HANSAPANK

COMMENTARY TO FINANCIAL RESULTS



HANSA CAPITAL'S FINANCIAL RESULTS, 9 M 2000



Financial Highlights                                                   

                                          9 m 2000      1999   9 m 1999

At period end (in EEK, millions)                                       

Total assets                              10 993,2   8 067,3    7 353,2

Financial Investments                      9 215,2   6 973,6    6 352,9

  Leasing                                  7 791,1   5 917,5    5 469,9

  Factoring                                  952,0     598,1      395,4

  Loans                                      318,8     371,5      397,0

  Assignment                                  66,1      64,4       69,5

  Consumer Factoring                          87,1      22,1       21,0

Provisions                                  -326,6    -267,5     -270,1

Debt capital                               9 452,6   7 037,1    6 410,0

Equity                                       722,1     398,6      345,7

At period end (in EEK, millions)                                       

Net interest income                          338,6     417,7      311,5

Net commission income                        111,5      73,4       53,9

Other operating income (net)                  45,1      64,8       30,7

Total operating income                       495,2     555,9      396,1

Net profit                                   313,2     217,8      162,7

NIM                                           4,8%      5,8%       5,9%

ROA                                           4,5%      3,0%       3,1%

ROE                                          27,6%     23,5%      26,0%

Interest yield on average assets             10,9%     11,7%      11,7%

Average cost of interest-bearing              7,1%      6,7%       6,5%

liabilities

Number or employees                            388       321        306



Hansa Capital Group’ s net profit for the first nine months of 2000

was 313.2 million kroons. As of September 30, the Group’s total assets

amounted to 10,993.2 million kroons.  The Group’s net profit after

deducting Hansabank Group’s general expenses, i.e. HC Group’s economic

profit, was 272.7 million kroons in the first nine months of 2000

(75.1 million kroons in the first quarter, 93.5 million kroonsin the

second quarter and 104.1 million kroons in the third quarter).  The

Group’s financial results were influenced by revival in the economy

and growth in loan demand, which resulted in the growth of total

assets by 2,925.9 million kroons or 36.3% during the first nine months

of 2000.

The main source of growth were leasing and factoring receivables,

which increased in all three Baltic states. The Group’s financial

investments increased by 2,241.6 million kroons (32,1%) during the

first three quarters of 2000 totalling 9,215.2 million kroons at the

end of September. Of the total growth 59.7% originated from Estonia,

23.3% from Latvia and 18.2% from Lithuania.

The growth of leasing portfolio remained relatively modest in the

first quarter, reaching only 6.0%. The second and third quarters

however witnessed a notable leap, and, as a result, leasing portfolio

increased by 31.7% compared to the beginning of the year and amounted

to 7,791.1 million kroons at the end of September. Supported by

improvement in economic environment and declining interest rates, new

business volume in the first nine months of the year was all-time

record for the Group (an increase of 2.3 times compared to the same 

period of the previous year).

Total leasing new business volume in the first nine months of 2000 was

4,253.1 million kroons (third quarter’s new business volume being

1,719.1 million), whereas 64.8% of new business came from Estonia,

16.8% from Latvia and 18.4% from Lithuania.

As at the end of September, the largest credited sector was transport

(22.1%), followed by business services (16.8%), and industry (15.5%).

Compared to the beginning of the year, the share of the transport

sector has declined on the account of other sectors. The leasing

portfolio distribution by assets was as follows: passenger cars –

26.1%, real estate – 23.2%, commercial vehicles – 22.0%, equipment –

19.5%, and other assets – 9.2%.

Group’s Estonian leasing market share by total portfolio has increased

to 69% by the end of September (compared to 62% at the beginning of

the year. The Group’s Latvian and Lithuanian estimated market shares

have not changed considerably compared to the beginning of the year

(being 35% and 37% respectively).

The Group’s factoring portfolio increased by 353.9 million kroons,

i.e. by 59.2% to 952.0 million kroons in the first nine months of

2000. At the same time factoring turnover totalled 4,070.6 million

kroons, an increase of 2.4 times compared to the same period of the

previous year.

The Group’s consumer factoring portfolio increased by 65.0 million

kroons in the first nine months of the year, assignment portfolio

increased by 1.8 million, and loan portfolio decreased by 52.7

million.

The Group’s interest-bearing liabilities increased by 2,415.6 million

to 9,452.6 million kroons as at the end of September. The largest

share of liabilities (94.2%) was formed by loans.

In July, share capital of AS Hansa Capital was increased through stock

dividend issue by 80.0 million kroons to 120.0 million kroons on the

account of retained earnings.

The Group’s total revenue increased by 24.4% (annualised) compared to

the previous year, amounting to 495.2 million kroons (excluding the

nonrecurring income – 25.1 million kroons income tax refund received

in the previous year). The revenue distribution for the first nine

months of the year was  the following: 68.4% net interest income,

22.5% net fee income, and 9.1% other income.

Provisions charged to income amounted to 53.8 million kroons in the

first nine months of 2000 (72.7 million kroons in the first nine

months of 1999). At the same time actual write-offs amounted to 39.5

million kroons and recoveries were 20,4 million kroons.

The Group’s operating expenses increased by 26.8% (annualised)

compared to the previous year, amounting to 133.6  million kroons. The

largest share of operating expenses (76.0 million kroons) was formed

by personnel expenses.

The Group’s cost-income ratio after provisions for the first nine

months of 2000 was 31,6%, the ratio has decreased by 4.8% compared to

the previous year.

In addition to above-mentioned factors, the Group’s result was

affected by regained pre-paid dividend income tax in total amount of

22.3 million kroons, which is shown as an extraordinary income in the

income statement.

The Group’s net interest margin was 4.8%, return on assets 4.5% and

return on operating equity 27.6% in the first nine months of 2000.



Additional information

Lauri Reinberg

Financial Analyst

Tel. +372 6131 767





Mart Tõevere

Head of Investor Relations

+372 6131 569