Handelsbanken Finans

Transcription

1 Annual report 2004 Handelsbanken Finans HANDELSBANKEN FINANS ANNUAL REPORT 2004

2 2 HANDELSBANKEN FINANS ANNUAL REPORT 2004 CONTENTS

3 Contents Key figures/definitions 4 Directors report 5 Income statement 6 Balance sheet 7 Change in shareholders equity 8 Cash flow statement 9 Accounting principles 10 Notes 11 Other disclosures 16 Changeover to new IAS-IFRS accounting standards 18 Proposed distribution of earnings/audit report 19 Five-year summary 20 Addresses 22 CONTENTS HANDELSBANKEN FINANS ANNUAL REPORT

4 Key figures Group Operating profit, SEK m Total assets, SEK m Return on shareholders' equity, % C/I ratio before credit losses, % , C/I ratio after credit losses, % Capital ratio, % Tier 1 capital ratio, % Bad debt reserve ratio, % Proportion of bad debts, % Credit loss ratio, % Average number of employees The change in the capital ratio and tier 1 capital ratio between 2001 and 2002 is partly because receivables from Group companies have been reported under group A since 30 June 2002 and not as previously under group D according to FFFS 2000:6. Definitions BAD DEBTS Receivables where payments will probably not be met according to the conditions of the contract. A receivable is not a bad debt if there is collateral which covers the principal amount, interest and penalties for late payments by a satisfactory margin. BAD DEBT RESERVE RATIO Provision for probable credit losses as a percentage of gross bad debts. CAPITAL BASE The capital base is the sum of tier 1 (primary) and tier 2 (supplementary) capital. Tier 1 capital comprises shareholders equity less goodwill plus 72% of untaxed reserves in the parent company. Tier 2 capital includes subordinated loans with some reduction when the residual maturity is under five years. This part of the supplementary capital must not exceed 50% of tier 1 capital. CAPITAL RATIO The capital ratio is the capital base in relation to riskweighted volume. The Act on Capital Adequacy and Large Exposures of Credit Institutions and Securities Companies stipulates that the capital ratio should be at least 8%. C/I RATIO Total expenses minus depreciation according to plan for leasing assets, in relation to total income minus depreciation according to plan for leasing assets. The C/I ratio is calculated before and after credit losses. CREDIT LOSS RATIO Credit losses as a percentage of the opening balance for lending to the general public and credit institutions (excl. banks). NON-PERFORMING CREDITS Credits where interest, repayments or overdrafts have been due for payment for more than 60 days. PROPORTION OF BAD DEBTS Bad debts (net) in relation to total lending to the general public, credit institutions (excluding banks) and leasing assets. RESTRUCTURED LOAN RECEIVABLES Loans where some kind of concession has been made due to the borrower s inadequate payment capacity. RETURN ON EQUITY The year s profit in relation to average shareholders equity. RISK-WEIGHTED VOLUME The risk-weighted volume is determined by the assets and off-balance-sheet items being placed in varying risk classes, in accordance with the Act on Capital Adequacy and Large Exposures of Credit Institutions and Securities Companies. The volumes are weighted taking into account the assessed risk such that they are included in the risk-weighted volume by 0%, 20%, 50% or 100%. TIER 1 CAPITAL RATIO Primary capital in relation to risk-weighted volume (see capital base and risk-weighted volume). 4 HANDELSBANKEN FINANS ANNUAL REPORT 2004 KEY FIGURES AND DEFINITIONS

5 Directors report Handelsbanken Finans AB (publ) Handelsbanken Finans is a wholly-owned subsidiary of Svenska Handelsbanken AB (publ), corporate identity no It operates in close co-operation with the Bank s branches. Handelsbanken has its registered office in Stockholm. BUSINESS CONCEPT AND GOALS The business concept of Handelsbanken Finans is to work in close co-operation with Handelsbanken to actively and professionally provide existing and future Handelsbanken Group customers with administrative and financial services. Handelsbanken Finans operates as an integral part of the Handelsbanken Group and in the business area reporting, aims to generate higher profitability than the Handelsbanken Group. For information concerning the business area performance for Handelsbanken Finans, this being the operative benchmark for evaluating operations in the Handelsbanken Group, please refer to Svenska Handelsbanken s annual report. OUR BUSINESS AREAS During the year, the organisation of Handelsbanken Finans comprised four business areas: Regional Bank Operations is responsible for leasing, conditional sales and car administration for corporate customers in Sweden. Factoring & Collection Services offers factoring services and collection services throughout Sweden. Handelsbanken Finans Direct Sales provides financing for purchases of consumer and capital goods through co-operation with retailers in Sweden. See also below. International is responsible for business operations outside Sweden. Handelsbanken Finans offers a full range of finance company products in the other Nordic countries and in Great Britain, where it has mainly leasing operations. The four business support units IT & Business Development, Accounting & Finance, Credits and Personnel are organised as separate areas. INTEGRATION OF HANDELSBANKEN FINANS OPE- RATIONS IN SWEDEN AND STADSHYPOTEK BANK On 1 September 2004, Stadshypotek Bank and Handelsbanken Finans started to co-ordinate their Swedish consumer-oriented operations with the purpose of increasing potential sales to private individuals. The Retail Financial Services business of Handelsbanken Finans has traditionally been very good at attracting new custom, but it lacks services for boosting its sales to customers. By complementing its business with Stadshypotek Bank s broader range of services, new opportunities have been created for extending and expanding the scope of customer relationships with both new and existing customers of Retail Financial Services. A new business area has been created, Handelsbanken Finans Direct Sales, and assigned with the responsibility for the shared customer base and the task of enhancing the Group s potential for creating long-term, profitable relations with more customers. FUTURE PROSPECTS In view of customers needs for financial solutions characterised by availability and simplicity and of pending capital adequacy rules, there is every reason to believe that the demand for services offered by the various business areas will rise. Handelsbanken Finans is well poised to meet this growth in demand and we anticipate continued volume growth over the coming year. EVENTS AFTER THE END OF THE FINANCIAL YEAR During the first six months of 2005, the factoring service operations of Handelsbanken Finans will be transferred to Handelsbanken. The debt collection operations will remain within Handelsbanken Finans, organised under the Credit Department. LENDING At the year-end, total lending by the Group amounted to SEK 38.2bn (36.2). Of this amount, the book value of finance and operating leasing agreements accounted for SEK 25.9bn (24.7). Lending by the parent company increased by 6% to SEK 34.0bn. PERFORMANCE The Group s operating profit was SEK 792m (737). The parent company s operating profit was SEK 656m (583). Total operating income, reduced by the amortisation of leasing assets according to plan, increased in the Group by SEK 84m to SEK 1,302m. In the parent company, operating income increased by SEK 106m to SEK 1,052m. Expenses excluding amortisation of leasing assets totalled SEK 502m, up 7% on the previous year. During the same period, credit volumes rose by 6%. Net credit losses were SEK 8m (10) for the Group and SEK 4m (4) for the parent company. The Group s bad debts (net), after deductions for provisions, totalled SEK 78m (84) at the turn of the year. For the parent company, bad debts totalled SEK 40m (54). For information regarding the distribution of earnings, please refer to page 19, Proposed distribution of earnings. FUNDING AND FINANCIAL RISKS Funds are raised for the most part internally via Handelsbanken and partly in the open market. Financial risks include interest rate risk, liquidity risk and currency risk. The interest rate risk is the impact that changes in market rates have on Handelsbanken Finans and is measured using a gap analysis for assets and liabilities with different interest rate adjustment periods. Interest rate risk and foreign exchange risk are kept to a minimum since conditions for lending largely match conditions for funding. Interest rate risk arises when lending has longer maturities than refinancing. Derivative instruments in the form of interest rate swaps have been used to cover future investments. Handelsbanken Finans uses interest rate swaps to reduce the impact of interest rate changes on earnings. Liquidity risk arises when the Bank s lending and funding do not coincide in time. Liquidity risk is measured by carrying out a gap analysis of the cash flows for various maturities and all currencies. Financial risks are measured and monitored at a central level in Handelsbanken Finans. CREDIT RISKS Handelsbanken Finans follows the credit policy established by Handelsbanken s central board. This means that the customer unit is responsible for both the evaluation and processing of credit risks. In this way, any available data on the customer, the local market and the finance company product on offer can be put to good use. Processing is rapid and efficient and, if necessary, central expertise can be called upon. With regard to credits generated by the branch offices, the board of Handelsbanken Finans has delegated responsibility for credit decisions to the Handelsbanken branch offices. These decisions follow the guidelines laid down by the board. An internal guarantee for these credits is granted by the parent company. Credits for which Handelsbanken Finans bears the risk are generated mainly by the Direct Sales business area, and in the International business area by retail financial services. These are largely card-based credits. Of Handelsbanken Finans 510,000 or so cards, the majority have been processed in a credit management system developed in-house by Handelsbanken Finans and through which more than a million credit applications have passed since the system was launched. The credit management system has shown stability in performance and has played an important part in the company s efforts to maintain a low level of credit losses. OPERATIONAL RISK Operational risk refers to the risk of loss due to internal processes that are inappropriate or otherwise inadequate, human error, erroneous systems or external events. At Handelsbanken Finans, operational risk is limited by maintaining a good level of internal control and quality assurance. This has been made possible by systems for risk management, good leadership and skilled staff. CAPITAL ADEQUACY The capital ratio at the year-end was 70% (66) in the Group and 82% (76) in the parent company. THE BOARD On 1 April 2004, Ulf Riese was appointed as the new head of Handelsbanken Asset Management and Executive Vice President of Handelsbanken. Yonnie Bergqvist was appointed as the new chief executive of Handelsbanken Finans, having previously also held the position of chief executive of Stadshypotek Bank during a transitional period. At the Annual General Meeting held on 28 April 2004, M. Johan Widerberg, Lennart Francke and Björn G. Olofsson took up positions as members of the board. At the same meeting, Bengt Ragnå and Magnus Uggla left the board. The Board has held 16 meetings during the year. At these meetings, the Board has discussed the financial position and strategy of Handelsbanken Finans. Risk limits for interest rate and other types of risk have also been monitored. The Board has received regular information regarding operational risks. It has made decisions concerning major credit issues, major investments and strategic issues. IT DEVELOPMENT In 2004, Handelsbanken Finans focused on IT projects concerning the new capital adequacy regulations and a number of business development projects in each of the business areas. ENVIRONMENTAL ISSUES Environmental issues are a vital element in the Handelsbanken Group s operations. This applies both to the Bank s responsibility for the environment in its own operations and taking into account environmental risks when assessing credits. Handelsbanken has signed and complies with voluntary agreements, such as the ICC Business Charter for Sustainable Development and the UN Environment Programme - Banks and the Environment. HUMAN RESOURCES In 2004, the average number of employees in the Group fell by 1.5% to 403. GROUP STRUCTURE During 2004, Handelsbanken Finans AB has conducted business via the following wholly-owned subsidiaries: Kredit-Inkasso AB Spartacus A/S Handelsbanken Rahoitus Oyj Handelsbanken Finans AS Collector Inkasso AS In Sweden, Kredit-Inkasso AB conducts debt collection services on behalf of Handelsbanken Finans AB. In Denmark, Spartacus A/S works mainly with retail financial services. Handelsbanken Finans AB s Danish branch runs factoring and leasing operations. In Finland, Handelsbanken Rahoitus Oyj provides factoring, leasing, conditional sales and debt collection services and also operates an extensive card business under the name Aktiiviraha. The mortgage financing operation is being phased out. Handelsbanken Finans AB s Finnish branch runs a leasing operation. In Norway, Handelsbanken Finans AS works with vehicle financing services and Collector Inkasso AS provides debt collection services. Handelsbanken Finans AB s Norwegian branch runs operations in leasing, promissory note loans, factoring and retail financial services. DIRECTORS REPORT HANDELSBANKEN FINANS ANNUAL REPORT

6 Income statement Group Parent company (SEK m) Interest income Note Leasing income Note Interest expense Note Commission income Note Commission expense Note Net result on financial operations Other operating income Total operating income General administrative expenses Staff costs Note Other expenses Note Depreciation and write-down in value of tangible and intangible fixed assets Note Total operating income Credit losses, net Note Total operating expenses Operating profit Appropriations Note Profit before taxes Tax Note Profit for the year Net earnings per share, SEK HANDELSBANKEN FINANS ANNUAL REPORT 2004 INCOME STATEMENT

7 Balance sheet Group Parent company (SEK m) ASSETS Lending to credit institutions Note Lending to the general public Note Shares and participations in Group companies Note Intangible fixed assets Goodwill Note Tangible assets Equipment Note Leasing assets Note Other assets Note Prepaid expenses and accrued income Note Total assets LIABILITIES, PROVISIONS AND SHAREHOLDERS' EQUITY Liabilities to credit institutions Note Funding from the general public Note Issued securities Note Other liabilities Note Accruals and deferred income Note Provision for deferred taxes Note Subordinated liabilities Note Total liabilities and provisions Untaxed reserves Note Share capital Other reserves Statutory reserve Other restricted reserves Profit brought forward Profit for the year Total shareholders' equity Note Total liabilities, provisions and shareholders' equity MEMORANDUM ITEMS Collateral provided none none none none Contingent liabilities Guarantees, other none 10 none 10 Other commitments Note BALANCE SHEET HANDELSBANKEN FINANS ANNUAL REPORT

8 Change in shareholders equity GROUP Shareholders Restricted Unrestricted Total (SEK m) equity reserves reserves Shareholders' equity 31 December Change of foreign currency component Change of price difference in financing of net investment in subsidiaries Total changes in equity not reported in the income statement Transfer between unrestricted and restricted equity Profit for the year Group contribution received Tax effect of Group contribution Shareholders' equity 31 December Change of foreign currency component Change of price difference in financing of net investment in subsidiaries Total changes in equity not reported in the income statement Transfer between unrestricted and restricted equity Profit for the year Group contribution received Tax effect of Group contribution Shareholders' equity 31 December PARENT COMPANY Shareholders Statutory Unrestricted Total (SEK m) equity reserves reserves Shareholders' equity 31 December Profit for the year Group contribution received Tax effect of Group contribution Shareholders' equity 31 December Profit for the year Group contribution received Tax effect of Group contribution Shareholders' equity 31 December HANDELSBANKEN FINANS ANNUAL REPORT 2004 CHANGE IN SHAREHOLDERS EQUITY

9 Cash flow statement Group Parent company (SEK m) OPERATING ACTIVITIES Operating profit Adjustment for items in the operating result which do not affect the cash flow: Credit losses Depreciation and write-downs Paid income tax Change in assets and liabilities of operating activities: Lending to the general public Leasing assets Liabilities to credit institutions Funding from the general public Issued securities Other liabilities and assets Cash flow on operating activities INVESTING ACTIVITIES Change in tangible fixed assets Change in intangible fixed assets Cash flow on investing activities FINANCING ACTIVITIES Subordinated loans Group contribution received Cash flow on financing activities CASH FLOW FOR THE PERIOD Liquid funds at beginning of period Cash flow on operating activities Cash flow on investing activities Cash flow on financing activities Exchange rate difference on liquid funds Liquid funds at end of period CASH FLOW STATEMENT HANDELSBANKEN FINANS ANNUAL REPORT

10 Accounting principles The accounting follows the regulations of the Annual Accounts Act for Credit Institutions and Securities Companies (ÅRKL), the Swedish Financial Accounting Standards Council s recommendations, and the directives issued by Finansinspektionen (the Swedish Financial Supervisory Authority (FFFS 2002:22). Classification of items in the balance sheets and profit and loss accounts follows ÅRKL and Finansinspektionen s accounting regulations. This classification differs from the Swedish Financial Accounting Standards Council s recommendation RR 22 Presentation of Financial Statements. In other respects the format of the annual accounts has not been affected by differences between Finansinspektionen s accounting regulations and the Swedish Financial Accounting Standards Council s recommendations. According to the definitions in RR 25 Segment Reporting, Handelsbanken Finans consists of a single line of business and has accordingly not made any disclosures in accordance with this recommendation. CONSOLIDATED ACCOUNTS The consolidated accounts comprise all companies in which Handelsbanken has a participating interest and directly or indirectly has a controlling influence. Subsidiaries are consolidated using the acquisition accounting method All foreign operations have been classified as independent. This classification is based on the observation that the foreign operations only carry out transactions with the parent company and other Group companies to a small extent, that financing is in local currency only, that salaries and other expenses are paid in local currency, that all billing is done mainly in local currency and that the operations do not have any direct influence on the cash flows of the parent company. When converting the foreign subsidiaries' balance sheets and income statements, the current method has been used. Assets and liabilities have been valued at the rate prevailing on the balance sheet date. Shareholders' equity is converted at the rate applicable at the time of investment or earning. The income statements have been translated at the average annual rate. The resulting translation differences have been classed as shareholders equity. Liabilities which refer to financing of net investment in subsidiaries are valued at the rate prevailing on the balance sheet date as the purpose is to reduce the exchange rate difference which arises when translating the balance sheets and income statements of operations outside Sweden (hedge accounting). The exchange rate difference that arises when translating these liabilities is recorded directly against shareholders equity. Goodwill and surplus value from the acquisition of foreign operations are reported at the rate prevailing on the balance sheet date. VALUATION OF ASSETS AND LIABILITIES IN FOREIGN CURRENCIES Receivables and liabilities in foreign currencies were converted at the rate applying on the balance sheet date, which is the average of buying and selling prices for the currency in question according to the officially listed rates on the balance sheet date. Unrealised gains or losses which have arisen as a result of the aforementioned valuation method are credited or charged to the operating result. In the parent company, liabilities raised for the purpose of hedging exchange rate differences in net investment in subsidiaries are recorded at the price applicable on acquisition. FINANCIAL INSTRUMENTS The acquisition price of fixed interest discount instruments is the accrued acquisition price. This price is the discounted present value of future payments where the discount interest rate represents the effective rate of interest at the time of acquisition. Fixed interest discount instruments are reported in the balance sheet under issued securities. Equities which are held on a permanent basis are classified as Financial fixed assets and are reported at acquisition value. For equities where the value has fallen and this decline in value is considered to be permanent, a write-down is made. Derivative instruments are valued at market value. An exception is made for derivative transactions which are hedging balance-sheet items that have not been given a market value. If the hedge is considered to represent an effective protection against unfavourable changes in value, i.e. the changes in value of the hedged instrument are balanced by corresponding changes in value of the hedging instrument, the derivative transaction is reported using the accounting principles which apply to the hedged transaction. LENDING Lending to the general public and credit institutions is classified as financial fixed assets and is reported on the balance sheet on the settlement date at acquisition value. Leasing agreements in which the lessee substantially bears the economic risks and acquires the rewards associated with ownership of the asset are also reported as lending in the Group. Loans which represent bad debts are reported on the balance sheet at their net amount, i.e. after deduction for probable and actual credit losses. INTANGIBLE ASSETS An intangible asset is an identifiable, non-monetary asset without physical substance that is held for use in production, supply of goods or services, for hiring out to others or for administrative purposes. An asset is a resource that is expected to provide future economic benefit over which there is control as a result of past events. In case of company acquisition, an acquisition balance sheet is prepared where identifiable assets and liabilities are valued at fair value at the time of acquisition. The part of the acquisition price which cannot be attributed to identifiable assets and liabilities is reported as goodwill. Internally accrued values in the form of goodwill, trademarks, publishing rights, registers of customers and similar are not reported as assets in the balance sheet. Investments in both software developed by the Bank and acquired software are carried as an expense on a current basis where the expenditure refers to maintenance of existing business operations or an existing intangible asset. In the case of development of new intangible assets, or new business operations for existing intangible assets, the direct expenditure accrued is capitalised from the time when it is probable that economic benefit that can be reliably measured will arise. For capitalisation of expenses referring to existing intangible assets there is the additional requirement that the economic benefits must clearly exceed the economic benefits that were associated with the existing asset in its original state. A review of write-down requirements is made when there is any indication that the asset may have decreased in value. TANGIBLE ASSETS Tangible assets are recorded at acquisition value. A review of write-down requirements is made if there is any indication of a decrease in value. LOAN COSTS Loan costs are normally carried as expenses on a current basis. Where the expenditure refers to intangible assets developed in-house, the expenditure is capitalised from the date on which a decision is made to capitalise development costs. DEPRECIATION Leasing assets Leasing assets are depreciated in accordance with the annuity method. Total depreciation during the base period of the contract corresponds to the acquisition price of the asset. When the supplier or another party secures a future residual value or when a sale can be made in an active secondary market, depreciation is made during the base period to a prudently calculated residual value according to plan. The original depreciation is made according to an individual plan for each asset. Equipment Equipment is depreciated on a straight-line basis over the useful life of the asset. This implies that personal computers are depreciated over three years and other equipment over five years. Intangible assets Goodwill from acquisitions with long-term strategic significance is amortised on a straight-line basis over 20 years. Other goodwill is amortised on a straight-line basis during the estimated useful period, normally five years. Other immaterial assets are amortised during the estimated useful period. INCOME Income is reported in the income statement when it is probable that the future economic benefits will be enjoyed and these benefits can be reliably measured. CREDIT LOSSES Actual credit losses for the year, probable credit losses and write-offs of interest shown as income in previous annual accounts are reported as credit losses. Lending is reported net, after deduction of actual credit losses and probable credit losses. Any part of a loan receivable where there is no realistic possibility of recovery is reported as an actual credit loss. This is the case, for example, when a trustee in bankruptcy has estimated bankruptcy dividends, a scheme of arrangement has been accepted or the claim has been reduced in some other way. An amount forgiven in connection with a reorganisation is always reported as an actual loss. A write-down for probable credit losses is made if the value of the collateral together with other payments from the counterparty do not cover the book value of the loan receivable. Write-downs are made down to the amount which is expected to be realised, taking into account the value of the collateral. For collectively valued homogeneous groups of loan receivables, mainly comprising card credits and small consumer credits, where a debt collection process has begun, an allocation to credit loss provisions is made, the amount of which is calculated based on past experience. Apart from the risk assessment for individual loan receivables which is made quarterly, an assessment of homogenous groups of loan receivables is made. This takes into account whether there have been credit losses in these groups of loan receivables which cannot yet be allocated to an individual credit. If necessary, a group provision is made for these loan receivables. As soon as the debt can be individually identified, the provision is transferred to probable credit losses. Unpaid interest on non-performing credits where the value of the collateral does not cover the principal amount and the accrued interest by a satisfactory margin is not taken up as income. Interest on these credits that was reported as income but not paid during the accounting year is reversed. Interest payments received thereafter in respect of this type of credit are reported in the year of receipt. PROVISIONS Provisions are reported as a consequence of past events when it is probable that an outflow of resources will be required to settle the obligation. The provision is recorded in the amount estimated to be most probable taking into account the time of settlement. WRITE-DOWNS This section describes the criteria applied to write-downs of tangible and intangible assets as well as shares in subsidiaries. Write-downs are reported when the recovery value is less than the book value. The recovery value is calculated as the higher of an asset s value in use or net realisable value. The recovery value is determined when there is an indication that the asset has fallen in value. LEASES Leases are normally defined as finance or operating leases. A finance lease implies that the lessor transfers substantially all the risks and rewards incident to ownership to the lessee. Operating leases are all other leases. The Swedish Financial Accounting Standards Council s recommendation on leases allows a lessor the right to classify all leases as operating leases in his annual accounts. This classification has been used in the parent company s annual accounts. The income is thus reported as leasing income. The assets are recorded as fixed assets, thus permitting the parent company to depreciate them. In the Group, all leases are categorised as finance leases except leases signed prior to 1997 which are reported as operational leases. Finance leases mean that the lease contracts are reported as lending. The income is reported as interest income. TAXES The tax expense for the period consists of current tax and deferred tax. Current tax refers to taxes relating to the period s taxable result. Deferred tax claims and liabilities are taxes based on temporary differences between the value of an asset or liability in the accounts and its taxable value or loss carryforwards. 10 HANDELSBANKEN FINANS ANNUAL REPORT 2004 ACCOUNTING PRINCIPLES

11 Notes to income statement and balance sheet Amounts in SEK million unless otherwise specified. NOTE 1: INTEREST INCOME AND INTEREST EXPENSE INTEREST INCOME Credit institutions General public Other interest income INTEREST EXPENSE Credit institutions General public Issued securities Subordinated liabilities Other interest expense Average interest rate for lending to the general public 4.7% 5.3% 8.4% 9.2% Net interest income (Interest income+leasing income- Interest expense-leasing depreciation) Interest spread 2.4% 2.4% 2.1% 2.1% Interest income from Group companies Interest expense to Group companies NOTE 2: LEASING INCOME Leasing income, gross Leasing depreciation according to plan Total net leasing income Of which received from Group companies Leasing depreciation is reported under the note for Depreciation and write-downs of tangible and intangible fixed assets. NOTE 3: COMMISSION INCOME AND COMMISSION EXPENSE COMMISSION INCOME Lending commission Leasing and factoring commission COMMISSION EXPENSE Payment commission Leasing and factoring commission NOTE 4: STAFF COSTS Salaries and renumeration Social security charges Pension costs 1) Allocation to profit-sharing foundation Other staff costs ) Pension costs refer to costs paid to the Svenska Handelsbanken Pension Fund Insurance Association for contractual defined-contribution pension insurance. Salaries and other remuneration Board, chief executive, Other senior managers Sweden Finland Denmark Norway Great Britain Others Sweden Finland Denmark Norway Great Britain Total GROUP Number of employees (average during year) Sweden Finland Denmark Norway Great Britain Distribution men/women men women men women Sweden Finland Denmark Norway Great Britain Gender distribution % men women men women Board Chief executive Other senior managers Sickness absence rate in the Swedish operations % Age men women Total men women Total , Total Of whom on long-term sick leave, percentage of total sickness absence Total Terms and remuneration of senior management Terms: Handelsbanken Finans has no agreements on severance pay. The chief executive of Handelsbanken Finans has a retirement age of 60. Other senior managers have a retirement age of 65. Between the ages of 60 and 64, the retirement pension is 65% of their salary. From the age of 65, the pension is 10% of the annual salary up to 7.5 index-linked base amounts. They also receive a pension under the general national insurance scheme. A retirement pension of 65% is paid on the portion of the salary in excess of 7.5 index-linked base amounts. Other senior managers are the chief executives/ country managers of subsidiaries and branches and the management group of Handelsbanken Finans. Remuneration: In 2004, remuneration and other benefits amounting to SEK 2.1m (1.9) were paid to the chief executive, of which other benefits were SEK 0.2m (0.1). The chairman of the board has not received any remuneration from the company. The other fourteen (14) senior managers have received remuneration and other benefits amounting to SEK 11.9m (11.5). SEK 1.0m (0.9) of this amount was other benefits. No variable bonuses are paid. Pensions: SEK 1.0m (0.8) of the Group s pension costs are in respect of the chief executive and SEK 1.9m (1.7) for the other fourteen (14) senior managers. The chairman of the board has not received any pension from the company. NOTES HANDELSBANKEN FINANS ANNUAL REPORT

12 NOTE 5: OTHER ADMINISTRATIVE EXPENSES Premises External IT costs Communication expenses Travel and marketing expenses Purchased services Supplies Other expenses Auditing costs Audit Consulting Audit Consulting External auditing KPMG Bohlins AB PricewaterhouseCoopers AB/ BDO Feinstein Revision AB Internal audit NOTE 6: DEPRECIATION AND WRITE-DOWNS Equipment Leasing assets Goodwill Other depreciation and write-downs NOTE 7: CREDIT LOSSES, LENDING TO THE GENERAL PUBLIC Individually valued loan receivables The year's write-off for actual credit losses Write-back of previous provisions for possible credit losses which are reported as actual credit losses in the year's accounts The year's provision for probable credit losses Paid in from actual losses in previous years Write-back of provisions for probable credit losses which are no longer necessary Net expense for the year for individually valued loan receivables Provision by group for individually assessed loan receivables Allocation to/dissolution of provision by group Collectively assessed homogenous groups of loan receivables The year's write-off for actual credit losses Paid in from actual losses in previous years Allocation to/dissolution of reserve for credit losses Net expense for the year for collectively assessed homogenous loan receivables Net expense for the year for credit losses According to Finansinspektionen s accounting directives, receivables which individually have been assessed as being posted at the correct value must also be assessed as to whether there may be a requirement for making a provision for probable loan losses for these receivables valued as a group. Over and above the risk assessment of individual loan receivables made quarterly by all units with customer and credit responsibility in the Group, no such requirement for provision for the receivables as a group has been identified. NOTE 8: APPROPRIATIONS Change in tax allocation reserve Depreciation in excess of plan, goodwill on the purchase of net assets -5-8 Depreciation in excess of plan, leasing assets NOTE 9: TAXES Current tax Tax for the period Adjustment of tax attributable to previous years Tax effect of Group contribution Deferred tax Change in temporary differences Nominal tax rate in Sweden % Deviations Goodwill amortisation Tax attributable to reassessment Appropriations Effects of foreign taxes and other Effective tax rate The tax authority has lodged objections for depreciation made during the financial years on leasing assets acquired in During the year, Handelsbanken Finans has reported as an expense tax debited in accordance with the tax authority s review decision for the 2002 tax assessment and has made a provision for an anticipated increase in tax for the 2004 and 2005 assessments. Handelsbanken Finans has won the case regarding this issue in the County Administrative Court for the assessments. As a result of the rulings, the tax authority has repaid the tax but for reasons of prudence, Handelsbanken Finans has entered the amounts as liabilities, i.e. not taken them up as income, since the tax authority has appealed the ruling of the County Administrative Court. Regarding the 2003 assessment, the issue is still pending a decision from the County Administrative Court. Handelsbanken Finans has also claimed settlement for tax paid abroad for the financial years. To date, the tax authority has refused settlement, but has allowed a cost deduction for the same amount which has had a deduction effect of 28%. The tax authority s decision has been supported by the County Administrative Court and Handelsbanken Finans has appealed this to the Administrative Court of Appeal. For contingent assets relating to tax disputes see page 16. NOTE 10: LENDING TO CREDIT INSTITUTIONS Banks, in Swedish kronor Banks, in foreign currencies Of which fixed assets Of which claims on Group companies Information concerning maturities Payable upon demand Remaining maturity: maximum three months Remaining maturity: over three months but maximum one year Remaining maturity: over one year but maximum five years Remaining maturity: over five years Total lending to credit institutions Average remaining maturity (months) HANDELSBANKEN FINANS ANNUAL REPORT 2004 NOTES

