Stadshypotek's Interim report January-June 2005
Stadshypotek's Interim report January-June 2005
Profits continue to grow
Operating profit was SEK 2,680m (2,628), a rise of 2%. Operating profit for the second quarter was SEK 1,318m (1,272), an increase of 4% compared with the corresponding quarter in the previous year. The improvement in profits is mainly due to higher income and lower expenses.
Return on equity was 17.3% (16.5).
Higher income
Income increased by 3% to SEK 2,694m (2,607). Of the total increase in income of SEK 87m, SEK 47m was net interest income and SEK 40m was "Net gains/losses on items at fair value". The increase in net interest income to SEK 2,679m, (2,632) is due to higher lending volumes and an increased proportion of private market loans, which could compensate for pressure on margins due to a continued tough competitive situation. Net interest income has been negatively impacted by reduced shareholders' equity and by lower interest rates.
"Net gains/losses on items at fair value" is in its entirety due to the new accounting standards according to IAS39.
Lower expenses and low loan losses
Expenses, excluding loan losses, were down 8% and amounted to SEK 69m (75). Staff costs decreased by 10% and other administrative expenses by 8%.
Recoveries exceeded new loan losses and the net amount recovered was SEK 55m (96), and thus the loan loss ratio was -0.03% (-0.05) of lending.
As at 30 June 2005, Stadshypotek's bad debts before deduction of the provision for probable loan losses amounted to SEK 839m (1,106). Of the bad debts, SEK 98m (211) were non-performing loans and SEK 741m (895) 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 627m (813).
Growth in lending
Loans to the public were SEK 427bn, an increase of 27bn compared to the same period in the previous year. The whole increase was attributable to private market loans. Since year-end, loans to the public have increased by SEK 14m.
Increased funding opportunities
During the spring, Stadshypotek has issued new bonds loans with maturities up to 12 years. The longest maturity issued until then was 5 years. This satisfies the increased demand from borrowers for longer interest rate fixing periods and also meets investors' wishes for longer-term investment alternatives.
Capital ratio
As at 30 June 2005, the capital ratio was 8.9% (8.7). As at 31 December 2004, the capital ratio was 8.1%. The increase is due to a debenture loan for SEK 3,500m raised in January 2005.
Rating
Stadshypotek's rating was unchanged.
Stadshypoteks rating
Long-term Short-term
Moody's Aa1 P1
Standard & Poor's AA- A-1+
Other disclosures
The accounts comply with the IASB accounting standards adopted by the EU. In addition to these standards, the Finansinspektionen's accounting regulations and the provisions of the Annual Accounts Act for Credit Institutions and Securities Companies (ÅRKL) make additional disclosure requirements. The interim report is adapted to these.
Stockholm August 23, 2005
Claes Norlén
Chief executive
This interim report has not been examined by the company's auditors.
The full report with tables can be downloaded from the following link: