Stadshypotek's interim report January-June 2011

FINANCIAL PERFORMANCE

January - June 2011 compared with January - June 2010

For the period January to June 2011, operating profit increased by SEK 209
million to SEK 2,813 million (2,604). Net interest income amounted to SEK 2,921
million (2,705), with the branch in Norway accounting for SEK 198 million (222),
the branch in Denmark, established on 1 May 2010, accounting for SEK 39 million
(1) and the branch in Finland, established on 1 May 2011, accounting for SEK 1
million (-). Thus, excluding the branches, net interest income rose by SEK 201
million compared with the corresponding period of the previous year, which was
mainly due to an increase in lending volume. However, net interest income was
affected negatively by SEK 46 million compared with the corresponding period of
the previous year, since from 1 January 2011, the fee to the Swedish
Stabilisation Fund is no longer halved. Net gains/losses on financial items at
fair value amounted to SEK 1 million (3).

Expenses rose by SEK 13 million to SEK 124 million (111), primarily due to
increased costs for purchased services from the parent company. Recoveries
exceeded new loan losses and the net amount recovered was SEK 21 million (17),
which corresponds to a loan loss ratio of -0.01 per cent (0.00) of lending.
Before deduction of the provision for probable loan losses, the volume of
impaired loans was SEK 85 million (109). SEK 51 million (43) of the impaired
loans were non-performing loans, while SEK 34 million (66) were loans on which
the borrowers pay interest and amortisation, but which are considered doubtful.
There were also non-performing loans of SEK 753 million (613) that are not
classed as being impaired loans. After deduction for a specific provision
totalling SEK -33 million (-48) and a collective provision of SEK -5 million (-
7) for probable loan losses, impaired loans totalled SEK 47 million (54).


Q2 2011 compared with Q1 2011

Stadshypotek's operating profit for the second quarter of 2011 decreased by SEK
15 million to SEK 1,399 million (1,414). However, net interest income increased
by SEK 45 million to SEK 1,483 million (1,438), of which SEK 93 million (105)
was attributable to the branch in Norway, SEK 20 million (19) to the branch in
Denmark and SEK 1 (-) million to the branch in Finland. Excluding these
branches, net interest income thus rose by SEK 55 million, which is due to
higher margins and a continued increase in lending volumes. Net gains/losses on
financial items at fair value amounted to SEK -30 million (31). Expenses rose by
SEK 2 million to SEK 63 million (61).


GROWTH IN LENDING

Loans to the public increased during the period by SEK 36 billion to SEK 795
billion (759). Stadshypotek's share of the private market in Sweden was
approximately 25 per cent (25) and its share of the corporate market in Sweden
was approximately 33 per cent (30).


BRANCH IN FINLAND

During the second quarter, Stadshypotek started a branch in Finland called
Handelsbanken Asuntoluottopankki. The branch's loans to the public were SEK 0.4
billion as at 30 June.


CAPITAL ADEQUACY

The capital ratio according to Basel II was 60.7 per cent (44.4) while the Tier
1 ratio calculated according to Basel II was 41.4 per cent (33.1). Further
information on capital adequacy is provided in the 'Capital base and capital
requirement' section on page 13.

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

Stadshypotek

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|Moody's          |Aaa          |-        |P-1       |
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|Standard & Poor's|             |AA-      |A-1+      |
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|Fitch            |             |AA-      |F1+       |
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Stockholm, 20 July 2011

Rainer Lawniczak
Chief executive


[HUG#1532209]