Stadshypotek's interim report January - June 2004
- Operating profit increased by 4% to SEK 2,628m
- Costs fell by 19%
- Recoveries continue to exceed new loan losses
- Increased growth rate for private market volumes
- Increased corporate market volumes strengthen Stadshypotek's position as a leading player in this market
- New products launched in the spring were well received
- e-bud has been supplemented with text message and e-mail functionality
Performance and income
Stadshypotek's operating profit increased by SEK 100m to SEK 2,628m (2,528), Stadshypotek's best six-monthly result ever. The improvement in results is due to higher net interest income, lower costs and the fact that recoveries continue to be higher than new loan losses.
The rise in net interest income by SEK 116m or 5% to 2,632m (2,516) is due partly to increased lending volumes and a continuing shift towards a higher proportion of private market lending, and partly to positive effects on the company's borrowing as a consequence of a favourable interest rate trend. Falling interest rates combined with lower shareholders' equity have however had a negative impact on net interest income.
Stadshypotek's costs went down by 19% to SEK 75m (93). The costs for 2003 included agent's commissions paid by Handelsbanken Hypotek to Handelsbanken before the merger with Stadshypotek which was carried out in March of that year. Excluding these agent's commissions totalling SEK 17m, expenses have gone down by SEK 1m compared to the previous year despite the company maintaining a high level of ambition for future system development.
Recoveries exceeded new loan losses and the net amount recovered was SEK 96m (129), which corresponds to a loan loss ratio of -0.05% (-0.07) of lending.
As at 30 June 2004, Stadshypotek's bad debts before deduction of the provision for probable loan losses amounted to SEK 1,106m (1,630). Of the bad debts, SEK 211m (287) were non-performing loans and SEK 895m (1,343) 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 provision for probable loan losses the volume of bad debts was SEK 813m (1,173).
As at 30 June 2004 lending was SEK 399.6bn, an increase of 22.6bn compared to the same date the year before.
The private market continues to show substantial growth, and this gained further momentum during late spring. Compared to the same date in the previous year the increase was SEK 17.9bn. The growth in the corporate market is still good and means that Stadshypotek is strengthening its position as the dominant lender to this important customer segment. Compared to the same date the previous year the increase in volumes was SEK 4.5bn.
This spring, a number of new products for the private market were launched. The demand remains high for floating rate loan products or with short-term fixed rates. In order to supplement Stadshypotek's extensive product range, a new loan product was launched in mid-April with rates fixed for three months at an attractive level. It has received a warm welcome and has seen healthy growth.
Since late May, in close collaboration with Handelsbanken, customers have been able to subscribe to the Loan protection scheme at no extra cost if all loans and credits are placed within the Handelsbanken Group. The e-bud product, offered free of charge by Stadshypotek as support in the sensitive bidding process for property transactions, is subject to continuous development based on requests from the constantly growing number of users. In late May, in addition to being able to follow the bidding process on the Internet, a service was launched to enable buyers and sellers to receive a text message or e-mail directly to their mobile phone with information about the latest bid.
Capital ratio and rating
As at 30 June 2004, the capital ratio was 8.7% (9.4). The lower capital ratio compared to the same date in the previous year is mainly due to increased lending volume.
In spring, Stadshypotek received a higher rating, Aa1, from Moody's for its long-term funding. The short-term rating remains unchanged at P1.
Stockholm, 17 August 2004
The full report incl. tables can be downloaded from the following link: