Interim report January March
Stadshypotek s interim report January March Summary Income for the period January March was SEK 2,013 million (1,465). Income for the fourth quarter of was SEK 1,735 million. Operating profit for the period January March was SEK 1,944 million (1,414). Operating profit for the fourth quarter of was SEK 1,641 million. Net for the period January March totalled SEK -3 million (10). Net for the fourth quarter of totalled SEK -9 million. Lending increased by SEK 2 billion (14) during the period to SEK 846 billion.
Stadshypotek s interim report January March FINANCIAL PERFORMANCE January to March compared with January to March For the period January to March, operating profit increased by SEK 530 million to SEK 1,944 million (1,414). Net interest income amounted to SEK 1,958 million (1,438), with the branch in Norway accounting for SEK 116 million (105), the branch in Denmark accounting for SEK 23 million (19) and the branch in Finland, established on 1 May, accounting for SEK 48 million ( ). Excluding these branches, net interest income thus rose by SEK 457 million, which was due to an increase in lending volume and to improved margins as a result of the company s good position in the funding market. Net gains/losses on financial items at fair value amounted to SEK 56 million (31). Expenses rose by SEK 5 million to SEK 66 million (61), primarily due to increased costs for purchased services from the parent company and IT expenses related to the branch in Finland. Net amounted to SEK -3 million (10). Before deduction of the provision, the volume of impaired was SEK 112 million (93). Of this amount, non-performing accounted for SEK 74 million (45), while SEK 38 million (48) related to on which the borrowers pay interest and amortisation, but which are nevertheless considered impaired. There were also non-performing of SEK 1,042 million (542) that are not classed as being impaired. After deductions for specific totalling SEK -49 million (-36) and collective of SEK -7 million (-6), impaired totalled SEK 56 million (51). CAPITAL ADEQUACY The capital ratio according to Basel II was 56.8 per cent (49.1) while the Tier 1 ratio calculated according to Basel II was 40.3 per cent (37.7). Further information on capital adequacy is provided in the Capital base and capital requirement section on page 15. RATING Stadshypotek s rating remained unchanged during the year, with a stable outlook. Stadshypotek Covered bonds Long-term Short-term Moody s Aaa - P-1 Standard & Poor s AA- A-1+ Fitch AA- F1+ Stockholm, 26 April Per Beckman Chief Executive compared with Q4 Stadshypotek s operating profit for the first quarter of increased by SEK 303 million to SEK 1,944 million (1,641). Net interest income increased by SEK 244 million to SEK 1,958 million (1,714). SEK 116 million (91) of the net interest income was attributable to the branch in Norway, SEK 23 million (25) to the branch in Denmark and SEK 48 (46) million to the branch in Finland. Excluding these branches, net interest income thus rose by SEK 219 million. Net gains/losses on financial items at fair value amounted to SEK 56 million (23). Expenses decreased by SEK 19 million to SEK 66 million (85), mainly due to a reduction of SEK 17 million in administrative expenses. The reduction was mainly due to the fact that administrative expenses during the fourth quarter were charged with higher expenses for updating existing foreign loan programmes and with the initial expenses associated with setting up loan programmes for covered bonds in Australia and Norway. GROWTH IN LENDING During the period, to the public increased by SEK 2 billion (14) to SEK 846 billion. This interim report has not been examined by the company s auditors. 1
Stadshypotek Group Income statement Group Q4 Jan Mar Jan Mar Interest income 8,408 6,548 28 8,216 2 8,408 6,548 28 29,869 Interest expense -6,450-5,110 26-6,502-1 -6,450-5,110 26-23,625 Net interest income Note 3 1,958 1,438 36 1,714 14 1,958 1,438 36 6,244 Net gains/losses on financial items at fair value Note 4 56 31 81 23-56 31 81 19 Fee and commission income 4 3 33 3 33 4 3 33 12 Fee and commission expense -5-7 -29-5 0-5 -7-29 -24 Net fee and commission income -1-4 -75-2 -50-1 -4-75 -12 Total income 2,013 1,465 37 1,735 16 2,013 1,465 37 6,251 Staff costs -12-12 0-14 -14-12 -12 0-49 Other administrative expenses Note 5-51 -46 11-68 -25-51 -46 11-208 Depreciation and amortisation -3-3 0-3 0-3 -3 0-12 Total expense -66-61 8-85 -22-66 -61 8-269 Profit before 1,947 1,404 39 1,650 18 1,947 1,404 39 5,982 Net Note 6-3 10 - -9-67 -3 10-12 Operating profit 1,944 1,414 37 1,641 18 1,944 1,414 37 5,994 Tax -516-372 39-434 19-516 -372 39-1,587 Profit for the period 1,428 1,042 37 1,207 18 1,428 1,042 37 4,407 Net earnings per share, before and after dilution, SEK 8,817 6,435 7,456 8,817 6,435 27,204 Statement of comprehensive income Group Q4 Jan Mar Jan Mar Profit for the period 1,428 1,042 37 1,207 18 1,428 1,042 37 4,407 Translation differences for the period 14-8 - -26-14 -8 - -7 Total comprehensive income for the period 1,442 1,034 39 1,181 22 1,442 1,034 39 4,400 Quarterly performance Group Q4 Q3 Q2 Interest income 8,408 8,216 7,858 7,247 6,548 Interest expense -6,450-6,502-6,249-5,764-5,110 Net interest income 1,958 1,714 1,609 1,483 1,438 Net gains/losses on financial items at fair value 56 23-5 -30 31 Net fee and commission income -1-2 -4-2 -4 Total income 2,013 1,735 1,600 1,451 1,465 Staff costs -12-14 -11-12 -12 Other administrative expenses -51-68 -46-48 -46 Depreciation and amortisation -3-3 -3-3 -3 Total expense -66-85 -60-63 -61 Profit before 1,947 1,650 1,540 1,388 1,404 Net -3-9 0 11 10 Operating profit 1,944 1,641 1,540 1,399 1,414 2
Summary balance sheet Group Assets Loans to credit institutions 13,373 9,435 10,428 Loans to the public Note 7 846,368 843,929 772,810 Value change of interest hedged item in portfolio hedge 5,121 4,490 4,447 Derivative instruments Note 8 17,258 18,211 12,820 Other assets 11,862 3,962 6,447 Total assets 893,982 880,027 806,952 Liabilities and equity Due to credit institutions 280,808 267,353 292,419 Issued securities 547,916 546,149 461,608 Derivative instruments Note 8 8,757 7,765 8,043 Other liabilities and 12,992 16,693 10,617 Subordinated liabilities 16,700 16,700 8,800 Total liabilities 867,173 854,660 781,487 Equity 26,809 25,367 25,465 Total liabilities and equity 893,982 880,027 806,952 Statement of changes in equity Group Jan Mar Share capital* Translation reserve Retained earnings Total Equity at ember 4,050-44 21,361 25,367 Profit for the period 1,428 1,428 Other comprehensive income 14 14 Total comprehensive income for the period 14 1,428 1,442 Equity ch 4,050-30 22,789 26,809 Statement of changes in equity Group Jan Dec Share capital* Translation reserve Retained earnings Total Equity ember 2010 4,050-37 20,418 24,431 Profit for the year 4,407 4,407 Other comprehensive income -7-7 Total comprehensive income for the year -7 4,407 4,400 Group contributions provided -4,700-4,700 Tax effect on group contributions 1,236 1,236 Equity ember 4,050-44 21,361 25,367 Statement of changes in equity Group Jan Mar Share capital* Translation reserve Retained earnings Total Equity ember 2010 4,050-37 20,418 24,431 Profit for the period 1,042 1,042 Other comprehensive income -8-8 Total comprehensive income for the period -8 1,042 1,034 Equity ch 4,050-45 21,460 25,465 * Average number of shares, before and after dilution, 162,000. 3
Summary cash flow statement Group Cash flow from operating activities 8,746 1,044 24,894 Cash flow from investing activities -2-38 -27,881 Cash flow from financing activities -4,700-1,628 6,272 Cash flow for the period 4,044-622 3,285 Liquid funds at beginning of year 4,319 1,049 1,049 Cash flow for the period 4,044-622 3,285 Exchange rate difference on liquid funds 10 1-15 Liquid funds at end of period 8,373 428 4,319 Liquid funds consist of funds available with banks and equivalent institutions, excluding funds in blocked account. Liquid funds with banks and equivalent institutions 8,373 428 4,319 Funds in blocked account with banks relating to issuance of covered bonds 5,000 10,000 5,116 Loans to credit institutions 13,373 10,428 9,435 Key figures Q4 Net interest margin, 0.88 0.72 0.78 0.88 0.72 0.75 C/I ratio before, 3.3 4.2 4.9 3.3 4.2 4.3 C/I ratio after, 3.4 3.5 5.4 3.4 3.5 4.1 Return on equity, * 19.5 16.1 17.1 19.5 16.1 16.3* Capital ratio according to Basel II, 56.8 49.1 58.1 56.8 49.1 58.1 Tier 1 ratio according to Basel II, 40.3 37.7 40.5 40.3 37.7 40.5 * The comparative figure for the full year has been adjusted following the rectification of a calculation error. Turnover of own debt instruments Stadshypotek issues and repurchases debt instruments which it has issued on its account. This is for the purposes of financing its operations. Turnover during the period was as follows: Issued (sold) SEK 95 billion (43) Repurchased SEK 30 billion (14) Matured SEK 39 billion (9) Segment information Jan Mar Jan Mar Private Corporate Group Private Corporate Group Private Corporate Group Net interest income 1,434 524 1,958 997 441 1,438 4,607 1,637 6,244 Net gains/losses on financial items at fair value 40 16 56 21 10 31 14 5 19 Net fee and commission income -1 0-1 -3-1 -4-9 -3-12 Total income 1,473 540 2,013 1,015 450 1,465 4,612 1,639 6,251 Expenses -48-18 -66-44 -17-61 -202-67 -269 Profit before 1,426 521 1,947 971 433 1,404 4,410 1,572 5,982 Loan losses -3 0-3 8 2 10 9 3 12 Operating profit 1,426 521 1,944 979 435 1,414 4,419 1,575 5,994 Loans to the public 583,718 262,657 846,375 533,432 239,378 772,810 581,665 262,270 843,935 Private market is defined as lending secured by mortgages in single-family or two-family houses, second homes, housing co-operative apartments, owner-occupied apartments or residential farms. Corporate market is defined as lending secured by mortgages in multi-family dwellings, family farms, commercial and office buildings or state and municipal. Geographical breakdown of business segments Jan Mar Jan Mar Income Total assets Income Total assets Income Total assets Sweden 1,825 798,524 1,342 750,714 5,685 786,604 Norway 116 56,277 105 49,200 397 54,466 Denmark 24 10,840 18 7,038 89 10,005 Finland 48 28,341 80 28,952 Group 2,013 893,982 1,465 806,952 6,251 880,027 4
Parent company Income statement parent company Q4 Interest income 8,408 6,548 28 8,216 2 8,408 6,548 28 29,869 Interest expense -6,450-5,110 26-6,502-1 -6,450-5,110 26-23,625 Net interest income Note 3 1,958 1,438 36 1,714 14 1,958 1,438 36 6,244 Fee and commission income 4 3 33 3 33 4 3 33 12 Fee and commission expense -5-7 -29-5 0-5 -7-29 -24 Net fee and commission income -1-4 -75-2 -50-1 -4-75 -12 Net gains/losses on financial operations Note 4 56 31 81 23-56 31 81 19 Total income 2,013 1,465 37 1,735 16 2,013 1,465 37 6,251 Staff costs -12-12 0-14 -14-12 -12 0-49 Other administrative expenses Note 5-51 -46 11-68 -25-51 -46 11-208 Depreciation and amortisation -3-3 0-3 0-3 -3 0-12 Total expense -66-61 8-85 -22-66 -61 8-269 Profit before 1,947 1,404 39 1,650 18 1,947 1,404 39 5,982 Net Note 6-3 10 - -9-67 -3 10-12 Operating profit 1,944 1,414 37 1,641 18 1,944 1,414 37 5,994 Tax -516-372 39-434 19-516 -372 39-1,587 Profit for the period 1,428 1,042 37 1,207 18 1,428 1,042 37 4,407 Statement of comprehensive income parent company Q4 Profit for the period 1,428 1,042 37 1,207 18 1,428 1,042 37 4,407 Translation differences for the period 14-8 - -26-14 -8 - -7 Total comprehensive income for the period 1,442 1,034 39 1,181 22 1,442 1,034 39 4,400 Summary balance sheet parent company Assets Loans to credit institutions 13,373 9,435 10,428 Loans to the public Note 7 846,368 843,929 772,810 Value change of interest hedged item in portfolio hedge 5,121 4,490 4,447 Derivative instruments Note 8 17,258 18,211 12,820 Other assets 11,862 3,962 6,447 Total assets 893,982 880,027 806,952 Liabilities and equity Due to credit institutions 280,808 267,353 292,419 Issued securities 547,916 546,149 461,608 Derivative instruments Note 8 8,757 7,765 8,043 Other liabilities and 12,992 16,693 10,617 Subordinated liabilities 16,700 16,700 8,800 Total liabilities 867,173 854,660 781,487 Equity 26,809 25,367 25,465 Total liabilities and equity 893,982 880,027 806,952 Memorandum items Pledged assets for own debt* 583,912 594,238 507,674 Other pledged assets none none none Contingent liabilities none none none Undertakings 2,956 4,077 5,993 * Pledged assets for own debt relates to collateral for covered bonds, which comprises against mortgages in single-family dwellings, second homes, multi-family dwellings and housing co-operative apartments with a loan-to-value ratio within 75 per cent of the market value, as well as office and commercial properties with a loan-to-value ratio within 60 per cent of the market value, plus additional collateral in the form of cash funds on a blocked account. 5
