SAMPO PANK

COMMENTARY TO FINANCIAL RESULTS



CONSOLIDATED UNAUDITED FINANCIAL RESULTS, 9 MONTHS 2001



The  net  profit  of Sampo Pank Group for the third quarter amounted  to  15.0

million kroons. The net profit for 9 months totalled 46.0 million kroons. When

compared to the first nine months of the previous year, this year’s result  is

over  three  times better. When compared to the beginning of  this  year,  the

balance sheet total of Sampo Group has increased by 733.8 million kroons, i.e.

by  17.0%  and  the deposits of customers have grown by 955.2 million  kroons,

i.e.  by  47.7%. The average return on assets was equal to 1.2% in  the  first

nine  month of this year, i.e. twice the result achieved at the same time last

year.  Return on equity was equal to 19.3%, i.e. three times the ratio of  the

previous year.



Funds received



Owing  to  the increase of customers' deposits, the interest-bearing  external

funds  increased by 725.1 million kroons, i.e. by 20.7% over  the  first  nine

months  of  the  year, amounting to 4.2 billion kroons. Over  the  first  nine

months,  growth  in the volumes of demand deposits and term deposits  totalled

333.6  million  kroons (31.9%) and 621.5 million kroons (65.0%), respectively.

Deposits  of enterprises and organisations increased by 33.9%, i.e.  by  426.4

million kroons and deposits of private individuals increased by 28.1%, i.e. by

148.0  million kroons in this period. Of the total volume of deposits,  demand

deposits  accounted for 46.7% (52.3% at the beginning of the  year)  and  term

deposits  accounted for 53.3% (47.7% at the beginning of  the  year).  Of  all

interest-bearing liabilities, customers’ deposits accounted for 70.0%  at  the

end  of  September. At the end of the year 2000, customers’ deposits accounted

for 57.2% of interest-bearing liabilities.



Of  interest-bearing external funds, the volume of issued debt instruments and

the  volume  of loans made with other banks decreased the most over  the  nine

months  (by  207.4 million kroons, i.e. by 28.2% and by 20.6  million  kroons,

i.e.  by  4.3%,  respectively). Of other external funds, customers’  money  in

transit  decreased by 100.2 million kroons, i.e. by 23.1% over three  quarters

of the year 2001.



At  the  end of September, the owners’ equity of the Group amounted  to  386.3

million kroons, i.e. 7.6% of assets, and the capital adequacy of the Group was

16.2%.



Assets



The  share of the Group’s liquid assets in the balance sheet was 29.9%. At the

end of September, cash formed 4.0% of the liquid assets, claims to the Central

Bank  accounted  for 15.1%, demand and term deposits at other banks  accounted

for  40,5%, and debt instruments trading portfolio formed 40.4% of the  liquid

assets.  The share of the debt instruments trading portfolio in the volume  of

liquid  assets increased from 16.3% in December of last year to 40.4%  at  the

end of September 2001.



The increase in the Group’s interest-bearing assets occurred mostly on account

of  the loan portfolio, which grew by 888.8 million kroons, i.e. by 39.3% over

the  nine  months.  The  volume of the gross loan portfolio  amounted  to  3.2

billion  kroons at the end of September, accounting for 68.0% of the interest-

bearing  assets  and  62.4% of total assets. The volume  of  loans  issued  to

enterprises and private individuals increased over the nine months  by  33.2%,

i.e.  by  618.2  million  kroons  and 68.0%, i.e.  by  228.7  million  kroons,

respectively.



The  share of the reserve for possible loan losses in the gross loan portfolio

decreased  from  4.5%  at the end of the year 2000  to  4.3%  at  the  end  of

September. The ratio of overdue loans to the reserve for possible loan  losses

decreased from 20.9% to 14.7%. Provisions for loan losses were formed  to  the

amount of 40.4 million kroons over the first nine months of the year 2001.



Interest income and expenses



The  net interest income of Sampo Bank Group totalled 131.7 million kroons  at

the  end  of  the  first nine months of the year 2001  while  at  the  end  of

September  of  the year 2000 the net interest income amounted to 86.1  million

kroons.  When  compared  to the first three quarters of  the  last  year,  net

interest income has grown by 53.1%. Thereby interest gains increased by 50.6%,

amounting  to  268.5  million kroons, and interest  expenses  grew  by  48.2%,

amounting to 136.7 million kroons.



Over  the  nine  months, the average interest income on assets increased  from

6.8%  in  year 2000 to 7.2% this year, whereby the net interest margin  before

provisions  for  the  same  period grew from 3.3% to  3.5%  and  the  interest

expenses on interest-bearing liabilities decreased by 0.2% percentage  points,

i.e. from 4.5% to 4.3%.



Non-interest income



The non-interest income for the first nine months of the year 2001 amounted to

116.2 million kroons, having grown by 11.9 million kroons, i.e. by 11.5%  when

compared  to  the  same  period of the year 2000. Of the non-interest  income,

commissions and service fees accounted for 58.5% (50.8% year ago), income from

currency  exchange  operations  accounted  for  25.9%  (34.3%),  income   from

securities  accounted  for 7.7% (4.3%), and other income  accounted  for  8.0%

(10.6%).



Of  the Group’s non-interest income, income from commissions and service  fees

grew  the most over the first three quarters when compared to the same  period

in the last year – by 28.3%, i.e. by 15.0 million kroons. Income from currency

exchange  operations amounted to 30.1 million kroons at the end of  the  first

nine  months of the year 2001, whereas the income from commissions and service

fees totalled 68.0 million kroons.



Expenses



The  non-interest  expenses  for the nine months  amounted  to  201.0  million

kroons, where staff expenses accounted for 33.3% (67.0 million kroons),  other

administrative  expenses  formed  25.0%  (50.3  million  kroons),   and   paid

commissions and service fees accounted for 8.0%.



Of the Group’s largest non-interest expense items, staff expenses increased by

23.8%,  i.e. by 12.9 million kroons and other administrative expenses grew  by

29.5%,  i.e. by 11.5 million kroons when compared to the first three  quarters

of  the previous year. Among other administrative expenses, costs relating  to

communications  and data processing are the largest expense  items  (28.2%  of

administrative  expenses) and costs relating to the lease  and  management  of

premises (23.7% of administrative expenses).





Kristjan Jõevere

PR manager

+372 6 302 246