Interim Report Swedbank Q1 2000

Interim report for FöreningsSparbanken (Swedbank) January - March 2000 April 28, 2000 Substantial profit improvement * Operating profit amounted to SEK 2,216 M (1,108 in 1999 excluding capital gains of SEK 1,350 M) * Net commission income rose to SEK 1,712 M (1,081) * Loan losses amounted to SEK 350 M (258) * Problem loans, net, declined to SEK 606 M (3,909) * Earnings per share amounted to SEK 2.91 (3.14)(1.59 excluding capital gains) * 150,000 new customers i Robur since year-end * 720,000 Internet bank users in the Group, including Hansapank * Incentive program introduced for FöreningsSparbanken employees * Birgitta Johansson-Hedberg appointed new President * e-business new business area * Coordination of retail operations * New platform launched for NetTrade Group profits The Group's operating profit for the first quarter of 2000 amounted to SEK 2,216 M (2,458). Excluding capital gains from property sales in 1999, operating profit rose by SEK 1,108 M or 100 percent. The return on equity amounted to 20.2 percent (23.3) and earnings per share were SEK 2.91 (3.14). Excluding capital gains, the return amounted to 12 percent during the first quarter of 1999 and the earnings per share 1.59 SEK SEK. Net interest income rose The Group's net interest income amounted to SEK 3,344 M (2,863). FIH and Hansapank, which were not included in the Group in the first quarter of 1999, contributed SEK 390 M, which means that net interest income in the other operations rose by slightly over 3 percent. The Bank's deposit margins improved, while its lending margins and the return on the bond portfolio declined. Substantial increase in net commission income Net commission income rose by SEK 631 M or 58 percent to SEK 1,712 M (1,081). The improvement is attributable to higher management commissions from fund savings, including the pension and life insurance operations of Robur Försäkring, higher brokerage income and an increase in payment commissions. Net commission income in Hansapank and FIH amounted to SEK 104 M. Net profit on financial operations Net profit on financial operations rose to SEK 432 M (105), primarily attributable to Swedbank Markets' strong profit. The profit from the bond portfolio also developed positively. Other income Other income amounted to SEK 192 M in the first quarter of 2000, compared with SEK 1,563 M in the first quarter of 1999, including SEK 1,350 M in capital gains from property sales. Expenses Expenses in the first quarter of 2000 amounted to SEK 3,227 M (2,951). The consolidation of FIH and Hansapank increased expenses by SEK 305 M, which means that excluding FIH and Hansapank the Group's total expenses declined by SEK 29 M or 1 percent. Staff costs rose by SEK 111 M or 8 percent to SEK 1,530 M (1,419). At FIH and Hansapank, staff costs amounted to SEK 108 M. Staff costs include an extra allocation of SEK 53 M to Kopparmyntet, FöreningsSparbanken's 1 (17) profit-sharing fund. In addition, staff costs were impacted by an increase in profit-related bonuses of approximately SEK 115 M mainly attributable to a higher trading profit. Staff costs from operating activities thus declined by SEK 165 M or 12 percent. During the period the Group's total IT expenses, after deducting income from independent savings banks and jointly owned banks, amounted to approximately SEK 473 M (467). Of the IT expenses, Hansapank and FIH accounted for approximately SEK 14 M. Consequently, in other parts of the Group, IT expenses declined by SEK 8 M or 2 percent. Other expenses were charged with, among other things, nonrecurring expenses for the disposal of personal computers leased by employees since 1997 and for the divestment of certain bank premises. Change in the number of full-time positions since 1996 March Dec. 31 Sep. 30 June 30 March 31 Dec. Dec. 31 31 31 2000 1999 1999 1999 1999 1998 1996 Permanent 9,040 9,002 8,950 8,978 9,075 9,146 12,350 employees Resource 0 0 300 383 1,025 1,080 0 Bank Early 0 0 307 333 425 450 0 retirement, etc. Temporary 709 820 954 1,052 1,014 1,058 399 employees Subtotal 9,749 9,822 10,511 10,746 11,539 11,734 12,749 Hansapank 2,927 2,825 FIH 138 144 Total 12,814 12,791 Continued low loan losses The loan loss level was 0.2 percent (0.2). Loan losses amounted to SEK 350 M (258), of which FIH and Hansapank accounted for SEK 44 M. The Group's problem loans, net, amounted to SEK 606 M (3,909) as of March 31, 2000. The share of doubtful claims declined to 0.1 percent (0.7), while the provision ratio for doubtful claims rose to 90 percent (53). Excluding FIH and Hansapank, problem loans, net, amounted to SEK 1,368 M (3,909) and the provision ratio was 69 percent. A specification of loan losses and problem loans is provided in Notes 3 and 4. Lower tax expense The tax expense for the period