Annual Report Stadshypotek. a Svenska Handelsbanken company

Transcription

1 Annual Report 2001 Stadshypotek a Svenska Handelsbanken company

2 ULLA JANSSON INFORMATION AB JOBB:SHB 1729 DEL:SH_INN 01 DAG: TID: SIGN: Eva Publication dates: Interim Report for 3 months, 22 April 2002 Interim Report for 6 months, 20 August 2002 Interim Report for 9 months, 22 October 2002 II

3 Contents KEY FINANCIAL FIGURES AND RATIOS 2 HIGHLIGHTS OF A WORD FROM THE CHIEF EXECUTIVE 4 REPORT OF THE BOARD OF DIRECTORS Organisation, IT issues and human resources 6 Lending operations 8 Funding operations 10 Risk management, capital adequacy and rating 13 Financial review 16 Sensitivity analysis 17 PROFIT AND LOSS ACCOUNT 18 BALANCE SHEET 19 ACCOUNTING PRINCIPLES 20 NOTES 22 RECOMMENDATION FOR DISTRIBUTION OF PROFITS 33 AUDIT REPORT 34 BOARD OF DIRECTORS, AUDITORS, SENIOR MANAGEMENT 35 FIVE-YEAR SUMMARY 36 FACTS ABOUT THE COMPANY, ADDRESSES Inside back cover

4 Key financial figures and ratios Key financial figures and ratios Profit before loan losses, SEK m Loan losses, SEK m Operating profit, SEK m Total assets, yearly average, SEK m Shareholders equity, SEK m Return on shareholders equity, % Cost/Income ratio before loan losses, % Cost/Income ratio after loan losses, % Interest margin, % Loan loss ratio, % Bad debt reserve ratio, % Proportion of bad debts, % Capital ratio, % Tier 1 capital ratio, % Return on total assets, % Average number of employees Definitions BAD DEBTS. A non-performing loan, or a loan where other circumstances lead to doubt concerning its value and where the value of the collateral does not cover the principal amount and the accrued interest by a satisfactory margin. Net bad debts are bad debts minus the reserve for possible loan losses. BAD DEBT RESERVE RATIO. Reserve for possible loan losses as a percentage of gross bad debts. CAPITAL BASE. The capital base is the sum of tier 1 (primary) and tier 2 (supplementary) capital. Tier 1 capital comprises shareholders equity less goodwill plus 72% of untaxed reserves in the parent company. Tier 2 capital includes subordinated loans with some reduction when the remaining maturity is under five years. This part of the supplementary capital must not exceed 50% of tier 1 capital. CAPITAL RATIO. Capital ratio or the total capital ratio is the capital base in relation to risk-weighted volume. The Act on Capital Adequacy and Large Exposures of Credit Institutions and Securities Companies stipulates that it should be at least 8%. C/I RATIO. Total expenses in relation to total income computed before and after loan losses incl. changes in the value of repossessed property. INTEREST MARGIN. Difference between the average interest rate on all assets and the average interest rate on all liabilities. LOAN LOSS RATIO. Loan losses and changes in value of repossessed property as a percentage of the opening balance for the period for lending to the general public, lending to credit institutions (excl. banks), repossessed property and credit guarantees. NON-PERFORMING LOANS. Loans where interest, repayments or overdrafts have been due for payment for more than 60 days. PROBLEM LOANS. The total of bad debts (net) and reduced rate loans. PROFITABILITY. See Return on equity. PROPORTION OF BAD DEBTS. Bad debts (net) in relation to total lending to the general public and credit institutions (excl. banks). REDUCED RATE LOANS. Loans for which the interest rate has been reduced relative to market rates. RETURN ON EQUITY. The result for the period after appropriations and tax in relation to average shareholders equity adjusted for rights issues, dividend and also including minority interest. RETURN ON TOTAL ASSETS. Operating profit before tax in relation to average total assets. RISK-WEIGHTED VOLUME. The risk-weighted volume is determined by the assets and off-balance-sheet items being placed in varying risk classes, in accordance with the Act on Capital Adequacy and Large Exposures of Credit Institutions and Securities Companies. The volumes are weighted taking into account the assessed risk such that they are included in the riskweighted volume by 0%, 20%, 50% or 100%. TIER 1 CAPITAL RATIO. Primary capital in relation to risk-weighted volume. (See Capital base and Risk-weighted volume.) 2

5 Highlights of 2001 Highlights of 2001 Operating profit continued to increase and was SEK 4 543m, Stadshypotek s best result ever Expenses still falling due to continual improvements in efficiency Recoveries exceeded new loan losses Continued substantial growth in volume in the private market Increased market shares in both the private and the corporate market Bidding on the Internet, continues to win ground as a tool for estate agents in Sweden. This market place had had more than visits by the end of Planned redemption of preference shares in Handelsbanken Hypotek 3

6 A word from the Chief Executive A word from the Chief Executive Stadshypotek s operating profit increased by SEK 421m to SEK 4 532m, our best result ever! Our position on the market has improved, which is mainly due to the strong position that Handelsbanken s branches enjoy as a result of their local presence. Excellent operating profit As new chief executive of Stadshypotek, this is the first time I have the opportunity to comment on the company s annual figures and it is very gratifying to report that the result for 2001 is the highest ever in the history of Stadshypotek. Five years after Handelsbanken s acquisition of Stadshypotek, it is also with great satisfaction that we note our successes in terms of both results and market position. Our operating profit has risen every year since the acquisition and our market position has strengthened. The year s operating profit of SEK 4 532m (4 122), an increase of 10% compared to the previous year, is very strong. Improved net interest income combined with a continued reduction in costs and a positive trend for loan losses are the reasons that our profits have continued to rise. CLAES NORLÉN Co-ordination Stadshypotek and its subsidiary Handelsbanken Hypotek are responsible for the majority of mortgage financing in the Swedish part of the Handelsbanken Group. In accordance with the way of working that is applied within the Handelsbanken Group, the mortgage operations are co-ordinated with Handelsbanken s branch network. An important element of this co-ordination is that the branches have delegated responsibility for customer contacts and pricing. Integration with Handelsbanken s branch network has been gradually developed since Handelsbanken acquired Stadshypotek in This work is the most important reason for the success which we have achieved, not least during the past financial year. Increased market shares 2001 was characterised by major demand for financing services, mainly from households. A contributing factor was the active trend to convert rented apartments into The result for 2001 is the highest ever in the history of Stadshypotek VICTOR BROTT housing co-operative apartments, particularly in the major cities. On the private market, Stadshypotek not only increased its lending, it also increased its market share. Private market volumes increased by SEK 21bn. In the corporate market too, Stadshypotek increased its lending for the first time since the acquisition. A large part of the increase of SEK 3bn is again attributable to the conversion from rented apartments to housing co-operative apartments, mainly in the Stockholm area. At the end of the year, Stadshypotek s lending to the public was SEK 350bn (326), an increase of SEK 24bn or 7%. Total lending on the Swedish mortgage market increased by 5% and was SEK 1 122bn (1 068) at year-end. Stadshypotek s total market share increased to 31.2% (30.5). On the private market, the market share increased to 30.6% (30.3) and on the corporate market to 31.9% (30.8). For Stadshypotek, this trend confirms how well its co-operation with Handelsbanken s branches functions. A contributory factor in this respect is the branches local presence and customer marketing, combined with the high degree of confidence which customers have in the services offered by Stadshypotek. This excellent result could not have been achieved without the considerable work that has been carried out at the Swedish branch offices. Higher net interest income Net interest income rose to SEK 4 608m, an increase of 4%, despite a lower return on shareholders equity, due to lower interest rates and a group contribution. The increase in lending volumes of SEK 24bn has had a positive impact on the net interest income. This mainly applies to the private market where the margins are higher compared to other lending. It is therefore favourable for Stadshypotek s result that the proportion of private market loans is gradually increasing. The trend which started with Handelsbanken s acquisition in 1997, also continued in 2001, and to an increasing degree. At year-end, private market lending was just over 55% of lending, which can be compared to around 40% in An important reason for the 4

