HANSABANKS SECOND QUARTER FINANCIAL RESULTS

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HANSABANKS SECOND QUARTER FINANCIAL
RESULTS Indrek Neivelt, Erkki Raasuke July 28,
1999
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2nd QUARTER 1999 Hansabank Group

• Rapid deposit growth (9.5 EEK 1,464.9 mil),
  caused by higher savings rate. Continuously slow
  loan growth (1.9 EEK 310.1 mil)
• Further decrease in interest rates. EEK loan
  prime rate was lowered by 2.5 (6.0 from the
  beginning of the year), 1-year EEK term deposit
  rate was lowered by 1.25 (6.75 from the
  beginning of the year)
• Extraordinary income from the sale of
  subsidiaries and affiliates EEK 98.0 mil
• Higher IT expenses (unification of databases) and
  marketing expenses (new corporate identity)
• The number of employees at the end of the 2nd
  quarter was 2,953 (4,358 after the merger with
  Hoiupank, a decrease of 32)

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NET PROFIT BY BUSINESS UNITS 2nd quarter
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HANSABANK 2nd quarter

• Income from off-balance sheet items decreased by
  EEK 50.4 mil in the 2nd q ( down to EEK 27 mil)
• Fees and commissions received increased by EEK
  27.9 mil in the 2nd q
• Extraordinary income from the sale of
  subsidiaries amounted to EEK 42.2 mil
• Deferred tax expense has been accrued in the
  amount of EEK 33.3 mil

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HANSABANKA 2nd quarter

• Very rapid deposit growth in the 2nd q (16.0
  EEK 503.9 mil) increased liquidity
• Comparatively low loans to asset ratio (33.8) is
  the main reason for low earnings

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HANSA CAPITAL 2nd quarter

• The road transport sector across the Baltics has
  incurred significant damages as a result of the
  Russian crisis. Provisions were increased by EEK
  85.6 mil in the 2nd q
• In Latvia a tax dispute from 1998 was settled,
  resulting in an extraordinary income of EEK 25.1
  mil

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RATIOS Hansabank Group
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SUMMARY AND EXPECTATIONS Hansabank Group

• Economy
• Stabilisation after the Russian crisis
• Modest growth over the next 6-12 months
• Public sector spending closely monitored
• Opportunities
• Lower interest rates favour crediting activities
  and improve asset quality
• Potential for loan recoveries (loan losses in
  1999 EEK 268.6 mil)
• Stable growth in fees and commissions (new
  products)
• Expansion in Latvia and Lithuania
• Opportunities for optimising risk capital
• Threats
• Asset quality deterioration