amounted to SEK 563 M, or an effective tax rate of 25 percent. The relatively low tax rate is primarily due to the elimination of corporate taxes in Estonia effective January 2000. For the corresponding period of 1999 the tax rate was 32 percent, mainly due to higher taxable than reported capital gains on property sales. Continued low international risk exposure and interest rate risk FöreningsSparbanken's international risk exposure remains low. An increase in market interest rates of one percentage point as of March 31, 2000 would have reduced the value of the Group's interest-bearing assets and liabilities, including derivatives, by approximately SEK 558 M (470), of which approximately SEK 407 M (450) relates to positions in SEK and approximately SEK 151 M (20) to positions denominated in foreign currency. The increase in the Group's interest rate risk is attributable to foreign currency and is due primarily to the consolidation of Hansapank and FIH. An increase in interest rates of one percentage point would have reduced 2 (17) the Group's net profit on financial operations by approximately SEK 370 M (200) as of March 31, 2000. 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 66 M (29) as of March 31, 2000, of which SEK 27 M would affect reported net profit on financial operations. Capital adequacy ratio 10.6 percent The capital adequacy ratio amounted to 10.6 percent (11.3) on March 31, 2000, of which the primary capital ratio was 6.4 percent (6.2). Market risks as a share of the total capital adequacy ratio amounted to 0.4 percentage points (0.3). During the first quarter the primary capital of the financial companies group was strengthened when the Bank issued primary capital certificates of USD 300 million, or approximately SEK 2.6 billion. The issue positively impacted the capital adequacy ratio and primary capital ratio by slightly more than 0.5 percentage points. Profit for the first quarters of 2000 and 1999 is not included in the capital base. Specification of capital adequacy SEK M March 31, Dec. 31, March 31, 2000 1999 1999 Primary capital 29,456 26,785 24,137 Supplementary capital 22,285 22,486 22,312 Less shares, etc. - 3,889 -3,650 - 2,801 Expanded portion of capital base827 854 Capital base 48,679 46,475 43,648 Risk-weighted amount for credit 440,121 429,972 376,595 risks Risk-weighted amount for market 17,679 17,316 10,933 risks Total risk-weighted amount 457,800 447,288 387,528 Capital adequacy ratio, % 10.6 10.4 11.3 Primary capital ratio, % 6.4 6.0 6.2 As of March 31, 2000 the FöreningsSparbanken financial companies group includes the FöreningsSparbanken Group, Eskilstuna Rekarne Sparbank AB, Färs och Frosta Sparbank AB, FöreningsSparbanken Sjuhärad AB, FöreningsSparbanken Söderhamn AB, Aktia Sparbank Ab in Finland and Sparebank 1 Gruppen in Norway. The Group's insurance companies are not included. Business volumes Savings Customer savings in FöreningsSparbanken amounted to approximately SEK 558 billion (534) as of March 31, 2000, of which savings in Hansapank and FIH amounted to approximately SEK 12 billion. Household deposits Household deposits amounted to approximately SEK 123 billion (122) as of March 31, 2000, of which Hansapank accounted for approximately SEK 6 billion. Other deposits rose to SEK 91 billion (84), of which Hansapank and FIH accounted for approximately SEK 6 billion. Robur's fund assets and number of customers rose substantially Net contributions to Robur's funds during the quarter totaled approximately SEK 4 billion (4), the large part of which was attributable to insurance savings. Robur's share of gross savings in the fund market 3 (17) was 27 percent, while its share of net savings amounted to 15 percent. The difference reflects to a large part withdrawals from interest-bearing funds. Assets under management by Robur amounted to SEK 307 billion (291) as of March 31, 2000, the highest level ever and an increase of SEK 16 billion or 5 percent since December 31, 1999. The share of investments in foreign equities rose to 45.2 percent (43.6 percent on December 31, 1999), while investments in Swedish equities declined to 33.2 percent (33.8) and investments in interest-bearing securities dropped to 21.6 percent (22.6). Robur's market share for assets under management in the fund market was 34 percent (34) on December 31, 1999. The number of customers who invest in Robur's funds was approximately 2.5 million. The subsidiary FöreningsSparbanken Kapitalförvaltning manages SEK 37 billion (37), of which SEK 13 billion (12) in its parent company Robur's own funds. Continued high demand for unit-linked insurance Sales of unit-linked insurance continued to rise. As of March 31, 2000 assets under management by Robur Försäkring (formerly SparFond) amounted to approximately SEK 45 billion (40), an increase of approximately SEK 5 billion or slightly over 12 percent since December 31, 1999. On a moving 12-month basis the market share for new unit-linked insurance policies was 30 percent as of December 31, 1999, making Robur Försäkring the leader in the Swedish market. At the end of March Robur Försäkring had around 408,000 (360,000) policies. In addition, it has around 950,000 group life insurance policyholders. Fund and insurance savings coordinated in Robur Efforts to consolidate the Bank's total range of fund and insurance savings in a new, expanded Robur Group are progressing as planned. The purpose of the consolidation is to further strengthen the Bank's product range in the fast-growing market for fund and insurance savings, where it has long been a market leader. The parent company of the new Robur Group is Robur AB (formerly Robur Kapitalförvaltning AB), which remains wholly owned by FöreningsSparbanken AB. Robur AB has applied for the approval of Financial Supervisory Authority to acquire all the shares of Robur Försäkring AB (formerly SparFond, livförsäkringsaktiebolag) from FöreningsSparbanken AB. Savings and investments, the Group SEK billion March 31 Dec. 31 March 31 2000 1999 1999 Deposits from the public Households, SEK 117.4 116.9 122.5 Other, SEK 74.0 71.9 57.5 Households, foreign currency (1)5.8 5.4 0.0 Other, foreign currency (2) 16.6 11.7 7.0 Total 213.8 205.9 187.0 Discretionary management 24.8 24.4 29.5 Fund management 307.0 290.5 207.9 Retail bonds, interest-bearing 6.2 6.0 13.2 Retail bonds, stock index 5.4 5.1 6.1 Unit-linked insurance 43.8 39.6 22.1 of which in own companies -43.0 -37.9 -21.0 Total 558.0 533.6 444.8 4 (17) (1) Of which Hansapank SEK 5.7 billion on March 31, 2000 (SEK 5.4 billion on December 31, 1999). (2) Of which FIH SEK 0.1 billion and Hansapank SEK 5.7 billion on March 31, 2000 (SEK 0.2 and 5.4 billion, respectively, on December 31, 1999). Lending rose The Group's net lending to the public and credit institutions other than banks and the National Debt Office, excluding repos, amounted to approximately SEK 572 billion (504) as of March 31, including total lending of approximately SEK 58 billion in Hansapank and FIH. During the first quarter lending rose by slightly over SEK 4 billion or 1 percent, the large part of which relates to local banks in Sweden. Loans to the household sector amounted to approximately SEK 256 billion (241). Household lending rose by approximately SEK 2 billion or 1 percent compared with December 31, 1999. Lending, the Group SEK billion March 31 Dec. 31 March 31 2000 1999 1999 Households (1) 256.4 254.1 241.1 Of which Spintab 200.1 198.2 190.1 Real estate management 132.3 130.3 122.9 Retail, hotels, restaurants 21.8 21.2 15.7 Construction 8.7 8.2 7.0 Manufacturing 39.6 39.5 12.6 Transportation 9.0 9.1 4.6 Forestry and agriculture 23.7 23.1 20.6 Other service businesses 12.2 14.0 12.4 Other business lending, 39.6 38.6 35.8 incl. credit institutions Municipalities (2) 16.3 16.7 16.4 Other 12.4 12.8 14.5 Total 572.0 567.6 503.6 Repos 25.9 5.9 13.5 Total lending (3) 597.9 573.5 517.1 (1) Of which Hansapank SEK 2.1 billion on March 31, 2000 (SEK 2.1 billion on December 31, 1999). (2) Municipal companies not included. (3) Of which FIH SEK 47.7 billion and Hansapank SEK 10.5 billion on March 31, 2000 (SEK 48.0 and 10.3 billion, respectively, on December 31, 1999). Payments increased Internet payments The number of Internet payments more than doubled to approximately 7 million during the quarter, compared with approximately 3 million during the corresponding period of 1999. e-billing The use of electronic billing (e-billing) by the Bank's business customers continues to develop well. To date 21 businesses offer e-billing to the Bank's Internet banking customers. A nationwide campaign to promote a new service, business-to-business e-billing, is planned during the summer. Cards FöreningsSparbanken's card operations continued to report high growth. As of March 31, 2000 there were approximately 2.4 million bank cards in issue, an increase of approximately 300,000 or 14 percent compared with the first quarter of 1999. The number of card transactions cleared also 5 (17) rose, to approximately 36 million (28), up 29 percent compared with the first quarter of 1999. Internet and telephone banking grow substantially 720,000 Internet bank users in the Group As of March 31, 2000 the number of Internet bank users in the Group was approximately 720,000, of whom around 100,000 were telephone banking customers with the simplified Internet banking service and around 120,000 were in Hansapank. Of the users in the Swedish operations with full Internet accounts, slightly over 450,000 were retail customers and 34,000 business customers. The growth rate for FöreningsSparbanken's Internet bank rose during the quarter and is now between 8,000 and 10,000 customers a week, compared with an average of slightly over 5,000 a week in 1999. The number of Internet payments more than doubled during the first quarter of 2000 compared with the first quarter of 1999, from 2.8 million to 6.7 million payments. 21 percent of all giro-payments were done via the Internet. During the first quarter of 2000 there were slightly over 350,000 online fund purchases and sales via the Internet, an increase of approximately 270,000 compared with the first quarter of 1999. The share of fund purchases via the Internet bank was 27 percent. Spintab's Internet loan, www.lanet.se In late January 2000 Spintab launched a new Internet-based mortgage loan for private customers. Customers had already been able to apply for loans, calculate their housing costs and so on through Spintab's web site. The Internet loan is an added service for those who prefer to have their loans processed efficiently and digitally - within 24 hours. Spintab's Internet loan is a complement to sales via branches and other meeting places. NetTrade again open for new customers - strong customer growth As of March 31, 2000 FöreningsSparbanken's online equity trading service, NetTrade, had around 26,000 customers, an increase of about 11,000 or 73 percent since March 31, 1999. NetTrade now accounts for slightly more than 28 percent of the number of stock trades and approximately 23 percent of the value of trades through local banks. On March 27, 2000 NetTrade launched a new version of its service, NetTrade3, at the same time that it again began to accept new customers. Interest in new accounts has been exceptionally high, at approximately 2,000 a day since the launch. To ensure the highest level of service to customers, the number of new accounts has initially been limited. With the enhanced service on a modern technical platform with high capacity, NetTrade is well-prepared for the expected increase in trading and new customers in the future. FöreningsSparbanken by Telephone As of March 31, 2000 approximately 896,000 customers (663,000) used FöreningsSparbanken by Telephone with personal assistance, an increase of 233,000 or 35 percent since the end of march 1999. The number of visitors to the Telephone bank using personal assistance rose by 27 percent during the first quarter of 2000 compared with the corresponding period a year earlier. The number of telephone banking customers who use the self- service option totaled approximately 1.9 million (1.7). The number of self-service visits to the Telephone Bank rose by 6 percent during the corresponding period of 1999. Nordic/Baltic alliances Denmark FöreningsSparbanken owns 59.7 percent of FI-Holding, which in turn owns nearly 100 percent of FIH. FIH's operating profit for the first quarter of 2000 amounted to SEK 182 M (210). Return on equity was 10.0 percent (12.4). Lending rose by 2.5 percent and amounted to SEK 48 billion by the end of the first quarter 2000. Total assets amounted to SEK 66 billion. 6 (17) The work under way to launch an Internet bank in the Danish retail market is progressing, and plans to launch an Internet banking concept during the third quarter remain unchanged. Baltic states In February Hansapank reached an agreement to acquire 100 percent of the Latvian bank A/S Ventspils Baltijas Banka (Ventspils UBB). The intention, following the acquisition, is to merge the bank with Hansapank's Latvian subsidiary A/S Hansabanka. Through the acquisition, Hansapank reaches a market share of 16 percent of deposits in the Latvian market. In Estonia Hansapank has a market share of approximately 50 percent. Hansapank reported a operating profit for the first quarter of 2000 of SEK 179 M (116). The return on equity was 25.5 percent (17.8). Deposits and borrowings from the public rose by approximately 9 percent during the first quarter, to slightly more than SEK 11 billion at the end of the quarter. Total assets as of March 31 amounted to slightly more than SEK 18 billion. In Latvia, deposits rose by 179 percent during the first quarter, while lending climbed 66 percent during the same period. The number of Internet banking customers rose by 20 percent to around 120,000. As a result, about a fifth of Hansapank's customers in Estonia have signed up for the Bank's Internet banking services. Norway FöreningsSparbanken's international branch in Oslo, which opened on March 6, offers central bank services to the SpareBank 1 banks as well as corporate services to large Norwegian companies and customers of the SpareBank 1 bank. Employee profit sharing FöreningsSparbanken's return on equity in 1999 was higher than the average for the Nordic region's major listed banks. As a result, an allocation was made to the Kopparmyntet profit-sharing