Stadshypotek s interim report January-September 2007

Performance
Stadshypotek's operating profit for the nine-month period was SEK
3,110m. The profit for the corresponding period the previous year was
SEK 3,408m. The change in the operating profit was chiefly
attributable to a decrease in net interest income. Price competition
on the market has persisted, which meant that the pressure on margins
continued during the third quarter. Stadshypotek's lending volume on
the private market maintained its very positive trend during the
period. However, compared to the same period last year, it was not
possible to offset the falling lending margins. Moreover, net
interest income was adversely affected during the January to
September period 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 second
quarter of 2007, net interest income was SEK 42m lower in the third
quarter, mainly due to decreasing margins.

Loan losses
Recoveries exceeded new loan losses, and the net amount recovered was
SEK 58m (82); this corresponds to a loan loss ratio of -0.02% (-0.02)
of lending. As at 30 September 2007, Stadshypotek's bad debts before
deduction of the provision for probable loan losses amounted to SEK
273m (430). SEK 35m (45) of the bad debts were non-performing loans,
while SEK 238m (385) 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
297m (328) that are not assessed as being bad debts. After deduction
of the provision for probable loan losses, the volume of bad debts
was SEK 197m (317).

Growth in lending
Loans to the public were SEK 511bn - an increase of SEK 31bn during
the period. During the period January-September, Stadshypotek's share
of net growth in the private market maintained its very favourable
increase. Stadshypotek's overall share of mortgage institutions'
lending on the private market was 26.6%. Stadshypotek has retained
its position as a leading player on the Swedish corporate market,
with a market share of 34.4%.

Capital ratio
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 implemented gradually,
since the transitional rules allow for an adaptation over three
years. As at 30 September 2007, the capital ratio was 9.7% (8.2). As
at 30 September 2007, the Tier 1 capital ratio was 6.9% (6.9).
Further information concerning 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



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 (ÅRKL) 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, 23 October 2007

Lars Kahnlund
Chief executive


This interim report has not been examined by the company's auditors

The report can be downloaded from the following link: