· Operating profit continued to rise, amounting to SEK 4 122 million,

· Net interest income increased to SEK 4 444 million.

· Expenses decreased by SEK 129 million or 25%.

· Loan losses continued to be very low. Recoveries exceeded reported loan losses

· Continued rise in lending to private customers. Total volume also increased.

· Flying start for e-bid - a new service for estate agents

Net interest income for the Stadshypotek Group rose by SEK 21 m compared with 1999. Profits before credit losses increased to SEK 4 100 m (4 055), while operating profit was SEK 4 122 m (4 120).

Operating income

The rise of SEK 21 m in net interest income for the Group is attributable to the improved lending margins, increased private market lending and a smaller negative impact from early redemptions of private market loans which were granted in 1993 and the first half of 1994. Net interest income has been adversely affected by lower interest levels and by lower shareholders' equity due to group contributions and dividends.

The decrease in the Other operating income is explained by capital gains from the sale of a business property in 1999, lower guarantee commission income from the parent company in 2000.

The Group's total expenses were SEK 377 m (506), a decrease of SEK 129 m or 25% compared to the same period last year. Expenses include the agents' commission which Handelsbanken Hypotek pays to Handelsbanken. Due to a decrease in the subsidiary's volumes, agents' commission fell by SEK 76 m compared with 1999.

Staff costs have been affected by a SEK 18 m write-back of the pension surplus from SPP. Prior to the deduction of these SPP funds, staff costs amounted to SEK 27 m which compared with 1999 corresponds to a decrease of SEK 6 m or 18%.

Loan losses
Losses on loan receivables amounted to SEK -22 m (-65), corresponding to a loan loss ratio of -0.01% (-0.02). The positive impact of SEK 22 m which loan losses had on the result is explained by the fact that written-back provisions and amounts recovered from actual loan losses in previous years exceeded actual and possible loan losses.

As at 31 December 2000, Stadshypotek's volume of bad debts before deduction of the reserve for possible loan losses amounted to SEK 3 672 m (4 729). After deduction of the reserve for possible loan losses this volume was SEK 2 599 m (3 457).

Of the bad debts, SEK 656 m (946) were non-performing loans and SEK 3 016 m (3 783) were loans on which the borrowers pay interest and amortisation but which are considered doubtful in view of the borrowers' repayment capacity and due to uncertainty as to the value of the collateral.

In addition, there were non-performing loans of SEK 940 m (843) for which the collateral was considered sufficiently good for interest to be reported as income. Apart from bad debts, problem loans also included reduced rate loans where the interest rate has been reduced in relation to market rates. These loans amounted to SEK 7 m (40) as at 31 December 2000.

The volume of problem loans after deduction of the reserve for possible loan losses was SEK 2 606 m (3 497) as at 31 December 2000.

Repossessed property

As at 31 December, there was one repossessed property: an undeveloped site with a book value of SEK 0.

Lending to the general public amounted to SEK 326.0 bn (319.3) at the end of the year. Of the total increase of SEK 6.7 bn (-7.2) in lending volume for the Stadshypotek Group in 2000, private market lending represented an increase of SEK 11.2 bn (5.8), while lending to corporate customers fell by SEK 4.5 bn (13.0). At the end of 2000, a monthly increase in private market lending could be reported for the twenty-ninth consecutive month.


Moody's has given Stadshypotek an Aa2 rating, which is the same as the parent company, Handelsbanken. This is the highest rating occurring on both companies' respective markets in the Nordic countries.

Capital ratio

The capital ratio as at 31 December 2000 was 11.9% (12.0). The lower capital ratio is due to payment of group contribution.

Publication dates for interim reports

Jan-March: 23 April 2001
Jan-June: 21 Aug 2001
Jan-Sep: 23 Oct 2001

The full interim report including tables is available to download from the enclosed link.

Michael Zell <br>President <br>tel +46 8 701 54 10 <br> <br>Stockholm, 20 February 2001 <br>

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