7 A word from the Chief Executive success was the introduction of e-bud, an Internet bidding service which has significantly improved the branches co-operation with estate agents. The increased proportion of loans with a variable interest rate has also contributed to the improvement in net interest income. After a slight decline at the beginning of 2001, this type of loan again represented an increasing proportion of total loans at the end of the year. Good control of costs Administration costs continued to decrease in The decrease was 14%. If the SPP repayment of insurance funds of SEK 18m in 2000 is also taken into account, the decrease was 18%. Despite a reduction of costs in 2001, a high level of ambition has been retained during the year for continued development of existing services, not least e-bud, and also to create new Internet-based services which will be available for Stadshypotek s borrowers in spring An example of this, which improves the level of service further, is the opportunity for borrowers themselves, via Handelsbanken s Internet service, to convert variable rate loans to a fixed interest rate at a time they find suitable. When Handelsbanken acquired Stadshypotek in 1997, an assessment was made that administration costs could be reduced through increased co-ordination. Now, five years later, we are pleased to see that the cost level has been reduced every year and that this assessment was correct. Recoveries exceeded new loan losses 2001 was also a year where recoveries exceeded new loan losses. A well-composed credit portfolio and continued low interest rates have led to this favourable trend. Stadshypotek s bad debts continued to decrease. The loan losses that have arisen are mainly attributable to areas with a dwindling population. Handelsbanken s strong local presence provides the best conditions to minimise the risks in such commitments. In my opinion, a well-run mortgage operation should only report minor loan losses, even in a recession. Redemption of preference shares in Handelsbanken Hypotek When Handelsbanken acquired Stadshypotek in 1997, the holders of shares in Stadshypotek, as an alternative to cash payment, were offered preference shares in Handelsbanken Hypotek. In accordance with the articles of association and after the annual general meeting has adopted the profit and loss account and the balance sheet, the board of Handelsbanken Hypotek intends to redeem all the outstanding preference shares as at 1 July The redemption amount is SEK 252.6m and it is deemed to affect the Stadshypotek Group s capital ratio only marginally. e-bud strengthens its position At the end of 2000, when Stadshypotek launched its Internet property bidding service called e-bud, the service was a completely new element in the Swedish housing market. e-bud makes it possible for buyers and sellers in real time via the Internet to follow the development of bidding on a property which an estate agent has put on the market. The service is based on close co-operation between branch offices and estate agents but does not change the estate agents role towards their customers. Stadshypotek s role is to provide the independent market place. During the year, just over 400 estate agents have linked up to the service. In total more than properties have been available for bidding and over bids have been submitted on the properties. e-bud has attracted increasing interest and the site has had more than visits. e-bud creates added value for all parties involved. The buyers are given security since they can follow the bidding in real time and assess themselves how their bid is doing. e-bud offers sellers the opportunity to have more interested parties participate in the bidding which leads to a more correct price. For estate agents, e-bud means increased efficiency as time saved can be used to give advice and on other market activities. Many estate agents who use the service frequently consider that the customer has a more positive experience of the difficult bidding process through using e-bud. Transparency is increased, information about how the sale is proceeding is speeded up, at the same time as it becomes more secure. The customer s financing needs can also be met at an earlier stage in the process. Handelsbanken s branches have a very important role in providing advice in connection with a property purchase. This is mainly in relation to financing issues but also as regards insurance and other banking business. We can look back on a very successful year. Stadshypotek has grown in a controlled way via the excellent co-operation with all the competent and dedicated employees at Handelsbanken s branch offices. The result is the best in Stadshypotek s history, something which all employees of Stadshypotek and Handelsbanken have reason to feel proud of. We now look forward with great expectations to the next year of operations. Stockholm, February 2002 CLAES NORLÉN Chief Executive 5

8 Report of the Board of directors Organisation, IT issues and human resources Stadshypotek is a public limited liability company authorised to conduct operations under the Act on Financing Operations. The core business comprises financing of housing but also office and commercial buildings. Since 26 February 1997, the company has been a wholly-owned subsidiary of Svenska Handelsbanken AB (publ), registered no STRUCTURE The Stadshypotek Group is a subgroup for mortgage business within the Handelsbanken Group. Stadshypotek AB is the parent company of this subgroup, with its 95%-owned subsidiary, Handelsbanken Hypotek AB. At the time Handelsbanken acquired Stadshypotek, shareholders were offered the option of obtaining newly issued preference shares in Handelsbanken Hypotek as an alternative to payment in cash. The preference shares are listed on the Stockholm stock exchange s O list. The total holding of these shares represents a minority share corresponding to approximately 5% of the equity and 0.5% of the votes. According to Handelsbanken Hypotek s articles of association, the company s Board of Directors may decide to redeem the preference shares from 1 July 2002 at the earliest, at a redemption price of SEK 190 per share. Until 1996, the state-owned Urban Mortgage Bank of Sweden was one of the main shareholders in Stadshypotek AB. Since the government has sold the Mortgage Bank s shares to Handelsbanken, the relationship between Stadshypotek and the Mortgage Bank comprises only a financial obligation. Stadshypotek has the actual responsibility for bond loans remaining in the name of the Urban Mortgage Bank. At year-end, this borrowing was SEK 3.5bn (7.1). By the end of 2005, this is expected to have been repaid in its entirety. In this Annual Report, the name Stadshypotek is used to refer to the Stadshypotek Group as a whole or when it is not important to specify a particular legal entity. The name Stadshypotek AB always refers to a specific legal entity, i.e. the parent company of the group. REDEMPTION OF PREFERENCE SHARES IN HANDELSBANKEN HYPOTEK As at 1 July 2002, pursuant to the Articles of Association and following the approval of the balance sheets and profit and loss account by the annual general meeting, the board of the subsidiary Handelsbanken Hypotek intends to redeem the outstanding preference shares. The redemption amount is SEK 252.6m and it is deemed to have a marginal impact on the capital ratio of the Stadshypotek Group. INTEGRATION WITH HANDELSBANKEN Stadshypotek s lending operations take place through Handelsbanken s branches. Stadshypotek s treasury function is integrated with that of Handelsbanken s Central Treasury. The functions which are necessary for the management and control of the company remain within Stadshypotek. Through the changes made, the mortgage operations have been integrated with the Bank s other operations in a highly cost-effective manner. The Stadshypotek brand name loan has been successfully established at Handelsbanken s branch offices as the natural mortgage product. In this way, the strong Stadshypotek brand name lives on, even after the acquisition. IT ISSUES During 2001, efforts have continued to adapt Stadshypotek s lending systems to the customer-oriented and decentralised business operations at Handelsbanken s almost 500 branches in Sweden. Integration with Handelsbanken s production environment has been an important element in this process. Now most of this adaptation and integration has been implemented. An increasingly large proportion of IT development is related to developing existing and new Internet-based services. e-bud, which was launched by Stadshypotek at the end of 2000, is a new factor on the Swedish housing market. Already in its first year, this product has showed that it fills a gap in many regions and it was given a particularly warm reception 6

9 Report of the Board of directors in the Uppsala, Huddinge and Gotland housing markets. More than properties have been available for bidding and over bids have been made. The service has developed substantially and at the year-end, the market place had had more than visits. e-bud is based on close co-operation between the branches and estate agents but does not change the estate agents role regarding their customers. By following the bidding on the Internet for the properties which estate agents have put on the marketplace, there is added value for all parties involved. The buyer can at all times see the status of his own bid; the seller has the benefit of more bidders taking an active part in the process; the estate agent gains efficiency and frees up time. e-bud has been further developed during the year in close co-operation with the estate agents involved in order to make the service even more efficient and convenient. These adaptations have been positively received and lay a stable foundation for continuing growth in the coming years. During the year, the introduction of e-giro continued and Stadshypotek s customers have shown great interest. By connecting to Handelsbanken on the Internet free of charge a customer can electronically receive information about future advices for their Stadshypotek loan and authorise payment of these. Everything is done on the Internet and the customer no longer needs to receive the paper advice sent by post. In 2002, more Internet-based services will be launched. Next in line is the opportunity to fix the interest rate for variable rate Stadshypotek loans directly via Handelsbanken on the Internet. In 2002, change of terms, which is currently done via letter, will also be possible via the Internet service. This development aims at making the Stadshypotek loan even more attractive and user-friendly. Despite major investments in developing new services, the total cost for IT operations was also reduced in HUMAN RESOURCES In 2001, the average number of employees in the Stadshypotek Group was 33 persons (39). At the end of 2001, there were 30 (36) employees, 25 (28) of whom were employed by the parent company. The reduction in the number of staff is the result of rationalisation measures. 47% (47) of the average number of employees in the Group are women and 53% (53) are men. The parent company reports the same distribution between male and female staff. AVERAGE NUMBER OF EMPLOYEES AS FULL-TIME POSITONS Stadshypotek AB Handelsbanken Hypotek AB ENVIRONMENTAL ISSUES Work on environmental issues is now a well-established part of Stadshypotek s operations, in terms of both internal work and granting credits and other operations. Environmental work is carried out in close co-operation with Handelsbanken and is thereby covered by the central agreements and policy decisions which apply within the Handelsbanken Group. The main principle in the Group s environmental policy is that as far as technically and economically possible, Stadshypotek must take measures to minimise any negative effect on the environment. Environmental issues associated with granting loans In accordance with the Handelsbanken Group s credit policy, environmental factors are taken into consideration when assessing a customer s repayment capacity. The branch which is responsible for the customer gathers environmentally-related information and assesses the impact of possible environmental effects on the company s situation. For property-related credits, it is essential to take into account environmental factors pertaining to buildings or activities conducted in the building which are harmful to the environment. Environmental factors in the vicinity of the property are also taken into consideration. These factors are also considered when determining the market value. BOARD OF DIRECTORS During the year, the board has convened nine times, of which four times per capsulam. At the annual general meeting in April, Björn Börjesson was elected as new board member. At an extraordinary general meeting in June, Claes Norlén was elected as a new board member. No other changes have occurred in the composition of the board during the year. Board member Michael Zell left his post as chief executive on 1 September and Claes Norlén replaced him as the new chief executive of Stadshypotek AB. A list of members of the board of Stadshypotek AB can be found on page 35. For information on certain terms of employment for senior management executives and on loans to board members and senior management executives, see Note 7 (page 23). AUDITORS At the annual general meeting in 2000, KPMG Bohlins AB were appointed auditors of Stadshypotek AB, with Roland Nilsson, authorised public accountant, as the Auditor in Charge until the annual general meeting in Finansinspektionen (Swedish Financial Supervisory Authority) appointed Ulf Davéus, authorised public accountant, Deloitte & Touche AB, as auditor of the company from the general meeting in 1999 until further notice. 7

10 Report of the Board of directors Lending operations THE STADSHYPOTEK LOAN AT HANDELSBANKEN The Handelsbanken Group offers mortgage finance principally via Stadshypotek AB and Handelsbanken Hypotek AB. The Stadshypotek loan is the main product, but the branches are able to place new loans with Handelsbanken Hypotek. For example, Handelsbanken Hypotek began to offer mortgage loans in euro in January Lending takes place through Handelsbanken s branch office network. As a result of the decentralised method of working within the Handelsbanken Group, the branches have been delegated responsibility for marketing, contact with customers, pricing and processing all mortgage loans. Handelsbanken acts as an agent for both mortgage companies, with responsibility for ensuring that credit assessment and collateral valuations are carried out in accordance with the guidelines approved by the boards of the two mortgage companies. Stadshypotek s strong brand name has been reinforced through a customer-oriented range of products whose design is very popular with customers. In combination with a branch network close to customers and a superior service level, this has strengthened the market position of the Stadshypotek loan and its role as Handelsbanken s main product for mortgage lending in the Handelsbanken Group. For lending to consumers, general decisions regarding the interest rates applying to loans of various maturities are made by the management of Stadshypotek. These interest rates are reported by most daily newspapers. THE MARKET IN 2001 In 2001, the mortgage market has been characterised by an increased demand for credit. During the year, the Swedish mortgage institutions lending to the general public increased by SEK 54bn. According to statistics from the Swedish central bank, the Swedish mortgage institutions lending, excluding lending volumes managed on behalf of other parties and including the reserve for possible loan losses, amounted to SEK 1 122bn (1 068) at the end of According to Statistics Sweden s figures, construction started on single-family houses and apartments in multi-family dwellings during this period, an increase of 24% compared with During 2001, reconstruction also started on approx apartments in multifamily housing, a decrease of 11% compared to More than 50% of all started and completed units in multi-family dwellings are in the large cities. In 2001, housing units were completed, an increase of 15% compared to Of the total number of completed units, were single-family houses and apartments in multi-family housing. In spite of a practically unchanged number of started and completed units in multi-family houses, and an increase in the conversion of rented apartments to housing co-operatives, the mortgage companies total corporate lending continued to decline for the fifth consecutive year. The decrease for the year was SEK 6bn (6). This is partly attributable to corporate customers moving their mortgage loans from the mortgage institutions to the banks and also that borrowers in this market have found other sources of funding to a large extent. Turnover in the secondary market weakened slightly during the period. The number of concluded transactions for single-family houses decreased compared to The prices of single-family houses increased at the beginning of 2001, but later in the year the price rise slowed down. In the Stockholm area in particular, there has been extensive demand for new loans to finance purchases of rented apartment buildings in connection with their conversion into housing co-operatives. The mortgage institutions private market lending rose in 2001 by SEK 60bn (27). STADSHYPOTEK S LENDING The fact that the Stadshypotek loan is now the Bank s main mortgage product has meant that loans have been gradually transferred from Handelsbanken Hypotek to Stadshypotek. For this reason, lending by the two mortgage companies within the Stadshypotek Group should be seen from a group perspective. LOAN PORTFOLIO STADSHYPOTEK 31 December Amounts in SEK bn Change Single-family housing Shares in housing co-operatives Private market Multi-family housing Office and commercial buildings Corporate market Total At year-end 2001, the Stadshypotek Group reported SEK 349.9bn (326.0) in loans to the general public. The Stadshypotek Group has increased lending in both the private market and the corporate market. At the end of 2001, a monthly increase in private market lending could be reported for the 41st consecutive month. Of the total increase in volume amounting to SEK 23.9bn (6.7), private market lending represented SEK 20.5bn (11.2) and corporate lending SEK 3.4bn ( 4.5). The shift towards private market lending, which began in connection with the takeover of Handelsbanken Hypotek in 1997, continued in 2001 and represented 55.1% (52.9) of total lending at the end of the year. The equivalent share at the year-end before Handelsbanken s acquisition was 38.8%. Since the margins for these loans are higher, this trend in the distribution of lending is very favourable for Stadshypotek. Despite a continued decrease in lending to municipalities and municipal housing companies, corporate lending has increased by SEK 3.3bn ( 4.5) mainly due to increased lending to housing co-operatives. 8

11 Report of the Board of directors CORPORATE MARKET BORROWERS 31 December Loan Share Loan Share Amounts in SEK bn volume % volume % Municipalities, municipal housing companies Housing co-operatives Private property companies, etc Private property owners The distribution of loan volumes by borrower on the corporate market at 31 December 2001 and 2000 is reported in the table above. The Stadshypotek Group s market share for lending to the general public increased during the year and was 31.2% (30.5) at the end of Distributed into categories of property, the market share was higher in both private and corporate markets. In the private market it was 30.6% (30.3) and in the corporate market 31.9% (30.8). Fixed lending rates had a varying trend in For single-family houses, the mortgage rate for a five-year fixed loan was at its lowest 5.95% at the end of March/beginning of April and at its highest 6.95% in July. At the end of the year, the five-year rate for a single-family house was 6.80%. At the end of the year the variable interest rate was 5.40%, which was the same as at the beginning of the year. The spread between variable and fixed rates continued to decrease during the first quarter. At the end of March, the two-year rate for single-family housing loans was 0.25 percentage points lower than the variable rate, while the five-year rate was at its lowest 0.30 percentage points higher than the variable rate. At the end of the year, the five-year rate for single-family housing loans was 1.40 percentage points higher than the variable rate, while the two-year rate was 0.65 percentage points higher than the variable rate. Despite the narrower spread between variable and fixed rates during large parts of the year, there continued to be considerable demand for variable rate loans in Total lending with variable interest rates was SEK 105.6bn (87.7) at the end of the year, which is an increase during the year of SEK 17.9bn (35.7). LOAN LOSSES A continued improvement of the housing market in certain parts of the country has, together with a low interest rate level, led to recoveries exceeding new loan losses again. Net loan losses were SEK 193m (22), which corresponds to a loan loss ratio of 0.06% ( 0.01) of total lending. The positive impact of SEK 193m which loan losses had on the result is explained by the fact that written-back provisions and amounts recovered from actual loan losses in previous years exceeded actual and possible loan losses. MORTGAGE RATE STADSHYPOTEK LOAN 2000 AND 2001 % year rate Variable rate The revived housing market in some regions of the country and a better market for certain medium-sized towns has led to recoveries of previous possible loan losses amounting to SEK 226m (149). The possible loan losses of SEK 103m (167) are mainly attributable to housing co-operatives and small property companies located in towns with a significantly negative demographic trend. The largest loan loss attributable to a single customer or customer category was almost SEK 10m (19). The ten largest loan losses amounted to a total of SEK 48m (69). Loan losses are reported in Note 10, page 24. PROBLEM LOANS As at 31 December 2001, Stadshypotek s volume of bad debts before deduction of the reserve for possible loan losses amounted to SEK 2 717m (3 672). After deduction of the reserve for possible loan losses, this volume amounted to SEK 1 887m (2 599). Of the bad debts, SEK 620m (656) were non-performing loans and SEK 2 097m (3 016) were loans, on which the borrowers pay interest and amortisation but which are considered doubtful in view of the borrowers repayment capacity and due to uncertainty as to the value of the collateral. In addition, there were non-performing loans of SEK 787m (940), for which the collateral was considered sufficiently good for interest to be reported as income. Apart from bad debts, problem loans also included reduced rate loans where the interest rate has been reduced in relation to market rates. These loans amounted to SEK 6m (7) as at 31 December The volume of problem loans after deduction of the reserve for possible loan losses was SEK 1 893m (2 606) as at 31 December See note 14, page 25, and for a definition of problem loans etc., page 20, Loan losses. REPOSSESSED PROPERTY The property that was repossessed at the previous yearend has been sold during the year. As at 31 December there was no repossessed property. 9

12 Report of the Board of directors Funding operations The treasury departments of Stadshypotek AB and Handelsbanken Hypotek AB are integrated with Handelsbanken s Central Treasury department. This organisation has improved the opportunities for active debt management of the Stadshypotek Group s balance sheet and more efficient use of the instrument offering the lowest funding cost each time funding is carried out. An integrated treasury department has also enabled efficient use of the Handelsbanken Group s liquidity. BORROWING THROUGH UMB The bond loans issued by the Urban Mortgage Bank of Sweden (UMB) are indirectly part of Stadshypotek s funding. The funds obtained by UMB have been transferred to Stadshypotek in their entirety and on unchanged terms. All new borrowing through UMB ceased in The outstanding debt in UMB continued to decline in At the end of 2001, SEK 3.5bn (7.1) of the company s debt remained. DEBT INSTRUMENTS The Stadshypotek Group raises funds mainly on the Swedish and US money and capital markets and through borrowing in Handelsbanken. The primary source of funding is bond loans in Sweden. Bonds are sold in the company s own name and mainly within the framework of a benchmark loan system aimed at the institutional market. This means that only a small number of separate bond loans are issued, with redemption dates set at intervals of nine months. By concentrating large volumes into a small number of loans in this manner, good market liquidity can be achieved for these instruments. Stadshypotek s benchmark loans, arranged by six market makers, are normally issued with an original maturity of about five years and are after that open for regular issues until about one year before the final maturity date. This borrowing is supported by a futures market in two- and five-year bonds with clearing provided by the OM clearing house. The futures contribute to improved liquidity for these bonds. Stadshypotek AB s domestic commercial paper programme remains unchanged with a ceiling of SEK 90bn. Stadshypotek s retail bonds are sold through its associated company Stadshypotek Bank AB. Handelsbanken Hypotek ceased issuing new retail bonds in its own name in In order to expand the borrowing base, in 2001, Stadshypotek started a commercial paper programme of USD 5bn in the US. The programme has been guaranteed by Handelsbanken and is supported by four market makers. The borrowing is done through an American company expressly formed for this purpose, Stadshypotek Delaware, Inc., which transfers borrowed funds to Stadshypotek AB. Standard & Poor s has rated this programme A-1 and Moody s P-1. INTEREST RATES The Riksbank s repo rate stayed unchanged at 4% during the first six months of A weakened Swedish krona and the risk of rising inflation prompted the Riksbank to raise the repo rate to 4.25% on 11 July. The terrorist attacks in the US had an impact on interest rates. In order to alleviate the effects of these BORROWINGS BY STADSHYPOTEK COMPANIES 31 December Book Share Book Share Amounts in SEK bn value % value % Borrowing from the parent bank Commercial paper Bond loans, domestic Retail bonds Bond loans, foreign Repos and promissory notes Commercial paper US Subordinated debentures, domestic Total Of which, through UMB Lent to Handelsbanken Hypotek

13 Report of the Board of directors events, central banks around the globe lowered their rates. The Riksbank followed suit and lowered the repo rate on 18 September by 0.50 percentage points to 3.75%. The trend for bond yields in 2001 has been characterised by great fluctuations as a consequence of the dramatic events around the world. The year began with yields continuing to fall. During the second quarter, the absence of European rate cuts and an increasingly weak krona led to rising domestic interest rates. The yield on long-term Swedish government bonds rose during spring and summer by 50 basis points more than the German equivalent. The five-year Stadshypotek bond rose from its lowest level of the year, 4.74%, in March to its highest level, 5.84%, in early July. Reports of weaker economic growth in Euroland and a rate cut by the European Central Bank led to falling yields from mid-year. In September, this was reinforced by the terrorist attacks in the US. At its lowest point, the five-year Stadshypotek bond had fallen to 4.81% in early November. Positive economic figures from the US and rising share prices made the long-term rate rise again in the last two months of the year. At the end of the year, the yield on the five-year Stadshypotek bond was 5.53%. Despite large fluctuations in the rate trend, the mortgage spread, i.e. the difference between the Swedish government bond yield and the mortgage institutions bond yield, has been stable. During the year, the fiveyear Stadshypotek bond has been trading in an interval of 50 60bp above the corresponding government bond. FUNDING AND DEBT MANAGEMENT IN 2001 In 2001, Stadshypotek s borrowers continued to choose loans with variable interest rates to a large extent. Financing of variable rate lending is done through transferring Handelsbanken s surplus liquidity to Stadshypotek, through issuing commercial paper in Sweden and the US and through bank deposits. In order to reduce the refinancing risks, lending at variable interest rates has also been funded through long-term borrowing, and then adapted to the variable rate lending through the use of swap agreements. The long-term lending is mainly funded with benchmark bonds. Some financing is also done using shortterm lending which is converted via swap agreements into the same maturity as the long-term lending. The refinancing risks involved are minimised as the shortterm debt always has an original maturity of at least a year. When appropriate in a yield curve perspective, the short-term funding requirement has been met by issuing benchmark bonds and simultaneously entering into swap agreements with diametrically opposed interest rate risk. MORTGAGE SPREAD 2001 AND YEAR GOVERNMENT BOND AND 5-YEAR STADSHYPOTEK BOND % 0.9 0, % MATURITY PROFILE FOR BORROWING 31 December INTEREST RATES IN 2001 AND YEAR GOVERNMENT BOND AND 5-YEAR STADSHYPOTEK BOND Mortgage bond Government bond Repo rate Maturity Book value Share period SEK bn % 2002, Q , Q , Q

14 Report of the Board of directors Swap instruments have thereby been used to both lengthen and shorten Stadshypotek s funding. In this manner, Stadshypotek has been a participant in the swap market both when the yield curve for interest rate swaps has been higher and lower than the yield curve for mortgage bonds. At the end of the year, interest rate swap agreements in which fixed interest is received amounted to SEK 67.5bn (78.7), while agreements paying fixed interest were SEK 106.0bn (84.6). Sales of bonds from Stadshypotek s benchmark series were SEK 73.6bn (88.8) in The book value of the outstanding bond debt was SEK 118.8bn (127.5) at year-end. At the end of the year, the outstanding volume of commercial paper in Sweden was SEK 18.6bn (38.3). This decrease is due to larger borrowings through bank deposits and on the US commercial paper market. At the end of the year, outstanding volume under the American commercial paper programme was SEK 40.6bn. New sales of retail bonds by Stadshypotek amounted to SEK 1.9bn (2.8) in The book value of the Stadshypotek Group s total retail bond funding was SEK 7.7bn (8.4) at year-end. Stadshypotek s total funding at year-end was SEK 325.7bn (298.1). Of this, borrowing from Handelsbanken represented SEK 143.9bn (131.1), which corresponds to 44% (44) of total funding. The distribution of funding by instrument is shown in the table on page

15 Report of the Board of directors Risk management, capital adequacy and rating Stadshypotek s policy is to conduct its operations with a controlled low level of risk. The main risks are credit risk and financial risks. The credit risk is minimised by carrying out credit assessment of all customers and through demanding adequate collateral for loans. The financial risks are limited by achieving a good balance between lending and funding. Credit risk Stadshypotek s business is property financing, primarily for housing purposes. The borrower base is distributed throughout Sweden with a concentration in built-up areas. The customers represent all categories of property owners, from individual households to large property companies. Of the loan portfolio, owner-occupied housing and shares in housing co-operatives account for 55.1% (52.9), multi-family housing for 38.5% (40.2) and office and commercial property for 6.4% (6.9). Lending to the largest corporate group corresponds to about 1% (1) of the whole portfolio. There are 5 (6) customers or corporate groups with more than SEK million in loans, a limit which corresponds to about 4.8% (4.7) of Stadshypotek s capital base. Credit assessment In the Handelsbanken Group, a joint credit analysis is carried out both for the Bank and its subsidiaries, and overall customer and corporate group limits are established. The branches and regional banks have the primary responsibility in this respect. All loans over a certain limit which are to be placed with Stadshypotek or Handelsbanken Hypotek must also be evaluated by the company involved before the loan is made. In the credit assessment, both the borrower s repayment capacity and the value of the collateral provided are taken into account. Valuation The valuation of properties and shares in housing co-operatives is a central part of lending operations. Collateral is assessed on the basis of its market value. In the case of small multi-family properties, singlefamily properties and shares in housing co-operatives, a simplified assessment of market value may be sufficient. In other cases, an up-to-date, complete valuation must always be made by an approved valuer before a loan can be granted. Handelsbanken s branches are responsible for ensuring that the valuation is correct and carried out in accordance with current instructions. Internal and external valuations are carried out. In order for a mortgage to qualify as adequate collateral, an upper ceiling of 75% of the estimated market value of the property normally applies. For favourably located single-family properties in an area where the market is stable, the mortgage ceiling may be extended to 85%, which is the upper limit according to the Articles of Association. FINANCIAL RISK Interest rate risk lending In the Stadshypotek Group, interest rate risk is defined as the difference which arises in the present value of future cash flows if the yield curve experiences an upward shift of one percentage point. Interest rate risks of this type arise when the rate adjustment periods for financial assets and liabilities or off-balance-sheet items do not coincide. If, for example, the repricing for funding occurs earlier for borrowing than for lending, the original margin would be exposed to changes in the market interest level towards the end of the maturity for lending. Due to the concentration of the benchmark loans in a small number of final maturity dates, it is not possible to match maturities in a traditional manner. Instead, the general method for achieving risk-neutral matching is based on the use of two different bond loans to finance one lending transaction. Since one of the bond loans has a somewhat shorter maturity than the lending and the other a somewhat longer maturity, interest risks which can balance each other are obtained so that the borrowing is risk-neutral with respect to the lending. Due to this matching of financial assets and liabilities and off-balance-sheet items, changes in interest rates have only a marginal effect on Stadshypotek s results. If a lack of balance arises, funding and derivative instruments can be used to achieve the required interest rate risk. Interest rate risks are measured on a daily basis. These measurements are carried out separately by each mortgage company, as are follow-ups of the interest rate risk limits that have been set by the boards of both mortgage companies. Interest rate risk equity capital Another form of interest rate risk is associated with the investment of Stadshypotek s equity capital. Most of this capital is placed in lending, and thus, on the balance sheet, the interest-bearing assets are a significantly larger item than the interest-bearing liabilities. When equity capital is placed in interest-bearing assets, fluctuations in the interest rate will have an impact on the return on this investment. The capital is placed in lending with an average rate adjustment period of three years. This is the standard level of risk for equity capital. The daily interest rate risk on equity capital must not deviate from this standard risk beyond an amount specified by the board. The tables below show the rate adjustment periods for the group s and the parent company s assets and liabilities in the balance sheet, and also off-balancesheet items at the end of

16 Report of the Board of directors INTEREST RATE ADJUSTMENT PERIODS FOR THE 'S ASSETS AND LIABILITIES AS AT 31 DECEMBER December 2001 SEK m 3 mths 3 6 mths 6 12 mths 1 5 yrs 5 yrs Total ASSETS Lending to credit institutions Lending to the general public Total assets LIABILITIES Liabilities to credit institutions Issued securities Total liabilities Off-balance-sheet items Difference between assets and liabilities including off-balance-sheet items Accumulated difference Accumulated difference as % of total assets Average interest rate adjustment period for lending to the general public 1.6 years (1.6). Average interest rate adjustment period for funding 1.0 years (1.2). INTEREST RATE ADJUSTMENT PERIODS FOR THE 'S ASSETS AND LIABILITIES AS AT 31 DECEMBER December 2001 SEK m 3 mths 3 6 mths 6 12 mths 1 5 yrs 5 yrs Total ASSETS Lending to credit institutions Lending to the general public Total assets LIABILITIES Liabilities to credit institutions Issued securities Total liabilities Off-balance-sheet items Difference between assets and liabilities including off-balance-sheet items Accumulated difference Accumulated difference as % of total assets Average interest rate adjustment period for lending to the general public 1.5 years (1.6). Average interest rate adjustment period for funding 1.0 years (1.3). Liquidity risk Not only variable rate lending but also part of the fixed rate lending is refinanced with short-term borrowing via swap agreements, thus extending the maturity. The gross flows arising from short-term borrowing on certain days and the refinancing carried out in this connection give rise to future liquidity risks. These liquidity risks are kept at a minimum by converting long-term loans to short-term borrowing via swap agreements. Currency risk In 2001, Stadshypotek raised euro loans corresponding to lending in the same currency. During the year, a commercial paper programme has been issued in the US. Loans taken up under this programme are denominated in US dollars. The currency risk in connection with this funding is eliminated by matching currency forward rate contracts. All other refinancing on the foreign markets is raised through Handelsbanken and subsequently transferred to Stadshypotek in SEK. Handelsbanken also handles the currency risk in this connection. 14

17 Report of the Board of directors Derivative instruments The majority of derivative transactions entered into by Stadshypotek are interest rate swaps. Stadshypotek enters into derivative transactions in order to hedge the risk in its own balance sheet or in order to obtain cheaper funding. The latter may be obtained by extending the maturity of short-term borrowing via interest rate swap agreements. Via the interest rate swap market, derivative instruments can also be combined with funding instruments to create attractive short-term and long-term funding solutions. The Stadshypotek Capped Rate Loan is a mortgage loan product where the borrower is insured against future interest rate increases. It is a five-year loan which is designed so that the interest rate decreases when short-term interest rates fall. If short-term interest rates increase, the customer never has to pay more than a predetermined maximum rate of interest. This commitment is hedged with interest rate caps on terms corresponding to this lending. The counterparty risks which arise when Stadshypotek enters into the above types of derivative agreements have been kept to a minimum by Handelsbanken being the counterparty for all these agreements. Standardised interest rate futures are also used; they do not give rise to any counterparty risks since they are cleared by OM. In connection with issuing commercial paper in the US, the currency risk is eliminated by currency forward rate contracts. Since the derivative agreements that are entered into constitute a hedge against unfavourable changes in value in the mortgage group s lending and borrowing portfolios, hedge accounting with acquisition valuation is applied on these types of position. Information about Stadshypotek s positions with respect to derivative instruments is provided in note 32 on page 30. CAPITAL RATIO Stadshypotek s capital ratio was 10.8% (12.1) as at 31 December The Tier 1 ratio was 10.8% (12.1). These calculations take into account dividends to the holders of preference shares in Handelsbanken Hypotek. The reduction of the capital ratio is explained by an increased risk-weighted amount combined with a slightly lower capital base. None of the companies in the Stadshypotek Group has a trading book of financial instruments or any open currency positions. Thus, there is no capital requirement for market risks. A full capital adequacy analysis is presented in Note 35 on page 32. RATING FOR STADSHYPOTEK S DEBT The costs of Stadshypotek s funding are affected by the credit assessments of the rating agencies. Since 1999, Moody s long-term rating of Stadshypotek is Aa2. Thus, Stadshypotek has the same rating as the parent company Handelsbanken. RATING Long-term Short-term Moody s Aa2 P1 Standard & Poor s A+ A-1 15

18 Report of the Board of directors Financial review The Stadshypotek Group s operating profit increased by SEK 421m to SEK 4 543m (4 122), the best result ever. Operating profit before loan losses rose by SEK 250m and was SEK 4 350m (4 100). OPERATING INCOME The SEK 164m increase in the Group s net interest income to SEK 4 608m (4 444) is mainly due to increasing lending volumes and an improved lending margin as a result of the continued shift towards private market lending. Net interest income has been adversely affected by lower return on equity due to lower interest rates and declining shareholders equity. As in previous years, there has been a certain variation in net interest income from quarter to quarter. These variations were mainly caused by a difference in the timing of interest rate adjustments for borrowing and lending of the type discussed under the heading Interest rate risk lending on page 13. EXPENSES AND LOAN LOSSES Total Group expenses were SEK 323m (377), a decrease of SEK 54m or 14%, partly due to continuing gains in efficiency. Excluding a write-back of pension surplus from SPP of SEK 18m in 2000, expenses decreased by SEK 72m or 18%. Expenses include the agent s commission which Handelsbanken Hypotek pays to Handelsbanken. Compared to the year before, these commissions decreased by SEK 58m as a consequence of the subsidiary s reduction of volume. Losses on loans receivable made a positive contribution to the result and were SEK 193m (22), corresponding to a loan loss ratio of 0.06% ( 0.01). More information about loan losses is provided under Loan losses on page 9. ADJUSTMENT ENTRIES AND APPROPRIATIONS The minority interest of SEK 22m (22), included in the operating profit, is deducted in the item Minority interest. A Group contribution of SEK 495m (506) has been received from the subsidiary Handelsbanken Hypotek. A Group contribution of SEK 5 355m (4 890) has been provided to Handelsbanken. TAXATION AND NET PROFIT FOR 2001 The net result for the year after taxes of SEK 1 289m (1 154) was SEK 3 232m (2 949). The net result for the parent company after taxes was SEK 3 836m (3 524). The Group result corresponds to return on equity of 13.3% (11.7). For a summary of profit and loss accounts and balance sheets for the past five years, and for key financial figures and ratios for the Group, see page 36 and page 2. QUARTERLY PERFORMANCE SEK m Q 4 Q 3 Q 2 Q 1 Q 4 Interest income Interest expense Net interest income Other operating income Total income General administrative expenses Staff costs Other expenses Depreciation according to plan Total expenses Profit before loan losses Net loan losses Operating profit

19 Report of the Board of directors SENSITIVITY ANALYSIS The factors which have the greatest impact on Stadshypotek's operating profit are the interest rate margin in the loan portfolio and the investment yield on own funds. Changes in the volume of lending, operating expenses and the loan loss level are also important. The table below shows the effect of changes in each one of these factors upon the result, assuming that all other parameters are unchanged. The table is based on the balance sheet as at 31 December For the effect of a variation in loan volume, an interval is specified, since a loan volume which is added or deducted from the loan portfolio may have a different margin than the portfolio on average. The calculations concern interest rate margins of 0.5% and 1.0%, respectively. It should be emphasised that changes in the interest rate level only gradually affect a portfolio of fixed-rate loans. If the margin for new lending changes or if the general interest rate level changes, it will take time before the full impact is seen on the average lending margin and on the investment yield on own funds in the whole portfolio. Changing factor Starting Change Effect point on result, SEK m Average nominal lending margin 0.86% 0.10%-point 350 Average interest level for own funds invested 5.29% 1.0%-point 207 Volume of lending SEK 350bn 1.0% Expenses SEK 323m 10% 32 Loan loss level 0.06% 0.01%-point 33 Relatively large changes in the volume of lending or other investments are required in order to have a more significant impact on the capital ratio. For example, with the same risk weight spread as for Stadshypotek's loan portfolio on average, a volume increase of about SEK 37bn would be required in order to reduce the capital ratio by one percentage point. A corresponding decrease would result if there is a reduction in the capital base of SEK 1.9bn. The following table shows how the capital ratio is affected by changes in different forms of investment. Changing factor Change Effect on in SEK m capital ratio, %-points Investments Claims on financial institutions Loans secured by Residential property Offices or commercial buildings Capital base

20 Profit and loss account and balance sheet Profit and loss account SEK m Interest income Note Interest expense Note Net interest income Dividends received Note Commission income Note Commission expense Note Other operating income Note Total operating income General administrative expenses Staff costs Note Other administrative expenses Note Depreciation according to plan Note Total expenses before loan losses Profit before loan losses Net loan losses Note Operating profit Appropriations Note Profit before tax Taxes Note Minority interest Profit for the year Net earnings per share, SEK

21 Profit and loss account and balance sheet Balance sheet 31 December SEK m ASSETS Lending to credit institutions Note Lending to the general public Note Shares and participations in Group companies Note Tangible assets Note Other assets Note Prepayments and accrued income Note Total income Group claims Note LIABILITIES, PROVISIONS AND EQUITY Liabilities to credit institutions Note Deposits from the general public Note Issued securities etc. Note Other liabilities Note Accruals and deferred income Note Provision for deferred taxes Note Subordinated liabilities Note Total liabilities and provisions Minority interests Untaxed reserves Note Equity Note 27 Share capital Statutory reserve Profit brought forward Profit for the year Total equity Total liabilities, provisions and equity Group liabilities Note Contingent liabilities Note Other commitments Note

22 Accounting principles Accounting Principles These annual accounts have been prepared in accordance with the regulations of the Annual Accounts Act for Credit Institutions and Securities Companies. (ÅRKL), the Swedish Financial Accounting Standards Council s recommendations and the directives issued by Finansinspektionen, (the Swedish Financial Supervisory Authority, FFFS 2000:18). Stadshypotek AB is a subsidiary of Svenska Handelsbanken AB. The Bank prepares consolidated accounts which include Stadshypotek AB. Income taxes The Accounting Standard s recommendation RR 9 on Income taxes came into force on 1 January This recommendation implies that both deferred tax claims and deferred tax liabilities shall be reported in the accounts. The recommendation has not had any impact on the comparative figures. Consolidated Accounts The Consolidated Accounts have been prepared in accordance with the acquisition accounting method. Borrowing through UMB Stadshypotek AB has borrowings both in its own name and through the Urban Mortgage Bank of Sweden (UMB). With regard to loans raised through UMB, the company s terms of borrowing correspond exactly to the terms achieved by UMB. Furthermore, the company is also obliged to compensate UMB for any costs arising due to agreements which UMB has entered into with external parties for the purpose of this funding. Since, in doing so, the company has assumed all the obligations connected with borrowing from the market, transactions concerning the company s liabilities are reported in accordance with the same principles which would apply if it were Stadshypotek AB itself which had carried out the market transactions. Borrowing through UMB is reported in the balance sheet item Liabilities to credit institutions. Reporting of lending Lending is classified as a financial fixed asset and is reported in the balance sheet on the payment date at its acquisition price. Lending is reported net after deductions for possible loan losses. Write-offs for possible loan losses are made in accordance with the principles disclosed under the heading Loan losses below. When borrowers renegotiate the terms of loans or redeem fixed rate loans before the scheduled maturity, Stadshypotek is normally entitled to apply an early redemption charge. These prepayment penalties are distributed over the remaining life of the redeemed loan. Income from prepayment penalties is included among net interest income. Reporting of financial instruments Purchases and sales of money market and capital market instruments on the spot market are subject to trade date accounting. Forward transactions are registered on the transaction date but until the date of settlement are regarded as commitments off the balance sheet. On the date of settlement, they are reported on the balance sheet. Liabilities in connection with funding in respect of fixed interest discount, coupon and zero-coupon instruments are reported at their accrued acquisition value. Acquired premiums and discounts at the time of issue are allocated over the remaining period, using the effective interest rate method. Premiums and discounts for repurchased bonds are distributed over the residual maturity of the repurchased bond according to the effective interest rate method. The premiums and discounts are reported under Net interest income. Bonds negotiated in repurchase agreements (repos) are reported as short-term funding for which the price difference is the interest cost over the period in question. The gain or loss arising on futures contracts with respect to Stadshypotek bonds is distributed over the life of the underlying bonds in accordance with the principle described above for price differences on bond issues. Stadshypotek s derivative instrument transactions constitute a hedging of balance-sheet items and are reported using the accounting principles which apply to these balance sheet items. When the hedged position is realised, the derivative transaction s impact on the result is distributed so that it corresponds to the reporting of the hedged position. Derivative instruments with positive accrued interest are reported under Other assets, and transactions with negative accrued interest are reported under Other liabilities. Assets and liabilities in foreign currencies Assets and liabilities in foreign currencies have been recorded at the price on the balance sheet date. Assets and liabilities in foreign currencies which are hedged by various means against exchange rate fluctuations are valued with respect to the hedging method employed. In cases where assets and liabilities in foreign currency have been hedged through forward contracts, the premium is distributed over the life of the contract. Equipment used for Stadshypotek s own activities Equipment is depreciated on a straight-line basis over five years. Personal computers are depreciated over three years. 20 Stadshypotek Annual report 2001

23 Accounting principles Loan losses Actual loan losses for the year and write-offs in respect of possible losses for loans receivable are reported as loan losses. Lending is reported net, i.e. after deductions for possible loan losses. Restored previous provisions for loan losses are deducted from the loan losses for the year. Also reported as loan losses are write-offs of interest shown as income in previous annual accounts. Reported as actual loan losses are losses where the amounts have been finally determined or are more than likely as a result of an official receiver providing an estimation of bankruptcy dividends, the acceptance of composition recommendations or the concession of claims in some other way. Write-downs of possible loan losses are made if the borrower s ability to repay is not considered likely to improve sufficiently within two years and the value of the collateral does not cover the loan amount. Writeoffs are made down to the amount which is expected to be realised, taking into account the value of the collateral. If the collateral consists of a mortgage on a property, the property is valued at the lower of cost or market. By market value is meant the market value after deduction of costs of sale. This value is based upon an individual valuation using recognised and accepted valuation methods. A non-performing loan is a loan where interest, repayments or overdrafts have been due for payment for more than 60 days. A bad debt is a loan which is non-performing or where other circumstances lead to doubt concerning its value and where the value of the collateral does not cover the principal amount and the accrued interest by a satisfactory margin. Reduced rate loans are loans for which the interest rate has been reduced compared to market rates. Bad debts as defined above are not included in reduced rate loans. Problem loans are bad debts and reduced rate loans. Unpaid interest on non-performing loans where the value of the collateral does not cover the principal amount and the accrued interest by a satisfactory margin is not taken up as income. Interest on these claims which was reported as income but not paid during the accounting year has been reversed. Interest payments received thereafter in respect of this type of credit are reported in the year of receipt. Special information In addition to the notes which consist of specifications and additional disclosures concerning individual items on the profit and loss account and balance sheet, supplementary information is presented in the following notes: Note 31 Cash flow statement Note 32 Derivatives Note 33 Assets and liabilities in foreign currencies Note 34 Disclosures about fair value Note 35 Capital adequacy analysis Other Reported income is entirely attributable to the Swedish market. The classification of balance sheet items into current assets and fixed assets is shown in Note 34 on page 31. The only subordinated asset of any of the Group companies is the subordinated loan made by the parent company to Handelsbanken Hypotek and which is reported in the item Lending to credit institutions. The companies do not administer, in their own name, any funds on behalf of a third party. Stadshypotek Annual report

24 Notes Notes Amounts in SEK million, unless otherwise specified Note 1 Interest income Lending to the general public Lending to credit institutions Average balance lending general public Average balance lending credit institutions During the year, the average interest rate on lending to the general public was 5.9% (6.4). Note 2 Interest expense Liabilities to credit institutions Commercial paper and other short-term borrowings Bond loans and other long-term borrowing Deposits from the general public Issued securities Commercial paper and other short-term borrowings Bond loans and other long-term borrowing Subordinated liabilities Other Other interest expense Average balance liabilities to credit institutions Average balance deposits from the general public Average balance issued securities in SEK Average balance issued securities in foreign currency During the year, the average interest rate on borrowings (liabilities to credit institutions, issued securities and subordinated liabilities) was 4.9% (5.5). The average interest rate on deposits from the general public was 6.2% (4.8). Note 3 Dividends received Group contribution received Note 4 Commission income Commission on lending Commission on credit guarantees Other commissions Note 5 Commission expense Commission on payments Commission on securities

25 Notes Note 6 Other operating income VAT payment Other income Note 7 Staff costs Salaries and other remuneration Social security costs Pension premiums paid Provision for profit-sharing foundation Other staff costs During the year, the average number of employees in the Group was 33 (39), of whom 29 (29) were employed by the parent company and 4 (10) by Handelsbanken Hypotek. Of the employees in the Group, 47% (47) were women and 53% (55) were men with the same distribution in the parent company. Pension premiums paid refers to premiums paid to the SHB Pension Fund for contractual pension insurance. Terms and remuneration of the Senior Management Stadshypotek has no agreements on severance pay for senior management. The chief executive, Claes Norlén, has a retirement age of 60. His retirement pension is 10% of his salary up to 7.5 basic amounts. His pension is 65% on salary amounts between 7.5 and 20 basic amounts, and 32.5% between 20 and 30 basic amounts. The board of directors and chief executive of the companies within the Group received SEK 2.0m (1.9) in remuneration and salary, of which the parent company accounted for SEK 2.0m (1.7). Pension commitments to the previous chief executive of the subsidiary Handelsbanken Hypotek are SEK 5.3m (5.4). At year-end 2001, the following loans were outstanding at Stadshypotek with respect to senior management of the company: CEOs in the parent company and subsidiaries: SEK 0 Other board members in the parent company and subsidiaries: SEK CEOs and EVPs in other companies in the Group: SEK The loans in question are distributed among 13 individuals and are all secured by pledged collateral. Paid pension insurance premiums for the present and previous boards, CEOs and EVPs amount to SEK 1.5m (1.4) for the Group and SEK 1.5m (1.4) for the parent company. Note 8 Other administrative expenses IT costs Cost of premises Consultancy fees Agent s commission 1) Other administrative expenses ) This item concerns agent s commission paid by Handelsbanken Hypotek to Handelsbanken. Auditing costs SEK thousand External auditing KPMG Bohlins AB Deloitte & Touche AB Internal auditing No consultancy fees have been paid to auditors. Operating lease contracts Leasing payments for the period

