ForeningsSparbanken (Swedbank): Interim Report, January - June 2002; Operating Profit Amounted to SEK 3,612 M

STOCKHOLM, Sweden, Aug. 23, 2002 (PRIMEZONE) -- ForeningsSparbanken (Swedbank):

First half year 2002 in summary:

- Operating profit amounted to SEK 3,612 M (4,360)
- The return on equity was 12.5 percent (16.2)
- Earnings per share amounted to SEK 4.34 (5.31)
- Net interest income rose to SEK 7,733 M (7,520)
- Net commission income decreased to SEK 2,956 M (3,068)
- Net profit on financial operations decreased to SEK 70 M (621)
- Expenses were largely unchanged at SEK 6,899 M (6,883)
- The personnel reduction program raised costs by SEK 100 M
- Loan losses amounted to SEK 868 M (645)
- Continued positive trend in household deposits in Sweden, market share 
  for new savings rose to 26.7 percent (12.3)
- Market share for new savings(1) on the Swedish market, net, rose to
  17.1 percent (13.0)
- Spintab's mortgage lending remains strong
- Acquisition of 33.3 percent of First Securities in Norway

Group profit

The Group's operating profit for the first half of 2002 amounted to SEK 3,612 M (4,360). Profit was affected positively by higher deposit and lending volumes as well as commission income from payment operations, while stock market-related income declined due to falling stock prices and lower market volume. Swedbank Markets' income from fixed income trading - and currency trading in particular - declined substantially during the second quarter, due in part to the rapid decline in the U.S. dollar against the Swedish krona. Expenses were largely unchanged. Loan losses rose compared with the first six months of 2001 but for the last three quarters they have remained on the same level.

The return on equity was 12.5 percent (16.2), while earnings per share amounted to SEK 4.34 (5.31). The loan loss level was 0.25 percent (0.20).


The Group's total income in the first half of 2002 decreased by 4 percent compared with the first half of 2001 and amounted to SEK 11,462 M (11,886). Net interest income rose slightly, while net profit on financial operations declined substantially and net commission income decreased slightly.

Income in the second quarter amounted to SEK 5,591 M compared with 5,871 the first quarter 2002. Net interest income rose, net commission income was unchanged while net profit on financial operations declined substantially due to negative results from Swedbank Markets' fixed income and currency trading.

 1) New sales of select savings products: Deposits from household 
    customers, mutual funds and unit-linked insurance regardless of 
    customer category, retail bonds and equity linked bonds.

Net interest income

The Group's net interest income amounted to SEK 7,733 M (7,520) during the first half year. Net interest income in FI-Holding and Hansabank rose by SEK 231 M, due primarily to volume growth. Continued strong volume growth for Spintab's mortgage lending raised net interest income by slightly more than SEK 100 M. Increased deposits in the Swedish branch operations also raised net interest income by slightly more than SEK 100 M, while lower deposit margins affected net interest income negatively by slightly more than SEK 200 M.

Net interest income amounted to SEK 3,908 M in the second quarter, compared with SEK 3,825 M in the first quarter of 2002. Dividends received During the first half year dividends received amounted to SEK 87 M (133). The decrease is due to a lower dividend from OM in 2002, among other things.

Net commission income

Net commission income for the period January - June 2002 amounted to SEK 2,956 M (3,068). Net commission income from payment services continued to develop strongly, rising by SEK 85 M. Due to lower market volume and declining stock prices, brokerage commissions fell by SEK 99 M and asset management commissions by SEK 127 M.

Net commission income amounted to SEK 1,479 M in the second quarter, compared with SEK 1,477 M in the first quarter of 2002.

Net profit on financial operations

Net profit on financial operations amounted to SEK 70 M (621). Profit from stock trading declined by SEK 76 M, while profit from trading in fixed income securities and other financial instruments fell SEK 125 M. Income from foreign exchange declined by SEK 351 M.

During the second quarter financial operations produced a net loss of SEK -173 M, compared with a corresponding profit of SEK 243 M during the first quarter of the year. The substantially lower income level was primarily attributable to negative exchange-rate changes.

Other income

Other income during the first half year amounted to SEK 616 M (544). The first quarter of 2002 included a capital gain of SEK 85 M on the sale of the branch operations in Gallivare to Sparbanken Nord.


Expenses for the first half of 2002 were largely unchanged at SEK 6,899 M (6,883). Expenses in the Swedish operations declined by 1 percent or SEK 76 M, from SEK 5,837 M to SEK 5,761 M. The increase in other parts of the Group is due primarily to the acquisition of Lithuania's LTB, now Hansa LTB, in June 2001.

Staff costs affected by personnel reduction program Staff costs amounted to SEK 3,515 M (3,208). The increase is due to contractual wage increases and Hansabank's acquisition of LTB. During the second quarter a personnel reduction program was initiated in the Swedish operations. The program, which will lead to the elimination of approximately 500 employees during the next two-year period, is primarily geared toward early retirement. The cost is estimated at SEK 300 M. The program will lead to a reduction in staff costs of SEK 100 M in 2003 and SEK 200 M annually beginning in 2004, when it is expected to have its full impact. The cost-effect of the personnel reduction program was an increase by SEK 100 M for the second quarter.

Change in the number of employees
Number of Group employees in terms of full-time positions.

                      June     Dec     Dec
                        30      31      31
                      2002    2001    2000
Total number of     15,711  16,068  13,002

Of whom Hansabank    6,083   6,387   3,180

IT expenses

IT expenses include all development and production expenditures as well as computer equipment service costs and depreciation. IT expenses for the first half year, after deducting IT-related income from partly owned banks and independent savings banks, amounted to SEK 1,119 M (1,258). The corresponding expense in the Swedish operations was SEK 974 M (1,161).

Other expenses

Other expenses - i.e. other administrative expenses, depreciation of tangible fixed assets and amortization of goodwill - amounted to SEK 3,384 M (3,675) during the period. Computer, consulting and marketing expenses all decreased.

Loan losses

The loan loss level was 0.25 percent (0.20) during the first half year. Loan losses amounted to SEK 868 M (645), of which FI-Holding and Hansabank accounted for SEK 42 M (51). Of the loan losses, SEK 567 M (402) related to collective provisions for claims assessed individually, which reflects the Group's conservative provisioning policy. A specification of loan losses and claims is provided in Notes 3 and 4. Share of profit/loss of associated companies The share of profit/loss of associated companies for the first half of 2002 was SEK - 83 M (2). The share of SpareBank 1 Gruppen's loss was SEK -117 M (-25). The larger loss was due to, among other things, the bearish Norwegian stock market, which led to a significant decline in the value of the assets in the group's insurance operations. The share of Marakanda's loss amounted to SEK - 60 M (- 69), including amortization of goodwill of SEK 42 M. The share of profit from Aktia was SEK 27 M (37). Aktia's operating profit was 32 percent lower than the corresponding period a year earlier. Net interest income decreased despite volume gains and expenses for staff and new technology rose. Tax expense 28 percent Consolidated profit before tax amounted to SEK 3,574 M (4,304) and the tax expense was SEK 997 M (1,166), or an effective tax rate of 28 percent (27).

Interest rate risk

An increase in market interest rates of one percentage point as of June 30, 2002 would have reduced the value of the Group's interest-bearing assets and liabilities, including derivatives, by SEK 527 M (854). The decrease in value of positions in SEK would have been SEK 349 M (591) and positions in foreign currency SEK 178 M (263). The Group's interest rate risk in foreign currency is primarily in the foreign subsidiaries Hansabank and FI-Holding. An interest rate increase of one percentage point would have reduced the Group's net profit on financial operations by SEK 158 M (242) as of June 30, 2002.

The Group also holds positions in inflation-indexed instruments denominated in SEK, which a one-percent increase in real interest rates would have reduced in value by SEK 3 M (6) as of June 30, 2002, which would affect reported net profit on financial operations.

The comparative figures refer to March 31, 2002.

Capital adequacy

The capital adequacy ratio, which is calculated for the financial companies group, amounted to 10.9 percent (11.3) on June 30, 2002, of which the primary capital ratio was 7.0 percent (7.1). Market risks as a share of the total capital adequacy ratio amounted to 0.6 percentage points (0.7).

The risk-weighted amount for credit risks rose during the first half year to SEK 528 billion (515). The increase is attributable primarily to higher lending by Spintab and Hansabank.

The risk-weighted amount for market risks declined by SEK 4 billion during the first half year to approximately SEK 29 billion. The decrease in the risk-weighted amount for market risks was due mainly to a change in maturity structure and a smaller holding of interest-bearing securities in FI-Holding as well as the lower market value of foreign exchange-related derivatives in Swedbank Markets owing to a stronger Swedish krona.

The comparative figures refer to December 31, 2001.

Specification of capital
                              June  Dec 31     June
                                30               30
SEK M                         2002    2001     2001

Primary capital             39,224  38,938   37,346
Supplementary capital       25,675  26,813   25,679
Less shares, etc.                -       -        -
                             5,365   5,300    5,292
Expanded portion of capital  1,144   1,292      230
Capital base                60,678  61,743   57,963
Risk-weighted amount for   528,038 514,743  514,206
credit risks
Risk-weighted amount for    29,052  33,054   32,197
market risks
Total risk-weighted amount 557,090 547,797  546,403
Capital adequacy ratio, %     10.9    11.3     10.6
Primary capital ratio, %       7.0     7.1      6.8

As of June 30, 2002 the ForeningsSparbanken financial companies group included the ForeningsSparbanken Group, Eskilstuna Rekarne Sparbank AB, Fars och Frosta Sparbank AB, ForeningsSparbanken Sjuharad AB, ForeningsSparbanken Soderhamn AB, Bergslagens Sparbank AB, Vimmerby Sparbank AB, Aktia Sparbank Abp in Finland and Sparebank 1 Gruppen in Norway. The Group's insurance companies are not included.

Sales and market shares

For 2002 ForeningsSparbanken's goal in the Swedish market is to achieve a market share of 20 percent for new sales of selected savings products: deposits from household customers, mutual funds and unit-linked insurance regardless of customer category, retail bonds and equity linked bonds.

During the first half year the market share rose to 17.1 percent, against 13.0 percent in the first six months of 2001. For household deposits, an area where ForeningsSparbanken has significantly improved its offering in a number of respects, its market share for new savings was 26.7 percent in the first quarter, compared with 12.3 percent in the first half of 2001. Due to a delay in reporting from Statistics Sweden, the corresponding figure for the second quarter is not available. On a cumulative basis for the first half year, new sales in the savings area amounted to SEK 11.9 billion, an increase of SEK 2.3 billion from the previous year.

Business area development


Customers' total savings in ForeningsSparbanken amounted to SEK 502 billion (526) as of June 30, 2002. Deposits have increased by 8 percent since the start of the year Customers' deposits rose to SEK 247 billion (229). The increase was SEK 18 billion or 8 percent. Deposits in SEK rose by 11 percent to SEK 199 billion (180), while deposits in foreign currency decreased by SEK 1 billion or 2 percent to SEK 48 billion (49).

Savings and investments, the

SEK billion                     June    Dec    June
                                  30     31      30
                                2002   2001    2001
Deposits from the public                           
Households, SEK                123.8  118.4   113.8
Other, SEK                      75.6   61.7    69.8
Households, foreign currency    14.1   14.0    13.0
Of which Hansabank              14.0   13.9    12.9
Other, foreign currency         33.7   35.3    33.9
Of which Hansabank              17.2   16.9    15.8
Subtotal                       247.2  229.4   230.5

Discretionary asset             18.5   21.1    19.4
Fund management                226.4  266.0   280.0
Retail bonds, interest-          2.5    2.4     3.1
Retail bonds, equity linked      5.0    4.6     5.4
Unit-linked insurance           40.8   43.3    45.7
Less unit-linked insurance in - 38.2      -   -43.7
Robur funds                            41.2
Total                          502.2  525.6   540.4


The Group's lending amounted to SEK 649 billion (640) on June 30, 2002, an increase of SEK 8.6 billion, of which approximately SEK 9.1 billion pertains to Swedish operations. Lending by Hansabank and FI-Holding amounted to SEK 96 billion (97).

Loans to private individuals amounted to SEK 291 billion (281), an increase of SEK 9.6 billion or 3 percent. The increase is attributable largely to mortgage lending by Spintab, related mainly loans arranged through the Swedish branch office network.

The Group's exposure to companies in the IT and telecommunications industries amounted to SEK 8.0 billion (9.3) as of June 30, 2002. The large part of the exposure relates to commitments to major, well-known Nordic telecommunications companies.

Lending, the Group                                    

SEK billion                        June    Dec    June
                                     30     31      30
                                   2002   2001    2001
Private individuals               290.8  281.2   273.8
Of which Spintab                  236.9  228.2   219.6
Real estate management            135.8  135.5   135.0
Retail, hotels, restaurants        25.3   24.9    25.2
Construction                       10.3   11.0    10.5
Manufacturing                      50.3   51.4    49.4
Transportation                     14.0   14.2    13.7
Forestry and agriculture           29.4   28.1    26.5
Other service businesses           14.9   16.7    15.5
Other business lending, incl.                         
credit institutions                54.6   54.3    52.6
Municipalities *)                  13.6   13.0    13.5
Other                               9.6    9.7    10.3
Subtotal                          648.6  640.0   626.0

Repurchase agreements (repos)      51.6   43.5    40.1

Total                             700.2  683.5   666.1

Of which Hansabank                 25.4   23.9    20.0
Of which FI-Holding                70.5   72.6    71.4

*) Not including municipal companies.

Payments Cards As of June 30, 2002 approximately 2.6 million (2.6) ForeningsSparbanken bank cards were in issue in the Swedish market, an increase of slightly over 53,000 cards or 2 percent since the start of the year. The trend toward greater card use is continuing. Compared with the first half of 2001 ForeningsSparbanken customers' card purchases have increased by 20 percent, while the number of card transactions cleared climbed 30 percent. Giro Customers continue to switch from paper-based giro payments to an electronic, Internet-based giro system through ForeningsSparbanken by Internet. The number of private customers with giro accounts has risen to 2.7 million (2.6), of whom 848,000 (673,000) are Internet-based. The share of Internet-based giro transactions was 36 percent. e-billing With e-billing, bills are sent directly to ForeningsSparbanken by Internet accounts, where customers can safely and conveniently approve payment. During the quarter 3 more companies signed on for the service, bringing the total to 106. Agreements have been signed with another 20 companies that will offer e-billing to their customers. The number of e- bills is rising steadily. During the first half year 209,000 e-bills were sent, compared with approximately 78,000 during the first half of 2001. Online banking services The Group's Internet banking services

                                June 30    Dec 31    June 30
                                   2002      2001       2001

Number of customers in        1,230,000 1,091,000    973,000
Of whom private customers     1,076,000   957,000    831,000

Of whom business customers       98,000    88,000     77,000
Of whom telephone bank via                            
the Internet                     56,000    46,000     65,000
Number of Baltic customers      594,000   430,000    315,000

Total number of customers     1,824,000 1,511,000  1,288,000

More Internet transactions

The number of Internet payments rose from 24 million during the firsthalf of 2001 to 30 million during the first half of 2002. In addition,31 percent (20) of mutual fund purchases and redemptions within theGroup were made online.

Using ForeningsSparbanken by Internet, customers can order new cards, apply for loans and arrange an individual pension savings plan. Since a new interface was introduced in April 2002 the number of orders has increased significantly. Hansabank's goal of 500,000 Internet customers by year-end already met The popularity of Hansabank's Internet bank is exceeding expectations. The goal for the year of 500,000 online customers was met by May.


Acquisition of First Securities In June ForeningsSparbanken acquired 33.3 percent of the shares in First Securities for SEK 200 M. Government authorization was received in July. Following this transaction ForeningsSparbanken, SpareBank 1 Gruppen and employees of First Securities each own one third. ForeningsSparbanken also has an option to increase its holding in the company to 51 percent after three years.

First Securities is the leading domestic brokerage in Norway, offering equity trading, equity research, corporate finance and fixed income services.

In 2001 First Securities had a market share of 7.8 percent in terms of the Oslo Stock Exchange's turnover. ForeningsSparbanken Privat The launch of ForeningsSparbanken Privat management services for customers who need professional advice continues to develop well. Nineteen advisory offices have been opened and another eleven are planned for the remainder of the year. Around 5,000 customers have signed up for the service.

Accounting change

The interim report has been prepared in accordance with recommendation RR20 of the Swedish Financial Accounting Standards Council and follows the same accounting principles as the most recent annual report. The recommendations that took effect on January 1, 2002 have been taken into account but have not had a significant impact. Reporting has been adapted, however, to the Financial Supervisory Authority's amended valuation and disclosure rules for claims. The amended rules, which apply as of 2002, have not resulted in a significant change in the loan portfolio's valuation. The new disclosure requirements are indicated in Notes 3 and 4. Comparative figures have been restated.

This information was brought to you by Waymaker

The following files are available for download:
The Full Report
The Full Report