HANSAPANK

COMMENTARY TO FINANCIAL RESULTS



HANSA CAPITAL'S UNAUDITED FINANCIAL RESULTS, 2000



Financial Highlights                                        

                                              2000      1999

At period end (in EEK, millions)                            

Total assets                              12 794,4   8 060,1

Financial Investments                     10 961,9   6 973,6

  Leasing                                  8 864,9   5 917,5

  Factoring                                1 394,1     598,1

  Loans                                      421,1     371,5

  Assignment                                 106,2      64,4

  Consumer Factoring                         175,6      22,1

Provisions                                  -342,3    -267,5

Debt capital                              11 287,9   7 037,1

Equity                                       770,0     398,6

At period end (in EEK, millions)                            

Net interest income                          485,7     417,7

Net commission income                        160,7      73,4

Other operating income (net)                  66,7      61,9

Total operating income                       713,1     552,9

Net profit                                   395,8     217,8

NIM                                           4,9%      5,8%

ROA                                           4,0%      3,0%

ROE                                          24,6%     18,8%

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

Cost-income ratio                            31,7%     24,9%

Net risk cost                                 0,5%      1,5%

Number or employees                            412       322



Hansa Capital Group’ s net profit for 2000 was 395.8 million kroons.

The Group’s net profit after deducting Hansabank Group’s general

expenses was 373.9 million kroons in 2000. As of December 31, the

Group’s total assets amounted to 12,794.4 million kroons.

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 4,734.3 million kroons during the year.

The main source of growth were leasing and factoring receivables,

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

investments increased by 3,988.3 million kroons (57.2%) during 2000

totalling 10,961.9 million kroons at the end of December. Of the total

growth 60.0% originated from Estonia, 22.6% from Latvia and 18.8% from

Lithuania.

The largest share of the Group’s financial investments as at the end

of the year was formed by Estonian portfolio (63.9%), followed by

Latvia (19.0%) and Lithuania (15.3%). Compared to the beginning of the

year, the geographical structure of assets shifted in favour of Latvia

and Lithuania, which is in line with the Group’s strategy to maintain

market share in Estonia and to increase it in the other two Baltic

countries. As at the end of December, the largest credited sector was

real estate management and other business services (22.6%), followed

by transport (22.2%), and private individuals (14.7%). Compared to the

beginning of the year, the share of the transport sector has declined

on the account of other sectors.

Supported by improvement in economic environment and declining

interest rates, new business volume in 2000 was all-time record for

the Group (an increase of 3,094.0 million kroons compared to the

previous year). Total leasing new business volume in 2000 was 6,799.8

million kroons, whereas 62.9% of new business came from Estonia, 19.4%

from Latvia and 17.7% from Lithuania. The Group’s leasing portfolio

increased by 49.8% compared to the beginning of the year and amounted

to 8,864.9 million kroons at the end of December. The leasing

portfolio distribution by assets was as follows: real estate – 26.7%,

passenger cars – 25.9%, commercial vehicles –  20.3%, equipment –

19.0%, and other assets – 8.1%. Compared to the beginning of the year,

the share of real estate has increased mainly on the account of

commercial vehicles.

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

to 68% by the end of December (compared to 62% at the beginning of the

year. The Group’s Latvian estimated market share increased by 6% to

42% and Lithuanian estimated market share by 5% to 40% as at the end

of the year. Hence the Group is the market leader in all three Baltic

States.

The Group’s factoring portfolio increased by 133.1% to 1,394.1 million

kroons in 2000. At the same time factoring turnover totalled 6,378.5

million kroons, an increase of 2.4 times compared to the previous

year. The Group’s consumer factoring portfolio reached 175.6 million

kroons as at the end of December. The growth was due to the launching

of EGO hire-purchase card in the fourth quarter.

The Group’s assignment portfolio increased by 41.8 million, and loan

portfolio by 49.5 million kroons during the year. The Group’s interest-

bearing liabilities increased by 60.4% to 11,287.9 million kroons as

at the end of the year. The largest share of liabilities (80.6%) was

formed by loans from parent company. In July of 2000, 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 32.8% compared to the previous

year, amounting to 713.1 million kroons (excluding 25.1 million one-

off income tax refund received in 1999). The revenue distribution was

the following: 68.2% net interest income, 22.5% net fee income, and

9.3% other income.

Provisions charged to income amounted to 73.0 million kroons in 2000.

At the same time actual write-offs amounted to 63.2 million kroons and

recoveries were 17.5 million kroons. The Group’s net risk cost has

decreased from 1.5% in 1999 to 0.5% in 2000. At the end of the year

the volume of leasing receivables overdue more than 60 days amounted

to 75.8 million kroons, forming 0.8% of the Group’s leasing portfolio.

The Group’s operating expenses increased by 67.5% compared to the

previous year, amounting to 222.2 million kroons. The higher level

reflects an increase in personnel, IT expenses, marketing expenses as

well as reorganisation of the Group. The largest share of operating

expenses – 122.0 million kroons – was formed by personnel expenses

(annual growth of 58.6%). The number of employees of the Group

increased by 28.0% to 412 as at the end of the year. The Group’s

office expenses totalled 23.6 million kroons (annual growth of 45.2%),

IT expenses totalled 12.8 million kroons (annual growth of 162.5%) and

marketing expenses totalled 12.0 million kroons (annual growth of

86.5%). The Group’s cost-income ratio before provisions was 31.7% (the

Group’s target is to lower the cost-income ratio to 30%).

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 4.9%, return on assets 4.0% and

return on operating equity 24.6% in 2000.



Additional information

Lauri Reinberg

Financial Analyst

Tel. +372 6131 767

E-mail    Lauri.Reinberg@hansa.ee





Mart Tõevere

Head of Investor Relations

+372 6131 569