Merger accepted by 97.1 per cent of Unidanmark shareholders

Merger accepted by 97.1 per cent of Unidanmark shareholders Strong first quarter pro forma results for the New Group Merger progress report: * Shareholders representing 97.1 per cent of the Unidanmark A/S shares have accepted the share exchange offer from Nordic Baltic Holding (NBH) AB (publ) * All other conditions fulfilled * New Board of Directors and new Group Management operative * Over 50 key management positions filled * All major merger integration projects identified * Nordic Baltic Holding now listed on the Stock Exchanges in Stockholm, Helsinki and Copenhagen * Mandatory offer and compulsory redemption regarding Unidanmark-shares: Nordic Baltic Holding has today decided to make a mandatory offer to the remaining shareholders of Unidanmark and to initiate compulsory redemption proceedings. The mandatory offer will be made in the beginning of May. Buy back-programme decided by the Board: The Board has, within the authorization given by the annual general meeting of shareholders, decided that Nordic Baltic Holding shall, within a maximum limit of SEK 5 billion, acquire own shares on the Helsinki, Copenhagen or Stockholm Stock Exchanges at market price: A press release on this subject is given separately. Strong first quarter 2000 for the new group * Operating profit EUR 729 million (DKK 5.4 billion/SEK 6.2 billion) * Return on equity 19.2 per cent * Strong growth within Retail and Asset Management Pro forma key ratios of the New Group Q 1 F ull year 2 000 1999 Operating profit, EUR million 729 2 089 Net profit, EUR million 4 98 1 661 Return on equity, % 1 9.2 1 8.0 Earnings per share, EUR 0 .17 0 .55 Shareholders' equity per share, EUR 3 .45 3.43 Shares outstanding, million 2 960.8 2 987.2 Cost/income ratio, banking, before loan losses, % 5 1 5 9 Combined ratio, non-life insurance, % 1 23 1 02 Core capital ratio, % 8.5 9 .0 Total capital ratio, % 1 0.6 1 1.1 Risk-weighted amount, EUR billion 1 11 1 05 Lending, EUR billion 109 1 04 Deposits, EUR billion 6 6 6 5 Technical provisions (insurance) EUR billion 18 1 6 Shareholders' equity, EUR billion 10 1 0 Total assets, EUR billion 194 1 86 Assets under management, EUR billion 1 02 8 9 For further information, see the interim reports for MeritaNordbanken and Unidanmark. In the combined pro forma financial data the consolidated data of Unidanmark have been adjusted for goodwill of EUR 308 million net after depreciation from the acquisition of Vesta and Dansk Kaution and a write- down directly against shareholders' equity of the value of own shares. The consolidated accounts of MeritaNordbanken have been adjusted to the effect that Merita Life is consolidated line by line instead of being reported as an associated company under the equity method. Goodwill as a consequence of the merger, amounts to EUR 1,002 million gross. It will be amortised over a period of 20 years. The first quarter goodwill amortisations amounts to EUR 17 million, including goodwill related to Vesta and Dansk Kaution. First-quarter report 2000 Unidanmark Group April 28, 2000 Unidanmark Group - five-quarter financial summary Vesta Forsikring AS is consolidated in the balance sheet as from 31 December 1999 and was included under Profit on shares in associated and group undertakings in 1999 as from the date of acquisition, 8 December 1999. In 2000 Vesta is fully consolidated. (EUR M) Profit and loss 1 999Q1 1 999Q2 1 999Q3 1999Q4 2000Q1 2000Q1 account (DKK million) Core earnings, 11 4 1 70 1 8 2 Unidanmark C ore earnings, bank 2,476 2,518 2 ,402 2 ,473 2 ,992 4 02 Core earnings, 731 720 6 99 6 64 616 8 3 insurance T otal core earnings 3,218 3,242 3 ,102 3,207 3 ,627 4 87 Expenses and 2 ,453 2 ,560 2 ,416 2 ,524 2 ,784 374 depreciation Profit on core 765 682 6 86 6 83 842 1 13 activities Investment 1 26 276 (69) 1,789 1,200 1 61 portfolio income Profit/(Loss) on 1 75 47 2 3 (5) (0) (0) shares in associated and group undertakings Profit before non- 1,067 1,005 639 2 ,469 2 ,042 2 74 recurring items Non-recurring - - - 1 - - income and expenses Profit before tax 1,067 1,005 6 39 2 ,469 2 ,042 2 74 Tax (1) 236 1 93 138 4 13 653 8 8 Profit 8 31 8 12 5 01 2 ,056 1 ,389 1 86 (EURbn) Balance sheet, end of 1 999Q1 1 999Q2 1 999Q3 1 999Q4 2 000Q1 2 000 period Q1 (DKK billion) Assets Cash in hand and balances 8 5 110 1 07 7 0 77 1 0 due from credit institutions Loans and advances 2 60 2 76 272 2 64 280 3 8 Ordinary loans and 1 63 1 71 163 1 63 179 24 advances Mortgage loans 7 3 7 6 7 9 8 0 81 1 1 Reverse repos 2 4 2 9 2 9 20 19 3 Debt securities and shares 1 83 1 77 167 194 197 2 6 etc Other assets 4 7 49 44 49 6 1 8 Land and buildings 9 1 2 12 1 3 1 4 2 Total assets 5 76 611 590 576 6 14 83 Liabilities Balances due to credit 1 34 161 1 29 9 7 97 1 3 institutions Deposits 173 1 75 177 1 69 186 25 Repos 1 2 1 2 1 6 9 10 1 Debt securities in issue 117 1 12 1 24 128 1 33 18 Mortgage bonds 87 8 4 8 1 82 8 4 1 1 Other liabilities 52 5 7 5 4 58 6 4 9 Technical provisions 6 7 69 6 9 91 9 8 1 3 Capital resources 34 3 7 3 7 35 3 6 5 Shareholders' funds 2 8 29 2 9 2 7 2 8 4 Total liabilities 5 76 6 11 590 5 76 6 14 83 Ratios and key figures (DKK except percentages) 1 999Q11 999Q2 1 999Q31 999Q4 2000Q1 Return on average equity 11.9 1 1.3 6 .9 2 9.4 20.2 (annualised) (%) Total capital ratio (%) 10.5 1 0.8 1 0.6 1 0.9 1 0.0 Tier 1 capital ratio (%) 9 .7 9.4 9.2 9 .7 9 .0 Earnings per share 1 2 1 1 7 2 9 1 9 Share price, end of period . . 4 72 5 16 5 00 Net asset value . . 4 05 372 3 92 Price/net asset value . . 1 .2 1 .4 1 .3 Number of employees (full-time 1 3,2091 3,175 1 3,2311 4,371 1 4,830 equivalents), end of period (2) Cost-income ratio, Group (%) (3) 7 6 79 7 8 79 7 7 Cost-income ratio, bank (%) (4) 6 9 79 7 5 75 6 2 Combined ratio, non-life 9 7 9 5 96 1 18 1 23 insurance (%) Claims ratio (%) 7 1 6 7 69 9 0 9 5 Claims ratio, excluding the . . . 6 9 7 9 hurricane in December 1999 (%) Expense ratio (%) 2 7 2 8 27 2 9 2 8 Bonus reserve for life insurance 1 7.0 1 8.3 16.8 2 7.7 3 2.5 as % of technical provisions 1 EUR = DKK 7.4460 at 31 March 2000. No changes have been made to the accounting policies applied in the 1999 annual accounts. Comparative figures have been restated as a result of the merger between Unidanmark A/S and Tryg-Baltica Forsikring, skadesforsikringsselskab A/S at 1 January 1999. (1) Tax for the quarters of 1999 is calculated at the actual effective tax rate for the whole year distributed on banking and insurance activities. For the first quarter of 2000 tax was calculated at the rate of 32% of Profit before tax. (2) Including Vesta Forsikring AS as from 31 December 1999, but excluding employees in unconsolidated companies. (3) Expenses and depreciation as % of core earnings. (4) Expenses and depreciation, excluding restructuring costs as % of core earnings, excluding provisions for bad and doubtful debts. Unidanmark posts a profit before tax of DKK 2,042 million @ Profit before tax up 91% on the first quarter of 1999 @ Return on equity of 20% @ Provisions for bad and doubtful debts remained low @ Expenses and depreciation remained largely unchanged (an increase of 14% including Vesta and others) @ Investment portfolio income remained high @ Funds under management doubled @ Premium income, non-life insurance, rose by DKK 900 million as a result of the acquisition of Vesta and others @ The hurricane resulted in an increase in the combined ratio, net of reinsurance, to 122.5%. Excluding the impact of the hurricane the combined ratio was 107.0% On 25 April 2000 the merger of Unidanmark and MeritaNordbanken became a reality. As from the second quarter of 2000 figures for Unidanmark, Unibank and Tryg-Baltica will form an integral part of Nordic Baltic Holding's quarterly report. The Group's core earnings were DKK 3,627 million, an increase of 15% compared with the first quarter of 1999, excluding Vesta and others, and the hurricane in December 1999. Unibank's core earnings came to DKK 2,992 million, up 21% compared with the first quarter of 1999. Net provisions for bad and doubtful debts remained low. Insurance core earnings, in which Vesta and others are fully included in the first quarter, amounted to DKK 616 million and were negatively affected by run-off losses due to the hurricane. Before run-off losses core earnings amounted to DKK 986 million. The Group's expenses and depreciation increased by 14% (2% excluding Vesta and others). The Group's profit on core activities was DKK 842 million, up 10% compared with the first quarter of 1999. Excluding Vesta and others, and the hurricane, the increase was 61%. The Group's investment portfolio generated income of DKK 1,200 million compared with DKK 126 million in the first quarter of 1999. Profit before tax was DKK 2,042 million, producing a return on equity of 20% (annualised). Summary profit and loss account (DKK million) 1 999Q1 2 000Q1 C hange Core earnings, Unidanmark 11 1 8 7 A/S Core earnings, bank 2 ,476 2,992 5 17 Core earnings, insurance 731 616 ( 115) Core earnings 3,218 3 ,627 4 09 Expenses and depreciation 2,453 2,784 3 31 Profit on core activities 7 65 8 42 7 7 I nvestment portfolio income 126 1,200 1,074 Associated and group 1 75 ( 0) ( 175) undertakings Non-recurring income - - - Profit before tax 1 ,067 2 ,042 9 75 Tax 2 36 653 4 17 Profit 8 31 1,389 5 58 Core earnings Core earnings from banking activities Retail Banking's core earnings before provisions for bad and doubtful debts amounted to DKK 1,527 million for the first quarter of 2000, which is at the same level as in 1999. Net interest income was somewhat lower as the lower interest rate level compared with the first quarter of 1999 has had a negative effect on deposit margins. However, fees and commissions receivable saw satisfactory progress particularly as a result of increasing commission income from securities trading. Corporate Banking's core earnings before provisions for bad and doubtful debts amounted to DKK 420 million against DKK 240 million in the first quarter of 1999. The level of activity increased significantly. The profitability of each customer relationship has a high priority and interest margins on lending rose in the first quarter. To this should be added increased commission income from Unibank's structured finance unit and positive securities revaluations from shareholdings acquired in connection with a restructuring of customer commitments. Markets' core earnings, after transfer pricing adjustments, were DKK 299 million in the first quarter of 2000, a slight increase on the high level of DKK 289 million recorded in the first quarter of 1999. Turnover was generally very high in all product groups. Core earnings, bank (DKK million) 1999Q1 2000Q1 Net interest income, excluding investment portfolio income 1 ,698 1,759 Fees and commissions receivable 5 83 8 22 Net interest and fees receivable 2 ,281 2,581 Provisions for bad and doubtful debts 2 26 1 04 -Securities and foreign exchange result, 3 43 4 55 excluding investment portfolio income -Other operating income, excluding investment 78 61 portfolio income Core earnings, bank 2 ,476 2 ,992 Asset Management's core earnings came to DKK 409 million, a significant improvement from DKK 220 million in the first quarter of 1999. During the past 12 months, funds under management have doubled to DKK 385 billion. Unidanmark's asset management unit is the first asset manager in Northern Europe to have received a top rating for European equities from the internationally recognised investment management and consulting firm Frank Russell. Investment Banking's core earnings more than doubled in the first quarter of 2000 to DKK 278 million against DKK 125 million in the same period last year. In Sweden core earnings increased to DKK 115 million in the first quarter of 2000 from DKK 32 million in the same period last year. Core earnings in other Aros units showed progress as well. Aros Securities posted a pro forma pre-tax profit of DKK 97 million in the first quarter of 2000 compared with a loss of DKK 15 million in the first quarter of 1999. . . . Change (DKK billion) 1 999Q1 2 000Q1 ( %) Ordinary loans and 1 63 179 1 0 advances Mortgage loans 7 3 81 1 1 Reverse repos 2 4 1 9 ( 21) Total loans and 2 60 280 7 advances Ordinary deposits 1 61 1 76 9 Repos 1 2 10 ( 18) Total deposits 1 73 186 8 Mortgage bonds in 8 7 84 ( 2) issue Total 2 59 2 70 4 Core earnings from insurance activities In April 2000 Tryg-Baltica was granted permission by the Norwegian authorities to take over Vesta in Norway. Vesta is fully included in the first-quarter report 2000. Insurance core earnings comprise the earnings of the three business areas Life Insurance and Pensions, Non-Life Insurance Personal and Non-Life Insurance Commercial and Industrial. Insurance core earnings equal the total balance on the technical account before expenses plus a risk-free return on equity. In Life Insurance and Pensions, the return on shareholders' funds corresponds to the interest rate provided on policyholders' savings by the parent company of the Life group. In 2000 the interest rate on policyholders' savings is 5.8% pa against 4.8% pa in 1999. The core earnings generated by Life Insurance and Pensions amounted to DKK 225 million in the first quarter of 2000, an improvement of DKK 48 million compared with the same period last year as a result of a 1 percentage point increase in the risk premium, an increase in the interest rate on policyholders' savings and earnings arising from the acquisition of Vesta and others. In Life Insurance and Pensions, premium income amounted to DKK 1.5 billion, of which Vesta's premium income represented just under DKK 0.6 billion. In Life Insurance and Pensions in Denmark, the policyholders' share of the investment return for the quarter exceeded the interest etc on policyholders' savings by DKK 3.2 billion. This amount has been transferred to the bonus equalisation provisions. In the first quarter of 1999 the amount was DKK 0.1 billion. The bonus reserve, which, in addition to the bonus equalisation provisions, comprises the surplus value over book value of the securities portfolio less contingent pension return tax, amounted to DKK 16 billion, equivalent to 32.5% of the life insurance provisions of the bonus paying companies. The bonus reserve reflects the future bonus paying capacity and the financial strength to withstand fluctuations in the financial markets. The core earnings from Non-Life Insurance Personal and Non-Life Insurance Commercial and Industrial amounted to DKK 391 million in the first quarter and were negatively affected by run-off losses due to the hurricane in December 1999. Before run-off losses core earnings amounted to DKK 761 million, including earnings arising from the acquisition of Vesta and others. Core earnings, insurance (DKK million) 1999Q1 2000Q1 Premium income, non-life, net of 1,493 2,410 reinsurance - Regular premiums, life and pensions, net 5 81 1,175 of reinsurance -Single premiums, life and pensions, net 3 12 346 of reinsurance -Investment return, excluding investment 9 80 5,112 portfolio income Claims, non-life 1,046 2 ,273 Claims and benefits, life 770 988 Increase in technical provisions 819 5 ,166 Core earnings, insurance 731 616 The increase in premium income of DKK 917 million is attributable to premium income arising from the acquisition of Vesta and others. The claims ratio increased to 94.5%. This is chiefly due to an increase in gross claims relating to the hurricane, which, at the closing of the annual accounts, were estimated at just over DKK 1.3 billion. Excluding the impact of the hurricane, the claims ratio was 79.1%. At the Annual General Meeting of Unidanmark it was estimated that additional expenses would amount to DKK 150 million-200 million. At the end of the first quarter, with half of the claims having been settled, the total additional expenses are estimated at approximately DKK 370 million. The full amount has been charged to the profit and loss account in the first quarter. The remaining claims are expected to be settled in the course of 2000. The Group's expenses and depreciation The Unidanmark Group's total expenses increased by 14% from DKK 2,453 million to DKK 2,784 million in the first quarter of 2000, primarily attributable to Vesta and others, which were not included in the first quarter of 1999. Excluding Vesta and others the increase represents 2%. Investment portfolio income Unibank's investment portfolio represents the shares, bonds and other financial instruments managed by Unibank's treasury function. Unibank's total market risk exposure is almost entirely related to this portfolio. The insurance companies' investment portfolio consists of the securities of the non-life companies together with a share of the securities in the life companies corresponding to the proportion of the total amounts invested attributable to shareholders' funds. Investment portfolio income was DKK 1,200 million in the first quarter, an increase of DKK 1,074 million compared with the same period in 1999. Investment portfolio income (DKK million) 1999Q1 2000Q1 Bank Net interest income and dividend 2 38 69 income -Revaluation of the investment ( 91) 3 69 portfolio of debt securities and shares etc Trading expenses (7) (7) T otal investment portfolio income, 1 39 4 30 bank Insurance Investment portfolio income (13) 7 70 Total 1 26 1 ,200 The overall interest rate exposure, defined as the expected loss resulting from a 1% point increase in interest rates, was DKK 941 million at 31 March 2000. A general change in equity prices of 10% at 31 March 2000 would have had an effect of DKK 997 million on the pre-tax profit against DKK 1,144 million at 31 December 1999. The exchange rate exposure remained low. Balance sheet and capital ratios At 31 March 2000 the Group's total assets amounted to DKK 614 billion, an increase of 7% on 31 March 1999. Shareholders' funds were DKK 28.2 billion at 31 March 2000, which is unchanged compared with 31 March 1999. Shareholders' funds (DKK million) -Shareholders' funds according to the 1999 26,801 annual accounts Change in minority interests 45 Profit for the period 1,389 (Of which minority interests (2)) Shareholders' funds at 31 March 2 8,235 (Of which minority interests 43) At 31 March the Unibank Group's total capital ratio stood at 9.4% compared with 8.8% at 31 March 1999. The tier 1 capital ratio was 6.8% against 6.9% the previous year. Risk-weighted assets were DKK 292 billion compared with DKK 273 billion at 31 March 1999. The Tryg-Baltica Group's core capital amounted to DKK 7.0 billion at 31 March 2000. The total solvency requirement for the Tryg-Baltica Group amounted to DKK 4.7 billion. Credit ratings Following the announcement of the merger with MeritaNordbanken on 6 March 2000, Moody's Investors Service has announced that it has placed on review for possible upgrade the long-term deposit and debt ratings and the financial strength rating of Unibank (A1/C) and confirmed Unibank's short- term rating at Prime-1. Similarly, Standard & Poor's has affirmed its A-1 short-term counterparty credit rating of Unibank, while Fitch IBCA has affirmed its short- and long-term ratings of Unibank (F1/A+). After the approval of the merger Thomson Bankwatch has upgraded the long-term rating of Unibank from A+ to AA-. Tax Tax for the period, calculated at a rate of 32%, amounted to DKK 653 million. Share buy back-programme In the annual report for 1999 Unidanmark announced that a share buy back- programme for a total amount of DKK 1 billion was initiated in 1999 with expected completion during the spring of 2000. Up till 6 March 2000, 1,432,911 shares, at a cost of DKK 682 million, had been purchased. With the merger with MeritaNordbanken it was decided not to complete the remaining part of the buyback programme. At Unidanmark's Annual General Meeting on 21 March 2000 it was resolved to reduce the company's share capital by the number of shares purchased. Employee shares In 1998 the Supervisory Board of Unidanmark decided to adopt an employee share scheme, under which employee shares may be issued based on an assessment of the Group's profit for the year relative to the results of comparable Danish financial services groups. In April 2000 the Supervisory Board has decided also to award shares to the employees of the Unidanmark Group for their contribution to the 1999 results. Employee shares corresponding to a total amount of approximately DKK 75 million have been issued, which amount will be charged to the profit and loss account in the second quarter of 2000. Outlook for the remainder of 2000 The merger with MeritaNordbanken will, to a large extent, result in cross- company integration of business areas. Overall, Unidanmark's contribution to the results of the new group is expected to be unchanged compared with the expectations announced in connection with the release of the annual report for 1999. 28 April 2000 Jørgen Høeg Pedersen Thorleif Krarup Chairman of the Group Chief Supervisory Board Executive *) MeritaNordbanken Group / Nordic Baltic Holding Review of interim results for January-March, 2000 Operating profit up to EUR 472 M first quarter Strong earnings growth, lower costs Merger with Unidanmark @ Operating profit for January-March increased to EUR 472 million (SEK 4.0 bn) @ Operating profit rose by 41 per cent compared to the fourth quarter 1999 and by 26 per cent compared to the adjusted first quarter 1999 @ Net commission income up by 48 per cent @ Strong profit growth in Retail @ Return on equity 23.1 per cent @ Earnings per share EUR 0.16 @ Shareholders representing over 97 per cent of the Unidanmark shares have accepted the offer and all other conditions have been met @ Aleksia real estate company sold @ Offer to the shareholders of Christiania Bank og Kreditkasse adjusted and prolonged *) This interim report refers to Nordic Baltic Holding group before the merger with Unidanmark Results for January - March 2000 (Comparison figures in brackets refer to the fourth quarter 1999) The Group's operating profit for January-March 2000 increased by 41 per cent to EUR 472 million (EUR 335 M). Compared to the first quarter 1999 (adjusted for the capital gain of EUR 114 million last year) the increase in operating profit was 26 per cent. The return on equity for the three months under review was 23.1 per cent compared with 20.6 per cent for the full year 1999, excluding the Pohjola capital gain. Earnings per share in the first quarter amounted to EUR 0.16 compared with EUR 0.51 for the full year 1999. Income The Group's total income for the first quarter was EUR 882 million (EUR 788 M). Net interest income totalled EUR 487 million (EUR 457 M). The increase is explained by improvement in margins, especially on deposits. Net commission income amounted to EUR 267 million (EUR 257 M). Compared to the first quarter 1999 the net commission income increased by nearly 48 per cent. The strong development in commission is related to income from fund management and brokerage fees. Net result from financial operations showed a profit of EUR 34 million (EUR 17 M). Realized and unrealized gains on interest-rate-related securities totalled EUR 6 million. At the end of March, the interest rate risk in the Group's financial current assets amounted to EUR 16.0 million (EUR 17.9 M) measured as VaR. Gains from currency-related transactions were EUR 18 million and gains from equity-related transactions amounted to EUR 10 million. Other income totalled EUR 94 million (EUR 57 M). The higher level is explained principally by larger capital gains on shares. In April the shares in Radiolinja were sold with a capital gain of EUR 46 million. This gain is not included in the first quarter profit. Expenses continued to decline Total expenses decreased by 12 per cent to EUR 422 million (EUR 481 M). Compared to the same period last year expenses rose by 2 per cent adjusted for the strengthening of the Swedish Krona. Personnel expenses amounted to EUR 202 million (EUR 200 M). Other expenses declined by 22 per cent to EUR 220 million (EUR 281 M). Cost/income ratio before loan losses was 47 per cent (59 per cent), well under the Group´s target of 55 per cent. Loan losses remain low Net loan losses for January-March amounted to EUR 3 million (EUR 2 M). The net volume of problem loans, including EUR 11 million of loans with interest deferments, decreased to EUR 764 million. The level of provisions against non-performing loans amounted to 66.3 per cent. The net volume represented 1.1 per cent of total lending. Aleksia sold On April 10, 2000 MeritaNordbanken and Ilmarinen, the Finnish pension insurance company, signed a deal on the share capital of the real estate company Aleksia. Following Ilmarinen's acquisition of the real estate company Aleksia, the parties have agreed that part of the real estate property transferred to the ownership of Ilmarinen be sold gradually on the markets in collaboration between MeritaNordbanken and Ilmarinen. The companies have made an agreement on how to divide profits from sales of the approximately 100 real properties to be sold. The sales of Aleksia have reduced the balance sheet value of MeritaNordbanken's real estate holdings by EUR 1.3 billion. The bank will continue to divest the Group's real estate holdings in accordance with its strategy. The loss on the disposal, EUR 40 million, is reported as a separate item after operating profit. Unrealized gains and shareholders' equity At the close of the first quarter, holdings of interest-bearing securities classified as financial fixed assets amounted to EUR 6.0 billion, which nearly matched the market value. Equity holdings, classified as financial current assets but carried at the lower of cost or market, amounted to EUR 0.6 billion, with unrealized gains at the end of the period totalling EUR 0.2 billion. The fair value of the assets of the Group's pension foundations and pension fund at the end of the period exceeded the pension commitments by EUR 0.5 billion. Shareholders' equity at the end of March was EUR 5.5 billion. Tier 1 ratio amounted to 8.1 per cent and the capital ratio to 11.7 per cent. Quarterly income statement Q 1 Q 4 Q 3 Q 2 Q 1 EUR million 2000 1999 1999 1999 1999 Net interest income 487 457 439 454 448 Net commission income 267 257 190 194 181 Net result from financial 34 17 -7 -53 34 * operations Other income 94 57 60 91 92 Total income 882 788 682 686 755 Personnel expenses -202 -200 -195 -196 -196 Other expenses -220 -281 -210 -229 -207 Total expenses -422 -481 -405 -425 -403 Profit before loan losses 460 307 277 261 352 Loan losses, net -3 -2 0 0 -20 Profit from companies accounted for under the equity method 15 30 5 19 43 Operating profit 472 335 282 280 375 * * Excluding capital gain on sale of shares in Pohjola Insurance Company, EUR 114 million. First-quarter market developments In Finland and Sweden, the first quarter was a period of economic growth. Short-term interest rates continued to rise, while the medium-term interest rates decreased slightly. Lending The Group's lending to the public at the end of March totalled EUR 71.5 billion, an increase since yearend of EUR 3.3 billion. Over the last twelve moths, Group lending to the public increased by EUR 7.7 billion or 12.1 per cent. The Group's market shareof lending to companies in Finland , as of February, was 48.4 per cent and 16.7 per cent in Sweden. In Sweden, the Group's mortgage market share rose to 15.3 per cent, while the market share of total lending to households was 14.6 per cent. In Finland, the Group's lending to households increased, while the market share contracted marginally to 33.1 per cent. The market share of mortgage lending in Finland was 36.4 per cent at the end of the quarter. Deposits The Group's total deposits from the public decreased by 1.3 per cent to EUR 41.5 billion, with marginally lower market shares. The market share of total deposits from households in Finland in February was 36.2 per cent while that of corporate deposits was 40.9 per cent. In Sweden, the Group's deposit market share in the household sector was 21.4 per cent and that in the corporate sector 15.9 per cent. Mutual funds The net inflow of savings into the Group's mutual funds in Sweden in the first quarter was EUR 362 million, which represented 12.7 per cent of net fund savings in Sweden during this period. In Finland, the net inflow of capital into the Group's mutual funds during the first quarter was EUR 430 million, corresponding to 19.3 per cent of total net savings in Finnish mutual funds during this period. The Group's market share of total mutual fund assets in Finland at the end of the period was 26.5 per cent. The aggregate assets managed by the Group's mutual funds was EUR 20.2 billion in Sweden and EUR 4.0 billion in Finland, totalling EUR 24.2 billion. Insurance savings The Group's first-quarter premium income from insurance business in Finland and Sweden was EUR 633 million. Premium income from unit-linked insurance products continued to rise rapidly, notably in Sweden. First- quarter premiums amounted to EUR 300 million. Sales of non-unit-linked life assurance products also continued to increase in Finland, with a total premium income during the period of EUR 333 million. Further growth in household savings At the end of March, total household savings, including bank deposits, mutual funds, insurance products, retail bonds, share-index-linked bonds, etc., with the MeritaNordbanken Group amounted to EUR 56 billion, an increase by EUR 4 billion during the first quarter. Internet banking To date, 1.2 million MeritaNordbanken customers have signed up as users of the Group's Internet banking services, and the targeted number is two million by the first quarter of 2001. Monthly log-ons are approaching 4 million and the number of payments is 4.1 million. New services are being introduced frequently, e.g. brokerage in Sweden. Results by business area Group operations were organized into four major business areas. The results of Treasury operations and Other operations are shown separately. Results by business area EUR million Asset Mgm/ . Retail Corporate Markets Life Treasury Other Total Insurance Q1/00 323 90 30 81 31 -83 472 Q4/99 228 78 28 66 23 -88 335 Q3/99 216 62 -2 48 10 -52 282 Q2/99 189 85 -3 60 -17 -34 280 Q1/99 197 53 29 47 71 92* 489 * including capital gain on Pohjola Retail Retail reported a first-quarter operating profit of EUR 323 million, up EUR 95 million or 42 per cent compared to the previous quarter. Improved margins, especially on deposits, growing volumes in mutual funds and high commissions from equity trading boosted Retails earnings in the first quarter 2000. In addition loan losses, net, were positive. Return on allocated equity was 37 per cent. Corporate Corporate's profit for the first quarter of 2000 totalled EUR 90 million, up EUR 12 million compared to the last quarter 1999. The increase is primarily related to higher earnings in custody services and growth in lending. In addition, further reductions in international risk exposures made it possible to reduce provisions related to such credits. Return on allocated equity was 20 per cent. Markets Earnings by Markets continued to be strong in the first quarter of 2000 reporting a profit of EUR 30 million, an increase of EUR 2 million compared to the previous quarter. High turnover in the equity markets, a downward trend in long-term interest rates and volatility in currency markets created opportunities to achieve this favourable earnings development. Asset Management/Life Insurance Thanks to continuing momentum in the first quarter, assets under management rose by EUR 4.1 billion to EUR 37.1 billion. First-quarter product earnings, comprising total management income less administrative, sales and distribution expenses, rose by 14 per cent compared to the previous quarter and totalled EUR 57 million. Operating profit, before sales and distribution expenses, amounted to EUR 81 million (EUR 66 M). Total assets under management, including private banking, amounted to EUR 50 billion. Treasury Treasury's profit for the first quarter 2000 was EUR 31 million, up EUR 8 million compared to the previous quarter. This refers mainly to favourable positions in the bond portfolio and some gains from the equity portfolio. Other operations The items under the heading "Other" consist of income and expenses related to remaining real estate holdings and income and expenses not directly attributable to any other business area as well as of intra-Group adjustments and eliminations. Cash offer to shareholders of Christiania Bank og Kreditkasse The offer to acquire all outstanding shares in Christiania Bank og Kreditkasse was repeatedly prolonged during the first quarter. And adjusted to NOK 42.50 per share after shareholders' meeting decision on extra dividend of NOK 1.50. Offer to shareholders of Unidanmark A/S On March 6, MeritaNordbanken and Unidanmark announced an agreement to merge by way of an offer from Nordic Baltic Holding to shareholders of Unidanmark to exchange one Unidanmark share for 12.704 NBH shares. The merger integration process has started with appointments and merger projects. When the offer to the shareholders expired, shareholders representing 97.1 per cent of the Unidanmark shares had accepted the offer, which equals to a new share issue from NBH of 869.8 million shares, and all other conditions had been met. The process to acquire remaining shares has started and the merger is being effected. Rating After the launch of the merger between MeritaNordbanken and Unidanmark, the international rating agencies Moody's Investors Service and Standard & Poor's placed their respective credit ratings for the MeritaNordbanken Group under review for a possible upgrade of the ratings. New Board of Directors Now that the merger with Unidanmark has been completed the Board of Directors has, in accordance with the resolution passed by the Annual General Meeting, the following members: Dan Andersson, Edward Andersson, Rune Brandinger, Claus Høeg Madsen and Timo Peltola for one year, and Hans Dalborg, Jørgen Høeg Pedersen, Bernt Magnusson and Vesa Vainio for two years. Thorleif Krarup is a deputy member for one year. Shares During the first quarter, the Nordic Baltic Holding share price ranged between SEK 41.80 and 51.50. The market capitalization of the Nordic Baltic Holding Group at end of April was EUR 21 billion. Stockholm, April 28, 2000 Hans Dalborg President and Group Chief Executive Officer This interim report has not been subject to summary review by the auditors. Further information: Hans Dalborg, President and Group CEO, tel. (+46 8) 614 7800 Arne Liljedahl, CFO,EVP tel. (+46 8) 614 7996 (or +46 70 566 7121) Björn Westberg, Investor Relations, tel. (+46 8) 614 7850 (or +46 70 590 5552) www.meritanordbanken.com Next reporting date The interim report of Nordic Baltic Holding for the first six months of 2000 will be published on August 23, 2000. Tables MeritaNordbanken Group Income Statements Balance Sheets Financial ratios Share-related indicators Problem loans Results by business area Cash flow analysis Income statement EUR million SEK million Jan - Mar Change Jan - Mar 2000 1999 % 2000 Net interest income, note 1 487 448 9 4 130 Net commission income, note 267 181 48 2 269 2 1) Net result from financial 34 148 -77288 operations, note 3 Other income, note 4 94 92 2 792 Total income 882 869 1 7 479 Personnel expenses -202 -196 3 -1 717 Other expenses, note 5 -220 -207 6 -1 863 Total expenses -422 -403 5 -3 580 Profit before loan losses 460 466 -1 3 899 Loan losses, net -3 -20 -85-25 Profit from companies accounted for under the equity method 15 43 -65130 1) Operating profit 472 489 -3 4 004 Loss on disposal of real -40 - -339 estate holdings Refund of the surplus in 8 - 70 the Pension Foundation/Fund Taxes -106 -76 39 -901 Minority interest -2 0 -14 Net profit for the period 332 413 -202 820 1) Includes items affecting comparability in the amount of EUR 114 million. See also note 3. Note 1: Net interest income EUR million SEK million Jan - Mar Change Jan - Mar 2000 1999 % 2000 Interest income 1 317 1 212 9 11 174 Interest expenses -830 -764 9 -7 044 Net interest income 487 448 9 4 130 Note 2: Net commission income EUR million SEK million Jan - Mar Change Jan - Mar 2000 1999 % 2000 Commission income Securities 161 79 104 1 364 Payment transmission 64 51 25 543 Lending 43 44 -2 368 Guarantees 7 8 -13 59 Deposits 8 5 60 67 Other commission income 17 14 21 146 Total commission income 300 201 49 2 547 Commission expenses Payment transmission 24 14 71 203 Securities 5 3 67 39 Other commission expenses 4 3 33 36 Total commission expenses 33 20 65 278 Net commission income 267 181 48 2 269 Note 3: Net result from financial operations EUR million SEK million Jan - Mar Change Jan - Mar 2000 1999 % 2000 Equity-related items 1) Realized gains/losses 14 114 -88 119 Unrealized gains/losses -4 0 -34 10 114 -91 85 Interest-rate-related items Debt redemption - - - Other realized gains/losses -33 55 -277 Unrealized gains/losses 39 -38 331 6 17 -65 54 Foreign exchange 18 17 6 149 gains/losses Net result from financial 34 148 -77 288 operations 1) Capital gain on shares in Pohjola Insurance Company. Note 4: Other income EUR million SEK million Jan - Mar Change Jan - Mar 2000 1999 % 2000 Dividends 16 7 129 133 Real estate income 14 44 -68 119 Sale of real estate 9 6 50 80 Sale of equity investments 45 0 383 Other 10 35 -71 77 Total other income 94 92 2 792 Note 5: Other expenses EUR million SEK million Jan - Mar Change Jan - Mar 2000 1999 % 2000 Administrative expenses 146 117 25 1 234 Real estate expenses 12 23 -48 105 Depreciation according to 29 36 -19 247 plan Other 33 31 6 277 Total other expenses 220 207 6 1 863 Exchange rates applied EUR 1 = FIM 5.94573 (fixed rate) Jan - Mar Jan - Dec EUR 1 = SEK 2000 1999 1999 Income statement (average) 8.4833 9.0214 8.8150 Balance sheet (at the end 8.2825 8.8871 8.5625 of period) Balance sheets EUR SEK million million Mar 31, Dec 31,Mar 31,Mar 31, 2000 1999 1999 2000 Assets Loans to credit 11 701 11 364 11 052 96 915 institutions Loans to the public 71 521 68 210 63 799 592 377 Interest-bearing securities Current assets 7 757 8 469 10 067 64 251 Financial fixed assets 5 966 5 791 3 761 49 416 Shares and participations 626 658 406 5 187 Shares and participations in Group and associated companies 475 666 658 3 930 Real estate holdings 1 531 2 761 2 971 12 683 Other assets 6 876 6 058 7 904 56 947 Total assets 106 453 103 977100 618881 706 Liabilities and shareholders' equity Due to credit institutions14 106 13 354 16 682 116 838 and central banks Deposits from the public 41 521 42 074 40 615 343 895 Other borrowing from the 2 668 1 924 2 044 22 102 public Debt instruments 28 957 28 094 21 737 239 832 outstanding Other liabilities 9 586 8 906 11 138 79 404 Subordinated debt 4 102 4 099 3 443 33 974 1 Shareholders' equity 5 513 5 526 4 959 45 661 ) Total liabilities and 106 453 103 977100 618881 706 shareholders' equity Capital adequacy Capital base 8 356 8 208 7 017 69 209 Risk-weighted amount 71 480 68 452 65 292 592 033 Total capital ratio, % 11.7 12.0 10.7 11.7 Tier I ratio, % 8.1 8.3 7.3 8.1 Off-balance-sheet commitments Guarantees 5 627 5 115 4 911 46 606 Stand-by facilities 9 139 7 200 5 329 75 691 Credit lines 9 489 8 304 5 542 78 591 Other commitments 1 945 1 937 1 897 16 117 Total 26 200 22 556 17 679 217 005 of which on behalf of 81 46 26 669 associated companies 1) Change in shareholders' equity Shareholders' equity at 5 526 the beginning of the year Dividends -427 Exchange rate changes 82 Profit Q1 332 Shareholders' equity at 5 513 the end of the period Derivative instruments (nominal amounts) EUR SEK million million Mar 31,Dec 31,Mar 31,Mar 31, 2000 1999 1999 2000 Contracts made for hedging purposes Interest-rate-related 17 929 18 257 3 879 148 496 derivatives Currency-related 7 122 8 409 19 269 58 984 derivatives Equity-related derivatives 780 631 248 6 464 Contracts made for other than hedging purposes Interest-rate-related 264 520265 830246 5882 190 derivatives 885 Currency-related 72 662 70 685 45 878 601 823 derivatives Equity-related derivatives 86 86 114 714 Other derivatives 18 113 23 148 Total Interest-rate-related 1 626 1 923 2 719 13 465 derivatives, credit equivalents Currency-related 1 371 2 169 2 659 11 353 derivatives, credit equivalents Financial ratios Jan - Mar Jan - Dec 2000 1999 1999 1 1) Return on equity, % 23.1 22.4 20.6 ) Cost/income ratio, % 1 1) - before loan losses 47 51 57 ) 1 1) - after loan losses 47 53 58 ) Loan losses/lending at the 0.02 0.1 0.04 beginning of the year, % Share-related indicators Jan - Mar Jan - Dec 2000 1999 1999 Shares outstanding at end 2 091.1 2 123.9 2 091.1 of period, mill. - after full conversion 