HANSAPANK

COMMENTARY TO FINANCIAL RESULTS



CONSOLIDATED UNAUDITED FINANCIAL RESULTS, 2001



- net  profit growth 41%, operating profit (before provisions) growth

  11%

- successful start of the Lietuvos Taupomasis Bankas (LTB) integration

  process

- loan growth 46%, 31% excluding LTB

- deposit growth 75%, 31% excluding LTB

- ROE 25.3%

- EPS 1.38 euros (21.6 kroons)

- improved recovery of loan write offs, net risk cost 0.21%

- largest internet bank in Estonia (318,000 customers) and in  Latvia

  (74,000 customers), in total 401,000 internet banking customers



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

rate is 15.64664.



Hansabank Group completed the year 2001 with a net profit of EUR 108.2

million (EEK 1,693.2 million), representing a 41% increase on the 2000

result  (43%  excluding  LTB). At the same time  the  Group  operating

profit  before  provisions increased by 11%. The  Group  earnings  per

share  increased to 1.38 euros. Return on equity was 25.3% and  return

on  assets  was 2.9%. The Group EVA result for the year was  EUR  56.0

million  (EEK  876.2 million). The Group’s assets  totalled  EUR  4.60

billion  (EEK 72.02 billion) at the end of December 2001. The  Group’s

results  were influenced by low risk cost, growth in business  volumes

and the acquisition of LTB.



The   privatisation  agreement  signed  between  Hansabank   and   the

Lithuanian  State Property fund became effective in May 2001.  LTB  is

the  second largest bank in Lithuania. Its loan portfolio amounted  to

EUR  266  million (EEK 4.16 billion) and deposits to EUR  813  million

(EEK  12.72 billion) at the end of the year. In June 2001 an  18-month

long integration project was started. The most important tasks of  the

project include a restructuring of the bank’s distribution network and

the  implementation of the Group’s IT system. By the end of  the  year

201  smaller  branches  had  already been closed  and  the  number  of

employees in the branch network had been decreased by 17%. At the same

time,  the bank increased its ATM network by 88% to 205 and the number

of  bank  cards  by 55% to 237,000. The other important  task  is  the

reorganisation  of the lending and risk management organisation.  This

includes  restructuring both, the front as well as the back  office  -

remodelling  the  credit granting process and  training  the  customer

relationship managers. At the end of 2001, the Group’s risk management

principles were already implemented. In December 2001 the legal merger

of  Hansabankas and LTB was finalised, the new bank is  called  Hansa-

LTB.

                                                                  2(7)

Hansapank Group’s EUR 108.2 million net profit can be divided  between

the  five  business  units  as  follows: Hansabank  Estonia  EUR  47.5

million,  Hansabanka  EUR 10.9 million, Hansa-LTB  EUR  –2.5  million,

Hansa Capital EUR 40.4 million, and Hansabank Markets EUR 20.1 million

and  other (operations, which are not directly linked to any  business

unit)  EUR  –8.2  million. These results are  not  comparable  to  the

results of the respective legal entities. Of the total result EUR 26.2

million  was  earned  in the first quarter, EUR 32.2  million  in  the

second  quarter, EUR 27.3 million in the third quarter  and  EUR  22.4

million.



The  Group’s revenues increased 27% (15% excluding LTB) to  EUR  288.7

million (EEK 4.52 billion). As a result of good risk asset growth, net

interest income increased 35% during the year (23% excluding LTB). The

Group’s net interest margin decreased by 44bp to 4.47% at the  end  of

the  year.  Non-interest income growth was 18% (6% excluding  LTB)  in

2001.  The  main reasons behind the slow growth were a 9% decrease  in

trading  revenues and a 10% growth in net fee income (both,  excluding

LTB).  The  revenue distribution was the following: 59%  net  interest

income, 24% net fee income, 12% financial income, and 5% other income.

Operating  expenses totalled EUR 172.4 million (EEK 2.70 billion)  for

the  period, increasing from previous year by 42% (15% excluding LTB).

Of  total  expenses  43%  was  formed by personnel  expenses,  18%  by

administrative  expenses,  21%  by  other  expenses  (incl.   goodwill

amortisation), 13% by depreciation, and 5% by IT expenses.

The  Group’s  cost-income ratio (before provisions) was  53.8%  (48.1%

excluding LTB) and the ratio of operating expenses to total assets was

4.1% in 2001.



The  Group’s  loan and guarantee losses totalled EUR 21.8  million  in

2001,  a  decrease of 31% from the previous year. During the year  the

Group wrote off loans worth EUR 21.2 million while recoveries totalled

EUR  16.8 million (EUR 8.3 million during 2000). The Group’s net  risk

cost was 0.21%.



The  Group’s total assets amounted to EUR 4.60 billion at the  end  of

2001. The Group’s loan portfolio increased 46% (31% excluding LTB)  to

EUR  2.57  billion (EEK 40.24 billion). The quarterly  growth  volumes

were  EUR  93  million in the first quarter, EUR 125  million  in  the

second, EUR 91 million in the third and EUR 259 million in the  fourth

quarter (the LTB consolidation effect has been excluding from Q2). The

rapid  growth  in  the fourth quarter originated from  strong  leasing

sales  in  Estonia,  but  also  from  US  dollar  appreciation,  which

especially influenced the Lithuanian portfolio.

The  Group’s  deposits increased 75% (31% excluding LTB) to  EUR  3.26

billion (EEK 51.06 billion) during 2001. EUR 258 million of the growth

originated  from Estonia, EUR 265 million from Latvia, EUR 59  million

from Lithuania and EUR 813 million from LTB. The consolidation of  LTB

increased  the share of deposits in total assets and raised the  share

of retail deposits in total deposits by 10% to 55%.





Mart Tõevere

Head of investor relations

+372 6131 569