Operating profit increased by 11% to SEK 2 528m

Net interest income rose by SEK 127m to SEK 2 516m

Expenses fell by 34%.

Recoveries continue to exceed new loan losses

Increased market share due to increase in lending in the corporate market

Stable growth for private market lending

Strongest brand name in the Swedish mortgage market

 

Stadshypotek's operating profit increased by SEK 253m to SEK 2 528m (2 275), which is the highest six-monthly result ever reported by Stadshypotek. The higher profit is due to improved net interest income, lower expenses and increased recoveries.

Net interest income went up to SEK 2 516m (2 389) which is mainly due to increased lending volumes. A continued shift towards private market lending has led to a somewhat higher lending margin which also had a positive impact on net interest income. Falling interest rates combined with lower shareholders' equity has however affected net interest income in a negative direction.

Expenses

The Group's total expenses continued to fall and were SEK 93m (140), a decrease of 34%. Excluding the agent's commissions which Handelsbanken Hypotek paid to Handelsbanken before the merger with Stadshypotek in March, expenses compared to the previous period in the previous year decreased by SEK 14m or 16%. This decrease is the result of continuing efficiency improvements.

 

Recoveries exceeded new loan losses and were SEK 129m (44), which corresponds to a loan loss ratio of -0.07% (-0.03) of lending.

 

As at 30 June 2003, Stadshypotek's bad debts before deduction of the reserve for probable loan losses amounted to SEK 1 630m (2 493). Of the bad debts, SEK 287m (546) are non-performing loans and SEK 1 343m (1 947) are 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 probable loan losses the volume of bad debts was SEK 1 173m (1 727).

 

Lending to the general public was SEK 377bn (357) as at 30 June 2003. The private market represented SEK 18bn of the increase in volume of SEK 20bn, and the corporate market SEK 2bn. Since the beginning of the year, total lending has increased by SEK 11bn, of which the private market represented SEK 9bn. The SEK 2bn in increased lending to the corporate market means a higher market share in this area.

 

In Sweden's biggest brand name survey performed by ISI Wissing in spring 2003, Stadshypotek was shown to have the strongest brand name in the category of Mortgage Institutions. The results of the survey are very gratifying and can be seen as yet further proof that the integration with Handelsbanken's branch office operations has been well received and very successful.

 

As at 30 June 2003, the capital ratio was 9.4% (10.5). The lower capital ratio compared to the same date in the previous year is mainly due to increased lending volume.

 

Stockholm, 19 August 2003

 

 

Claes Norlén

 

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.