Year-end report 2000 FöreningsSparbanken

Profit rose by 45% to SEK 9,366 M · Operating profit rose by 45 percent to SEK 9,366 M (6,454) · The return on equity was 19.7 percent (15.7) · Net interest income rose by 20 percent to SEK 13,589 M (11,343) · Net commission income rose by 38 percent to SEK 6,784 M (4,903) · Earnings per share amounted to SEK 12.10 (8.70) · Robur's share of net fund savings rose to 21% during the fourth quarter · In the fourth quarter, SEK 670 M earmarked as allocation to the Kopparmyntet employee profit-sharing fund for 2000 · The number of Internet banking customers in the Group now exceeds one million · Proposed dividend of SEK 5.50 per share (5,00). Strong Group profit for the year The Group's operating profit for 2000 amounted to SEK 9,366 M (6,454). Excluding capital gains and profit sharing expenses, operating profit rose by SEK 4,289 M or 84 percent to SEK 9,419 M (5,130). The return on equity amounted to 19.7 percent (15.7) and earnings per share were SEK 12.10 (8.70). Excluding capital gains and employee profit sharing expenses, the return was 19.9 percent (13.3). Income Net interest income The Group's net interest income rose by SEK 2,246 M or 20 percent to SEK 13,589 M (11,343). FIH and Hansapank contributed SEK 1,682 M. As a result, other net interest income rose by 5 percent. Net commission income Net commission income rose by SEK 1,881 M or 38 percent to SEK 6,784 M (4,903). The improvement was attributable to higher management commissions on fund investments, including the pension and life insurance operations of Robur Försäkring, an increase in payment processing commissions and higher brokerage income. Net commission income in Hansapank and FIH totalled SEK 522 M. Net profit on financial operations Net profit on financial operations rose substantially, to SEK 1,694 M (579). Approximately SEK 800 M of the increase was due to Swedbank Markets' strong profit. Other income Other income in 2000 amounted to SEK 1,689 M (2,087). Other income includes capital gains of SEK 716 M on the sale of shares in Svensk Exportkredit AB and Bank Handlowy as well as a value-added tax refund of SEK 168 M. The figure for 1999 included approximately SEK 1,350 M in capital gains on property sales. Expenses Staff costs Staff costs for 2000 amounted to SEK 6,734 M (5,792). The increase is attributable largely to FIH, which is included in the Group as of November 1999, and Hansapank, which is included in the Group as of January 1, 2000. In addition, staff costs were affected by profit-sharing allocations, higher bonuses and expenses to subsidize the employee warrant program. Excluding these items, staff costs declined by 9 percent. Profit-sharing system When FöreningsSparbanken's return on equity exceeds a weighted average for large, publicly listed Nordic banks, an allocation is made to the employee profit-sharing fund, Kopparmyntet. In the interim report for the third quarter, it was announced that such an allocation was highly likely. In view of the Group's profit trend and return on equity, a transfer to Kopparmyntet has been allocated in the year-end accounts. The allocated expense, which is charged against the fourth quarter of 2000, amounts to nearly SEK 540 M excluding and SEK 670 M including a special employer's contribution of 24.26 percent. Moreover, net profit for the year was charged during the first quarter with an additional allocation to Kopparmyntet of approximately SEK 50 M for profit shares for 1999 and a charge for profit shares in Hansapank of SEK 49 M. As a whole, profit- sharing expenses amounted to SEK 769 M (50). The annual allocation to Kopparmyntet is limited to 1.5 basis points per employee, currently SEK 55,000, and can total not more than one third of the dividend to shareholders. The final decision on the allocation will be made by FöreningsSparbanken's Board of Directors in March 2001, when comparative data are available. Change in the number of full-time positions The number of employees in the Group on December 31 expressed as full-time positions. Dec 31 Dec 31 2000 1999 Permanent employees 9,106 9,002 Temporary employees 574 820 Subtotal 9,680 9,822 Hansapank 3,180 2,825 FIH 142 144 Total 13,002 12,791 IT expenses In 2000 the Group's total IT expenses, after deducting income from independent savings banks and jointly owned banks, amounted to SEK 2,335 M (2,113). Of these expenses, Hansapank, FIH and Firstviewbank in Denmark accounted for SEK 279 M. Consequently, in other parts of the Group IT expenses declined by 3 percent. Previously announced IT investments implemented During the fourth quarter the bank, as previously announced in connection with the sale of shares in Poland's Bank Handlowy, advanced certain investments to adapt internal systems to the Web and increase the range of services available on the Internet bank. These efforts will be completed during the first half of 2001 and will result in a number of significant functional and efficiency improvements. Loan losses The loan loss level for 2000 was 0.2 percent (0.1). Loan losses amounted to SEK 1,115 M (636), of which FIH and Hansapank accounted for SEK 272 M. The Group's problem loans, net, amounted to SEK -17 M (890) as of December 31, 2000. A specification of loan losses and problem loans is provided in Notes 4 and 5. Tax expense 26 percent Tax expense amounted to SEK 2,476 M (1,904), or an effective tax rate of 26 percent (29). The lower tax rate is primarily due to a higher share of non-taxable income and to the elimination of corporate taxes in Estonia as of January 2000. The 29-percent tax rate in 1999 was mainly due to higher taxable than reported capital gains on property sales. Fourth quarter 2000 development During the fourth quarter of 2000 income amounted to SEK 5,857 M, slightly higher than the third quarter when taking into account the one-time value- added tax refund. Income rose for Swedbank Markets, FIH and Hansapank and was higher in the fourth than the third quarter. Expenses in the fourth quarter of 2000 amounted to SEK 4,267 M, while third-quarter expenses were SEK 3,106 M. The increase of SEK 1,161 M was attributable largely to a SEK 670 M allocation earmarked for Kopparmyntet, Hansapank and FIH's expansion and increased expenses for IT and E- business. Interest rate risk An increase in market interest rates of one percentage point as of December 31, 2000 would have reduced the value of the Group's interest- bearing assets and liabilities, including derivatives, by approximately SEK 603 M (849). The decrease in value for positions in SEK would have amounted to SEK 437 M (562) and for positions in foreign currency SEK 166 M (287). 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 92 M (431) as of December 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 approximately SEK 40 M (42) as of December 31, 2000, of which approximately SEK 9 M (9) would affect reported net profit on financial operations. Capital adequacy ratio 10.8 percent On December 31, 2000 the capital adequacy ratio amounted to 10.8 percent (10.4), of which the primary capital ratio was 6.9 percent (6.0). Market risks as a share of the total capital adequacy ratio amounted to 0.5 percentage points (0.4). Specification of capital adequacy SEK M Dec 31 Dec 31 2000 1999 Primary capital 35,045 26,785 Supplementary capital 24,091 22,486 Less shares, etc. - 5,020 - 3,650 Expanded portion of capital base 883 854 Capital base 54,999 46,475 Risk-weighted amount for credit risk 484,775 429,972 Risk-weighted amount for market risks 24,192 17,316 Total risk-weighted amount 508,967 447,288 Capital adequacy ratio, % 10.8 10.4 Primary capital ratio, % 6.9 6.0 As of December 31, 2000 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, 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 531 billion (534) as of December 31, 2000. Savings and investments, the Group SEK billion Dec 31 Dec 31 2000 1999 Deposits from the public Households, SEK 110.5 116.9 Other, SEK 68.6 71.9 Households, foreign currency 1) 7.5 5.4 Other, foreign currency 2) 24.7 11.7 Total 211.3 205.9 Discretionary management 21.5 24.4 Fund management 287.9 290.5 Retail bonds, interest-bearing 3.1 6.0 Retail bonds, stock index 5.6 5.1 Unit-linked insurance 45.4 39.6 of which in own companies -43.5 - 37.9 Total 531.3 533.6 1) Of which Hansapank SEK 7.5 billion (5.4) 2) Of which Hansapank SEK 9.1 billion (5.4) Household deposits Total household deposits rose by SEK 5.4 billion or 3 percent. While deposits in SEK declined by SEK 9.7 billion, deposits in foreign currency rose by SEK 15.1 billion. Hansapank's deposits rose by SEK 5.8 billion or 54 percent. Robur most popular premium pension choice Robur was the most popular choice in Sweden's recent premium pension selection process, with a market share of 20.4 percent among active selections. Other Swedish banks together received approximately 15 percent, while Robur's largest single competitor had approximately 10 percent. Robur's share of net investments rose to 21% in fourth quarter Net contributions to Robur's funds totaled approximately SEK 17 billion in 2000, of which approximately SEK 9 billion was insurance savings in Robur Försäkring. Robur's share of net investments in the fund market was 17 percent during the year. Its share of gross fund investments during the year was 27 percent. During the last quarter of the year net contributions to Robur's funds amounted to SEK 9 billion (2), of which SEK 1 billion was attributable to insurance savings and SEK 8 billion to premium pension selections. Robur's share of gross investments in the fund market was 26 percent during the last quarter, while its share of net investments was 21 percent. For equity funds, Robur's market share of net investments was 25 percent during the last quarter. Fund management, Robur Dec 31 Dec 31 Dec 31 2000 1999 1998 Assets under management (SEK bn) 288 291 193 Of which Swedish equities, % 34.0 33.8 42.1 Foreign equities, % 45.3 43.6 27.0 Interest-bearing securities, % 20.7 22.6 30.9 Number of customers (thousands) 2,637 2,300 2,300 Insurance savings, Robur Försäkring Assets under management (SEK bn) 45 40 19 Number of policies (thousands) 498 360 182 Assets under management by Robur amounted to SEK 288 billion (291) as of December 31, 2000, a decrease of SEK 3 billion or 1 percent during the year. Robur's share of assets under management in the fund market was 32 percent as of December 31, 2000. The number of customers who invest in Robur's funds rose during the year by around 287,000 to slightly over 2.6 million. The subsidiary FöreningsSparbanken Kapitalförvaltning manages assets of SEK 35 billion (37), of which SEK 13 billion (12) is in Robur funds. Unit-linked insurance rising substantially Sales (premiums paid) of unit-linked insurance rose during the year by 21 percent compared with 1999. Sales during the year amounted to SEK 14 billion (12). As of December 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 13 percent since December 31, 1999. For the year 2000 Robur Försäkring had a market share for new unit-linked insurance policies of 24 percent, thereby retaining its position as the leader in the Swedish market. At year-end Robur Försäkring had around 498,000 (360,000) policies, in addition to approximately 1 million (950,000) group life insurance policyholders. Lending The Group's net lending to the public and credit institutions other than banks and the National Debt Office, excluding repurchase agreements (repos), amounted to approximately SEK 608 billion (568) as of December 31. Lending by Hansapank and FIH totaled approximately SEK 77 billion (58). During 2000 lending rose by approximately SEK 40 billion or 7 percent, of which SEK 14 billion relates to local banks in Sweden, SEK 13 billion to FIH and SEK 5 billion to Hansapank. Loans to the household sector amounted to approximately SEK 270 billion (254). Household lending rose by approximately SEK 16 billion or 6 percent during the year, of which SEK 12 billion is mortgage lending by Spintab. In 2000 Spintab continued to raise its lending volume, primarily loans to the public and agricultural loans arranged through the bank's branch network. Online mortgage sales have also risen since the first half of the year, when this sales channel was introduced. Internet sales are now supported by a portal containing special customer offers and information from Spintab and a number of its partners. Lending, the Group SEK billion Dec 31 Dec 31 2000 1999 Households 1) 270.1 254.1 Of which Spintab 210.1 198.2 Real estate management 131.1 130.3 Retail, hotels, restaurants 23.5 21.2 Construction 9.6 8.2 Manufacturing 43.7 39.5 Transportation 11.5 9.1 Forestry and agriculture 25.4 23.1 Other service businesses 15.6 14.0 Other business lending, 50.3 38.6 incl. credit institutions Municipalities 2) 14.3 16.7 Other 12.8 12.8 Subtotal 607.9 567.6 Repurchase agreements (repos) 28.6 5.9 Total lending 3) 636.5 573.5 1) Of which Hansapank SEK 3.6 billion (2.1). 2) Not including municipal companies. 3) Of which FIH SEK 61.4 billion (48.0) and Hansapank SEK 15.3 billion (10.3) Payments Cards FöreningsSparbanken's card operations reported continued growth. At year- end the bank had approximately 2.5 million cards in issue, an increase of 70,000 or 3 percent compared with 1999. The number of card transactions cleared rose substantially during the year, to 176 million (135), up 30 percent from 1999. e-billing The popularity of electronic billing (e-billing) among the Bank's business customers continues to grow. With this service, bills are sent directly to customers' online bank accounts, where they can safely and conveniently approve payment. During the year 38 more companies signed up for the service, which means that 56 in all, including Vattenfall, Shell and Sydkraft, were offering e-billing to their customers as of year-end. Agreements have been signed with another 41 companies which will offer e- billing in 2001, including Telia and Statoil. Svenska Girot Svenska Girot has been formed by FöreningsSparbanken, Handelsbanken, Nordbanken and SEB, with the four banks owning 25 percent each. During the year Svenska Girot reached an agreement with Sweden Post to acquire Postgirot. Svenska Girot's aim is to merge Postgirot, Bankgirot and Privatgirot into a new Swedish giro system. E-business FöreningsSparbanken named best Internet bank by Sparöversikt In November 2000 the magazine Sparöversikt named FöreningsSparbanken Sweden's best Internet bank. Seven banks were included in the ranking. FöreningsSparbanken's online bank was praised for its range of services and ease of use. Customers can also obtain personal information and advice. 1,028,000 Internet bank users in the Group At year-end the Group had 1,028,000 Internet banking users. In December the Swedish online banking service grew at between 7,000 and 10,000 customers a week. New online business service launched In November the bank launched a new Internet service for businesses. In addition to offering customers new functionality, such as e-payroll lists, they can now obtain information on the bank's products and services, offers, calculation tools, checklists, links to external information sources, etc. During the year the number of companies subscribing to the bank's Internet services in Sweden more than doubled, from 26,000 to 58,000. The Group's Internet banking services Dec 31 Dec 31 Dec 31 2000 1999 1998 No. of customers in Sweden 749,000 387,000 174,000 Of whom private customers 691,000 361,000 166,000 Of whom business customers 58,000 26,000 8,000 Telephone bank via the 65,000 100,000 Internet No. of Baltic customers 214,000 100,000 Total number of customers 1,028,000 587,000 174,000 Customers conduct growing share of transactions online The number of Internet payments more than doubled during the year compared with 1999, from 15 to 32 million. Of the giro payments during the year, 25 percent (14) were made online. The number of fund purchases and redemptions via the Internet amounted to approximately 1.1 million during in 2000, an increase of 580,000 compared with 1999 and corresponding to 22 percent (12) of the total number of fund purchases and redemptions within the Group. NetTrade online equity trading As of December 31, 2000 FöreningsSparbanken's online brokerage service, NetTrade, had approximately 43,000 customers, an increase of about 19,000 or 79 percent from a year earlier. During the year NetTrade accounted for 27 percent (20) of equity trades through FöreningsSparbanken's local banks. Marakanda - e-commerce alliance with Telia Marakanda is an e-commerce company jointly owned by Telia and FöreningsSparbanken which will develop marketplaces for electronic commerce. The company is based on Telia's established e-commerce solution and on FöreningsSparbanken's financial competence and strong municipal ties. In addition to its strong current position in the public sector, Marakanda hopes to develop operations for small and medium-sized companies. The company's system is already used by around 30 large companies and organisations. Development of mobile banking services FöreningsSparbanken has joined a cooperation between Ericsson and Sybase to create the market's first standardised platform for mobile banking services that will work regardless of whether or not network coverage exists. Mobile Internet solutions will provide greater convenience, availability and customer value, and add a new dimension in the distribution of financial services. Venture capital cooperation with IT-Provider FöreningsSparbanken and IT Provider have signed an agreement to jointly invest in and actively develop e-businesses. Services and products will primarily be offered to small and medium-sized companies and private individuals that use FöreningsSparbanken's internetbanking services. Over 1 million customers for telephone banking with personal assistance As of December 31, 2000 approximately 1,049,000 customers (834,000) had signed up for FöreningsSparbanken by Telephone with personal assistance, an increase of 215,000 or 26 percent in the past year. The number of telephone banking customers who use the self-service option totaled approximately 1.9 million (1.8), an increase of 5 percent during the year. The number of self-service visits to the telephone bank rose by 4 percent compared with 1999. The number of visitors to the telephone bank using personal assistance rose by 15 percent compared with a year earlier. Nordic/Baltic alliances Denmark FöreningsSparbanken owns 59.7 percent of FI-Holding, which in turn owns nearly 100 percent of FIH, whose operating profit for 2000 amounted to SEK 794 M (665). The improvement in profit is primarily due to higher income. The return on equity was 10.9 percent. Lending amounted to SEK 61 billion (48) on December 31, 2000, with total assets of approximately SEK 78 billion (63). Baltic states Holding in Estonia's Hansapank raised In December 2000 FöreningsSparbanken acquired an additional 4 million shares, or slightly over 5 percent, in Estonia's Hansapank through the exercise of a call option. The acquisition - of Bank Handlowy of Poland's entire holding in Hansapank - raises FöreningsSparbanken's interest from 52.64 percent till 57.72 percent. Hansapank reported an operating profit of SEK 697 M (440) in 2000. Its return on equity was 24 percent (18). Deposits from the bank's customers amounted to SEK 17 billion (11) as of December 31, while lending to customers totaled SEK 15 billion (10). Total assets were approximately SEK 26 billion (19) at year-end. Following a bidding process, the Lithuanian State Property Fund selected Hansapank as the sole bidder in the sale of Lietuvos Taupomasis Bankas (LTB), Lithuania's largest retail bank, with 1.5 million customers. If the negotiations lead to an acquisition, Hansapank would strengthen its position as the dominant bank in the Baltic region. Norway FöreningsSparbanken owns 25 percent of SpareBank 1 Gruppen. Following the finalization of its VÅR-gruppen acquisition, Sparebank 1 Gruppen, together with its Norwegian co-owner banks, is the fourth largest banking and financial group in Norway. Finland FöreningsSparbanken owns 25 percent of Aktia Sparbank in Finland. Aktia reported a substantial profit improvement in 2000. Operating profit amounted to approximately SEK 357 M (193), primarily due to a strong increase in income. Net interest income rose by 32 percent and net commission income by 35 percent. Total assets as of December 31, 2000 amounted to SEK 26 billion (23). Other Offex Crossing Together with Handelsbanken, Nordbanken and SEB, FöreningsSparbanken has established Offex Crossing, the purpose of which is to offer the banks' customers the opportunity to buy and sell shares during hours when the stock market is closed. FöreningsSparbanken's ownership interest is 25 percent. Dividend The Bank's Board of Directors is recommending that the Annual General Meeting approve a cash dividend of SEK 5.50 per share (5.00). The proposed record day for 2000 dividend is Tuesday, April 10, 2001. The last day for ex-dividend trading is Thursday, April 5, 2001. If the Annual General Meeting adopts the Board's recommendation, the cash dividend is expected to be paid by VPC (the Swedish Securities Register Center) on Tuesday, April 17, 2001. Annual General Meeting FöreningsSparbanken's Annual General Meeting will be held at 12 noon on April 5, 2001 at the Concert Hall in Stockholm. Shareholders who wish to attend must be directly recorded in the Bank's share register maintained by VPC by Monday, March 26. Highlights after December 31, 2000 FöreningsSparbanken increases its interest in FI-Holding Early in February 2001 FöreningsSparbanken acquired an additional 5 percent of the shares in FI-Holding, thereby raising its holding to 64.7 percent. The acquisition was effected through the exercise of an option agreement with two of FI-Holding's co-owners. The purchase price amounted to slightly over SEK 400 M for 50,025 shares. Firstviewbank In mid-February 2001 FöreningsSparbanken introduced its Danish Internet service, Firstviewbank. Firstviewbank is both an online bank offering payment services, savings, loans and equity trading as well as a financial web site that gives customers an overview of their financial status, individualised information services and a sophisticated dialogue function. The goal is to have 100,000 to 150,000 customers within three years. Firstviewbank is an international branch of FöreningsSparbanken developed in collaboration with the bank's Danish subsidiary, FIH. Svenska Girot On February 13 the Swedish Competition Authority announced that it opposed the coordination of Bankgirot and Postgirot as part of Svenska Girot and has therefore asked the Stockholm District Court to forbid the deal. Consequently, Sweden Post has decided to cancel the agreement it previously signed to sell Postgirot to Svenska Girot. Key ratios for the Group 2000 1999 Return on equity, % 19.7 15.7 Return on total equity, % 1.04 0.83 Operating profit per share, SEK * 11.99 8.74 Earnings per share * 12.10 8.70 Earnings per share after dilution** 12.08 8.70 Equity per share, SEK 66.22 58.75 I/E ratio before loan losses 1.76 1.58 I/E ratio after loan losses 1.63 1.50 E/I ratio before loan losses 0.57 0.63 E/I ratio after loan losses 0.61 0.66 Capital adequacy ratio, % 10.8 10.4 Primary capital ratio, % 6.9 6.0 Loan loss ratio, net, % 0.2 0.1 Share of doubtful claims, % 0.0 0.1 Provision ratio for doubtful claims, % 105 85 No. of shares at beginning of period 527,808,843 351,872,562 No. of shares at end of period 528,808,843 527,808,843 * No. of shares in calculation 527,808,843 527,808,843 ** No. of shares after dilution 528,697,422 527,808,843 BUSINESS AREA REPORT Profit by business area Retail Swedbank Asset Nordic/ E- Other Group banking Markets Mgmt. Baltic busines incl. allianc s insuran es ce. SEK M January - 200 199 2000 199 200 199 200 199 200 199 2000 199 2000 199 December 0 9 9 0 9 0 9 0 9 9 9 Income 13, 11, 3,13 2,1 3,6 2,6 2,8 225 256 181 982 1,9 24,0 19, 090 942 9 00 70 78 66 45 03 071 Internal sales 2,2 1,6 -350 - - - commissions 66 83 270 1,9 1,4 16 13 Expenses - - - - - - - -78 - - - - - - 7,9 8,1 1,41 1,0 793 682 1,3 612 261 1,55 1,8 13,7 12, 68 45 6 82 73 7 98 19 146 Profit/loss before loan losses 7,3 5,4 1,37 748 961 583 1,4 147 - -80 -575 47 10,2 6 88 80 3 93 356 84 925 Loan losses - - 0 -11 - -24 -16 6 - - 827 607 272 1,11 636 5 Share of associated 70 27 134 135 -42 35 3 197 165 companies' profit Operating 6,6 4,9 1,37 737 961 583 1,3 258 - -80 -556 56 9,36 6,4 profit/loss 31 00 3 55 398 6 54 (of which (10 (4) (56 (37 minority ) 8) ) interests) Estimated 18, 18, 4,87 4,7 1,9 2,1 4,8 1,5 0 0 2,11 2,7 32,4 29, share- 670 156 1 86 37 46 46 21 7 31 41 340 holders' equity Return on 25. 19. 20.3 11. 35. 19. 11. 10. neg neg 19.7 15. equity after 5% 4% % 1% 7% 6% 7% 5% % 7% tax 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 in relation to risk in each business area according to capital adequacy regulations with the addition of unamortized goodwill. The return on equity for the business areas is calculated based on operating profit less minority interests and standard tax. The return on equity for the Group is calculated based on reported profit. The Nordic/Baltic alliances and E-business are reported separately as business areas as of the fourth quarter of 2000. Comparative figures have been recalculated. Retail Banking Retail Banking comprises Local banks, FöreningsSparbanken by Telephone, Spintab, FöreningsSparbanken Cards, FöreningsSparbanken Finans and jointly owned banks in Sweden. Income including internal sales commissions rose by SEK 1,731 M or 13 percent compared with 1999. Net interest income from local banks rose thanks to higher deposit margins and higher lending volumes but was negatively affected by lower lending margins. Commissions developed very positively, mainly due to growth in fund and insurance savings. Expenses declined by 2 percent, while loan losses rose. Operating profit rose by SEK 1,731 M or 35 percent. The return on equity increased substantially, to 25.5 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 in 2000, exceeding 1999 by 49 percent, owing to continued growth in equity, fixed income and currency trading. As a result, bonus expenses rose as well. The profit improvement compared with 1999 was SEK 636 M, an increase of 86 percent. The return on equity rose substantially, to 20.3 percent. Asset Management Asset Management comprises Robur, including Robur Försäkring, and the Group's discretionary asset management. Income from fund and insurance savings rose by SEK 992 M or 37 percent compared 1999. Although internal sales commissions and expenses rose, profit improved by SEK 378 M or 65 percent. The return on equity rose substantially, to 35.7 percent. Nordic/Baltic alliances Nordic/Baltic alliances consist of FI-Holding, Hansapank and equity interests in Aktia and SpareBank 1 Gruppen. FI-Holding is included in the Group as of November 1999, while Hansapanks result in 1999 was reported according to the equity method. These circumstances have significantly impacted comparative figures. The profit trend for 2000 was very positive, owing to good volume growth and the subsequent increase in income in both Denmark and the Baltic region. The income level has risen quarter by quarter, while the expense/income ratio before loan losses was around 0.50. The return on risk-weighted equity according to capital adequacy rules, plus unamortized goodwill, amounts to 11.7 percent. E-business E-business comprises FöreningsSparbanken by Internet, NetTrade, Firstviewbank in Denmark and the e-commerce company Marakanda. Income in 2000 consists of full cost-based compensation from Retail Banking and Swedbank Markets. Expenses include SEK 180 M to establish Firstviewbank, the international branch in Denmark. The share of the profit of associated companies was affected adversely by the acquisition of Marakanda. Other Other comprises income and expenses that do not fall under any of the business areas as well as eliminations of internal income and expenses. This includes FöreningsSparbanken Fastighetsbyrå (real estate brokerage) and computer services for independent savings banks and jointly owned banks. Also included are capital gains on the sale of financial fixed assets, such as the shares in Svensk Exportkredit AB and Bank Handlowy. Expenses for profit sharing in Kopparmyntet are also reported here, as are the surplus insurance refunds from SPP. Quarterly profit trend by business area SEK M Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2000 2000 2000 2000 1999 1999 1999 1999 Retail Banking Income 3,320 3,281 3,212 3,277 3,253 2,947 2,848 2,894 Internal sales 536 576 538 616 491 405 414 373 commissions Expenses - - - - - - - -1,914 2,136 1,946 1,953 1,933 2,020 2,037 2,174 Profit before 1,720 1,911 1,797 1,960 1,724 1,315 1,088 1,353 loan losses Loan losses -143 -163 -219 -302 -240 -98 -1 -268 Share of profit 8 15 24 23 -2 12 9 8 of associated companies Profit after loan 1,585 1,763 1,602 1,681 1,482 1,229 1,096 1,093 losses Swedbank Markets Income 886 641 788 824 567 375 574 584 Internal sales -76 -89 -51 -134 -85 -45 -71 -69 commissions Expenses -426 -274 -388 -328 -299 -230 -276 -277 Profit before 384 278 349 362 183 100 227 238 loan losses Loan losses 0 0 0 0 -4 -2 -4 -1 Share of profit of associated companies Profit after loan 384 278 349 362 179 98 223 237 losses Asset Management Income 921 919 917 913 804 677 624 573 Internal sales -460 -487 -487 -482 -406 -360 -343 -304 commissions Expenses -237 -204 -181 -171 -216 -158 -159 -149 Profit before 224 228 249 260 182 159 122 120 loan losses Loan losses Share of profit of associated companies Profit after loan 224 228 249 260 182 159 122 120 losses Nordic/Baltic alliances Income 838 755 617 656 225 Expenses -409 -348 -312 -304 -78 Profit before 429 407 305 352 147 loan losses Loan losses -71 -94 -62 -45 -24 Share of profit 36 6 64 28 16 47 53 19 of associated companies Profit after loan 394 319 307 335 139 47 53 19 losses E-business Income 63 64 61 68 54 43 45 39 Expenses -263 -178 -103 -68 -72 -60 -67 -62 Profit/loss -200 -114 -42 0 -18 -17 -22 -23 before loan losses Loan losses Share of profit -42 of associated companies Profit/loss after -242 -114 -42 0 -18 -17 -22 -23 loan losses Other Income -171 324 835 -6 -37 238 194 1,550 Expenses -796 -156 -182 -423 -320 -510 -519 -549 Profit/loss -967 168 653 -429 -357 -272 -325 1,001 before loan losses Loan losses -21 17 -9 -3 -4 -4 3 11 Share of profit 5 15 5 10 2 1 0 0 of associated companies Profit/loss after -983 200 649 -422 -359 -275 -322 1,012 loan losses Profit and loss accounts Change The Bank Group Period 2000 1999 % 2000 1999 SEK M Interest receivable 52,560 40,19 31 23,414 19,85 7 0 Interest payable - - 35 - - 38,971 28,85 16,454 13,01 4 8 Net interest income 13,589 11,34 20 6,960 6,832 (Note 1) 3 Dividends received 247 159 55 4,652 4,106 Commissions receivable 8,377 6,119 37 5,640 4,473 Commissions payable - - 31 - 922 - 718 1,593 1,216 Net commission income 6,784 4,903 38 4,718 3,755 (Note 2) Net profit on 1,694 579 1,388 488 financial 193 Operations (Note 3) Other operating income 1,689 2,087 -19 1,608 2,072 Total income 24,003 19,07 26 19,326 17,25 1 3 General administrative expenses - Staff costs - - 16 -5,566 - 6,734 5,792 5,167 - Surplus insurance 286 174 refund from SPP - Other - - 7 -4,779 - 5,791 5,420 4,840 Depreciation and -641 -439 46 -441 -399 writedown of tangible fixed assets Amortization of -630 -359 75 -101 -101 goodwill Other operating -209 -136 54 -185 -141 expenses Total expenses - 12,14 13 -10,898 - 13,719 6 10,64 8 Profit before loan 10,284 6,925 49 8,428 6,605 losses Loan losses, net (Note -1,123 -635 77 -764 -533 4) Change in value of 8 -1 3 -2 property taken over (Note 4) Write-down of - 105 - 53 financial fixed assets Share of profit of 197 165 19 associated companies Operating profit 9,366 6,454 45 7,562 6,017 Appropriations - 5 70 - 1,126 - 1,338 Tax - 2 - 30 - 1,767 - 476 1,904 1,211 Minority interest - 501 - 28 - Profit for the period 6,384 4,592 39 4,669 3,468 Note 1. Of which charge for - 553 - 556 - 1 - 541 - 543 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 0.508 percent (0.499). Quarterly profit trend for the Group SEK M Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2000 2000 2000 2000 1999 1999 1999 1999 Net interest income 3,460 3,496 3,289 3,344 3,052 2,711 2,717 2,863 * Commissions, net 1,773 1,670 1,629 1,712 1,362 1,202 1,258 1,081 Financial 395 451 416 432 267 184 23 105 operations, net Other income 229 367 1,096 244 185 183 287 1,591 Total income 5,857 5,984 6,430 5,732 4,866 4,280 4,285 5,640 Staff costs - - - - - - - - 1,517 1,410 1,570 1,468 1,360 1,449 1,514 1,419 Profit-sharing fund -684 -14 -9 -62 -50 Surplus insurance 26 260 refund from SPP Other expenses - - - - - - - - 2,092 1,682 1,800 1,697 1,645 1,546 1,631 1,532 Total expenses - - - - - - - - 4,267 3,106 3,119 3,227 3,005 2,995 3,195 2,951 Profit before loan 1,590 2,878 3,311 2,505 1,861 1,285 1,090 2,689 losses Loan losses, incl. change -235 -240 -290 -350 -272 -104 -2 -258 in value of property taken over Share of profit of 7 36 93 61 16 60 62 27 associated companies Operating profit 1,362 2,674 3,114 2,216 1,605 1,241 1,150 2,458 * Of which deposit -138 -137 -138 -140 -138 -138 -137 -143 guarantee fee Note 2. Specification of net commission income Group The Bank January - December, SEK M 2000 1999 2000 1999 Payment processing 2,232 1,493 1,892 1,485 commissions Brokerage 860 549 768 510 Asset management 3,338 2,522 1,623 1,249 Other securities 159 179 162 175 commissions Other commissions 1,788 1,376 1,195 1,054 receivable Total commissions 8,377 6,119 5,640 4,473 receivable Payment processing 821 593 749 585 commissions Securities commissions 192 131 140 90 Other commissions payable 580 492 33 43 Total commissions payable 1,593 1,216 922 718 Total commissions, net 6,784 4,903 4,718 3,755 Note 3. Specification of net profit on financial operations Group The Bank January - December, SEK M 2000 1999 2000 1999 Capital gains/losses Shares/participating 708 351 592 325 interests Interest-bearing 221 -54 190 -63 securities Other financial 30 -1 0 4 instruments Total 959 296 782 266 Unrealized change in value Shares/participating -192 -33 -149 -84 interests Interest-bearing 137 -5 146 -3 securities Other financial 5 2 2 1 instruments Total -50 -36 -1 -86 Change in exchange rates 785 319 607 308 Total 1,694 579 1,388 488 Note 4. Specification of loan losses, net, and change in the value of property taken over Group The Bank January - December, SEK M 2000 1999 2000 1999 Claims assessed individually The year's write-down for 2,058 2,599 1,076 1,714 established loan losses Reversal of previous -817 - -395 -803 provisions for anticipated 1,174 loan losses The year's provisions for 728 841 391 599 anticipated loan losses Recoveries from previous -471 -697 -151 -458 years' established loan losses Recovered provisions for -447 -984 -205 -527 anticipated loan losses The year's net expense for 1,051 585 716 525 individually assessed claims Claims assessed collectively The year's established 99 109 98 107 loan losses Recoveries from previous -15 -13 -13 -12 years' established loan losses Allocations/withdrawals -8 -46 -24 -45 from loan loss reserve The year's net expense for collectively assessed 76 50 61 50 claims Contingent liabilities The year's net expense for discharged guarantees and other contingent -4 0 -13 -42 liabilities The year's net loan loss 1,123 635 764 533 expense Change in the value of -8 1 -3 2 property taken over Total loan losses, net, and change in value of 1,115 636 761 535 property taken over Note 5. Problem loans Group The Bank 12/3 12/31 12/31 12/3 1 1 SEK M 2000 1999 2000 1999 Doubtful claims, gross 3,21 4,544 1,455 2,12 7 9 Provisions for anticipated 3,38 3,879 1,384 1,60 loan losses 1 0 Doubtful claims, net -164 665 71 529 Claims with interest 147 225 40 97 concessions Problem loans, net -17 890 111 626 Unsettled claims for which accrued interest has been 1,05 1,517 589 668 entered as income 6 Property taken over to protect claims: 4 19 3 12 - Buildings and land 19 81 7 7 - Shares and participations 0 71 0 0 - Other 23 171 