Stadshypotek's operating profit for 2007 was SEK 3,926m (4,851). The decrease was mainly due to the net interest income being SEK 477m lower than the previous year. For the past couple of years the competition for private customers' mortgage loans has led to reduced margins, which has had a negative impact on the net interest income. However, for the past six months, the margins for newly-priced mortgage loans have remained stable. Stadshypotek's lending volume in the private market continued to perform well during the year. But the increase could not compensate for the lower lending margins. Net interest income was also negatively affected due to the remaining effects from previously repurchased bonds.

 

Recoveries exceeded new loan losses and the net amount recovered was SEK 70m (278), which corresponded to a loan loss ratio of -0.01 % (-0.06) of lending. Bad debts before deduction of the provision for probable loan losses amounted to SEK 267m (393) at the end of 2007. SEK 41m (44) of the bad debts were non-performing loans, while SEK 226m (349) were loans on which the borrowers pay interest and amortisation, but which are considered doubtful in view of the uncertainty as to the borrowers' repayment capacity and the value of the collateral. In addition, there were non-performing loans of SEK 318m (229) that are not assessed as being bad debts. After deduction of the provision for probable loan losses, the volume of bad debts was SEK 190m (284). 

 

Lending to the public was SEK 524bn, an increase of 44bn. Stadshypotek's share of net growth in the private market
developed favourably and the market share went up to 25.6% (25.5).  Stadshypotek retained its position as a leading player on the Swedish corporate market, with a market share of 34.2% (34.8). 

 

On 1 February 2007, new capital adequacy regulations were implemented - the Basel II rules. The new rules entail major changes in how the capital requirement is to be calculated and how a satisfactory capital base is to be ensured. They will be implemented gradually, since the transitional rules allow for an adaptation over three years. As at 31 December 2007, the capital ratio was 9.3% (8.3). As at 31 December 2007, the Tier 1 capital ratio was 6.6% (7.1). Further information concerning capital adequacy is provided in the section entitled capital base and capital requirement.

 

Stadshypotek's rating was unchanged.

 

 

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 (ÅRKL) and the directives issued by the Swedish Financial Supervisory Authority are also applied. The same accounting policies have been applied as in the latest anual report.

 

 

 

 

Stockholm, 27 February 2008

 

Lars Kahnlund
Chief executive