HANSAPANK

COMMENTARY TO FINANCIAL RESULTS



CONSOLIDATED FINANCIAL RESULTS , 6 M 2001



We are proud to present you with yet another set of excellent results.

Hansapank Group achieved the highest-ever semi-annual profit of EUR

58.4 million, 73.8% increase from previous year’s same period. The

Group’s balance sheet grew by 68.7% to EUR 4.4 billion during one

year. In addition to strong organic growth, the Group also completed

the acquisition of the largest retail bank in Lithuania, Lietuvos

Taupomasis Bankas (LTB).



Indrek Neivelt

Chairman of the Board, CEO





-    net profit growth 73.8%, operating profit growth 55.9%

-    asset growth 68.7%

-    ROE 29.0%

-    EPS 1.49 euros

-    EUR 4 million one-off gain from change in Hansa Capital’s

provisioning principles

-    improved recovery of loan write offs

-    completion of the LTB privatisation process

-    largest internet bank in Estonia (255,000 customers) and in

Latvia (38,000 customers), in total 300,000 internet banking customers





All figures in this announcement are in euros. The EEK/EUR exchange

rate is 15.64664. The financial results of the first half 2001 have

been reviewed by the bank’s Auditors.

Starting from May 31, 2001 Hansabank’s consolidation group also

includes LTB. Hansapank and the Lithuanian State Property Fund signed

the share purchase agreement of 90.73% of LTB’s shares on April 23,

2001. Hansabank paid LTL 150 million for the mentioned shares.

Following the due diligence performed in LTB during the privatisation

process, the Group formed EUR 42.7 million of additional provisions,

including EUR 20.0 million on loans and EUR 20.1 million on real-

estate. These additional provisions are reflected in the goodwill (EUR

17.8 million as of June 30, 2001) that will be amortised on a straight-

line basis over 5 years.

The Group’s semi-annual income statement includes LTB’s June net

profit and the balance sheet LTB’s assets and liabilities. In the text

all growth ratios are on pro-forma basis, unless stated otherwise.



Hansabank Group completed the first half of 2001 with a net profit of

EUR 58.4 million, representing a 73.8% increase on the 2000 first half

result (not pro-forma). The Groups earnings per share (annualised)

increased to 1.49 euros. Hansapank Group’s return on equity was 29.0%

and return on assets was 3.6%.



Hansapank  Group’s EUR 58.4 million net profit can be divided  between

the  five  business  units  as  follows: Hansabank  Estonia  EUR  22.4

million,  Hansabanka  EUR 3.7 million, Hansabankas  and  LTB  EUR  0.2

million,  Hansa  Capital EUR 21.7 million, and Hansabank  Markets  EUR

12.3  million and other (operations, which are not directly linked  to

any  business unit) EUR -1.9 million. These results are not comparable

to the results of the respective legal entities (AS Hansapank EUR 27.0

million, a/s Hansabanka EUR 4.8 million, AB bankas Hansabankas  EUR  -

0.2  million,  LTB  EUR 1.1 million (only June result)  and  AS  Hansa

Capital  EUR  23.6 million.) Of the total result EUR 26.2 million  was

earned  in  the  first  quarter and EUR 32.2  million  in  the  second

quarter.

The Group’s EVA result for the first half of the year was EUR 30.1

million, which is 43.3% more than in the respective period last year.



Improving asset quality on the one hand and growth in business volumes

on the other influenced the Group’s results. As a result of good loan

growth, interest income increased by 32.0% from last year’s first

half. The Group’s loan portfolio grew by 37.8% (excl. LTB), primarily

in Lithuania (+78.7%) and in Latvia (+51.3%). Supported by strong

interest income growth, the Group’s total revenues increased to EUR

131.4 million in the first half of 2001. The revenue distribution was

the following: 59.1% net interest income, 23.4% net fee income, 12.3%

financial income, and 5.3% other income.

Operating expenses totalled EUR 71.3 million for the period,

increasing from previous year's same period by 15.8%. Of total

expenses 42.2% was formed by personnel expenses, 17.7% by

administrative expenses, 19.9% by other expenses (incl. goodwill

amortisation), 14.2% by depreciation, and 6.0% by IT expenses.

In the first half of 2001 the Group’s cost-income ratio (before

provisions) was 48.7% and the ratio of operating expenses to total

assets was 3.9%.



In the first half of 2001 the Group’s loan and guarantee losses

totalled EUR 7.7 million. In the second quarter Hansa Capital replaced

its general provisions with specific provisions, resulting in a EUR

4.0 million one-off gain. During the first half of the year the Group

wrote off loans worth EUR 9.5 million while recoveries totalled EUR

8.0 million. As a result, the Group’s net risk cost in the first half

of 2001 was 0.15%.



The Group’s total assets amounted to EUR 4.42 billion at the end of

June, of which EUR 0.97 billion was formed by LTB’s assets. In the

first half of the year the Group’s assets increased by 15.8% (pro-

forma), growth was 6.4% in the first quarter and 12.1% in the second

quarter. The good result achieved in the second quarter resulted from

strong growth in customer deposits. Annual growth was 30.1%. Excluding

the effects of LTB’s acquisition, Hansabank Group’s assets grew by

32.7% during one year. Hansabank’s market share on the Baltic banking

market was 37% by deposits and 36% by loans at the end of June.



For a more detailed overview of the 2001 semi-annual financial results

please go to <a href='http://www.hansa.ee/en/2q2001' target='_blank'>http://www.hansa.ee/en/2q2001</a>





Mart Tõevere

Head of investor relations

+372 6131 569