Stadshypotek's interim report January - March 2007
* Lending increased by SEK 8bn (8) to SEK 489bn * Operating profit was SEK 1,097m (1,264) * Recoveries exceeded new loan losses during the period
Earnings performance Stadshypotek's operating profit for the period was SEK 1,097m. The profit for the corresponding period in 2006 was SEK 1,264m. The change in profit is mainly due to decreased net interest income. During the first quarter, there has been great price pressure in the market, which has led to continued pressure on margins with a negative impact on net interest income. Stadshypotek's lending volume on the private market has continued its very positive development during the period. However, compared to the same period last year, it has not been possible to fully compensate the falling lending margins. Net interest income was also negatively impacted during the first quarter by effects relating to decisions concerning repurchase of bonds relating to the transition to IFRS. These effects will gradually decline until 2008. Compared to the fourth quarter of 2006, net interest income was SEK 36m higher during the first quarter of 2007.
Low loan losses Recoveries exceeded new loan losses; the net amount recovered was SEK 29m (54), which corresponds to a loan loss ratio of -0.02% (-0.05) of lending. As at 31 March 2007, Stadshypotek's bad debts before deduction of the provision for probable loan losses were SEK 328m (528). SEK 35m (52) of the bad debts were non-performing loans and SEK 293m (476) were loans on which the borrowers pay interest and amortisation, but which are considered doubtful in view of the uncertainty as to the borrowers' repayment capacity and the value of the collateral. In addition, there were non-performing loans of SEK 221m (222) that are not assessed as being bad debts. After deduction of the provision for probable loan losses, the volume of bad debts was SEK 236m (400).
Growth in lending Loans to the public were SEK 489bn - an increase of SEK 8bn for the period. The first quarter has continued to see a very favourable increase in Stadshypotek's share of net growth in the private market. Stadshypotek's overall share of mortgage institutions' lending on the private market was 26.5%. Stadshypotek has retained its position as a leading player on the Swedish corporate market, with a market share of 34.5%.
Capital adequacy On 1 February 2007, new capital adequacy regulations were implemented - the Basel II rules. The new rules entail major changes in how the capital requirement is to be calculated and how a satisfactory capital base is to be ensured. The new rules will be gradually implemented since the transitional rules allow for an adaptation over three years. As at 31 March 2007, the capital ratio was 10.3% (8.6). As at 31 March 2007, the Tier 1 capital ratio was 7.3% (7.3). Further information about capital adequacy is available in the section Capital base and capital requirement.
Rating Stadshypotek's rating was unchanged.
Stadshypotek Long-term Short-term Moody's Aa1 P-1 Standard & Poor's AA- A-1+ Fitch AA- F1+
Covered bonds Moody's Aaa
Accounting policies The accounts comply with the IASB accounting standards adopted by the EU. The regulations of the Annual Accounts Act for Credit Institutions and Securities Companies (ÅRKL) and the directives issued by the Swedish Financial Supervisory Authority are also applied. The interim report is also adapted to these. The same accounting policies and calculation methods have been applied in the interim report as in the latest annual report.
Stockholm, 23 April 2007
Frank Vang-Jensen Chief executive
This interim report has not been examined by the company's auditors
The report can be downloaded from the following link: