Stadshypotek's interim report January - June 2009

FINANCIAL PERFORMANCE
January - June 2009 compared with January - June 2008
Stadshypotek's operating profits went up by SEK 1,155m to SEK 3,020m
(1,865). As of August 2008, Stadshypotek's branch in Norway is
included in the figures and this made a contribution of SEK 211m in
the first half of the year. Excluding the branch in Norway, operating
profits rose by SEK 944m. Net interest income increased by SEK 1,349m
of which SEK 229m was attributable to the branch in Norway. The
increase in net interest income was due to higher volumes and to
improved margins, partly because the company's good position in the
funding market resulted in low funding costs. Net gains/ losses on
financial operations decreased by SEK 175m to SEK 31m (206). This was
mainly because unrealised changes in market value of financial assets
and liabilities subject to hedge accounting and derivatives in the
same period of the previous year were positively affected by rising
market interest rates.

Expenses were SEK 106m (90). Net loan losses were SEK 22m (28), which
corresponds to a loan loss ratio of -0.01% (-0.01) of lending. Before
deduction of the provision for probable loan losses, the volume of
bad debts was SEK 143m (247). SEK 50m (62) of the bad debts were
non-performing loans, while SEK 93m (185) were loans on which the
borrowers pay interest and amortisation, but which are considered
doubtful. In addition, there were non-performing loans of SEK 807m
(490) that are not assessed as being bad debts. After deductions for
specific provisions totalling SEK -51m (-76) and provisions by group
of SEK -11m (-) for probable loan losses, bad debts totalled SEK 81m
(171).

Q2 2009 compared with Q1 2009
Stadshypotek's operating profits for the second quarter of 2009
increased by SEK 178m to SEK 1,599m (1,421). Excluding the branch in
Norway, operating profits rose by SEK 173m.

Net interest income was SEK 1,592m (1,493), of which SEK 117m (112)
was attributable to the branch in Norway. The underlying increase of
SEK 94m is partly due to higher volumes on the private and corporate
markets and to increased margins in the corporate market, but also to
the company's healthy position in the funding market. The average
margin in the private market during the quarter was 0.64% (0.66). Net
gains/losses on financial operations increased by SEK 67m to SEK 49m
(-18).

GROWTH IN LENDING
Stadshypotek's lending volume continued to increase during the
period. Loans to the public increased during the first six months by
SEK 34bn to SEK 650bn (615). Compared with the same period in the
previous year, lending volumes increased by SEK 104bn, of which SEK
47bn was attributable to the branch in Norway. Stadshypotek's share
of the private market in Sweden was approximately 25% and for the
corporate market, it was some 30%.

CAPITAL RATIO
The capital ratio according to Basel II was 36.5% (39.8) while the
Tier 1 capital ratio according to Basel II was 25.4% (28.2). Further
information concerning capital adequacy is provided in the 'Capital
base and Capital requirement' section.

RATING
Stadshypotek's rating remained unchanged, with a "stable outlook".


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 and the directives issued by
the Swedish Financial Supervisory Authority are also applied.

The accounting policies are unchanged compared to the latest annual
report.

Stockholm, 21 July 2009

Lars Kahnlund
Chief executive


The full report including tables can be downloaded from the following
link: