General
The following discussion is based upon, and should be read in conjunction with, the audited financial information of the Bank included elsewhere in this Offering Circular. All financial information discussed in this section is based on financial statements of the Bank prepared in accordance with International Accounting Standards.

Changes in 1996

1. Analysis of the profit statement
Net Interest Income
Income from direct insurance operation
Income from other financial transactions
Net service fees income
Structure and growth of service fees income
Administrative expenses
Other income and value adjustments of fixed assets
Loan losses and estimated losses on loans and guarantees
Average interest earning assets, interest bearing liabilities, interests and interest rates (table)

2. Analysis of the Balance Sheet
The balance sheet and explanatory notes to the balance sheet entries have been provided in the financial statements. The trends and changes occurred in the major balance sheet entries during 1996 are presented here.

Assets
Liquid assets;Shares and stocks, Bonds; Loans against securities

Loans -
Estonian loan market
Hoiupank's loan operation
Main development trends in 1996
Loan portfolio
Long-term financial investments and tangible fixed assets

Liabilities
Payables to credit institutions
Deposits
Shareholder's equity and capital adequacy
Off-balance sheet liabilities

Changes in first six months of 1997

1. Analysis of the Profit Statement
Net interest income
Income from other financial transactions
Direct insurance operation
Net service fees income
Administrative expenses
Other income; Value adjustments of fixed assets
Loan losses and estimated losses on loans and guarantees

2. Analysis of the Balance Sheet

Assets
Liquid Assets; Shares and stocks; Bonds; Loans against securities; Loans; Long-term financial investments; Tangible fixed assets

Liabilities
Payables to credit institutions; Deposits ;Shareholders' equity