26 Notes Note 9 Depreciation and write-down of tangible and intangible fixed assets Depreciation, equipment Note 10 Net loan losses A. INDIVIDUALLY VALUED CLAIMS The year s write-down for actual loan losses Write-back of previous provisions for possible loan losses now reported as actual losses Actual loan losses, net The year s write-down for possible loan losses Recovered from actual losses in previous years Write-back of provisions for possible losses which are no longer necessary Net expense for the year, individually valued claims B. CLAIMS VALUED AS A Allocation to/dissolution of loan loss reserve Net expense for the year, claims valued as a group Total loan losses All written-down and recovered losses are in respect of lending to the general public. Note 11 Appropriations Note 12 Tax Tax paid Change in allocation reserve Change in tax equalisation reserve based on equity Tax cost for the period Adjustment of tax relating to previous years Deferred tax Nominal tax rate in Sweden 28.0% 28.0% 28.0% 28.0% Deviations Adjustment of tax relating to previous years 0.4% 0.0% 0.4% 0.1% Effective tax rate 28.4% 28.0% 28.4% 28.1% Note 13 Lending to credit institutions CURRENT ASSETS Banks Other credit institutions FIXED ASSETS Other credit institutions Total lending Information concerning maturities: Payable upon demand Remaining maturity: maximum three months Remaining maturity: over three months but maximum one year Remaining maturity: over one year but maximum five years Remaining maturity: over five years Total Average remaining maturity (years)

27 Notes Note 14 Lending to the general public FIXED ASSETS Lending, gross Provision for possible loan losses Book value Information concerning maturities: Payable upon demand Remaining maturity: maximum three months Remaining maturity: over three months but maximum one year Remaining maturity: over one year but maximum five years Remaining maturity: over five years Total Average remaining maturity (years) Non-performing loans etc. Bad debts Reserve for possible loan losses Bad debts, net Reduced rate loans without a provision for possible loan losses 6 7 Total problem loans Problem loans before write-down for possible loan losses Current income on problem loans during the year Annual interest rate on problem loans 6.7% 7.0% 6.3% 7.0% Annual interest rate on claims which are not problem loans 5.9% 6.4% 5.8% 6.3% Non-performing loans for which interest is accrued Note 15 Shares and participations in Group companies FIXED ASSETS Shares in Group companies Name Registered Company Thousand Nom. value, Proportion of Book value, office reg. number shares SEK m share capital, % SEK m Handelsbanken Hypotek AB Stockholm Stadshypotek Delaware, Inc. Delaware The holding consists exclusively of unlisted shares. Preference shares belonging to minority interests in Handelsbanken Hypotek are listed on the Stockholm Stock Exchange s O list. Note 16 Tangible assets FIXED ASSETS Equipment used for Stadshypotek s own activities Residual value accordning to plan, January Net new acquisitions during the year The year s depreciation according to plan Residual value according to plan Note 17 Other assets CURRENT ASSETS Prepaid tax Interest and fees due Settlement claims in respect of own securities Derivatives Other

28 Notes Note 18 Prepayments and accrued income CURRENT ASSETS Accrued interest Other Note 19 Liabilities to credit institutions Borrowing from UMB Other Part of Stadshypotek AB s borrowings comes through UMB which has issued securities on the money and capital markets and lent the funds to the company on the same terms. UMB s funding in the market is allocated as follows: Swedish credit institutions Bonds 1) ) Domestic bond loans, nominal value Rate differences Book value Information concerning maturities: Payable upon demand Remaining maturity: maximum three months Remaining maturity: over three months but maximum one year Remaining maturity: over one year but maximum five years Remaining maturity: over five years Total Average remaining maturity (years) Note 20 Deposits from the general public Deposits Information concerning maturities: Remaining maturity: maximum three months 8 8 Total 8 8 Average remaining maturity (years)

29 Notes Note 21 Issued securities etc Commercial paper 1) Bonds 2) Promissory notes 3) ) Commercial paper in Sweden Foreign commercial paper ) Domestic bond loans Retail market bonds Foreign bonds Circulating bonds, nominal value Price differences Book value ) Domestic promissory note loans, nominal value Price differences Book value A list of bonds can be obtained from Stadshypotek. Besides the bonds issued by Stadshypotek AB and Handelsbanken Hypotek AB, the list also contains bonds and subordinated debentures issued by UMB (see also Note 19). Information concerning maturities: Payable upon demand Remaining maturity: maximum three months Remaining maturity: over three months but maximum one year Remaining maturity: over one year but maximum five years Remaining maturity: over five years Total Average remaining maturity (years) Note 22 Other liabilities Tax liability Settlement liabilities in respect of own securities Derivatives Other liabilities Note 23 Accruals and deferred income Accrual interest Other accruals and deferred income Note 24 Provisions for deferred taxes DEFERRED TAX LIABILITY Tax allocation reserve

30 Notes Note 25 Subordinated liabilities At year-end 2000, the parent company s subordinated borrowings comprised one domestic subordinated debenture loan raised by UMB. Subordinated debentures, nominal Price differences 0 0 Book value Information concerning maturities: Payable upon demand Remaining maturity: maximum three months Remaining maturity: over three months but maximum one year Remaining maturity: over one year but maximum five years Remaining maturity: over five years Total Average remaining maturity (years) SPECIFICATION Currency/loan No. Terms of interest Loan date Interest payment Repayment Circulating year, month, day days year amount Stadshypotek AB SEK % Handelsbanken Hypotek AB FL3 1) Zero coupon ) This subordinated debenture loan is issued by Handelsbanken Hypotek AB and is held by Stadshypotek AB. The loan has been eliminated in the consolidated accounts. Note 26 Untaxed reserves Tax allocation reserve Note 27 Equity Share capital Reserves Profit brought Result Total forward for the year Equity brought forward according to balance sheet for Dividend 0 0 Transfer between restricted and unrestricted equtiy Group contribution paid Tax on Group contribution Profit for the year Balance at year-end Share capital 1) Reserves Profit brought Result Total forward for the year Equity brought forward according to balance sheet for Dividend 0 0 Group contribution paid Tax on Group contribution Profit for the year Balance at year-end ) At the balance sheet date, the share capital comprised shares with a nominal value of SEK 25 each, of which were Class A and were Class B shares. 28

31 Notes Note 28 Contingent liabilities Guarantees to Group companies Guarantees to other parties Total Note 29 Other commitments Nominal amount Interest rate-related and currency-related contracts Interest rate swaps Currency swaps Interest rate options and futures Currency forwards Hedge loans Total commitments Interest rate swaps have been made with the aim of converting, in terms of risk, fixed-rate borrowings into variable rate borrowings and vice versa, in order to match the borrowing and lending interest flows. Currency swaps are used to convert borrowings in foreign currencies to corresponding borrowings in Swedish kronor. Interest rate options are used in connection with capped rate loans. Contracted future operating lease payments distributed by the year they fall due for payment Amounts SEK thousands Total Note 30 Group claims/group liabilities CLAIMS Lending to credit institutions Other assets Prepayments and accrued income Total LIABILITIES Liabilities to credit institutions Issued securities etc Other liabilities Accruals and deferred income Total PROFIT AND LOSS ACCOUNT Interest income Interest expense Commission income Commission expense Dividends received Other administrative expenses Total Inter-company transactions are reported under the above headings in the balance sheet and profit and loss account, either between the companies within the Stadshypotek Group or between these and other companies within the Handelsbanken Group. 29

32 Notes Note 31 Cash flow statement OPERATING ACTIVITIES Operating profit Adjustment for items in the operating result which do not affect the cash flow: Loan losses Depreciation and write-downs Paid income tax Changes in the assets and liabilities of operating activities: Lending to credit institutions Lending to the general public Financial current assets 0 0 Liabilities to credit institutions Deposits and funding from the general public Issued securities Other Cash flow on operating activities INVESTING ACTIVITIES Change in tangible fixed assets Cash flow on investing activities FINANCING ACTIVITIES Subordinated loans Paid dividend Cash flow on financing activities Cash flow for the year Liquid funds at beginning of year Cash flow on operating activities Cash flow on investing activities Cash flow on financing activities Liquid funds at end of year Note 32 Derivatives Stadshypotek uses derivatives in order to hedge against interest rate and currency risks and applies the deferral method of hedge accounting. This means that the book value of the derivatives consists of the accrued interest. In the case of swap contracts, accrued interest is reported in the balance sheet items "Other liabilities/assets". The difference between the fair value of the derivatives and the book value below corresponds to equally large, but opposite differences between the fair value and the book value of the items on the balance sheet which are being hedged by the derivatives. Besides the derivative contracts which Stadshypotek AB has entered into in its own name, the following disclosures also include the swap agreements which UMB has entered into on behalf of Stadshypotek AB and which the company must disclose in its capital adequacy analysis. These swaps are not reported as assets or liabilities on Stadshypotek AB's balance sheet. Instead, they are reported as memorandum items under the heading Contingent liabilities. Interest rate-related Currency-related Fair Book Nominal Fair Book Nominal value value amount value value amount Derivatives with positive values or zero value Futures with positive values Options with positive values Swaps with positive values Total Of which cleared Derivatives with negative values Futures with negative values Options with negative values Swaps with negative values Total Of which cleared