Notes The information in these notes relates to both the Group and the parent company. Note 1 Accounting policies Information relating to the Group has been stated in accordance with IAS 34. The contents of the interim report also comply with the applicable of the Swedish Act on Annual Reports in Credit Institutions and Securities Companies, the Swedish Financial Supervisory Authority s regulations and general guidelines FFFS 2008:25 on annual reports in credit institutions and securities companies and recommendations from the Swedish Financial Reporting Board. The interim report for the parent company has been prepared in accordance with the Swedish Act on Annual Reports in Credit Institutions and Securities Companies and the Swedish Financial Supervisory Authority s regulations and general guidelines FFFS 2008:25 on annual reports in credit institutions and securities companies. None of the changes in the accounting standards which have come into force during the period has had a material impact on the parent company s or the Group s financial reports. The Group s and parent company s interim reports have been prepared in accordance with the same accounting policies and calculation methods that were applied in the annual report for. Note 2 Information Risk Stadshypotek s operations are conducted with a controlled low level of risk. Stadshypotek s risks are credit risk, market risk, liquidity risk, operational risk and business risk. A description of material risks and uncertainty factors, and how they are handled by the Group, is presented in the company s annual report. No material changes have occurred since the annual report was published that are not presented in this report. Information about credit risks regarding and non-performing and impaired can be found in notes 6 and 7 of this interim report. At ch, Stadshypotek s interest rate risk in the case of a parallel increase in the yield curve of one percentage point was SEK -142 million (-182), which was well within the limit set by the board. Capital-related matters At the start of the transition to Basel II, Stadshypotek entered into a guarantee facility relating to mortgages for housing co-operative properties, to speed up the transition. In June 2008, Stadshypotek utilised the guarantee, which had a 0.13 percentage point effect on the Tier 1 ratio as at ch. This transaction affects only capital adequacy in accordance with the transitional rules. 6
Note 3 Net interest income Q4 Interest income Loans to the public 8,322 6,463 29 8,124 2 8,322 6,463 29 29,516 Loans to credit institutions 86 85 1 92-7 86 85 1 353 Total 8,408 6,548 28 8,216 2 8,408 6,548 28 29,869 Interest expense Due to credit institutions -1,888-1,559 21-1,981-5 -1,888-1,559 21-7,381 Issued securities -4,324-3,793 14-4,359-1 -4,324-3,793 14-16,260 Subordinated liabilities -199-43 - -119 67-199 -43 - -333 Derivative instruments* 15 333-95 26-42 15 333-95 572 Fee to the Swedish Stabilisation Fund -50-42 19-63 -21-50 -42 19-202 Other -4-6 -33-6 -33-4 -6-33 -21 Total -6,450-5,110 26-6,502-1 -6,450-5,110 26-23,625 Net interest income 1,958 1,438 36 1,714 14 1,958 1,438 36 6,244 * Net interest income from derivative instruments which are related to Stadshypotek s funding and can have both a positive and a negative impact on interest expenses. Note 4 Net gains/losses on financial items at fair value Q4 Hedge accounting, fair value hedges 10-5 - 4-10 -5 - -69 of which hedged items 1,186 2,536-52 -475-1,186 2,536-53 -3,604 of which hedging instruments -1,176-2,541-52 479 - -1,176-2,541-54 3,535 Loans, valued at cost 52 33 58 51 2 52 33 58 174 Financial liabilities, valued at cost -30-26 16-23 30-30 -26 15-41 Derivatives not recognised as hedges 24 29-16 -9-24 29-17 -45 Total 56 31 81 23-56 31 81 19 The profit/loss item Fair value hedges includes the net result of unrealised and realised changes in the fair value of financial assets and liabilities which are subject to hedge accounting. Interest income and interest expenses for these instruments are recognised under net interest income. Derivatives not recognised as hedges are included in the held-for-trading category. Loans, valued at cost, refers to the early redemption charge for and other receivables which are repaid ahead of time. Financial liabilities, valued at cost, refers to realised price differences when repurchasing bonds. 7
Note 5 Other administrative expenses Q4 IT costs -24-22 9-28 -14-24 -22 9-94 Cost of premises -1-1 0-1 0-1 -1 0-4 Purchased services -23-20 15-23 0-23 -20 15-86 Other administrative expenses -3-3 0-16 -81-3 -3 0-24 Total -51-46 11-68 -25-51 -46 11-208 Note 6 Loan losses Q4 Specific provision for individually assessed Provision for the period -9 0 - -8 13-9 0 - -16 Wrote-back of previous 1 4-75 2-50 1 4-75 7 Total -8 4 - -6 33-8 4 - -9 Collective provision Collective provision for individually assessed -1 0 - -1 0-1 0-0 Write-offs Actual for the period -10-7 43-10 0-10 -7 43-31 Utilised share of previous 3 2 50 1-3 2 50 7 Write-back of actual in previous years 13 11 18 7 86 13 11 18 45 Total 6 6 0-2 - 6 6 0 21 Net -3 10 - -9-67 -3 10-12 Impaired Impaired 112 110 93 Specific provision for individually assessed -49-44 -36 Collective provision for individually assessed -7-6 -6 Net impaired 56 60 51 Proportion of impaired, 0.01 0.01 0.01 Reserve ratio for impaired, 43.6 39.8 38.6 Loan loss ratio, 0.00-0.00-0.01 which are not impaired 1,042 906 542 8
Note 7 Loans to the public Loans to the public, by borrower category Loans before Provisions Loans after Loans before Provisions Loans after Loans before Provisions Loans after Households 607,255-26 607,229 604,994-22 604,972 557,267-16 557,251 Public sector, municipal companies 24,237-24,237 25,706-25,706 21,100-21,100 Housing co-operative associations 110,549-14 110,535 110,529-14 110,515 99,597-12 99,585 Other legal entities 104,383-9 104,374 102,750-8 102,742 94,888-8 94,880 Total to the public, before collective 846,424-49 846,375 843,979-44 843,935 772,852-36 772,816 Collective provision -7-7 -6-6 -6-6 Total to the public 846,424-56 846,368 843,979-50 843,929 772,852-42 772,810 of which in operations outside Sweden Households 78,483-1 78,482 76,266-76,266 48,719-48,719 Public sector, municipal companies 1,689-1,689 1,482-1,482 - - - Housing co-operative associations 10,482-10,482 10,065-10,065 5,563-5,563 Other legal entities 3,893-3,893 3,858-3,858 1,666-1,666 Total to the public in operations outside Sweden 94,547-1 94,546 91,671-91,671 55,948-55,948 9
Note 7 Loans to the public, cont. Loans to the public, by type of collateral Loans before Provisions Loans after Loans before Provisions Loans after Loans before Provisions Loans after Single-family housing 442,149-18 442,131 439,372-14 439,358 407,820-9 407,811 Housing co-operative apartments 130,518-1 130,517 130,983-1 130,982 125,188 0 125,188 Owner-occupied apartments* 11,071-1 11,070 11,325-11,325 433-433 Private market 583,738-20 583,718 581,680-15 581,665 533,441-9 533,432 Multi-family housing 202,737-27 202,710 203,814-26 203,788 187,005-25 186,980 Offices and commercial buildings 59,949-2 59,947 58,485-3 58,482 52,406-2 52,404 Corporate market 262,686-29 262,657 262,299-29 262,270 239,411-27 239,384 Total to the public, before collective provision 846,424-49 846,375 843,979-44 843,935 772,852-36 772,816 Collective provision -7-7 -6-6 -6-6 Total to the public 846,424-56 846,368 843,979-50 843,929 772,852-42 772,810 of which in operations outside Sweden Single-family housing 64,274-64,274 61,915-61,915 44,262-44,262 Housing co-operative apartments 4,400-4,400 4,335-4,335 4,032-4,032 Owner-occupied apartments* 11,071-1 11,070 11,325-11,325 433-433 Private market 79,745-1 79,744 77,575-77,575 48,727-48,727 Multi-family housing 14,376-14,376 13,665-13,665 6,791-6,791 Offices and commercial buildings 426-426 431-431 430-430 Corporate market 14,802-14,802 14,096-14,096 7,221-7,221 Total to the public in operations outside Sweden 94,547-1 94,546 91,671-91,671 55,948-55,948 * Owner-occupied apartments entail individual ownership of a specific apartment in a multi-family dwelling and either an undivided interest in the property where the apartment is situated (direct ownership), or an interest in a legal entity which owns the property where the apartment is situated (indirect ownership). At the Norwegian branch, a lending volume has been reclassified from owner-occupied apartments to housing co-operative apartments. The comparative figures have been changed and the impact on these is SEK 4,025 million as at ch. 10
Note 7 Loans to the public, cont. by borrower category which are not impaired which are included in impaired which are not impaired which are included in impaired which are not impaired which are included in impaired Households 977 60 770 48 514 36 Public sector, municipal companies - - - - - - Housing co-operative associations 9 0 5-5 2 Other legal entities 56 14 131 9 23 7 Total 1,042 74 906 57 542 45 of which in operations outside Sweden Households 96 4 99-83 - Public sector, municipal companies - - - - - - Housing co-operative associations - - - - - - Other legal entities - - - - - - Total non-performing in operations outside Sweden 96 4 99-83 - by type of collateral which are not impaired which are included in impaired which are not impaired which are included in impaired which are not impaired which are included in impaired Single-family housing 662 44 629 34 441 23 Housing co-operative apartments 217 5 118 2 68 2 Owner-occupied apartments* 24 4 20-1 - Private market 903 53 767 36 510 25 Multi-family housing 114 18 120 14 28 19 Offices and commercial buildings 25 3 19 7 4 1 Corporate market 139 21 139 21 32 20 Total 1,042 74 906 57 542 45 of which in operations outside Sweden Single-family housing 66-72 - 79 - Housing co-operative apartments 6-7 - 3 - Owner-occupied apartments* 24 4 20-1 - Private market 96 4 99-83 - Multi-family housing - - - - - - Offices and commercial buildings - - - - - - Corporate market - - - - - - Total non-performing in operations outside Sweden 96 4 99-83 - * For a definition, see page 10. 11
Note 7 Loans to the public, cont. Impaired by borrower category Impaired Provision Net impaired Impaired Provision Net impaired Impaired Provision Net impaired Households 69-26 43 63-22 41 47-16 31 Public sector, municipal companies - - - - - - - - - Housing co-operative associations 29-14 15 35-14 21 33-12 21 Other legal entities 14-9 5 12-8 4 13-8 5 Total 112-49 63 110-44 66 93-36 57 of which in operations outside Sweden Households 4-1 3 - - - - - - Public sector, municipal companies - - - - - - - - - Housing co-operative associations - - - - - - - - - Other legal entities - - - - - - - - - Total impaired in operations outside Sweden 4-1 3 - - - - - - Impaired by type of collateral Impaired Provision Net impaired Impaired Provision Net impaired Impaired Provision Net impaired Single-family housing 50-17 33 44-14 30 31-9 22 Housing co-operative apartments 7-1 6 6-1 5 6 0 6 Owner-occupied apartments* 4-1 3 - - - - - - Private market 61-19 42 50-15 35 37-9 28 Multi-family housing 48-28 20 53-27 26 52-25 27 Offices and commercial buildings 3-2 1 7-2 5 4-2 2 Corporate market 51-30 21 60-29 31 56-27 29 Total 112-49 63 110-44 66 93-36 57 of which in operations outside Sweden Single-family housing - - - - - - - - - Housing co-operative apartments - - - - - - - - - Owner-occupied apartments* 4-1 3 - - - - - - Private market 4-1 3 - - - - - - Multi-family housing - - - - - - - - - Offices and commercial buildings - - - - - - - - - Corporate market - - - - - - - - - Total impaired in operations outside Sweden 4-1 3 - - - - - - * For a definition, see page 10. The reserved amount losses in the tables showing impaired consists of a specific provision for individually assessed receivables. 12
