January-December 2011

FINANCIAL PERFORMANCE
Full year 2011 compared with full year 2010

Operating profits in 2011 rose by SEK 586 million to SEK 5,994 million (5,408). Net interest income amounted to SEK 6,244 million (5,501), with the branch in Norway accounting for SEK 396 million (438), the branch in Denmark, established on 1 May 2010, accounting for SEK 89 million (24) and the branch in Finland, established on 1 May 2011, accounting for SEK 79 million (-). Excluding the branches, net interest income rose by 13 per cent or SEK 641 million, which was due to an increase in the lending volume and to improved margins as a result of the company's good position in the funding market. However, net interest income was affected negatively by SEK 119 million compared with the previous year, since from 1 January 2011, the fee to the Swedish Stabilisation Fund is no longer halved. Net gains/losses on financial items at fair value amounted to SEK 19 million (129).

Expenses rose by SEK 27 million to SEK 269 million (242), primarily due to increased costs for purchased services from the parent company and IT expenses related to the branch in Finland. Recoveries exceeded new loan losses and the net total was SEK 12 million (38). Gross impaired loans amounted to SEK 110 million (108). SEK 57 million (49) of the impaired loans were non-performing loans, while SEK 53 million (59) were loans on which the borrowers pay interest and amortisation, but which are considered impaired. There were also non-performing loans of SEK 906 million (509) that are not classed as being impaired loans. After deduction for a specific provision totalling SEK -44 million (-41) and a collective provision of SEK -6 million (-6) for probable loan losses, net impaired loans totalled SEK 60 million (61).

Q4 2011 compared with Q3 2011

Stadshypotek's operating profit for the fourth quarter of 2011 increased by SEK 101 million to SEK 1,641 million (1,540). Net interest income increased by SEK 105 million to SEK 1,714 million (1,609). SEK 91 million (107) of the net interest income was attributable to the branch in Norway, SEK 25 million (25) to the branch in Denmark and SEK 46 (32) million to the branch in Finland. Excluding these branches, net interest income thus rose by SEK 107 million, mainly due to higher margins due to the company's good funding position, but also as a result of an increase in lending volume. Net gains/losses on financial items at fair value amounted to SEK 23 million (-5). Expenses increased by SEK 25 million to SEK 85 million (60), which mainly consisted of an increase of SEK 22 million in administrative expenses. The increase was mainly due to expenses related to the updating of existing international loan programmes and the establishment of loan programmes in Australia and Norway for covered bonds and IT expenses related to the branch in Finland.

GROWTH IN LENDING
Loans to the public increased during the year by SEK 85 billion (74) to SEK 844 billion. On 1 August, Stadshypotek's branch in Finland acquired a loan portfolio of approximately EUR 3 billion from the parent company's branch in Finland, which corresponds to approximately SEK 28 billion of the increase in lending during the year. Stadshypotek's share of the private market in Sweden was approximately 25 per cent (25) and its share of the corporate market in Sweden was approximately 33 per cent (32).

CAPITAL ADEQUACY
The capital ratio according to Basel II was 58.1 per cent (48.9), while the Tier 1 ratio calculated according to Basel II was 40.5 per cent (36.8). Further information on capital adequacy is provided in the 'Capital base and capital requirement' section on page 15.

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

Stockholm 15 February 2012

Per Beckman

Chief Executive

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