverige with Föreningsbanken January-June 1997 Improved operating income Operating income rose by 23 percent to SEK 3,684 M (2,993) Total income rose by five percent to SEK 10,281 M (9,779) Net interest income declined by two percent to SEK 6,621 M (6,776) Net commission income rose by 28 percent to SEK 2,082 M (1,626) Expenses rose by four percent to SEK 5,574 M (5,380) The loan loss ratio was 0.4 percent (0.6) Earnings per share SEK 7.56 (6.57, old Group) Return on equity 20.4 percent (16.5) The comparable figures for the new Group with Föreningsbanken as a subsidiary are stated as follows: The income statement is compared with the pro forma income statement of 1996. The figures include Föreningsbanken for the entire period, after which Foreningsbanken´s operating income before the acquisition date is deducted as "income from acquired operations." In addition, an income statement is shown for the old Group excluding Föreningsbanken. Items related to the balance sheet are compared with the new Sparbanken Sverige Group including Föreningsbanken unless otherwise indicated. Key ratios are compared with pro forma 1996. In addition, key ratios are stated for the old Group. The purchase accounting method has been used in the consolidation of Föreningsbanken. The acquisition date is June1, 1997, as of which Föreningsbanken is included in income for the period. Goodwill is amortized over 20 years. Improved operating income The new Group's operating income rose by 23 percent to SEK 3,684 M (2,993). The improvement in operating income is due in large part to increased net commission income and lower loan losses. The return on equity amounted to 20.4 percent (16.5) and earnings per share (after estimated tax) to SEK 7.56 (6.57, old Group), based on the average number of shares during the first six months of the year. Group revenue rose by SEK 502 M or five percent compared with the corresponding period of 1996 and amounted to SEK 10,281 M for the first two quarters of 1997. The increase is due primarily to substantially higher net commission income. The Group's net interest income amounted to SEK 6,621 M (6,776). The decrease of two percent is due to, among other things, the fact that expenses for the state's compulsory deposit guarantee doubled compared with 1996 to SEK 339 M (173). Net commission income rose by SEK 456 M to SEK 2,082 M or by 28 percent compared with the corresponding period of 1996. Increased fund savings in Robur and Föreningsbanken Fond accounted for a large part of the increase. Commission revenue from insurance savings rose. Brokerage commissions also developed positively during the first half of 1997. The Group's net income from financial operations amounted to SEK 724 M (687). As an element in the preparations prior to their merger, Sparbanken Sverige and Föreningsbanken have decided to reclassify financial fixed assets with a value of approximately SEK 10 billion to current assets. These assets were subsequently sold. The effect on income of the reclassification and assets sales amounts to approximately SEK 585 M, of which SEK 223 M has been deducted as income from acquired operations. As a result of the reclassification and sale, the Group's liquidity and equity/assets ratio have improved and its financial options increased, which is deemed strategically correct for the merger. Income includes the change in the value of the holding of the shares in Föreningsbanken of SEK 146 M on previously acquired shares, which as of the consolidation date were reclassified from current assets to fixed assets. See Note 2. areas." ------------------------------------------------------------ http://www.bit.se/bitonline/1998/10/20/19981020BIT00150/Inte2q97.doc