Note 8 Derivative instruments Market value Market value Market value Positive values Interest rate instruments 16,643 17,399 12,335 Currency instruments 615 812 485 Total 17,258 18,211 12,820 Negative values Interest rate instruments 2,491 2,614 1,100 Currency instruments 6,266 5,151 6,943 Total 8,757 7,765 8,043 Net 8,501 10,446 4,777 Stadshypotek uses fair value hedges to protect the Group against undesirable impact on profit/loss due to changes in the market prices of reported assets or liabilities. Hedged risks in hedging packages at fair value comprise interest rate risk on lending and funding at fixed interest rates and currency risk on funding in foreign currency. The hedging instruments in these hedging packages consist of interest rate swaps and cross-currency interest rate swaps. Fair value hedges are also applied for portfolios of financial instruments. The hedged risk in these portfolio hedges is the interest rate risk for lending where the original interest rate was fixed for three months and interest rate caps for lending with a fixedinterest period of three months. The hedging instruments in these portfolio hedges consist of interest rate swaps and interest rate options (caps). Interest rate swaps and currency swaps are also used as hedges for changes in market value without hedge accounting being applied. 13
Related-party transactions Group claims/group liabilities BALANCE SHEET Group claims Loans to credit institutions 13,373 9,435 10,428 Derivative instruments 17,262 18,030 12,684 Other assets 74 55 85 Total 30,709 27,520 23,197 Group liabilities Due to credit institutions 274,485 263,341 291,095 Derivative instruments 8,656 7,403 6,876 Other liabilities 972 5,536 482 Subordinated liabilities 16,700 16,700 8,800 Total 300,813 292,980 307,253 INCOME STATEMENT Interest income 92 294 80 Interest expense -1,976-6,990-1,470 Fee and commission expense -1-9 -3 Other administrative expenses -47-180 -43 Total -1,932-6,885-1,436 The business operations of Stadshypotek are highly decentralised. The basic principle is that organisation and working practices are determined by the branch offices of the Handelsbanken Group, which are responsible for all the business of individual customers. One consequence of this approach is that Stadshypotek s lending operations are run via Handelsbanken s Swedish branch operations and the lending operations in Stadshypotek s branches in Norway, Denmark and Finland are run via Handelsbanken s branch operations in Norway, Denmark and Finland respectively. Lending is to be carried out to the extent and on the terms stated in guidelines for granting credits, established annually by the board of Stadshypotek. These guidelines include the maximum permitted loan-to-value ratio for various property types, as well as the decision limits which apply to the branches lending. In addition, for in excess of a certain amount, an advance examination of the case is to be conducted by Stadshypotek s credit department before the loan can be disbursed. Stadshypotek s treasury function is also integrated with Handelsbanken s treasury department. Functions necessary for management and control of the company remain within Stadshypotek. Those services which Handelsbanken performs on behalf of Stadshypotek are regulated in a collaboration agreement between the parties. Most of the inter-company transactions are thus with the parent company, Handelsbanken. The services that Stadshypotek purchases from the parent company, which are included in other administrative expenses, consist primarily of IT services and the treasury function. As in previous years, no payments have been made to the parent company in respect of the services performed by the latter in relation to the sale and administration of mortgage in Sweden. However, at Stadshypotek s branches outside Sweden, payments in line with market levels have been made to Handelsbanken s branches in the country in question for services performed on behalf of Stadshypotek in relation to the sale and administration of mortgage. In addition, inter-company transactions consist of funding from the parent company, derivative transactions and lending to the parent company. 14
Capital base and capital requirement Capital base Tier 1 capital 1) 28,325 24,355 Tier 1 capital 2) 29,753 28,319 25,397 Tier 2 capital 11,580 12,289 7,378 Capital base 1) 39,905 31,733 Capital base 2) 41,333 40,608 32,775 Capital requirement Credit risk according to standardised approach 16 20 23 Credit risk according to IRB approach 4,841 4,918 4,495 Operational risk 760 655 655 Total capital requirement according to Basel II 5,617 5,593 5,173 Adjustment according to transitional rules 27,144 26,894 24,265 Capital requirement according to Basel II, transitional rules 32,761 32,487 29,438 Risk-weighted assets in accordance with transitional rules 409,516 406,091 367,970 Risk-weighted assets according to Basel II (capital requirement/8) 70,213 69,913 64,663 Capital adequacy analysis Capital requirement in Basel II compared with transitional rules 17 17 18 Capital ratio according to Basel II 1) 56.8 49.1 Capital ratio according to transitional rules 1) 9.7 8.6 Capital ratio according to Basel II 2) 58.9 58.1 50.7 Capital ratio according to transitional rules 2) 10.1 10.0 8.9 Tier 1 ratio according to Basel II 1) 40.3 37.7 Tier 1 ratio according to transitional rules 1) 6.9 6.6 Tier 1 ratio according to Basel II 2) 42.4 40.5 39.3 Tier 1 ratio according to transitional rules 2) 7.3 7.0 6.9 Capital base in relation to capital requirement Basel II 2) 736 726 634 Capital base in relation to capital requirement according to transitional rules 2) 126 125 111 The figures reported in this section refer to the minimum capital requirements under Pillar 1 of the capital adequacy rules in Basel II. Table references marked According to Basel II mean that the figures are based on the minimum capital requirements after the transitional rules have ceased to apply. Stadshypotek has applied the advanced IRB approach for retail exposures (households and small companies) since 2007. As of ember, the advanced IRB approach was applied for medium-sized companies, housing co-operative associations and property companies. For the remaining credit risk exposures, the capital requirement is measured using the Basel II standardised regulations. 1) Excluding profits generated during the period, since the interim report has not been examined by the auditors. 2) Including profit generated during the period. 15
Capital base and capital requirement, cont. Credit risks ch Standardised approach IRB approach Capital requirement Exposure after credit risk protection (EAD) Average risk weight Capital requirement Institutions 2 - - - Companies - 228,564 12.4 2,275 of which advanced approach 227,641 12.4 2,254 of which foundation approach 923 28.8 21 Households 11 588,912 5.4 2,566 Other 3 - - - Total 16 817,476 7.4 4,841 Credit risks ember Standardised approach IRB approach Capital requirement Exposure after credit risk protection (EAD) Average risk weight Capital requirement Institutions 7 - - - Companies - 226,311 13.1 2,373 of which advanced approach 225,251 13.0 2,344 of which foundation approach 1,060 17.9 29 Households 10 586,238 5.4 2,545 Other 3 - - - Total 20 812,549 7.6 4,918 Credit risks ch Standardised approach IRB approach Capital requirement Exposure after credit risk protection (EAD) Average risk weight Capital requirement Institutions 10 - - - Companies - 209,836 15.1 2,531 of which advanced approach 208,548 15.0 2,502 of which foundation approach 1,288 27.9 29 Households 9 539,479 4.6 1,964 Other 4 - - - Total 23 749,315 7.5 4,495 16
Facts about the company Registered name: Stadshypotek AB (publ). Corporate identity number: 556459-6715. Ownership: A subsidiary of Svenska Handelsbanken AB (publ), corporate identity 502007-7862. The Bank publishes consolidated accounts in which Stadshypotek is included. The next interim report: will be published on 17 July. ADDRESS Stadshypotek AB Office address: Torsgatan 12 Postal address: SE-103 70 Stockholm, Sweden Tel: +46 (0)8 701 54 00, Fax: +46 (0)8 701 55 40 Website: www.stadshypotek.se 17
www.stadshypotek.se +46 (0)8-701 54 00 SE-103 70 Stockholm, Sweden Production: Hallvarsson & Halvarsson.