Interim report january - september 2002

Interim report for FöreningsSparbanken (Swedbank) January - September 2002 October 25, 2002 Operating profit amounted to SEK 5,000 M January - September 2002 in summary: · Operating profit amounted to SEK 5,000 M (6,362) · Operating profit was affected by write-offs totalling SEK 551 M · The return on equity was 10.9 percent (15.5) · Earnings per share amounted to SEK 5.69 (7.71) · Net interest income rose to SEK 11,663 M (11,201) · Net commission income amounted to SEK 4,325 M (4,586) · Net profit on financial operations amounted to SEK 253 M (962) · Expenses decreased to SEK 10,241 M (10,326) · Loan losses amounted to SEK 1,243 M (878) · Continued positive trend for mortgage lending in Sweden · Market share for new household deposits in Sweden for the first six months rose to 23 percent (12) · Market share for new savings1), net, in Sweden rose to 17 percent (15) · Acquisition of HSB Bank strengthens the Bank's position in the Stockholm area 1) New sales of select savings products: deposits from household customers, mutual funds, unit-linked insurance from all customer categories, retail bonds and equity linked bonds. Group profit The Group's operating profit for the period January - September 2002 amounted to SEK 5,000 M (6,362). Net interest income and other income rose by SEK 462 M and SEK 78 M, respectively, while net commission income declined by SEK 261 M and net profit on financial operations declined by SEK 709 M. The Group's expenses decreased slightly, despite that the ongoing personnel reduction program has resulted in expenses of SEK 200 M. Loan losses rose compared with the corresponding period of 2001, but have remained at a largely unchanged level during the last four quarters. In addition, profit for the period was affected substantially by write-offs of the shareholdings in OM and Marakanda of SEK 264 M and SEK 108 M, respectively. Norway's SpareBank 1 Gruppen's goodwill write-off resulted in a charge against FöreningsSparbanken's earnings of SEK 179 M. The return on equity was 10.9 percent (15.5), while earnings per share amounted to SEK 5.69 (7.71). Aside from the effect of the above-mentioned and earlier communicated write-offs, the profit trend between the year's second and third quarters was favourable. Income rose by SEK 158 M and expenses declined by slightly over SEK 100 M, resulting in an increase in profit before loan losses for the third quarter of slightly over SEK 250 M to SEK 2,407 M compared with SEK 2,155 M for the second quarter. In addition, loan-losses decreased during the quarter by SEK 58 M from SEK 433 M to SEK 375 M. Income The Group's total income in the first nine months of the year decreased by 2 percent compared with the corresponding period of 2001 and amounted to SEK 17,211 M (17,641). Net interest income rose slightly due to higher deposit and lending volumes, while net profit on financial operations decreased substantially and net commission income decreased slightly. Income in the third quarter amounted to SEK 5,749 M, against SEK 5,591 M in the second quarter of 2002. Net profit on financial operations rose substantially, while net commission income and other income decreased. Net interest income The Group's net interest income for January - September amounted to SEK 11,663 M (11,201). Continued strong volume growth for Spintab's mortgage lending raised net interest income by nearly SEK 200 M. Increased deposits in the Swedish branch operations also raised net interest income by slightly over SEK 200 M, while lower deposit margins affected net interest income negatively by slightly over SEK 350 M. Net interest income in FI-Holding and Hansabank rose by SEK 400 M, primarily through volume growth. Net interest income increased through volume growth to SEK 3,930 M in the third quarter, compared with SEK 3,908 M in the second quarter of 2002. Dividends received During the first nine months dividends received amounted to SEK 87 M (144). The decrease is due to lower dividends from shares in the trading portfolio and OM. Net commission income Net commission income for the year's first three quarters amounted to SEK 4,325 M (4,586). Net commission income from payment services continued to develop strongly, rising by SEK 95 M. Due to lower market volume and declining stock prices, brokerage commissions fell by SEK 117 M and asset management commissions by SEK 263 M. Net commission income amounted to SEK 1,369 M in the third quarter, compared with SEK 1,479 M in the second quarter of 2002. The decline is due to lower asset management fees because of the declining equity markets. Net profit on financial operations Net profit on financial operations amounted to SEK 253 M (962) during the period January - September. Profit from stock trading declined by SEK 46 M, while profit from trading in fixed income securities and other financial instruments fell SEK 235 M. Income from foreign exchange operations declined by SEK 428 M. Net profit on financial operations increased by SEK 356 M to SEK 183 M during the third quarter. The increase is due to higher income from equity, fixed income and foreign exchange trading. Other income Other income during the first nine months amounted to SEK 883 M (748). Income includes a capital gain of SEK 95 M on the sale of the branch operations in Gällivare to Sparbanken Nord in the first quarter of 2002. Expenses The Group's expenses decreased to SEK 10,241 M (10,326). Expenses in the Swedish operations declined by 4 percent or SEK 388 M, from SEK 8,941 M to SEK 8,553 M. The increase in other parts of the Group is due primarily to the acquisition of Lithuania's LTB, now Hansa LTB, in June 2001. Staff costs affected by personnel reduction program Staff costs amounted to SEK 5,219 M (4,869). The increase is due to contractual wage increases, Hansabank's acquisition of LTB with around 3,000 employees and expenses attributable to the current personnel reduction program that amounts to SEK 200 M. Group employees in terms of full-time positions Sep 30 Dec 31 Sep 30 2002 2001 2001 Total number of employees 15,461 16,068 16,523 Of whom Hansabank 5,843 6,387 6,751 IT expenses IT expenses include all development and production expenditures as well as computer equipment service costs and depreciation. IT expenses for the first nine months of the year, after deducting IT-related income from partly owned banks and independent savings banks, amounted to SEK 1,668 M (1,696). The corresponding expense in the Swedish operations was SEK 1,448 M (1,557). Other expenses Other expenses - i.e. other administrative expenses, depreciation of tangible fixed assets and amortization of goodwill - amounted to SEK 5,022 M (5,457) during the period. Computer, consulting and marketing expenses all decreased. Loan losses and doubtful claims The loan loss level for January - September 2002 was 0.24 percent (0.18). Loan losses amounted to SEK 1,243 M (878), of which FI-Holding and Hansabank accounted for SEK 72 M (77). Of the loan losses, SEK 786 M (380) related to collective provisions for claims assessed individually. The Group's doubtful claims, gross, amounted to SEK 3,977 M, compared with SEK 4,253 M on December 31, 2001. Doubtful claims, net, i.e. after deducting loan loss reserves, amounted to SEK - 1,029 M. A specification of loan losses and claims is provided in Notes 3 and 4. Write-offs of financial fixed assets During the third quarter FöreningsSparbanken wrote down the book value of its shareholding in OM from SEK 506 M to SEK 242 M. Thus, the write- off of financial fixed assets amounted to SEK 264 M. The write-off is based on the assumption that the stock market will remain weak for an extended period. If conditions for OM's operations improve and the improvement is expected to last, a revaluation will be made in the future to no more than the original acquisition value, SEK 506 M. Share of profit/loss of associated companies The share of profit/loss of associated companies in January - September 2002 amounted to SEK - 463 M (- 75). The share of SpareBank 1 Gruppen's loss was SEK - 413 M (- 130). The shared loss was affected by the goodwill write-off in SpareBank 1 Gruppen of SEK 179 M and by operating losses caused primarily by the declining stock market in Norway. In the third quarter the Parent Company, FöreningsSparbanken AB, wrote down its holding in SpareBank 1 Gruppen A/S by SEK 495 M to the Group's book value. FöreningsSparbanken's shareholding in Marakanda was written down during the quarter from SEK 108 M to 1 krona. The share of Marakanda's loss, including the write-off, amounted to SEK - 197 M (- 98) during the year. Tax expense 30 percent Consolidated profit before tax amounted to SEK 4,949 M (6,329) and the tax expense was SEK 1,474 M (1,718), or an effective tax rate of 30 percent (27). The higher rate was due mainly to the share write-offs, which are not tax-deductable until they have been realized. Interest rate risk An increase in market interest rates of one percentage point as of September 30, 2002 would have reduced the value of the Group's interest- bearing assets and liabilities, including derivatives, by SEK 694 M (527). The decrease in value of positions in SEK would have been SEK 531 M (349) and positions in foreign currency SEK 163 M (178). An interest rate increase of one percentage point would have reduced the Group's net profit on financial operations by SEK 207 M (158) as of September 30, 2002. 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 SEK 33 M (3) as of September 30, 2002, which would affect reported net profit on financial operations. The comparative figures refer to June 30, 2002. Capital adequacy The capital adequacy ratio, which is calculated for the financial companies group, amounted to 10.9 percent (11.3) on September 30, 2002, of which the primary capital ratio was 7.1 percent (7.1). Market risks as a share of the total capital adequacy ratio amounted to 0.6 percentage points (0.7). The risk-weighted amount for credit risks rose during the period to SEK 531 billion (515). The increase is attributable primarily to higher lending by Spintab and Hansabank. The risk-weighted amount for market risks declined by SEK 5 billion during the period to approximately SEK 28 billion. The decrease was due mainly to a change in maturity structure and a smaller holding of interest-bearing securities in FI-Holding as well as the lower market value of foreign exchange-related derivatives in Swedbank Markets owing to a stronger Swedish krona. The comparative figures refer to December 31, 2001. Specification of capital adequacy Sep 30 Dec 31 Sep 30 SEK M 2002 2001 2001 Primary capital 39,423 38,938 37,405 Supplementary capital 26,141 26,813 25,864 Less shares, etc. - 5,655 - 5,300 - 5,453 Expanded portion of capital 1,156 1,292 244 base Capital base 61,065 61,743 58,060 Risk-weighted amount for 530,980 514,743 523,269 credit risks Risk-weighted amount for 28,181 33,054 29,924 market risks Total risk-weighted amount 559,161 547,797 553,193 Capital adequacy ratio, % 10.9 11.3 10.5 Primary capital ratio, % 7.1 7.1 6.8 As of September 30, 2002 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 Abp in Finland, and Sparebank 1 Gruppen A/S and First Securities A/S in Norway. The Group's insurance companies are not included. Sales and market shares For 2002 FöreningsSparbanken's goal in the Swedish market is to achieve a market share of 20 percent for new sales of select savings products: deposits from household customers, mutual funds, unit-linked insurance from all customer categories, retail bonds and equity linked bonds. During the first nine months of the year the market share rose to 17 percent, against 15 percent for corresponding period of 2001. For household deposits, an area where FöreningsSparbanken has significantly improved its offering in a number of respects, its market share for new savings was 23 percent in the first half year, compared with 12 percent in the first half of 2001. Its market share for mutual funds and unit- linked insurance was 14 percent and for retail bonds and equity linked bonds 2 percent. On a cumulative basis for the first nine months, new sales in the savings area amounted to SEK 26.5 billion, an increase of SEK 10.1 billion from the previous year. Business area development Savings Customers' total savings in FöreningsSparbanken amounted to SEK 471 billion (526) as of September 30, 2002. Customers' deposits rose to SEK 249 billion (229) or by 9 percent. Deposits in SEK rose by 11 percent to SEK 200 billion (180), while deposits in foreign currency were unchanged at SEK 49 billion (49). Savings and investments, the Group SEK billion Sep 30 Dec 31 Sep 30 2002 2001 2001 Deposits from the public Households, SEK 126.0 118.4 119.4 Other, SEK 73.9 61.7 63.3 Households, foreign currency 14.0 14.0 13.3 Of which Hansabank 13.9 13.9 13.3 Other, foreign currency 34.7 35.3 37.1 Of which Hansabank 17.0 16.9 16.2 Subtotal 248.6 229.4 233.1 Discretionary asset management 17.0 21.1 21.1 Fund management 195.3 266.0 238.1 Retail bonds, interest-bearing 2.5 2.4 3.2 Retail bonds, equity linked 5.1 4.6 5.4 Unit-linked insurance 31.9 43.3 38.3 Less unit-linked insurance in - 29.6 - 41.2 - 36.3 Robur funds Total 470.8 525.6 502.9 Lending The Group's lending amounted to SEK 658 billion (640) on September 30, 2002, an increase of SEK 18 billion, of which approximately SEK 16 billion pertains to Swedish operations. Lending by Hansabank and FI- Holding amounted to SEK 99 billion (97). Loans to private individuals amounted to SEK 296 billion (281), an increase of SEK 15 billion or 5 percent since the beginning of the year. The increase is attributable largely to mortgage lending by Spintab arranged through the Swedish branch office network. The Group's exposure to companies in the IT and telecommunications industries amounted to SEK 7.4 billion (9.3) as of September 30, 2002. The large part of the exposure relates to commitments to major, well- known Nordic telecommunications companies. Lending, the Group SEK billion Sep 30 Dec 31 Sep 30 2002 2001 2001 Private individuals 296.3 281.2 277.5 Of which Spintab 242.1 228.2 223.9 Real estate management 136.9 135.5 136.7 Retail, hotels, restaurants 25.7 24.9 24.9 Construction 10.5 11.0 10.6 Manufacturing 50.7 51.4 51.1 Transportation 14.4 14.2 15.5 Forestry and agriculture 30.4 28.1 27.2 Other service businesses 14.0 16.7 14.6 Other business lending, incl. credit institutions 54.2 54.3 55.4 Municipalities *) 12.8 13.0 13.3 Other 12.5 9.7 10.0 Subtotal 658.4 640.0 636.8 Repurchase agreements (repos) 45.6 43.5 52.3 Total 704.0 683.5 689.1 Of which Hansabank 27.7 23.9 22.2 Of which FI-Holding 71.4 72.6 75.4 *) Not including municipal companies. Payments Cards As of September 30, 2002 approximately 2.7 million FöreningsSparbanken bank cards were in issue in the Swedish market, an increase of slightly over 140,000 cards or 5 percent since the beginning of the year. The trend toward greater card use is continuing. Compared with the first nine months of 2001 customers' card purchases have risen by 21 percent, while the number of card transactions cleared climbed 28 percent. Giro Customers continue to switch from paper-based giro payments to an electronic, Internet-based giro system through FöreningsSparbanken by Internet. The number of private customers with giro accounts has risen to 2.7 million (2.6), of whom 890,000 (760,000) are Internet-based. The share of Internet-based giro transactions was 38 percent. e-billing With e-billing, bills are sent directly to FöreningsSparbanken by Internet, where customers can safely and conveniently approve payment. A total of 108 companies offer the service. Agreements have been signed with another 11 companies that will offer e-billing to their customers. The number of e-bills is rising steadily. During the period 353,000 e- bills were sent, compared with 152,000 during the corresponding period of 2001. Internet banking services The Group's Internet banking services Sep 30 Dec 31 Sep 30 2002 2001 2001 Number of customers in 1,281,000 1,091,000 1,047,000 Sweden Of whom private 1,133,000 957,000 886,000 customers Of whom business 101,000 88,000 81,000 customers Of whom telephone bank 47,000 46,000 80,000 via the Internet Number of Baltic 647,000 430,000 383,000 customers Total number of 1,928,000 1,521,000 1,430,000 customers More Internet transactions The number of Internet payments rose to 44 million, against 36 million in January - September 2001. In addition, 29 percent (20) of mutual fund purchases and redemptions within the Group were made online. Other Acquisition of HSB Bank strengthens FöreningsSparbanken's position in Stockholm area Pending the approval of supervisory authorities, FöreningsSparbanken is acquiring the remaining shares in HSB Bank from HSB Sweden. Prior to the acquisition FöreningsSparbanken owned 9.1 percent of the shares in HSB Bank, which has around 200,000 private customers, primarily mortgage savings and mortgage lending customers. In addition, a large number of condominium associations are customers of HSB Bank. In 2001 HSB Bank had total assets of SEK 10 billion and shareholders' equity of SEK 505 M. Its profit in 2001 amounted to SEK 48 M. Until further notice there will be no change in HSB Bank's product range. HSB Bank's personnel will be offered employment at FöreningsSparbanken. Carl Eric Stålberg nominated as new working Chairman At the Annual General Meeting of FöreningsSparbanken on April 10, 2003 Göran Collert will step down as Chairman. At the same time, at the suggestion of the Nominating Committee he will be appointed Honorary Chairman and will act as advisor to the new Chairman. The Nominating Committee has unanimously chosen Carl Eric Stålberg, First Deputy Chairman of the Bank's Board of Directors, as new working Chairman. Stålberg's nomination has the support of all major shareholders. Carl Eric Stålberg held various positions with Sweden's savings banks during the years 1975 - 1996, most recently as Chief Financial Officer of Sparbanken Sverige, where he was responsible for its successful initial public offering. Thereafter he has been President and CEO of JM AB (a residential project developer, listed on the Stockholm Stock Exchange), a position which he will leave in November 2002. From year-end up to the Annual General Meeting, Carl Eric Stålberg will act as working First Deputy Chairman in FöreningsSparbanken. FöreningsSparbanken Privat The launch of FöreningsSparbanken Privat, management services for customers who need professional advice, continues to develop well. During the year 30 advisory offices have been opened and around 6,000 customers have signed up for the service. Accounting change The interim report has been prepared in accordance with recommendation RR 20 of the Swedish Financial Accounting Standards Council and follows the same accounting principles as the most recent annual report. The recommendations that took effect on January 1, 2002 have been taken into account but have not had a significant impact. Reporting has been adapted to the Financial Supervisory Authority's amended valuation and disclosure rules for claims. The amended rules, which apply as of 2002, have not resulted in a significant change in the loan portfolio's valuation. The new disclosure requirements are indicated in Notes 3 and 4. Comparative figures have been restated. [Removed Graphic] [Removed Graphic] * The operational profit and loss account comprises the same legal entities and follows the same accounting principles as the legal profit and loss account, except that the respective items for insurance operations (consisting in large part of the pension and endowment insurance operations of Robur Försäkring) are integrated on a line-for- line basis in the income and expenses of the other operations. In the legal profit and loss account, insurance operations results are shown on a separate line. On an operating profit level, the two profit and loss accounts show the same results. The descriptions in the running text and the business area report are based on the operational profit and loss account unless indicated otherwise. The notes refer to the legal profit and loss account on page 20. Quarterly profit trend for the Group [Removed Graphic] [Removed Graphic] Business areas' accounting principles Market-based compensation is applied between business areas. All expenses in IT, Support and Group Staffs are transferred at full cost- based internal prices to the business areas. Executive Management expenses are not distributed. The Group's shareholders' equity (the year's opening equity balance excluding the dividend) is allocated to each business area at the beginning of the year. The allocation is based on capital adequacy rules and estimated capital requirements during the year. Estimated interest on allocated equity is calculated based on average Swedish demand loan rates. Group goodwill, including the effect on profit, financial expense and amortization, is allocated to each respective business area. The return on equity is based on allocated shareholders' equity for the business areas. The return on equity for the business areas is based on operating profit less estimated tax and minority interests. Swedish branch operations The Swedish branch operations include the Retail operations, i.e. customer responsibility for private individuals, small and medium-size companies, organizations, municipalities and county councils in Sweden, and the Bank's own distribution channels in the form of branches, ATM's, the Swedish telephone and Internet banks, the Lending business area, the Payments business area, Bank deposits, E-business (Firstviewbank in Denmark is included in Other in 2001), partly owned Swedish banks, and the private banking operations in Luxembourg. The branch network in Sweden is organized in 93 local banks in 7 regions throughout the country. With 537 branches, FöreningsSparbanken has the largest branch network of any Swedish bank. The cooperation with the partly owned and independent savings banks adds another 320 branches. The branch network is complemented by 328 in-store banking locations and the agreement with Posten, the Swedish postal service, which gives customers access to certain teller transactions at around 1,200 post offices and through some 2,700 rural mail carriers. 2 million customers have signed up for FöreningsSparbanken by Telephone. Since the start of the year the number of customers using FöreningsSparbanken by Internet has risen by 190,000 to 1.3 million, of whom 1.1 million were private customers, or 26 percent of FöreningsSparbanken's total private customers. 42 percent of business customers in the Swedish operations use FöreningsSparbanken by Internet. [Removed Graphic] Operating profit in the Swedish branch operations remained stable, amounting to SEK 1,336 M in the third quarter, an increase of SEK 18 M from the second quarter. Deposit and lending volumes continued to develop positively, as did card and payment operations. Income from fund and insurance savings fell again in the last quarter due to the declining stock market. Expenses and loan losses decreased. The share of profit/loss of associated companies was affected negatively by SEK 108 M by the write-off of the shareholding in Marakanda. The return on equity decreased slightly to 19.5 percent in the third quarter. Swedbank Markets Swedbank Markets is responsible for the Bank's Investment and Merchant Banking operations as well as for large companies and financial institutions. In addition to operations in Sweden and First Securities in Norway, the business area includes the international branches in Oslo, London and New York. The business area offers trading in securities and derivatives in the equity, fixed income and foreign exchange markets as well as financing solutions and professional analysis and advice. The research unit issues a steady stream of analyses on around 150 Nordic companies. For individual investors, Swedbank Markets offers stock trading and broad- market products, such as equity linked bonds, through the Group's Swedish branch network, independent savings banks, partly owned banks, FöreningsSparbanken by Internet and FöreningsSparbanken by Telephone. [Removed Graphic] Swedbank Markets reported an operating profit of SEK 113 M in the third quarter. Equity and corporate finance operations continued to develop weakly due to the stock market's decline. Fixed income and foreign exchange operations developed well during the third quarter. Operating profit for the year's first nine months amounted to SEK 125 M, or SEK 623 M lower than the corresponding period of 2001. The return on allocated equity fell to 3.4 percent. Swedbank Markets has initiated a cost savings program with the aim of substantial cost-reductions during 2003. Asset management and insurance Asset management and insurance comprises the Savings business area, excluding bank deposits in the Swedish branch operations. This includes the Robur Group and its operations in fund management, institutional asset management, discretionary asset management, insurance and individual pension savings. [Removed Graphic] Operating profit for the third quarter was SEK 87 M, compared with SEK 132 M in the second quarter and SEK 163 M in the first quarter. The decrease in profit for Asset management and insurance is primarily due to the declining stock market, since its earnings are strongly related to the size of its assets under management. The return on allocated equity fell to 12.8 percent. Fund volumes and flows Net contributions to Robur's mutual funds during the period January - September totaled SEK 8.2 billion, against SEK 8.5 billion in the corresponding period of 2001. Of the net contributions, SEK 2.8 billion (2.6) was from premium pension investments and SEK 3.1 billion (4.0) from unit-linked insurance in Robur Försäkring. Robur's assets under management amounted to SEK 195 billion (266) on September 30, 2002. The institutional asset management operations managed SEK 30 billion (36) in assets, of which SEK 13 billion (15) was invested in Robur funds. Robur's share of net contributions in the Swedish mutual fund market was 16 percent (19) for the year's first nine months. Its share of assets under management in the fund market was 29 percent (30) on June 30, 2002. Fund management, Robur Sep 30 Dec 31 Sep 30 2002 2001 2001 Assets under management (SEK 195 266 238 bn) Of which: Swedish equities, % 24.4 29.4 26.8 Foreign equities, % 36.5 43.6 42.9 Interest-bearing securities, % 39.1 27.0 30.3 Number of customers 2,737 2,719 2,698 (thousands) Unit-linked insurance, Robur Försäkring Assets under management (SEK 30.0 41.7 36.7 bn) Of which in Robur funds -29.6 - 41.2 -36.3 Number of policies (thousands) 631 602 592 Discretionary asset management, FöreningsSparbanken Kapitalförvaltning Assets under management (SEK 30 36 34 bn) Of which in Robur funds 13 15 13 Unit-linked insurance Sales (premiums paid) of unit-linked insurance amounted to SEK 5.6 billion (7.0) during the first nine months. Net contributions during the same period totaled SEK 3.0 billion (4.3). As of September 30, 2002 assets under management by Robur Försäkring amounted to SEK 30.0 billion (41.7). The decrease, despite the net contributions, was due to the effects of the substantial decline in global stock prices on the value of the investments. The market share for new unit-linked insurance was 18.3 percent as of June 30, 2002. Robur Försäkring had approximately 631,000 (602,000) policies as of September 30, in addition to around 1 million group life insurance policies. Asset management results Robur's asset management operations in Sweden succeeded well relative to market indexes. Its Swedish funds outperformed comparative indexes by 1 percentage-unit for the first nine months of the year. Its public savings funds, which invest in both Sweden and globally, also surpassed their indexes during the period. The highest relative returns were generated by funds that invest in commodities, real estate and the forestry industry. Funds that invest in both equities and fixed income instruments, Robur's blend funds, have fallen in value by slightly over 20 percent this year. The fixed income investments in these funds have limited the decline. Robur's Swedish fixed income funds have generated a return of between 3 and 6 percent on an annual basis, which is slightly lower than their comparative indexes. International banking operations The International banking operations business area includes the subsidiaries Hansabank in the Baltic states and FI-Holding in Denmark and FöreningsSparbanken's interests in the associated companies SpareBank 1 Gruppen of Norway and Aktia of Finland. [Removed Graphic] Income rose by SEK 43 M or 4 percent during the third quarter compared with the second quarter. Of the increase, Hansabank accounted for SEK 50 M and FI-Holding for SEK 31 M, while dividend income of SEK 33 M from the Bank's Norwegian holdings was included in the second quarter. Expenses decreased by SEK 50 M or 8 percent under third quarter compared with the second quarter. Of the decrease, Hansabank accounted for SEK 41 M and FI-Holding for SEK 12 M. The share of associated companies' aggregate loss was SEK 235 M higher, resulting in a charge of SEK 280 M during the third quarter, of which SEK - 296 M was from SpareBank 1 Gruppen. On a cumulative basis, the share of SpareBank 1 Gruppen loss this year amounts to SEK - 413 M, or SEK 283 M lower than the corresponding period of 2001. Operating profit amounted to SEK 263 M in the third quarter, a decrease of SEK 161 M or 38 percent from the second quarter. The return on allocated equity was negative in the third quarter. For Hansabank, however, the return rose to 27.9 percent, while for FI-Holding it rose to 10.5 percent. Treasury management The business area includes Treasury management in Sweden (the parent company, FöreningsSparbanken AB, and the subsidiary Spintab). Treasury management in Sweden is responsible for long-term funding, including funding for mortgage operations, the Bank's strategic short- and long- term portfolios, and certain other shareholdings, e.g. the holdings in Erste Bank, OM Gruppen and HSB Bank. [Removed Graphic] Treasury management's operating loss amounted to SEK -156 M for the third quarter and includes a charge of SEK 264 M for the write-off of shares in OM. Other Other comprises income and expenses that do not fall under any of the business areas. This includes IT and computer services for independent savings banks and partly owned banks, Group Staffs, the support organization and FöreningsSparbanken Fastighetsbyrå (real estate brokerage). Included in Other also includes central provisions for loan losses that are not reported by units with responsibility for customers. 2001 also includes costs for the cancelled merger with SEB and the Internet bank Firstviewbank in Denmark. [Removed Graphic] [Removed Graphic] [Removed Graphic] [Removed Graphic] [Removed Graphic] Note 1. Specification of net commission income SEK M The Group The Bank January - September 2002 2001 2002 2001 Payment processing 2,041 1,603 1,506 commissions 1,876 Brokerage 215 333 171 271 Asset management 1,618 1,825 944 1,038 Other securities 120 110 118 113 commissions Other commissions 1,331 775 798 receivable 1,244 Total commissions 5,325 5,388 3,611 receivable 3,726 Payment processing - 718 - 648 - 613 - 560 commissions Securities commissions - 109 - 130 - 77 - 94 Other commissions payable - 423 - 336 - 24 - 26 Total commissions payable - - - 714 - 680 1,250 1,114 Total commissions, net 4,075 4,274 2,897 3,046 Note 2. Specification of net profit on financial operations SEK M The Group The Bank January - September 2002 2001 2002 2001 Capital gains/losses Shares/participating - 84 - 205 - 85 - 209 interests Interest-bearing - 55 184 - 56 169 securities Other financial 31 10 1 2 instruments Total - 108 - 11 - 140 - 38 Unrealized changes in value Shares/participating 109 285 139 278 interests Interest-bearing 60 33 - 13 - 22 securities Other financial - 81 - 31 0 0 instruments Total 88 287 126 256 Change in exchange rates 305 733 89 513 Total 285 1,009 75 731 Note 3. Specification of loan losses, net, and change in the value of property taken over SEK M The Group The Bank January - September 2002 2001 2002 2001 Specific provisions for claims assessed individually The period's write-off for -920 -798 -562 -409 established loan losses Reversal of previous 474 349 234 166 provisions for anticipated loan losses reported in the period's accounts as established The period's provisions for -627 -712 -319 -279 anticipated loan losses Recoveries from previous 436 444 147 155 years' established loan losses Recovered provisions for 257 285 81 130 anticipated loan losses The period's net expense -380 -432 - 419 -237 Collective provisions for claims assessed individually Allocations to collective -786 -380 - 710 -397 provisions Collectively valued homogenous groups of claims with limited value and similar credit risk The period's write-off for -82 -52 - 56 -49 established loan losses Recoveries from previous 23 13 13 10 years' established loan losses Allocations/withdrawals -12 -1 - 15 -6 from loan loss reserve The period's net expense -71 -40 - 58 -45 for claims assessed collectively Contingent liabilities The period's net expense -6 -11 4 -6 for discharged guarantees and other contingent liabilities The period's net loan loss - -863 - -685 expense 1,243 1,183 Change in the value of 0 -15 0 0 property taken over Total loan losses, net, and - -878 - -685 change in value of property 1,243 1,183 taken over [Removed Graphic] * Total provision, i.e. including collective provision for claims assessed individually, in relation to book value before provision for individually identified doubtful claims. Note 5. Change in shareholders' equity The Group The Bank Jan- Full- Jan- Full- Sep year Sep year SEK M 2002 2001 2002 2001 Shareholders' equity at 37,48 34,95 24,575 24,52 beginning of period 3 4 3 Dividend - - - - 2,903 2,903 2,903 2,903 Group contribution paid -267 Tax reduction due to Group 75 contribution paid Translation differences - 106 228 Profit for the period 3,006 5,204 - 545 3,147 Shareholders' equity at end 37,48 37,48 21,127 24,57 of period 0 3 5 Warrant program In the spring of 2000 employees of FöreningsSparbanken and wholly owned Group companies in Sweden and members of local bank boards were offered the opportunity to buy warrants in FöreningsSparbanken. The 8,008,100 warrants outstanding carry the right to subscribe for an equal number of shares during a specific period in 2005, as described in detail in the warrant terms and conditions. The option premium was SEK 15 and the subscription price SEK 187. On September 30, 2002 the price of the FöreningsSparbanken share was SEK 92. Derivatives The Group trades in 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 foreign currencies. The following table is prepared in accordance with the directives of the 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 included in the portion of the Group's operations covered by hedge accounting. Specification of Group derivatives as of September 30, 2002 [Removed Graphic] [Removed Graphic] [Removed Graphic] Auditors' review This interim report has not been reviewed by the Bank's auditors. Stockholm, October 25, 2002 FöreningsSparbanken AB (publ) Birgitta Johansson-Hedberg President and Chief Executive Officer For further information, please contact: Nils-Fredrik Nyblæus, Deputy President, Chief Financial Officer phone + 46 8 5859 2532 Staffan Salén, Executive Vice President, Head of Communications phone + 46 8 5859 2779, + 46 705 310 111 Jonas Blomberg, Head of Investor Relations phone + 46 8 5859 3322, + 46 702 650 133 Financial information 2003 The Group's financial reports can be obtained or ordered on FöreningsSparbanken's home page at http://www. foreningssparbanken.se/ir or at the nearest branch of FöreningsSparbanken. FöreningsSparbanken will publish financial reports on the following dates: - Year-end report for 2002 on February 14, 2003 - Interim report January - March 2003 on April 29, 2003 - Interim report January - June 2003 on August 22, 2003 - Interim report January - September 2003 on October 24, 2003 The Annual General Meeting will be held in Stockholm on April 10, 2003. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/10/25/20021025BIT00120/wkr0001.doc http://www.waymaker.net/bitonline/2002/10/25/20021025BIT00120/wkr0002.pdf