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Interim Report January-September 2000

On the road to Europe
During the third quarter a number of steps has been taken to make SEB a European player:
Intensified efforts are made to build a strong brand in Europe; e.g. BfG is to be renamed SEB. SEB´s acquisition of shares in the Polish bank BOS was approved by the authorities. SEB made cash offers for all outstanding shares of Eesti Ühispank in Estonia, Latvijas Unibanka in Latvia and Vilniaus Bankas in Lithuania.

Focused European private strategy
SEB mainly focuses on a target group consisting of financially capable and financially active people. This target group comprises 17 per cent of all Europeans. SEB´s pan-European e-banking structure is easily escalated and costs for new releases are only half of the expenses for the first launch. Operational costs are low due to co-operation with third parties.

Focused corporate strategy
SEB has decided to concentrate on growth- and/or international companies and financial institutions, based on its Nordic market leadership. The product needs of these customers are investment bank services in a wide sense and transaction services, to a high extent supported by e-solutions. The risks have been reduced in all areas, while there are clear growth opportunities in several investment bank-related areas. These growing areas, such as the European debt capital market and equity capital markets, are more advice- and less credit-oriented.

E-banking and e-brokerage - key issues to our private customers
SEB's target customers are investment intensive and have little time. Therefore, the strategy is to integrate e-banking and e-brokerage in each country. In Germany there has been a strong growth of e-banking customers as a result of the migration strategy. To acquire new customers the launch of SEBdirect, an e-brokerage service, was announced a few days ago. This launch is the first step in the re-branding of BfG to SEB, a process to be started in the first quarter of 2001. The cost is calculated to a total of EUR 100 M over two years, including normal marketing costs. With the launch of Vilniaus Bankas Internet service in Lithuania in September, all the three Baltic banks are on the net, with Estonia's Ühisbank in the forefront with 60,500 customers. The total number of e-banking customers in SEB is approximately 690,000. In the last quarter of 2000, a mobile Internet service will be launched.

* The Group´s total result comprises operating results, change in surplus value in life insurance operations and compensation from pension funds.

Restructuring measures continues to yield results
Most of the planned efficiency measures have been implemented and are starting to yield results. The restructuring of BfG is ahead of plan. In Sweden, restructuring and efficiency measures continue to yield results within Retail Distribution. Within Merchant Banking, overall lower cost levels have been achieved through a number of efficiency programmes in the international network and in mature business segments.

"I am happy to see that all parts of the Group have contributed to the good income development. Nordic Banking, and especially Merchant Banking, showed very strong results. We have a very positive development in the Nordic region outside Sweden with total results of approximately 800 million kronor", says President and Group Chief Executive Lars H Thunell. "Our restructuring and efficiency measures are showing results, and our costs are under control, despite major investments in e-banking and continued intense activities in all areas. This is a good basis for continued European expansion in our core areas."

Total income rose by 73 per cent, to SEK 24,967 M. For comparable entities the increase was 28 per cent, mainly due to a strong rise in commission income.

Capital gains and other one-off items in the first nine months of the year totalled SEK 1,597 M (SEK 841 M), i.e. unchanged from the second quarter. The largest one-off items are SEK 500 M from the sale of Svensk Exportkredit, SEK 420 M from the sale of the Bank´s head office and SEK 373 M from the transaction with Orkla Finans. The capital gain of SEK 300 M from the divestment of the so-called post write-off debt collection to Hoist Kredit AB will be booked in the fourth quarter.

On 30 September 2000, a change of one percentage point in the Group's combined positions in SEK and other currencies means that the market value of the Group's interest-sensitive positions would increase/decrease by SEK 1.4 billion (SEK 0.8 billion in the first nine months of 1999).

The total assets of SEB´s pension funds amounted to SEK 25.3 billion at the end of September (compared to SEK 25,2 billion at year-end), while the pension commitments totalled SEK 7.9 billion (SEK 7,1 billion). Thus, the surplus value was SEK 17.4 billion (SEK 18.1 billion).

Total costs rose by 52 per cent, to SEK 15,813 M. For comparable entities the increase was 6 per cent.

On 30 September 2000, SEK 1,919 M - including SEK 220 M in the current year - of the restructuring reserve of SEK 2,255 M established in the accounts for 1997, had been utilised.

The acquisition of BfG in January 2000 has resulted in a difference between purchase price and equity of SEK 3.4 billion to be accounted for in the closing of the books in the year of 2000. The restructuring costs for BfG will be fully covered, to some extent by restructuring reserves established by BfG in 1999 and for the remainder from a part of the above mentioned difference. The results of SEB will thus not be affected by the restructuring costs.

The Group's lending losses, including changes in the value of assets taken over and write-downs, amounted to SEK 778 M, net, of which SEK 587 M pertained to BfG. The level of lending losses was 0.15 per cent.

Credit exposure of the SEB Group
By tradition, a great part of SEB´s credit exposure is related to companies in the Nordic market. Since the Nordic corporate market is strongly linked to the telecommunications industry and also to some extent to companies within the IT sector, SEB has chosen to present its credit exposure on these particular industries. Telecommunications are here defined as telephone operators and manufacturers of tele-products, including their respective subcontractors.

The exposure of the Group on companies within the telecommunications industry is approximately 1.5 per cent, or SEK 15 billion of its total credit exposure. Most of it is related to well-established Nordic companies of excellent credit quality. In addition, SEB takes part in a number of Nordic-related project financing arrangements for major operators, mostly within OECD countries.

The IT sector represents a very small part of the portfolio, SEK 3.5 billion, which means less than 0.5 per cent. The exposure is spread on a large number of companies and newly-established companies represent a very small part.

On 30 September 2000, SEB´s exposure in emerging markets amounted to SEK 11,314 M, net, after provision for possible lending losses, a decrease of SEK 3.4 billion or 22.8 per cent from the second quarter. The significant change is mostly due to an adaptation of BfG´s accounting principles. Substantial reductions of the exposure also concern Russia and Hong Kong. (For details see appendix 3.)

Doubtful claims, net, increased because of BfG to SEK 6,946 M (SEK 3,038 M), while the volume of pledges taken over declined to SEK 195 M (SEK 720 M).

Growth in the Nordic region
SEB´s investments in the Nordic Region over the last years are now contributing a substantial part of the total earnings of the Group. For the first nine months of 2000 the entities in the Nordic countries outside Sweden - with more than 1,000 employees - showed a combined result of approximately SEK 800 M.

Sale of Self Trade
In September, the French Internet agent Self Trade and Direkt Anlage Bank in Germany decided to merge. SEB, as the largest owner in Self Trade with 20.4 percent of the share capital, has decided to swap its shares in exchange for about 3.6 per cent of the shares in Direkt Anlage Bank. These holdings are subject to special conditions within a time-limited lock-in clause.

The book value of SEB´s holdings in Self Trade is approximately SEK 210 M. The current value of the shares received in Direkt Anlage Bank amounts to almost SEK 1 billion. This means that SEB today has an unrealised surplus value of approximately SEK 800 M, which is not accounted for.

Green light for BOS
The relevant Polish and Swedish authorities have approved that SEB acquires up to 37 per cent of the shares in the Polish bank Bank Ochrony Srodowiska, BOS.

SEB currently owns 4.4 per cent of the shares in BOS. After the additional acquisitions, SEB will control approximately 32 per cent of the shares and votes in BOS. A presence in Poland is in line with SEB's strategy to grow in Europe through representation in the whole Baltic Sea region.

BOS is a medium-sized bank, active in both the corporate and private segments, with its head office in Warsaw. The bank has a market capitalisation of approximately SEK 2 billion, total assets of SEK 9,6 billion (as per 30 June 2000), 1,700 employees, 700 sales agents and 55 branch offices.

Capital adequacy
As of 30 September 2000, the capital base of the financial group of undertakings (which does not include insurance companies) amounted to SEK 55.1 billion (SEK 46.5 billion at December 31, 1999). Core capital was SEK 36.9 billion (SEK 34.4 billion), of which SEK 1.7 billion con-stituted so-called core capital contribution. At the same time, risk-weighted assets amounted to SEK 502 billion (SEK 318 billion at December 31, 1999). The capital ratio was thus 10.97 per cent (14.62 per cent as per December 31, 1999) and the core capital ratio 7.36 per cent (10.80 per cent).

In the first quarter of 2000 - after including BfG - risk-weighted assets rose to SEK 510 billion. Since then, the reduction in risk-weighted assets amounts to SEK 8 billion, mainly related to capital efficiency measures in Nordic Banking and BfG.

Events after the reporting period
At the end of October, Standard & Poor´s revised its outlook for SEB from negative to stable.
The revision was explained by SEB´s strong earnings growth in its core markets, the anticipation of stable earnings in the short and medium term and the continued restructuring of SEB´s German operations.

In October, SEB sold a property in Paris with a capital gain of SEK 85 M, which will be included in the result for the fourth quarter of 2000.

Stockholm, 27 October, 2000
Lars H Thunell
President and Group Chief Executive

The report for the full year 2000 will be published on 16 February, 2001. SEB Group interim reports are available on the Internet (www.seb.se; www.seb.net).

Additional information is available from:
Gunilla Wikman, Head of Group Communications, +46 8  763 81 25
Lotta Treschow, Head of Investor Relations, +46 8 763 95 59

The full report including tables can be downloaded from the following link: