Stadshypotek s interim report January - June 2007

* Lending increased by SEK 21bn (16) to SEK 501bn.
  * Operating profit was SEK 2,229m (2,452).
  * Recoveries exceeded new loan losses during the period.

Performance
Stadshypotek's operating profit for the period was SEK 2,229m. The
profit for the corresponding period in 2006 was SEK 2,452m. The
change in the profit figure is mainly due to lower net interest
income. During the first half of 2007, there was major price pressure
in the market and thus the pressure on margins continued.
Stadshypotek's lending volume in the private market has continued its
very positive trend during the period. However, compared to the same
period last year, it has not been possible to fully compensate for
the falling lending margins. Moreover, net interest income was
negatively impacted during the first half of the year by effects
relating to decisions concerning repurchase of bonds resulting from
the transition to IFRS. These effects will gradually decline until
2008. Compared to the first quarter of 2007, net interest income was
SEK 48m lower in the second quarter, which was mainly due to
decreasing margins.

Low loan losses
Recoveries exceeded new loan losses. The net amount recovered was SEK
49m (65), corresponding to a loan loss ratio of -0.02 % (-0.03) of
lending. As at 30 June 2007, Stadshypotek's bad debts before
deduction of the provision for probable loan losses amounted to SEK
284m (508). SEK 32m (44) of the bad debts were non-performing loans
and SEK 252m (464) 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
283m (306) that are not assessed as being bad debts. After deduction
of the provision for probable loan losses, the volume of bad debts
was SEK 204m (384).

Growth in lending
Lending to the public was SEK 501bn - an increase of SEK 21bn during
the period. The first six months have continued to see a very
favourable increase in Stadshypotek's share of net growth in the
private market. Stadshypotek's overall share of Swedish 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 34.3%.

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. They will be gradually implemented
since the transitional rules allow for an adaptation over three
years. The capital ratio was 10.0 (8.4) as at 30 June 2007. As at 30
June 2007, the Tier 1 capital ratio was 7.1  (7.1). Further
information about capital adequacy is provided in the section
entitled 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

Events after the balance sheet date
Stadshypotek has decided to submit an application to the Swedish
Financial Supervisory Authority for setting up branches in Finland
and Denmark.

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
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, 18 July 2007


Lars Kahnlund
Chief executive

The report can be downloaded from the following link: