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SBABs net operating income for 2005 amounted to SEK 666 million


Jan 31st 2005, SBABs new lending to the retail market was a record-breaking 57 % higher than last year. The market share for SBABs retail market lending has increased to 9.4 % (8.3 %).
- SBAB has had a successful year with increased sales to the retail market. Our net profit is above our profitability requirement, says Eva Cederbalk, SBABs CEO.

Net operating income for the full year 2005
SBABs net operating income for 2005 amounted to SEK 666 million (SEK 678 million). The change in income is mainly explained by increased expenses. Net interest income totalled SEK 1,296 million, compared with SEK 1,214 million in 2004. This increase is explained by a very good development of retail market lending although falling interest rates have had a negative impact on yield. New lending to the retail market was a record-breaking 57 % higher than last year. Expenses totalled SEK 596 million
(SEK 505 million).

- The high level of new sales has led to an increase in staff costs and volume-related costs. Furthermore, SBAB has pursued a number of extensive development projects due to adaptation to various rule changes. In addition, restructuring expenses for a reorganisation have been charged to expenses for 2005, says Eva Cederbalk, SBABs CEO.

New lending to the retail market amounted to SEK 37,260 million (SEK 23,750 million) during the year. When SBAB as the first mortgage loan company in Sweden dropped the top loan in April 2005, this contributed to a larger customer flow which further increased the growth of new lending to retail customers. The portfolio now totals
SEK 93,528 million (SEK 60,942 million) excluding securitisations.
New lending in the corporate market was SEK 4,976 million (SEK 4,481 million). The corporate market portfolio excluding securitisations amounted to SEK 62,492 million SEK 69,965 million).

Long-term funding during the year amounted to SEK 68,866 million (SEK 43,321 million) of which SEK 47,696 million (SEK 21,698 million) was raised in the international market and SEK 21,170 million (SEK 21,623 million) in the domestic bond market. The original short-term loan debt, defined as short-term on the issue date, totalled SEK 45,075 million (SEK 34,717 million).

Loan losses and doubtful loan receivables
Loan losses continued to be low and amounted net to a positive SEK 36 million (SEK 7 million).
The doubtful loan receivables have decreased during the year from SEK 214 million to SEK 144 million. The provision ratio regarding specific provisions for individually accessed loan receivables amounted to 66%. At the end of 2005, total provisions amounted to SEK 228 million, of which collective provision for individually assessed loan receivables amounted to SEK 113 million.

Capital adequacy
At the end of 2005, the capital adequacy ratio was 8.9% (10.0%). The primary capital ratio was 6.9% (8.4%). SBABs capital base amounted to SEK 7,376 million (SEK 6,386 million). The capital adequacy ratio was 9.4% (10.6%), the primary capital ratio 7.3% (8.8%) and the capital base SEK 7,040 million (SEK 6,120 million) for the parent company. The change in the capital adequacy ratio was mainly due to increased lending in the retail market and to the repurchase of securitised loans.

Current events

On 16 December 2005, the Riksdag, the Swedish Parliament, decided to approve a broadening of SBABs mission to include accepting deposits from the public. During 2006, SBAB will prepare for also being able to offer savings products to customers.

The parts of SBABs activities relating to retail market credits have been concentrated at two customer centres in Karlstad and Uppsala. As a result of this, the office in Linköping has been wound up.

A new business area, Corporate Lending, was established during the autumn with the intention of a renewed focus on the corporate market.

In November, SBAB won an award in Dagens Industris and the Association of Swedish Advertisers´ advertising competition for long-term trademark management, 100-wattaren. SBAB also received an award for the campaign “Drop the top loan”.

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Annual General Meeting of Shareholders
SBABs Annual General Meeting of Shareholders will be held on Wednesday, 19 April 2006.


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