Hansapank                     FINANCIAL RESULTS           08/23/2002 09:00



GROUP FINANCIAL RESULTS, Q2 2002



- Net profit EUR 26.8 million (EEK 419.4 million) in Q2 2002, +7.6%

  qoq and -21.1% yoy (excl. Hansa-LTB)

- Operating profit before provisions +12.6% qoq and +6.4% yoy 

  (excl. Hansa-LTB)

- Revenues +2.6% qoq and +4.9% yoy (excl. Hansa-LTB)

- Expenses -2.5% qoq and +3.6% yoy (excl. Hansa-LTB)

- Stabilisation in interest margins - net interest margin (NIM) 4.09%

  in Q2 2002 (4.40% excl. Hansa-LTB), 4.01% in Q1 2002 and 4.63% in 

  Q2 2001

- Return on equity (ROE) 21.2%, return on assets (ROA) 2.2%, earnings

  per share (EPS) EUR 1.36 (EEK 21.3)

- Q2 euro denominated asset and loan growth significantly influenced

  by USD depreciation against the Euro

- Successful launch of the II Pillar pension reform in Estonia

   - 37 thousand members in total by June 1, during the first month

   Hansabank acquired 50.1% market share of total number and 52.7% of

   assets under management

- Restructuring in Hansa-LTB on a final stretch

   - Number of employees reduced by 9% 2,611

   - Number of branches reduced by 13% 164

- Hansabank paid dividends of 0.256 euros (EEK 4) per share, resulting

  in a tax expense of EUR 3.25 million (EEK 50.9 million).



The financial results of the first half 2002 have been reviewed by the

bank’s Auditors and the net profit of the period is included in the

capital adequacy calculation.



AS Hansapank and its subsidiaries (hereinafter Hansabank Group or the

Group) earned EUR 26.8 million net profit in the second quarter of 2002.

The Group’s operating profit before provisions increased 6.4% yoy

(2001 second quarter) (all annual growth rates concerning the income

statement in this document are excl. Hansa-LTB, unless stated

otherwise). Several one-off items affect the net profit comparison. In

Q2 2001 Hansa Capital decreased its provisions by EUR 4 million after

unifying its provisioning principles with the Group. Also, the Group’s

dividend income tax was EUR 0.9 million versus EUR 3.25 million this year.



The Groups earnings per share (annualised) were 1.36 euros (EEK 21.3)

in Q2 2002 vs 1.26 euros (EEK 19.8) in Q1. Hansapank Group’s return on

equity was 21.2% and return on assets was 2.2%. The Group’s EVA result

for the second quarter of the year was EUR 15.2 million, which is 9%

more than in Q1, but 2% less than in the respective period last year.

Hansapank Group’s EUR 26.8 million net profit can be divided between the

three countries as follows: EUR 25.7 million from Estonia (EUR 22.4

million in Q1 2002), EUR 4.8 million from Latvia (EUR 3.4 million), EUR 5.3

million from Lithuania (EUR 2.6 million) and EUR -9.0 million (EUR -3.5

million) from support functions (group management and IT servers). The

cost of the support functions also includes the dividend income tax.



Following the action plan established in the beginning of the second

quarter the Group took several steps to improve overall profitability.

In order to simplify the organisational structure and speed up the

decision making process, Hansabank consolidated its branch network

in Estonia, reducing the number of regions from 15 to 7. In Lithuania

the number of employees was reduced by a further 258 to 2,611 and the

number of branches was decreased by 24 to 164 during the second

quarter. On the revenue side the Group has undertaken several

initiatives to enhance fee generation. In Estonia fees were introduced

to certain services that have also free of charge alternatives - cash

withdrawal from the ATM for corporate customers, account statements

ordered by retail customers by mail more frequently than each quarter.

Several fees were also raised in Latvia. However, the biggest potential

lies in Hansa-LTB, where the fees-to-assets ratio was just 0.97% in 

Q2 2002 versus 1.92% in the rest of the Group.



The Group’s total revenues amounted to EUR 80.1 million (EEK 1.25 bln)

in Q2 2002, increasing 2.6% qoq and 4.9% yoy. Revenue distribution was

the following: 62% net interest income, 26% net fee income, 8%

financial income, and 4% other income.

Operating expenses decreased 2.5% qoq and increased 3.6% yoy,

totalling EUR 50.7 million (EEK 0.80 bln) in Q2 2002. 44% of total

expenses was formed by personnel expense, 20% by other expenses (incl.

goodwill amortisation) 16% by administrative expenses, 13% by

depreciation, and 7% by IT expenses.

The Group’s cost-income ratio (before provisions) improved to 57.3%

(48.4. excl. Hansa-LTB) from 60.3% (50.5%) in Q1 2002 and 50.5%

(48.7%) in Q2 2001. The ratio of operating expenses to total assets

improved to 3.81% (3.44% excl. Hansa-LTB ) from 4.0% (3.6%) in Q1 2002

and 3.88% in Q2 2001. The Group is targeting to maintain its cost-

income ratio below 50%. The Group will not achieve this target in 2002

because of the ongoing restructuring process in Hansa-LTB.



The Group’s total assets amounted to EUR 4.83 billion (EEK 75.5 bln) at

the end of June 2002. Interest-earning assets totalled EUR 4.30 billion,

89.1% of total assets (89.9% at the end of Q1 2002). Interest-bearing

liabilities amounted to EUR 4.02 billion, forming 83.3% of total

liabilities and shareholders’ equity (83.5% at the end of Q1 2002).

The volume of the Group’s assets and liabilities (in particular in

Latvia and Lithuania) was affected by the US dollar depreciation

against the euro. The approximate negative effect was EUR 70 million on

loans and EUR 140 million on deposits.

The loan portfolio increased by EUR 0.12 billion, or 4.3% during the

second quarter to EUR 2.83 billion. Annual growth was EUR 0.61 billion or

27.3%. 54% of the annual growth originated from Estonia, 18% from

Lithuania, 26% from Latvia and 2% from other countries. Lending to

private individuals formed 28% of the growth, with real-estate

management and industry contributing another 20% and 17% respectively.

The Group’s loan loss reserve amounted to EUR 46.2 million at the end of

June, forming 1.63% of the loan portfolio. Loans overdue totalled EUR

211.4 million, up 5.1% qoq, while non-performing loans (overdue more

than 60 days) amounted to EUR 14.8, down 46.9% qoq. Total overdues

formed 7.5% and non-performing loans 0.5% of total loans at the end of

June 2002. Despite the economic slowdown the Group has not seen any

signs of deterioration in asset quality.

Customer deposits decreased because of the US dollar depreciation by EUR

24.3 million during the second quarter to EUR 3.42 billion. Without any

changes in USD/EUR exchange rate, deposit growth would have exceeded EUR

100 million or 3% qoq. At the end of June loan to deposit ratio stood

at 82.6% (78.8% in the beginning of the year). The Group’s deposit

market shares as at June 30 were 56.8% in Estonia, 17.7% in Latvia and

30.8% in Lithuania.



1 EUR = 15.64664 EEK



Consolidated Balance Sheet

(in millions, unaudited)           EEK                     EUR        

                     30.06.02 31.12.01 30.06.01 30.06.02 31.12.01 30.06.01

Assets                                                                 

Cash                    2,039.4 2,404.3 1,945.8   130.4   153.7   124.4

Due from Central Bank   2,338.1 4,393.6 3,959.8   149.4   280.8   253.1

Due from other          6,070.1 7,466.9 8,320.1   388.0   477.2   531.7

financial institutions

Treasury securities     6,287.3 4,247.5 6,197.4   401.8   271.5   396.1

Trading securities        866.8   437.9 1,237.2    55.4    28.0    79.1

Investment securities   4,886.1 5,128.2 5,155.4   312.3   327.8   329.5

Securities purchased    2,704.2 2,508.4 2,447.8   172.8   160.3   156.4

under resale agreements

Loans                   44248.8 40243.9 34765.9 2,828.0 2,572.0 2,221.9

  - Allowances for       -722.2  -859.7  -971.4   -46.2   -54.9   -62.1

credit losses

Net loans               43526.6 39384.2 33794.5 2,781.8 2,517.1 2,159.8

Tangible assets         2,037.0 2,178.3 2,279.2   130.2   139.2   145.7

Intangible assets         468.5   621.8   645.0    30.0    39.7    41.2

Prepayments and accrued 2,616.3 2,562.8 2,541.0   167.2   163.8   162.4

interest

Other assets            1,654.2   684.5   654.6   105.7    43.7    41.9

Total assets            75494.6 72018.4 69177.8 4,825.0 4,602.8 4,421.3

                                                                       

Liabilities                                                            

Due to Central Bank and   103.3   109.3   128.2     6.6     7.0     8.2

government

Due to other financial  3,674.4 4,198.0 5,067.6   234.9   268.3   323.9

institutions

Deposits                53581.3 51063.4 48399.7 3,424.5 3,263.6 3,093.3

   Demand deposits      34549.6 32480.2 28928.1 2,208.1 2,075.9 1,848.8

   Time deposits        19031.7 18583.2 19471.6 1,216.4 1,187.7 1,244.5

Securities sold under         -     0.1   462.5       -       -    29.6

repurchase agreements

Debt securities issued  4,819.6 3,815.3 3,866.2   308.0   243.8   247.1

to the public

Accrued liabilities     1,751.6 1,865.1 1,381.0   111.9   119.2    88.3

Appropriations            520.1   474.3   425.1    33.2    30.3    27.2

Deferred tax liability     23.0    14.2     7.2     1.5     0.9     0.5

Other liabilities       2,256.2 2,221.9 1,811.6   144.2   142.0   115.7

Total liabilities       66729.5 63761.6 61549.1 4,264.8 4,075.1 3,933.8

Minority ownership         16.2    15.2    49.0     1.0     1.0     3.1

                                                                       

Subordinated liabilities  713.7   721.9   746.0    45.6    46.1 47.7



Shareholders' equity                                                   

Common stock              793.4   788.6   788.6    50.7    50.4    50.4

Share premium           2,826.5 2,762.1 2,761.2   180.7   176.5   176.5

Treasury stock            -14.8   -37.5   -39.4    -0.9    -2.4    -2.5

Reserves                  453.8   450.9   450.6    29.0    28.8    28.8

Other restricted equity   100.5   100.5   100.5     6.4     6.4     6.4

Currency translation       18.3    88.2   183.8     1.2     5.7    11.7

reserve

Retained earnings       3,857.5 3,366.9 2,588.4   246.5   215.2   165.4

Total shareholders'     8,035.2 7,519.7 6,833.7   513.6   480.6   436.7

equity

Total liabilities and   75494.6 72018.4 69177.8 4,825.0 4,602.8 4,421.3

shareholders' equity



Consolidated Income Statement

(in millions, reviewed)              EEK                   EUR        

                         6m 2002    2001 6m 2001 6m 2002   2001 6m 2001

                                                                     

Interest income          2,414.7 4,604.9 2,135.8   154.3  294.3   136.5

Interest expense          -895.9 -1943.3  -920.8   -57.3 -124.2   -58.8

                                

Interest income, net     1,518.8 2,661.6 1,215.0    97.0  170.1    77.7

                                                                     

Fee and commission income  828.5 1,395.1   607.0    53.0   89.2    38.8

Fee and commission exp.   -207.5  -306.5  -126.4   -13.3  -19.6    -8.1

Fees and commissions,net   621.0 1,088.6   480.6    39.7   69.6    30.7

                                                                     

Net result from            219.6   571.7   263.2    14.1   36.5    16.8

financial operations

Net income from             14.4    45.6    23.8     0.9    2.9     1.5

insurance activities

Other income               101.7   150.9    74.0     6.5    9.6     4.7

Total income             2,475.5 4,518.4 2,056.6   158.2  288.7   131.4

                                                                     

Operating expenses                                                   

Personnel expenses         731.3 1,163.7   471.2    46.7   74.4    30.1

Data network expenses      102.3   150.0    66.5     6.5    9.6     4.3

Administrative expenses    257.3   478.5   197.2    16.4   30.6    12.6

Other expenses             314.8   557.8   222.0    20.1   35.6    14.2

 incl. goodwill            151.7   265.9   113.2     9.7   17.0     7.2

amortisation

Depreciation               203.2   348.1   158.2    13.0   22.2    10.1

Total operating expenses 1,608.9 2,698.1 1,115.1   102.7  172.4    71.3

Operating profit before    866.6 1,820.3   941.5    55.5  116.3    60.1

provisions

Losses on loans and       -133.5  -340.9  -120.7    -8.5  -21.8    -7.7

guarantees

Recovered loans            156.6   262.5   125.6    10.0   16.8     8.0

Profit from associates       0.5     8.8     1.1       -    0.6     0.1

under the equity method

Operating profit           890.2 1,750.7   947.5    57.0  111.9    60.5

Extraordinary                  -       -       -       -      -       -

income/(expense)

Profit before income tax   890.2 1,750.7   947.5    57.0  111.9    60.5

Income tax                 -80.7   -57.5   -31.6    -5.2   -3.7    -2.0

Profit after income tax    809.5 1,693.2   915.9    51.8  108.2    58.5

Minority interest           -0.9       -    -1.8    -0.1      -    -0.1

Net profit                 808.6 1,693.2   914.1    51.7  108.2    58.4





Consolidated Income Statement

(in millions of euros,    Q2 02   Q1 02  Q4 01   Q3 01  Q2 01   Q1 01

reviewed)

Interest income            78.0    76.3   77.5    80.3   72.0    64.5

Interest expense          -28.4   -28.9  -30.5   -34.9  -31.2   -27.6

Interest income, net       49.6    47.4   47.0    45.4   40.8    36.9

                                                                     

Fee and commission income  28.0    25.0   26.2    24.2   21.4    17.4

Fee and commission exp.    -7.3    -6.0   -6.4    -5.1   -4.4    -3.7

Fees and commissions,net   20.7    19.0   19.8    19.1   17.0    13.7

                                                                     

Net result from             6.2     7.9   11.7     8.0    9.2     7.6

financial operations

Net income from             0.5     0.4      -     1.4    0.8     0.7

insurance activities

Other income                3.1     3.4    2.4     2.5    2.4     2.3

Total income               80.1    78.1   80.9    76.4   70.2    61.2

                                                                     

Operating expenses                                                   

Personnel expenses         22.6    24.1   23.2    21.1   17.0    13.1

Data network expenses       3.4     3.1    3.2     2.1    2.4     1.9

Administrative expenses     8.0     8.4    9.6     8.4    6.6     6.0

Other expenses             10.1    10.0   11.4    10.0    7.9     6.3

 incl. goodwill             4.8     4.9    5.0     4.8    3.8     3.4

amortisation

Depreciation                6.6     6.4    5.9     6.2    5.4     4.7

Total operating expenses   50.7    52.0   53.3    47.8   39.3    32.0

Operating profit before    29.4    26.1   27.6    28.6   30.9    29.2

provisions

Losses on loans and        -3.5    -5.0   -9.0    -5.1    0.1    -7.8

guarantees

Recovered loans             5.3     4.7    4.3     4.5    2.3     5.7

Profit from associates        -       -    0.4     0.1      -     0.1

under the equity method

Operating profit           31.2    25.8   23.3    28.1   33.3    27.2

Extraordinary                 -       -      -       -      -       -

income/(expense)

Profit before income tax   31.2    25.8   23.3    28.1   33.3    27.2

Income tax                 -4.3    -0.9   -0.9    -0.8   -1.1    -0.9

Profit after income tax    26.9    24.9   22.4    27.3   32.2    26.3

Minority interest          -0.1       -      -     0.1      -    -0.1

Net profit                 26.8    24.9   22.4    27.4   32.2    26.2





Mart Tõevere

Head of investor relations

+ 372 6131 569