2 114.3 2 151.0 2 114.3 1 1) Earnings per share (EPS) EUR 0.16 EUR EUR ) 0.13 0.51 Shareholders' equity per EUR 2.67 EUR EUR share at end of period 2.38 2.68 Share price at end of SEK SEK SEK period 46.00 47.00 50.00 1) Excluding capital gain on sale of shares in Pohjola Insurance Company, EUR 114 million. Problem loans Mar Dec 31 Sep June Mar 31 30 30 31 EUR million 2000 1999 1999 1999 1999 Non-performing loans, gross2 234 2 252 2 407 2 574 3 061 Loan loss provisions -1 -1 460 -1 -1 -2 481 477 717 126 Non-performing loans, net 753 792 930 857 935 Loans with interest 11 13 19 16 17 deferments Problem loans, total 764 805 949 873 952 Problem loans, total in SEK6 328 6 891 million Loan loss provision/ non-performing loans, gross66.3 64.8 % 61.4 66.7 69.5 % % % % Non-performing loans, net, 1.1 % 1.2 % 1.4 % 1.3 % 1.5 % percent of lending Results by business area, January - March 2000 Asset Management / Life EUR million RetaiCorporatMarket Insurance TreasuOtherTotal l e s ry Operating profit/loss Income 654 118 57 95 37 -79 882 Expenses -335 -44 -27 -14 -6 4 -422 Loan losses 4 16 - - - -23 -3 Profit from companies accounted for under the - - - - - 15 15 equity method Operating 323 90 30 81 31 -83 472 profit/loss of which 85 2 -8 -79 reallocated Operating profit/loss Q 4, 1999 228 78 28 66 23 -88 335 Q 3, 1999 216 62 -2 48 10 -52 282 Q 2, 1999 189 85 -3 60 -17 -34 280 Q1, 1999 197 53 29 47 71 92 489 Product earnings Income 95 Administrative -14 expenses Sales and -24 distribution expenses Product earnings 57 Product earnings Q 4, 1999 50 Q 3, 1999 34 Q 2, 1999 48 Q 1, 1999 34 Cash flow analysis EUR SEK million million Q1, Q1, Full Q1, 2000 1999 year 2000 1999 Ordinary business Operating profit 472 489 1 386 4 004 Adjustments for items not -180 419 687 -1 527 included in cash flow Refund of the surplus in the 8 - 65 70 Pension Fund/Foundation Taxes -106 -76 -205 -901 Cash flow from ordinary business before changes in ordinary business assets 194 832 1 933 1 646 and liabilities Changes in ordinary business -5 461 -4 397 -4 478 -46 327 assets Changes in ordinary business 1 161 3 834 -161 9 848 liabilities Cash flow from ordinary -4 106 269 -2 706 -34 833 business Investment operations Change in shares and participations in subsidiaries and associated companies 191 -38 -46 1 620 Change in other financial -176 -67 -2 095 -1 492 fixed assets Net change in tangible and 1 239 -43 -105 10 511 intangible assets Cash flow from investment 1 254 -148 -2 246 10 639 operations Financial operations Change in securities issued 863 -949 5 407 7 321 etc Change in subordinated debt 3 897 1 553 25 Dividends - - -367 - Other 81 148 7 687 1 Translation difference - - - -606 ) Cash flow from financial 947 96 6 600 7 427 operations Cash flow for the period -1 905 217 1 648 -16 767 Liquid assets at the beginning3 552 1 904 1 904 30 408 of the period Liquid assets at the end of 1 647 2 121 3 552 13 641 the period Additional information Liquid assets include 2) Cash in hand 475 908 2 693 3 937 Loans to credit institutions, 1 172 1 213 859 9 704 repayable on demand Total 1 647 2 121 3 552 13 641 Interest payments and dividends Interest income received 1 111 1 217 4 875 9 424 Interest expenses paid 493 557 2 937 4 182 Dividends received 16 7 27 133 Dividends paid - - 367 - 1) The translation difference derives mainly from the fact that the line- by-line figures have been translated into SEK using the average exchange rate, whereas liquid assets have been translated using the exchange rate on the last day of the period. 2) Cash and receivables repayable on demand from the Bank of Finland and Riksbanken. Press Release Stockholm/Helsinki/Copenhagen, April 28, 2000 MeritaNordbanken extends offer to shareholders of Christiania Bank og Kreditkasse to 26 May 2000 MeritaNordbanken Plc extends its offer to acquire all outstanding shares in Christiania Bank og Kreditkasse ASA for NOK 42.50 per share until 17.00 on Friday 26 May 2000. The offer is extended in anticipation of a decision expected before summer on the guidelines for the Norwegian Government's ownership of 34,65 per cent of the shares in Christiania Bank og Kreditkasse. The effected merger between MeritaNordbanken and Unidanmark has created the leading financial services group in the Nordic and Baltic Sea region with substantial market shares for banking or insurance in Denmark, Finland, Norway and Sweden. The prolonged offer to the shareholders of Christiania Bank og Kreditkasse provides a possibility for the bank to join this leading Nordic financial group in its formative stage. MeritaNordbanken's offer to acquire all shares of Christiania Bank og Kreditkasse for NOK 44 per share was presented on 20 September 1999. The offer was initially scheduled to expire at 17.00 on 29 October 1999. Prior to today's prolongation it has successively been extended to 28 April 2000. The annual shareholders meeting of Christiania Bank og Kreditkasse decided on regular dividend of NOK 1.50 and extraordinary dividend of NOK 1.50. After that MeritaNordbanken has adjusted its offer for the extraordinary dividend to NOK 42.50 per share. Upon completion shareholders who have accepted the offer will receive interest rate compensation of 6 per cent per annum from the date the shares were received by MeritaNordbanken. The Board of Directors of Christiania Bank og Kreditkasse, its management and employees have recommended shareholders to accept the offer as industrially sound and financially fair. Further information: Lars Thalén, Identity and Communications, +46 8 614 7951, +46 709 200 665 Arne Liljedahl, CFO, +46 8 614 7996, +46 70 566 71 21 Not for distribution in Australia, Canada, Japan and USA. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/04/28/20000428BIT00690/bit0001.doc http://www.bit.se/bitonline/2000/04/28/20000428BIT00690/bit0002.pdf