33 Notes Interest rate-related Currency-related Fair Book Nominal Fair Book Nominal value value amount value value amount Derivatives with positive values or zero value Futures with positive values Options with positive values Swaps with positive values Total Of which cleared Derivatives with negative values Futures with negative values Options with negative values Swaps with negative values Total Of which cleared Note 33 Assets and liabilities in foreign currencies The total value in SEK of liabilities in foreign currencies is specified below. Loans denominated in Loans taken up in USD EUR Other Total USD Other Total currencies currencies ASSETS Lending to the general public 9 9 LIABILITIES Liabilities to credit institutions Issued securities Derivative positions Net foreign currency position The principal and interest amounts for the above liabilities in foreign currencies are hedged against exchange risk. Note 34 Disclosures about fair value Booki Adjusted value to fair value ASSETS Cash in hand and balance with central banks current assets Lending to credit institutions current assets Lending to credit institutions fixed assets Lending to the general public fixed assets Tangible assets fixed assets 1 Other assets current assets Prepayments and accrued income current assets Total assets LIABILITIES AND PROVISIONS Liabilities to credit institutions Issued securities etc Other liabilities Accruals and deferred income Provisions 730 Minority interests 261 Total liabilities and provisions Total surplus value 449 In accordance with the Financial Supervisory Authority's directives (1999:14), a comparison must be made between the fair value and book value for each asset and liability on the balance sheet and for financial items which are not reported on the balance sheet. The directives allow scope for choice of method and various calculation assumptions. Information of this type concerning the fair value of the various items does not constitute a corporate valuation. The following methods have been used to determine the fair value: In the case of means of payment, short-term claims and liabilities and also claims and liabilities with variable interest rates, fair value has been taken to be equivalent to book value. Financial instruments which are traded on liquid markets have been valued at the quoted price at the balance sheet date. Financial instruments which are not traded on liquid markets have been valued on the basis of the current market rate for liquid instruments with corresponding maturities, adjusted for credit and liquidity risk. In the case of the valuation of fixed-rate loans, the credit and liquidity risk premiums by which the market rate should be adjusted have been assumed to correspond to the average margin for new lending at the balance sheet date. 31

34 Notes Note 35 Capital adequacy analysis ON-BALANCE-SHEET COMMITMENTS REQUIRING CAPITAL COVER Risk weight, % On-balance- Risk-weighted On-balance- Risk-weighted sheet items amounts 2001 sheet items amounts OFF-BALANCE-SHEET COMMITMENTS REQUIRING CAPITAL COVER Risk-weight, % Nominal Converted Risk-weighted Nominal Converted Risk-weighted amounts amounts amounts 2001 amounts amounts amounts TOTAL RISK-WEIGHTED AMOUNT Total risk-weighted amount Capital base Tier 1 capital Taxed equity Minority interest Untaxed reserves Tier 2 capital Subordinated borrowings Total capital base Capital adequacy Capital ratio, % Tier 1 ratio, %

35 Recommendation for distribution of profits Recommendation for distribution of profits The Group s unrestricted equity according to the Consolidated Balance Sheet is SEK 7 095m. No allocations to restricted reserves are necessary. After deduction of group contribution, the following amounts in the parent company are at the disposal of the Annual General Meeting: SEK m Profit brought forward Net profit for the year The Board of Directors proposes that SEK 7 089m be carried forward to the next year. Stockholm, 12 February 2002 CURT KÄLLSTRÖMER Chairman BJÖRN BÖRJESSON HANS CHRISTOFFERSON LENNART FRANCKE SVEN GREVELIUS MICHAEL ZELL ERIK ÖSTERLÖF CLAES NORLÉN Chief Executive 33

36 Audit report Audit report To the General Meeting of the Shareholders of Stadshypotek AB (publ) Registered Number We have audited the annual accounts, the accounting records and the administration of the Board of Directors and the Chief Executive of Stadshypotek AB (publ) for the year These accounts and the administration of the Company are the responsibility of the Board of Directors and the Chief Executive. Our responsibility is to express an opinion on the annual accounts and the administration based on our audit. We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts are free of material misstatement. During the year, the auditing department of Svenska Handelsbanken has continuously examined the internal controls and accounts. We have received the reports that have been prepared. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and their application by the Board of Directors and the Chief Executive, as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the Company in order to be able to determine the liability, if any, to the Company of any Board Member or the Chief Executive. We also examined whether any Board Member or the Chief Executive has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act for Credit Institutions and Securities Companies or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below. The annual accounts have been prepared in accordance with the Annual Accounts Act for Credit Institutions and Securities Companies, and thereby give a true and fair view of the Company s and the Group s financial position and results of operations in accordance with generally accepted accounting principles in Sweden. We recommend to the General Meeting of Shareholders that the profit and loss account and balance sheet be adopted, that the profit be dealt with in accordance with the proposal in the administration report and that the Members of the Board of Directors and the Chief Executive be discharged from liability for the financial year. Stockholm, 21 February 2002 KPMG Bohlins AB ROLAND NILSSON Authorised Public Accountant ULF DAVÉUS Authorised Public Accountant Appointed by the Swedish Financial Supervisory Authority 34

37 Board of directors, auditors, senior management Board of directors, auditors, senior management Members Board of directors, Stadshypotek AB CURT KÄLLSTRÖMER Executive Vice President of Handelsbanken, Chairman. Chairman of the Board since Board member since BJÖRN BÖRJESSON Executive Vice President of Handelsbanken, Board member since April HANS CHRISTOFFERSON Senior Vice President of Handelsbanken. Board member since LENNART FRANCKE Executive Vice President of Handelsbanken. Board member since SVEN GREVELIUS Executive Vice President of Handelsbanken. Board member since CLAES NORLÉN Chief Executive. Board member since June Auditors Auditors, Stadshypotek AB KPMG BOHLINS AB Chief auditor: ROLAND NILSSON, Authorised Public Accountant, Stockholm. Auditor of the company since the Annual General Meeting ULF DAVÉUS Deloitte & Touche Åkersberga AB. Authorised Public Accountant, Auditor of the company since the Annual General Meeting 1999, Appointed by the Financial Supervisory Authority. Parent company Senior management CLAES NORLÉN Chief Executive. Employed since September BENGT EDHOLM Treasury. Employed at Handelsbanken. RALF GUSTAVSSON Accounting and Control. Employed since ANDERS LÖF Credits. Employed since Management of subsidiary CLAES NORLÉN Chief Executive of Handelsbanken Hypotek AB since September MICHAEL ZELL Executive Vice President of Handelsbanken. Board member since ERIK ÖSTERLÖF Employee representative Board member since

38 Five-year summary Five-year summary PROFIT AND LOSS ACCOUNT SEK m Interest income Interest expense Net interest income Other operating income Total income Administrative expenses Result before loan losses Loan losses Operating profit Adjustment for acquisition 270 Appropriations Tax Minority interests Profit for the year BALANCE SHEET SEK m ASSETS Cash in hand and balances with central banks 0 0 Instruments eligible as collateral with central banks etc. 57 Lending to credit institutions Lending to the general public Shares and participations 2 4 Tangible assets Other assets Prepayments and accrued income Total assets LIABILITIES, PROVISIONS AND EQUITY Liabilities to credit institutions Deposits and funding from the general public Issued securities etc Other liabilities Accruals and deferred income Provisions Subordinated liabilities Minority interests Equity Total liabilities, provisions and equity The structure of the Stadshypotek Group changed as of 31 March 1998, when its subsidiary Stadshypotek Fastigheter AB was sold to Handelsbanken. The result generated by this subsidiary was reported together with the result of the sale in the consolidated profit and loss account for The structure of the Stadshypotek Group also changed in 1997, when Handelsbanken Hypotek AB was acquired as of 1 June as a new subsidiary, while the previous subsidiary, Stadshypotek Bank AB, was sold to Handelsbanken as of the same date. The consolidated profit and loss account for 1997 was prepared by calculating the operating profit as though the new group had existed throughout the year. The result generated by Handelsbanken Hypotek before 1 June was then eliminated in the item Adjustment for acquisition. The subsidiary that was sold, Stadshypotek Bank AB, has been reported in accordance with the above-mentioned principles applied to the sale of Stadshypotek Fastigheter AB. 36

39 Facts about the company Addresses REGISTERED NAME: Stadshypotek AB (publ). REGISTRATION NUMBER: DATE OF REGISTRATION: 23 December REGISTERED OFFICE: Stockholm. SHARE CAPITAL: SEK , registered 22 December The lowest and highest permissible share capital, according to the Articles of Association, is SEK and SEK NUMBER OF SHARES: shares with a nominal value of SEK 25 per share, of which are Class A and are Class B. Stadshypotek AB Street address: Kungsträdgårdsgatan 20 Postal address: SE Stockholm Telephone: Fax: Subsidiary Handelsbanken Hypotek AB Street address: Kungsträdgårdsgatan 20 Postal address: SE Stockholm Telephone: Fax: NUMBER OF VOTES PER SHARE: Each share carries one vote. CONVERTIBLE DEBT ETC.: The company has not issued any debt instruments which can be converted into or exchanged for shares or which are linked with options for a subscription of new shares. OWNERSHIP: A subsidiary of Svenska Handelsbanken AB (publ), registered no The Bank publishes consolidated annual accounts in which Stadshypotek AB is included. STADSHYPOTEK TELEPHONE SERVICE MATTERS CONCERNING RETAIL BONDS Telephone: in Sweden: (toll free), from abroad: (collect) Fax: Produced by: Ulla Jansson Information AB Cover: Painting by Magnus Dahlbäck Repro: Typografen Text&Bild Printing: Ljung, ISO environmental certificate Inside photos: Björn Röhsman/N NaturFotografernas Bildbyrå, inside cover Kenneth Bengtsson/Naturbild, page 1 Karlsonhus, page 3 Victor Brott/Global Reporting, page 4 Hans Nelsäter/Windh, page 6 Magnus Jönsson/Pressens Bild, page 12 Sten Pettersson, page 15 Ulf Hinds, page 17 Cover photos: Björn Röhsman/N NaturFotografernas Bildbyrå Ulf Hinds Per-Erik Adamsson/GreatShots Kenneth Bengtsson/Naturbild Karlsonhus Hans Strand/GreatShots

40 Stadshypotek a Svenska Handelsbanken company