Interim report January - June 2001

Stable profit trend for FöreningsSparbanken Operating profit for the second quarter 2001 rose 17 percent compared with the first quarter First six months 2001 in brief: · Operating profit amounted to SEK 4,360 M (5,330) · Excluding capital gains and the insurance refund from Alecta last year, operating profit was unchanged · The return on equity amounted to 16.2 percent (24.5) · Net interest income rose by 13 percent to SEK 7,520 M (6,633) · Net commission income decreased by 8 percent to SEK 3,068 M (3,341) · Earnings per share amounted to SEK 5.31 (7.20) · Robur's share of new mutual fund investments rose to 20 percent (13) · The number of Internet banking customers in the Group amounts to approx. 1.3 million (0.8) · Hansapank's acquisition of the Lithuanian bank LTB is finalized · Human capital measurements in FöreningsSparbanken show very good results · EU's review of the proposed merger with SEB is continuing during the autumn. Group profit FöreningsSparbanken's profit trend is stable. The Group's operating profit for the first half of 2001 amounted to SEK 4,360 M (5,330). The first half of 2000 included capital gains of approximately SEK 700 M and a surplus insurance refund from Alecta (formerly SPP), which reduced expenses by SEK 260 M. Excluding the capital gains and insurance refund, operating profit for the first half of 2000 was SEK 4,370 M. The return on equity during the period was 16.2 percent (24.5). Earnings per share amounted to SEK 5.31 (7.20). Operating profit for the second quarter of 2001 amounted to SEK 2,353 M, an increase of SEK 346 M or 17 percent compared with the first quarter 2001. Operating profit for the second quarter 2000 amounted to SEK 3 114 M, excluding the capital gains and insurance refund, operating profit for the second quarter of 2000 amounted to SEK 2,154 M. Income The Group's total income for the first half of 2001 amounted to SEK 11,886 M (12,162). Income for the second quarter amounted to SEK 6,031 M (6,430). Net interest income During the first half of 2001, the Group's net interest income rose by SEK 887 M, or 13 percent to SEK 7,520 M (6,633), compared with the corresponding year-earlier period. The improvement is primarily due to an increase in FIH and Hansapank's net interest income of approximately SEK 400 M. Spintab's net interest income rose by approximately SEK 200 M, of which SEK 100 M relates to a refund of insurance fees for loan insurance. In addition, the state deposit guarantee fee, which is charged to net interest income, was reduced by SEK 232 M. During the second quarter net interest income amounted to SEK 3,724 M (3,289), an improvement of SEK 435 M or 13 percent compared with the second quarter of 2000. Net commission income Net commission income for the first half of 2001 decreased by SEK 273 M or 8 percent to SEK 3,068 M (3,341). Due to the market's lower trading volume and lower stock prices, brokerage commissions declined by approximately SEK 230 M and asset management commissions by approximately SEK 190 M. Net commission income from payment services continues to develop strongly, rising by approximately SEK 120 M compared with the first half of 2000. Net commission income during the second quarter amounted to SEK 1,549 M. In the second quarter of 2000 net commission income was SEK 1,629 M. Compared with the first quarter of 2001, net commission income rose by SEK 30 M. Net profit on financial operations Net profit on financial operations amounted to SEK 621 M (848) in the first six months of 2001. Profit from trading in equities and fixed income instruments declined, while income from currency operations developed positively, mainly at Swedbank Markets, though also in Hansapank. Net profit on financial operations during the second quarter of the year amounted to SEK 397 M. In the second quarter of 2000 the corresponding profit was SEK 416 M. Compared with the first quarter of 2001, net profit on financial operations rose by 77 percent, from SEK 224 M to SEK 397 M, primarily due to the positive development of the currency operations. Other income Other income amounted to SEK 544 M (1,104) during the first half of 2001. The second quarter of 2000 included capital gains of approximately SEK 700 M from FöreningsSparbanken sale of its shareholdings in Bank Handlowy and Svensk Exportkredit AB. Expenses Expenses for the first half-year amounted to SEK 6,883 M (6,346). Expenses for the second quarter of 2001 amounted to SEK 3,405 M, compared with SEK 3,119 M in the corresponding period last year. In the second quarter of 2000 the Group reported a surplus insurance refund from Alecta, which reduced expenses by SEK 260 M. Compared with the first quarter of 2001, the second quarter's expenses decreased by slightly over 2 percent or SEK 73 M, from SEK 3,478 M to SEK 3,405 M. Expenses for the Swedish operations in the first half-year, excluding allocations to the Kopparmyntet profit-sharing fund and insurance refund from Alecta, decreased by SEK 79 M or by 1 percent to SEK 5,837 (5,916). Staff costs Staff costs for the first half of 2001 amounted to SEK 3,208 M (3,109). Profit was charged with SEK 212 M (71) for profit sharing expenses in the Group. Change in the number of full-time positions Number of employees in the Group in terms of full-time positions. June Mar 31 Dec 31 June 30 30 2001 2001 2000 2000 Permanent employees 9,194 9,201 9,106 9,038 Temporary employees 493 527 574 704 Subtotal 9,687 9,728 9,680 9,742 Hansapank* 6,309 3,190 3,180 3,078 FIH 143 139 142 139 Total 16,139 13,057 13,002 12,959 * The increase in Hansapank is due to the acquisition of LTB during the second quarter of 2001. IT expenses During the first half of 2001 the Group's total IT expenses, after deducting IT-related income from jointly owned banks and independent savings banks, amounted to SEK 1,303 M (1,119). The corresponding expenses for the first quarter of 2001 were SEK 683 M, which decreased to SEK 620 M in the second quarter. In the fourth quarter of 2000 the Bank decided to make certain web modifications to its internal systems and expand its range of online services. Extensive development work was carried out during the first half year, which resulted in a number of significant functional and efficiency improvements. Development activity in the IT area will be lower during the second half of 2001 than the first. Other expenses Expenses during the second quarter directly attributable to the planned merger with SEB, excluding staff and IT expenses, amounted to approximately SEK 50 M. Loan losses The loan loss level for the first half of 2001 was 0.2 percent (0.2). Loan losses amounted to SEK 645 M (640), of which FIH and Hansapank accounted for SEK 51 M (107). A specification of loan losses and problem loans is provided in Notes 4 and 5. Tax expense 27 percent The tax expense amounted to SEK 1,166 M (1,284) for the first half year, or an effective tax rate of 27 percent (24). The lower tax rate is primarily due to a larger share of tax-exempt income. Interest rate risk An increase in market interest rates of one percentage point as of June 30, 2001 would have reduced the value of the Group's interest-bearing assets and liabilities, including derivatives, by approximately SEK 864 M (683). The decrease in value for positions in SEK would have amounted to SEK 636 M (485) and for positions in foreign currency SEK 228 M (198). The Group's interest rate risk in foreign currency is primarily in the foreign subsidiaries Hansapank and FIH. An interest rate increase of one percentage point would have reduced the Group's net profit on financial operations by approximately SEK 149 M (286) as of June 30, 2001. The Group also holds positions in inflation- indexed instruments, denominated in SEK, which a one-percent increase in real interest rates would have reduced in value by approximately SEK 40 M (36) as of June 30, 2001, of which approximately SEK 13 M (2) would affect reported net profit on financial operations. Capital adequacy ratio 10.6 percent On June 30, 2001 the capital adequacy ratio, which is calculated for the financial companies group, amounted to 10.6 percent (10.8), of which the primary capital ratio was 6.8 percent (6.9). Market risks as a share of the total capital adequacy ratio amounted to 0.6 percentage points (0,5). The risk-weighted amount for credit risks rose to SEK 514 billion (485). The increase is primarily attributable to higher lending by Spintab, FIH and Hansapank. The risk-weighted amount for market risks rose by SEK 8 billion to SEK 32 billion. The increase is primarily due to increased lending in euro by Hansapank, increased holdings of and change in maturity structures of interest-bearing securities in FIH and substantially higher market values for currency-related derivatives in Swedbank Markets' operations due to falling exchange rates for the Swedish krona. Specification of capital adequacy SEK M June 30 Dec 31 June 30 2001 2000 2000 Primary capital 37,346 35,045 32,022 Supplementary capital 25,679 24,091 24,278 Less shares, etc. - 5,292 - 5,020 - 3,074 Expanded portion of capital base 230 883 844 Capital base 57,963 54,999 54,070 Risk-weighted amount for credit 514,206 484,775 449,594 risks Risk-weighted amount for market 32,197 24,192 18,742 risks Total risk-weighted amount 546,403 508,967 468,336 Capital adequacy ratio, % 10.6 10.8 11.6 Primary capital ratio, % 6.8 6.9 6.8 Profit for each period is included in the capital base. As of June 30, 2001 the FöreningsSparbanken financial companies group included the FöreningsSparbanken Group, Eskilstuna Rekarne Sparbank AB, Färs och Frosta Sparbank AB, FöreningsSparbanken Sjuhärad AB, FöreningsSparbanken Söderhamn AB, Bergslagens Sparbank AB, Vimmerby Sparbank AB, Aktia Sparbank Ab in Finland and Sparebank 1 Gruppen in Norway. The Group's insurance companies are not included. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/23/20010823BIT00070/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/08/23/20010823BIT00070/bit0001.pdf The full report