10 19 Doubtful claims as % of 0.0% 0.1% 0.0% 0.2% total lending Provision ratio for 105% 85% 95% 75% doubtful claims The relationship betwen problem loans and provisions is affected by foreign susidiaries that pratcise general provisioning. Balance sheets Group The Bank SEK M 12/31 12/31 12/31 12/31 2000 1999 2000 1999 Loans to the public 629,73 569,40 219,03 191,1 7 9 1 62 Loans to credit 130,29 104,51 149,69 135,5 institutions 4 6 9 36 Interest-bearing 60,466 58,427 59,649 44,25 securities 6 - Financial fixed assets 2,258 6,135 1,705 6,035 - Financial current 58,208 52,292 57,944 38,22 assets 1 Other assets 108,94 101,35 70,141 67,42 2 8 5 Total assets 929,43 833,71 498,52 438,3 9 0 0 79 Deposits and borrowings 247,43 210,53 229,34 197,5 from 8 7 8 39 the public Amounts owed to credit 126,47 127,94 117,03 121,9 institutions 8 8 0 89 Debt securities in issue 379,62 344,08 56,191 40,50 0 2 6 Subordinated liabilities 29,359 25,352 20,119 15,20 4 Other liabilities 111,59 94,784 51,309 40,70 0 6 Shareholders' equity 34,954 31,007 24,523 22,43 5 Total liabilities, provisions and shareholders' equity 929,43 833,71 498,52 438,3 9 0 0 79 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 included in the portion of the Group's operations covered by hedge accounting. Specification of Group derivatives as of December 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 valu valu valu valu valu valu valu valu e e e e e e e e Derivatives reported entirely 9,69 8,33 22,8 15,5 2,43 2,05 0 0 or partly on the 0 5 30 60 0 3 balance sheet Derivatives not reported 28 269 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 valu valu valu valu valu valu valu valu e e e e e e e e Derivatives reported entirely 11,0 10,0 14,7 14,9 1,97 1,56 0 0 or partly on the 73 27 68 06 5 9 balance sheet 11 10 14 14 1 1 0 0 073 027 768 906 975 569 Derivatives not reported 10 232 on the balance sheet Statement of cash flows Group The Bank January - December, SEK M 2000 1999 2000 1999 Liquid assets at beginning of 75,15 54,486 53,994 54,819 period * 9 Operating activities Operating profit 9,366 6,454 7,562 6,017 Adjustments for non-cash items including taxes paid 2,002 -126 699 2,302 Increase/decrease in receivables - 1,287 -2,558 - from 12,45 17,249 credit institutions 8 Increase/decrease in loans to - - -274 3,876 the public 30,48 11,662 1 Increase in holdings of securities classified as current - -1,165 -8,051 -1,916 assets 4,617 Increase in deposits and borrowings from 4,059 886 -3,527 9,206 the public, including retail bonds Increase/decrease in amounts owned to - 3,829 - -398 credit institutions 19,93 20,797 1 Change in other assets and 3,124 -317 1,860 -3,294 liabilities, net Cash flow from operating - -814 - -1,456 activities 48,93 25,086 6 Investing activities Purchase of fixed assets - -8,073 -1,277 -7,850 2,367 Sale of fixed assets 2,344 5,241 2,926 6,264 Branch sales 114 61 114 61 Cash flow from investing 91 -2,771 1,763 -1,525 activities Financing activities Issuance of interest-bearing 114,3 93,773 6,295 8,450 securities 15 Redemption of interest-bearing - - -6,994 -4,583 securities 92,33 108,17 2 2 Increase in other funding 26,55 30,299 35,437 752 8 Dividend paid - -2,463 -2,639 -2,463 2,639 Warrants 120 120 Cash flow from financing 46,02 13,437 32,219 2,156 activities 2 Cash flow for the period - 9,852 8,896 -825 2,823 Acquired liquid assets 10,821 Exchange rate differences in 311 liquid assets Liquid assets at end of period * 72,64 75,159 62,890 53,994 7 * of which securities pledged for OM, etc. at beginning of period 4,657 4,769 4,657 4,769 at end of period 8,981 4,657 8,981 4,657 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 Fitch R/I Shor Long Shor Long BFSR* Short Long Long t t FöreningsSparbanken A-1 A P-1 Aa3 B F-1 A+ AA- Spintab A-1 - P-1 Aa3 - F-1+ AA- - Hansapank A-2 BBB P-2 Baa1 D+ - - - FIH - - P-1 A1 - - - - Stockholm, February 15, 2001 FöreningsSparbanken AB (publ) Birgitta Johansson-Hedberg President and Chief Executive Officer For further information, please contact: Nils-Fredrik Nyblæus, Deputy President, Accounting and Finance, phone + 46 8 5859 2532 Staffan Salén, Vice President, Investor Relations and Information, phone + 46 8 5859 2779, + 46 705 310 111 Financial information The Group's financial reports can be accessed on FöreningsSparbanken's home page at http://www. foreningssparbanken.se/ir or at the nearest branch of FöreningsSparbanken. The annual report will be published around March 19 and will be available at FöreningsSparbankens headquarter, Brunkebergstorg 8 in Stockholm. The english version of the annual report will be available about two weeks later. Current financial information in Swedish is also published in Sweden on TV4's text-TV, page 182. FöreningsSparbanken will release earnings reports on the following dates in 2001: Interim report January-March 2001 April 27 Interim report January-June 2001 August 23 Interim report January-September 2001 October 23 The Annual General Meeting in 2001 will be held on April 5 in Stockholm. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/02/15/20010215BIT00840/bit0001.doc http://www.bit.se/bitonline/2001/02/15/20010215BIT00840/bit0001.pdf