fund on behalf of the Group's employees. FöreningsSparbanken's Board of Directors decided on a total allocation to the fund of SEK 83 million for 1999, with SEK 40 M allocated at mid-year 1999. Including a special payroll tax, FöreningsSparbanken's profit for the first quarter of 2000 was charged with SEK 54 M for the additional allocation. Highlights after March 31, 2000 Birgitta Johansson-Hedberg new President and CEO Following the Annual General Meeting on April 12, 2000 the new Board of Directors appointed Birgitta Johansson-Hedberg President and Chief Executive Officer of FöreningsSparbanken. New organization and coordination of the Bank's retail operations FöreningsSparbanken has adopted a seven-point program with a focus on e- business and coordination of the Bank's sales channels in a strong retail operation. In practical terms, this will mean an enhancement of the level of service offered to customers in the Swedish market. The Bank will offer both its own and others' products through the various channels. The alliances in growth regions in the Nordic and Baltic countries give the product companies Robur and Spintab, together with NetTrade, FöreningsSparbanken's marketplace for online equity trading, the opportunity to launch their products in new markets. e-business: new business area A special business area for e-business is being established to further concentrate on growth areas and new business development. This represents a further prioritization of the Internet bank in Sweden, with an expanded customer offering and coordinated online marketplace for businesses and consumers. The aim is to also expand in Europe by establishing a European 7 (17) Internet presence through both the Internet bank and NetTrade along with a financial portal in Denmark during the autumn of 2000. Incentive program for FöreningsSparbanken employees FöreningsSparbanken's Annual General Meeting approved the issue of promissory notes with detachable warrants. The purpose is to give the employees and board members of the local banks the opportunity to share in the expected appreciation in value generated by the Bank. It is hoped that this will further increase their motivation and commitment to their work, thereby benefiting both the Bank and its shareholders. The offer comprises not more than 15.2 million warrants, corresponding to a maximum dilution of the current subscribed capital of 2.9 percent. SpareBank 1 Gruppen In April 2000 FöreningsSparbanken increased its ownership in SpareBank 1 Gruppen to 25 percent (24.01) by exercising an option it received in connection with the original acquisition. Jointly owned bank established in Bergslagen In February 2000 Bergslagens Sparbank was officially converted to a banking corporation with the name Bergslagens Sparbank AB. On April 28, according to plan, FöreningsSparbanken became a co-owner of the bank by acquiring newly issued shares. FöreningsSparbanken's ownership interest amounts to 48 percent of the capital and voting rights. At the same time Bergslagens Sparbank AB acquired FöreningsSparbanken's branch operations in Nora, Fellingsbro, Frövi and Lindesberg. The new bank, which will have 8 branches with total deposits of SEK 1.4 billion and lending of SEK 1.2 billion, will take over the former FöreningsSparbanken branches on May 1. Stockholm, April 28, 2000 FöreningsSparbanken AB (publ) Birgitta Johansson-Hedberg President and CEO This interim report has not been reviewed by the bank´s auditors. For further information, please contact: Nils-Fredrik Nyblæus, Executive Vice President, phone +46-8-5859 2532 Staffan Salén, Investor Relations, phone +46-8-5859 2779 Key ratios for the Group Excluding capital gains 1) 2) January - March 2000 1999 1999 Return on equity, % 20.2 23.3 12.0 Earnings per share, SEK 2.91 3.14 1.59 Operating profit per share, SEK 2.82 3.35 1.51 Equity per share, SEK 56.58 53.09 I/E ratio before loan losses 1.80 1.92 1.46 I/E ratio after loan losses 1.62 1.77 1.35 Capital adequacy ratio, % 10.7 11.3 Primary capital ratio, % 6.4 6.2 Loan loss ratio, net, % 0.2 0.2 Share of doubtful claims, % 0.1 0.7 A bonus issue during the second quarter of 1999 raised the number of shares to 527,808,843. Comparative per share figures for 1998 have been recalculated. 