Highlights of Stadshypotek's 2009 annual report

PERFORMANCE

Full year 2009 compared with full year 2008
Stadshypotek's operating profit increased by SEK 2,079 million to SEK 5,761 million (3,682). As of August 2008, Stadshypotek's branch in Norway is included in the figures and this contributed SEK 346 million to operating profit. Excluding the branch in Norway, operating profit rose by SEK 1,733 million. Net interest income increased by SEK 2,167 million, of which SEK 368 million was attributable to the branch in Norway. The increase in net interest income was due to higher volumes and higher margins as a result of the company's good position in the funding market. Net gains/losses on financial operations were SEK -101 million (-71).

Expenses amounted to SEK 212 million (191), of which SEK 38 million (16) was attributable to the branch in Norway. Recoveries exceeded new loan losses and the net amount recovered was SEK 31 million (75), which corresponds to a loan loss ratio of -0.00 percent (-0.01) of lending. After deduction of the provision for probable loan losses, the volume of impaired loans was SEK 116 million (193). SEK 61 million (56) of the impaired loans were non-performing loans, while SEK 55 million (137) were loans on which the borrowers pay interest and amortisation, but which are considered doubtful. In addition, there were non-performing loans of SEK 591 million (605) that are not assessed as being impaired loans. After deductions for specific provisions totalling SEK -55 million (-73) and provisions by group of SEK -11 million (-12) for probable loan losses, net impaired loans totalled SEK 50 million (108).

Q4 2009 compared with Q3 2009
Stadshypotek's operating profit for the fourth quarter of 2009 decreased by SEK 59 million to SEK 1,341 million (1,400). Net interest income was SEK 1,414 million (1,568), of which SEK 130 million (132) was attributable to the branch in Norway. The average margin in the private market during the quarter was 0.65 percent (0.63). Net gains/losses on financial operations increased by SEK 108 million to SEK -12 million (-120).

GROWTH IN LENDING
During the year, loans to the public increased by SEK 70 billion or 11 percent to SEK 685 billion (615). Stadshypotek's share of the private market in Sweden was approximately 25 percent and its share of the corporate market in Sweden was approximately 30 percent.

CAPITAL ADEQUACY
The capital ratio according to Basel II was 39.9 percent (37.1) while the Tier 1 capital ratio calculated according to Basel II was 28.4 percent (25.9). Further information concerning capital adequacy is provided in the 'Capital base and Capital requirement' section.  

Rating

Stadshypotek's rating remained unchanged, with a "stable outlook".

Accounting policies
The accounts comply with the IASB accounting standards adopted by the EU. The regulations of the Annual Accounts Act for Credit Institutions and Securities Companies and the directives issued by the Swedish Financial Supervisory Authority are also applied.

As of the 2009 financial year, new regulations in IAS 1 have affected the presentation of the Group's financial reports so that changes in equity not deriving from transactions with the owners are presented in a separate statement of "Other comprehensive income". In addition to total comprehensive income for the period, changes in equity thus only include changes in equity deriving from transactions with the owner.

As from 2009, IFRS 8 Operating Segments is applied whereby identification and measurement of reportable segments is carried out on the basis of the same principles as used for internal reporting to central and managing functions. The application of IFRS 8 has not led to any changes in the division of segments for the Stadshypotek Group.

In all other respects, the highlights of the annual report have been prepared in accordance with the same accounting policies and calculation methods that were applied in the annual report for 2008.

Stockholm, 18 February 2010

Lars Kahnlund
Chief executive

The report can be downloaded from the following link: