Stadshypotek's interim report January - June 2002

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- Operating profit increased to SEK 2 275m
- Expenses continue to drop
- Recoveries continue to exceed new loan losses
- Continued positive growth in private market volumes
- 'Fixing interest rates on the Internet' was launched in June
- Preference shares in Handelsbanken Hypotek were redeemed on 1 July 2002

The Stadshypotek Group's operating profit increased by SEK 86m to SEK 2 275m (2 189).  
Net interest income rose by SEK 86m to SEK 2 375m (2 289).

Operating income
The SEK 86m increase in the Group's net interest income is primarily due to increased lending volumes. Continued strong growth in private market lending has contributed to an improved lending margin. Net interest income has been negatively impacted both by reduced shareholders' equity and by lower interest rates.

Group expenses continue to fall and were SEK 140m (173), a decrease of SEK 33m or 19%. Expenses include agent's commission paid by Handelsbanken Hypotek to Handelsbanken, which has gone down by SEK 27m due to the subsidiary's lower lending volume.


Loan losses
Recoveries exceeded new loan losses and were SEK 44m (67), which corresponds to -0.03% (-0.04) of lending.
As at 30 June 2002, Stadshypotek's volume of bad debts before deduction of the reserve for possible loan losses amounted to SEK 2 493m (3 334). Of the bad debts, SEK 546m (765) were non-performing loans and SEK 1 947m (2 569) 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.
After deduction of the reserve for possible loan losses the volume of bad debts was SEK 1 727m
( 2 338).
Lending to the general public continues to increase and was SEK 357bn (339) as at 30 June 2002. Private market lending increased by SEK 19bn while lending on the corporate market decreased by SEK 1bn.  
Fixing interest rates on the Internet
'Fixing interest rates on the Internet' was launched in June. Using this service, private customers with variable interest rate loans who are connected to Handelsbanken on the Internet can change to fixed interest rates directly from their own PC. This improves both the service level and accessibility for Stadshypotek's private customers. In the autumn, the next step will be taken when it will be possible to change terms via the Internet.

Redemption of preference shares in Handelsbanken Hypotek
The preference shares in the subsidiary Handelsbanken Hypotek were redeemed on 1 July 2002,
the redeemed value of the shares being SEK 252.6m. This means that Handelsbanken Hypotek is now a wholly-owned subsidiary of Stadshypotek AB.

Capital ratio
As at 30 June 2002, the capital ratio was 10.5% (11.8). The lower capital ratio is mainly due to increased lending volumes.
Stockholm, 20 August 2002

Claes Norlén
Chief Executive
This interim report has not been examined by the company's auditors
The full Interim Report including tables is available to download from the enclosed link.