1) Key ratios for January - March 1999 include a capital gain of SEK 1,350 M. 2) Excluding capital gain Jan. - March of SEK 1,350 M. 8 (17) BUSINESS AREA REPORT Retail Swedbank Markets Asset Mgmt. incl. banking insurance SEK M January - March 2000 1999 2000 1999 2000 1999 Income 3,277 2,894 824 584 913 573 Internal sales commissions 616 373 - 134 - 69 - 482 - 304 Expenses -1,929 -1,928 - 328 - 277 - 171 - 149 Profit before loan losses 1,964 1,339 362 238 260 120 Loan losses - 302 - 268 0 - 1 Share of profit of associated 23 8 companies Operating profit 1,685 1,079 362 237 260 120 Estimated share- 17,063 18,285 4,179 5,223 2,095 2,334 holders' equity Return on equity after tax 28.4% 17.0% 24.9 13.1% 35.7 14.8% SEK M Other Group January - March 2000 1999 2000 1999 Income Internal sales 718 1,589 5,732 5,640 commissions Expenses - - - Profit before - 799 - 597 - 3 227 -2,951 loan losses Loan losses - 81 992 2,505 2,689 Share of profit of - 48 11 - 350 -258 associated companies Operating profit 38 19 61 27 Estimated share- - 91 1,022 2,216 2,458 holders' equity Return on equity 7,098 2,589 30,435 28,431 after tax 20.2% 23.3% The reported profit per business area includes both external and internal income and expenses. Internal sales commissions refer to market-based compensation paid to customer service units for brokered transactions. Shareholders' equity has been distributed according to capital adequacy regulations with the addition of unamortized goodwill in each business area. The return on equity for the business areas is calculated based on operating profit after minority interests and standard tax. The return on equity for the Group is calculated based on reported profit. 9 (17) Retail Banking Retail Banking comprises Local banks, FöreningsSparbanken by Internet, FöreningsSparbanken by Telephone, Spintab, FöreningsSparbanken Cards, FöreningsSparbanken Finans and jointly owned banks in Sweden. Income, including internal sales commissions, rose by SEK 626 M or 19 percent compared with the first quarter of 1999. Net interest income from deposits in the local banks, rose by approximately SEK 200 M due to higher deposit margins, but was affected negatively by approximately SEK 50 M by lower lending margins. Commissions developed positively, mainly due to growth in fund and insurance savings. Expenses remained unchanged while loan loses showed a slight increase. Operating profit rose by SEK 606 M or 56 percent. The return on equity rose to 28.4 percent. Swedbank Markets Swedbank Markets comprises the Bank's capital market, international and large corporate customer operations, as well as securities brokerage and corporate finance. Income rose during the quarter and exceeded the corresponding period of 1999 by 41 percent, due to the positive development of the trading operations. The profit improvement compared with 1999 was SEK 125 M, an increase of 53 percent. The return on equity rose to 24.9 percent. Asset Management Asset Management comprises Robur, including the Group's discretionary asset management, and Robur Försäkring. Due to volume growth for fund and insurance savings, income rose by approximately SEK 340 M or 59 percent compared with the first quarter of 1999. Although internal sales commissions and expenses rose, profit improved by SEK 95 M or nearly 120 percent. The return on equity rose substantially to 35.7 percent. Other Other comprises income and expenses that do not fall under any of the business areas. This includes the Nordic/Baltic alliances, FöreningsSparbanken Fastighetsbyrå (real estate brokerage) and computer services for independent savings banks and jointly owned banks. Income included capital gains on property sales of approximately SEK 1,350 M during the first quarter of 1999. For quarterly profit trends by business area, see appendix. Profit and loss accounts Group Change The Bank January - March 2000 1999 % 2000 1999 SEK M Interest receivable 12,583 10,012 26 5,455 4 973 Interest payable -9,239 -7,149 29 - 3,719 - 3 219 Net interest income Note 1 3,344 2,863 17 1,736 1 754 Dividends received 52 28 86 57 28 Commissions 2,098 1,382 52 1,457 1 028 receivable Commissions payable - 386 - 301 28 - 220 - 174 Net commission income 1,712 1,081 58 1,237 854 Net profit on financial Note 2 311 operations 432 105 319 107 Other operating 192 1,563 -88 172 1 539 income Total income 5,732 5,640 2 3,521 4 282 10 (17) General administrative expenses - Staff costs -1,530 -1,419 8 -1,292 -1,310 - Other -1,388 -1,354 3 -1,110 -1,195 Depreciation and write-down of 63 tangible fixed assets - 153 - 94 - 107 - 85 Amortization of - 156 - 84 86 - 25 - 25 goodwill Total expenses -3,227 -2,951 9 -2,534 -2,615 Profit before loan 2,505 2,689 - 7 987 1,667 losses Loan losses, net Note 3 - 350 - 259 35 - 264 - 235 Change in value of property taken over Note 3 0 1 0 0 Write-downs of - 105 financial fixed assets Share of profit of 61 27 126 associated companies Operating profit 2,216 2,458 - 10 618 1,432 Appropriations - 1 -22 - 95 Tax - 563 - 777 - 28 Minority interest - 114 Profit for the period 1,538 1,659 - 7 Note 1, - 140 - 143 - 137 - 140 Of which charge for deposit guarantee. The charge is calculated based on account deposits as of December 31 of the year prior to the year in question and amounts to 0.499 percent (0.516). Note 2. Specification of net profit