Stadshypotek's interim report January-September 2010

FINANCIAL PERFORMANCE

January - September 2010 compared with January - September 2009

Operating profit for the first nine months went down by SEK 519 million to SEK
3,901 million (4,420). The lower profit figure is entirely due to the fact that
net interest income fell by SEK 638 million to SEK 4,015 million (4,653). The
decrease is mainly due to higher funding costs, partly since Stadshypotek opted
to extend the maturities of its funding during the period. Covered bonds for a
total of SEK 134 billion were issued. SEK 326 million (361) of the net interest
income was attributable to the branch in Norway and SEK 4 million (-) to the
branch in Denmark. Net gains/losses on financial operations were SEK 37 million
(-89).

Expenses were SEK 168 million (154). Recoveries exceeded new loan losses and the
net amount recovered was SEK 30 million (28), which corresponds to a loan loss
ratio of -0.01 percent (-0.01) of lending. Before deduction of the provision for
probable loan losses, the volume of impaired loans was SEK 101 million (127).
SEK 41 million (50) of the impaired loans were non-performing loans, and SEK 60
million (77) were loans on which the borrowers pay interest and amortisation,
but which are considered impaired. In addition, there were non-performing loans
of SEK 552 million (652) that are not assessed as being impaired loans. After
deductions for specific provisions totalling SEK -44 million (-49) and
provisions by group of SEK -7 million (-11) for probable loan losses, impaired
loans totalled SEK 50 million (67).

Third quarter of 2010 compared with second quarter of 2010

Operating profit increased by SEK 66 million to SEK 1,297 ­million (1,231). Net
interest income increased by three percent to SEK 1,310 million (1,273), of
which SEK 103 million (103) was attributable to the branch in Norway and SEK 3
million (1) to the branch in Denmark. The increase is mainly due to the lending
volume rising by two percent but also to a slightly lower funding cost. The
average margin on the private market in Sweden during the third quarter was
unchanged at 0.67 percent. Net gains/losses on financial operations were SEK 34
million (16).

FUNDING

In September, Stadshypotek became the first Nordic company to issue covered
bonds in the US. A total of USD 1.6 billion was issued, with a maturity of three
years. This bond issue opens up a large, important financing market that will
enable a further diversification of the long-term funding.

GROWTH IN LENDING

During January - September 2010, loans to the public increased by SEK 49 billion
to SEK 734 billion (685). Compared with 30 September 2009, the increase in
lending volume was SEK 69 billion. Stadshypotek's share of the private market in
Sweden was approximately 25 percent and its share of the corporate market in
Sweden was approximately 30 percent.

CAPITAL ADEQUACY

The capital ratio according to Basel II was 44.3 percent (37.0) while the Tier
1 ratio calculated according to Basel II was 33.0 percent (25.8). 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

                  Covered bonds Long-term Short-term

Moody's           Aaa           -         P-1

Standard & Poor's               AA-       A-1+

Fitch                           AA-       F1+




Stockholm, 20 October 2010

Lars Kahnlund
Chief executive


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



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