on financial operations Group The Bank January - March, SEK M 2000 1999 2000 1999 Capital gains Shares and participations 300 - 16 262 - 26 Interest-bearing 41 - 56 39 - 54 securities Other financial 9 - 1 0 1 instruments Total 350 - 73 301 - 79 Unrealized changes in value Shares and participations - 94 88 - 102 77 Interest-bearing 101 - 14 75 3 securities Other financial - 14 3 0 3 instruments Total - 7 77 - 27 83 11 (17) Exchange rate fluctuations 89 101 45 103 Total 432 105 319 107 Note 3. Specification of loan losses, net, and change in the value of property taken over Group The Bank January - March, SEK M 2000 1999 2000 1999 Claims assessed individually The period's write-down for established loan losses 476 371 245 234 Reversal of provisions previously made for anticipated loan losses - 301 - 266 - 161 - 182 The period's provisions for anticipated loan losses 406 920 271 376 Recoveries from previous years' established loan losses - 124 - 130 - 39 - 56 Recovered provisions for anticipated loan losses - 118 - 650 - 62 - 100 The period's net expense for individually assessed claims 339 245 254 272 Claims assessed collectively The period's established 22 20 22 20 loan losses Recoveries from previous years' established loan losses - 4 - 3 - 3 - 3 Allocations/withdrawals from loan loss reserve - 4 0 1 - 6 The period's net expense for 14 17 20 11 collectively assessed claims Contingent liabilities The period's net expense for discharged guarantees and - 3 - 3 - 10 - 48 other contingent liabilities The period's net loan loss 350 259 264 235 expense Change in the value of 0 - 1 0 0 property taken over Total loan losses, net, and change in value of 350 258 264 235 property taken over 12 (17) Note 4. Problem loans Group The Bank SEK M 3/31 12/31 3/31 3/31 12/31 3/31 2000 1999 1999 2000 1999 1999 Doubtful claims, gross 4,276 4,544 7,439 1,899 2,129 4,143 Provisions for anticipated 3,865 3,879 3,916 1,660 1,600 2,397 loan losses Doubtful claims, net 411 665 3 523 239 529 1,746 Claims with interest 195 225 386 54 97 150 concessions Problem loans, net 606 890 3,909 293 626 1,896 Unsettled claims for which has been entered as income 1,470 1,517 1,576 652 668 460 Property taken over to protect claims: - Buildings and land 13 19 25 12 12 19 - Shares and 14 81 10 6 7 0 participations - Other 0 71 5 0 0 5 Total 27 171 40 18 19 24 Doubtful claims as % of 0.1% 0.1% 0.7% 0.1% 0.2% 0.7% total lending Provision ratio for 90 % 85% 53% 87 % 75% 58% doubtful claims Quarterly profit trend for the Group SEK M 1Q 4Q 3Q 2Q 1Q 4Q 2000 1999 1999 1999 1999 1998 Net interest income * 3,344 3,052 2,711 2,717 2,863 2,828 Commissions, net 1,712 1,362 1,202 1,258 1,081 1,039 Financial operations, net 432 267 184 23 105 326 Other income 244 185 183 287 1,591 572 Total income 5,732 4,866 4,280 4,285 5,640 4,765 Staff costs 1,530 1,360 1,449 1,564 1,419 1,555 Other expenses 1,697 1,645 1,546 1,631 1,532 1,896 Total expenses 3,227 3,005 2,995 3,195 2,951 3,451 Profit before loan losses 2,505 1,861 1,285 1,090 2,689 1,314 Loan losses, incl. changes - 350 - 272 - 104 - 2 - 258 - 26 in value Share of profit of 61 16 60 62 27 - 2 associated companies Operating profit 2,216 1,605 1,241 1,150 2,458 1,286 * Of which deposit 140 138 138 137 143 146 guarantee fee Balance sheets Group The Bank SEK M 3/31 12/31 3/31 3/31 12/31 3/31 2000 1999 1999 2000 1999 1999 13 (17) Loans to the 581,250 569,409 522,958 201,608 191,162 211,539 public Loans to 126,595 104,516 86,912 152,310 135,536 130,581 credit institutions Interest- 59,548 58,427 69,884 53,641 44,256 73,514 bearing securities - Financial 5,849 6,135 4,751 5,996 6,035 5,854 fixed assets - Financial 53,699 52,292 65,133 47,645 38,221 67,660 current assets Other assets 108,066 101,227 81,315 62,838 67,327 65,470 Total assets 875,459 833,579 761,069 470,397 438,281 481,104 Deposits and 228,258 210,537 195,394 215,041 197,539 192,606 borrowings from the public Amounts owed 117,765 127,948 121,135 127,933 121,989 146,879 to credit institutions Debt 364,407 344,082 311,931 44,049 40,506 54,628 securities in issue Subordinated 27,802 25,352 23,493 17,770 15,204 15,812 liabilities Other 107,363 94,653 81,094 45,388 40,604 51,219 liabilities Shareholders' 29,864 31,007 28,022 20,198 22,439 19,960 equity Total liabilities, provisions and 875,459 833,579 761,069 470,397 438,281 481,104 shareholders' equity Derivatives The Group uses 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 currencies. The following specification 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 that are included in the portion of the Group's operations covered by hedge accounting. Specification of derivatives in the Group as of March 31, 2000 Derivatives with positive fair values or nil value Interest- Currency- Equity- Other related related related SEK M Fair Book Fair Book Fair Book Fair Book value value value value valuevalue value value 14 (17) Derivatives reported 7,794 6,486 18,150 13,564 2,6181,924 0 0 entirely or in part on the balance sheet Derivatives not reported 224 132 on the balance sheet Derivatives with negative fair values Interest- Currency- Equity- Other related related related SEK M Fair Book Fair Book Fair Book Fair Book value value value value valuevalue value value Derivatives reported 8 164 7 313 9 776 9 326 3 3262 631 0 0 entirely or in part on the balance sheet Derivatives not reported 41 140 on the balance sheet Condensed statement of cash flows Group The Bank January - March 2000 1999 2000 1999 SEK M Liquid assets at beginning of 75,159 54,486 53,994 54,819 period * Operating activities Operating profit 2,216 2,458 617 1,432 Adjustments for non-cash items including taxes paid 538 - 3,680 123 2,403 Increase/decrease in claims on - 10,671 - - credit institutions 15,577 10,232 13,162 Increase/decrease in loans to 6,170 - 6,966 - the public 10,097 5,697 Decrease in holdings of securities - 137 -3,758 - -4,046 classified as current assets 4,063 Increase in deposits and borrowings from the public, 11,372 279 12,592 578 including retail bonds Increase/decrease in amounts owned - 7,845 10,068 8,323 25,345 to credit institutions Change in other assets and - 1,572 1,464 822 3,685 liabilities, net Cash flow from operating - 4,835 8,682 18,705 8,258 activities Investing activities 15 (17) Purchase of fixed assets - 794 -1,366 - 105 -1,360 Sale of fixed assets 141 4,986 18 5,583 Branch sales 0 17 0 17 Cash flow from investing - 653 3,637 - 87 4,240 activities Financing activities Issuance of interest-bearing 36,209 54,216 2,566 5,509 securities Redemption of interest-bearing - - - -1,258 securities 30,337 51,684 1,914 Increase/decrease in other 2,367 11,330 - 6,523 funding 2,437 Cash flow from financing 8,239 13,862 - 10,774 activities 1,785 Cash flow for the period 2,751 26,181 16,833 23,272 Liquid assets at end of period * 77,910 80,667 70,827 78,091 * of which securities pledged for OM, etc. at beginning of period 4,657 4,769 4,657 4,769 at end of period 2,933 2,948 2,933 2,948 Liquid assets include cash and balances with central banks, for net claims the net of demand loan receivables and demand loan liabilities with maturities up to five days, and Treasury bills, other bills and mortgage bonds eligible for refinancing with Sveriges Riksbank, taking into account repos and short-selling. Ratings S&P Moody´s Bankwatch FitchIBCAJapan R/I Shor Long ShorLong BFSR* ShortLongIssuerShorLongLong t t t FöreningsSparbanken A-1 A P-1 Aa3 B TBW-1AA- B/C F-1 A+ AA- Spintab A-1 - P-1 Aa3 - TBW-1AA- B/C F-1+ AA- - Hansapank A-2 BBB P-3 Baa2 D+ - - - - - - FIH - - P-1 A1 - - - - - - - *Bank Financial Strength Rating Financial information The Group's financial reports can be accessed on FöreningsSparbanken's home page on the Internet at http://www. foreningssparbanken.se/ir or at the nearest branch of FöreningsSparbanken. FöreningsSparbanken will preliminarily release earnings reports on the following dates: Interim report for January-June August 24, 2000 Interim report for January-September October 27, 2000 Appendix 16 (17) Quarterly profit trend by business area SEK M 1Q 4Q 3Q 2Q 1Q 4Q 2000 1999 1999 1999 1999 1998 Retail Banking Income 3,277 3,253 2,947 2,848 2,894 3,135 Internal sales 616 491 405 414 373 341 commissions Expenses - - - - - - 1,929 2,039 2,049 2,187 1,928 2,234 Profit before loan 1,964 1,705 1,303 1,075 1,339 1,242 losses Loan losses - 302 - 240 - 98 -1 - 268 - 56 Share of profit of 23 - 2 12 9 8 0 associated companies Profit after loan 1,685 1,463 1,217 1,083 1,079 1,186 losses Swedbank Markets Income 824 567 375 574 584 539 Internal sales - 134 - 85 - 45 - 71 - 69 - 77 commissions Expenses - 328 - 299 - 230 - 276 - 277 - 284 Profit before loan 362 183 100 227 238 178 losses Loan losses 0 - 4 - 2 - 4 - 1 - 6 Share of profit of associated companies Profit after loan 362 179 98 223 237 172 losses Asset Management Income 913 804 677 624 573 503 Internal sales - 482 -406 - 360 -343 - 304 - 264 commissions Expenses - 171 -216 - 158 -159 -149 - 149 Profit before loan 260 182 159 122 120 90 losses Loan losses Share of profit of associated companies Profit after loan 260 182 159 122 120 90 losses Other Income 718 242 281 239 1,589 588 Internal sales commissions Expenses - 799 - 451 - 558 - 573 - 597 - 784 Profit before loan - 81 - 209 - 277 - 334 992 - 196 losses Loan losses - 48 -28 - 4 3 11 36 Share of profit of 38 18 48 53 19 -2 associated companies Profit after loan -91 - 219 - 233 - 278 1,022 - 162 losses 17 (17) ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/04/28/20000428BIT00030/bit0001.doc http://www.bit.se/bitonline/2000/04/28/20000428BIT00030/bit0002.pdf