13 NOTE 11: LENDING TO THE GENERAL PUBLIC General public, in Swedish kronor General public, in foreign currencies Total Probable credit losses Total lending to the general public Of which fixed assets Of which current assets Repossessed property Provision for probable losses Book value of repossessed property Information concerning maturities Payable upon demand Remaining maturity: maximum three months Remaining maturity: over three months but maximum one year Remaining maturity: over one year but maximum five years Remaining maturity: over five years Total Average remaining maturity (months) LENDING TO THE GENERAL PUBLIC ACCORDING TO CATEGORY GROUP Loan receivables Provisions Swedish counterparties Private individuals Municipalities and county councils Agriculture and forestry Manufacturing Construction Retailing Transport Property management Others Non-Swedish counterparties Total BAD DEBTS ETC Lending to credit institutions, the general public, leasing assets and other assets Bad debts Specific provisions for individually valued loan receivables Provisions for collectively valued homogenous groups of loan receivables with limited value Bad debts, net Bad debt reserve ratio 60.8% 59.6% 64.6% 58.0% Proportion of bad debts 0.20% 0.23% 0.12% 0.17% BOOK VALUE OF RESTRUCTURED AND RECLASSIFIED LOAN RECEIVABLES Restructured loan receivables before restructuring Restructured loan receivables after restructuring Doubtful loan receivables which during the period have regained the status of normal receivables DETAILS ON GROSS INVESTMENTS AND PRESENT VALUE OF CREDITS CONCERNING FUTURE MINIMUM LEASING CHARGES Gross investment Present value of credits concerning future minimum leasing charges as at balance sheet date DISTRIBUTION OF GROSS INVESTMENT AND MINIMUM LEASING CHARGES ON MATURITY DATES Within Between 1 Later than Total 1 year and 5 years 5 years Distribution of gross investment Distribution of minimum leasing charges using present value computation Non-earned financial income SEK 1 799m Non-guaranteed residual values accruing to the lessor All Handelsbanken Finans' leasing agreements have guaranteed residual values. Reserve for bad debts concerning minimum lease charges The book value of the provision for bad debts with respect to minimum leasing charges is SEK 6.7m Variable part of leasing charges which are included in the period's results SEK -177m for 2004, owing to lower interest rates in 2004 compared to Major lease contracts The largest individual leasing exposure is worth SEK 6.8bn, corresponding to 18.1% of the Handelsbanken Finans Group's total credit volume as at 31 December NOTES HANDELSBANKEN FINANS ANNUAL REPORT

14 NOTE 12: SHARES AND PARTICIPATIONS IN GROUP COMPANIES Shares in Swedish credit institutions 0 0 Shares in foreign credit institutions Shares in other foreign subsidiaries Of which fixed assets SHARES AND PARTICIPATIONS IN GROUP COMPANIES Number of Book Parent comshares value pany s share SEKm of capital % FOREIGN CREDIT INSTITUTIONS Handelsbanken Rahoitus Oyj (Helsinki) Handelsbanken Finans AS (Oslo) Collector Inkasso AS (Bergen) Spartacus A/S (Nykøbing Mors) OTHER SWEDISH SUBSIDIARIES Kredit-Inkasso AB (Stockholm) Total NOTE 13: GOODWILL Acquisition value Total acquisition value Accumulated amortisation at beginning of year Amortisation for the year Accumulated amortisation at end of year Foreign currency effect Residual value according to plan Of which fixed assets The possible need for amortisation has been examined. NOTE 14: EQUIPMENT Acquisition value at beginning of year Acquisition value of new assets Acquisition value of assets sold during the year Total acquisition value Accumulated depreciation according to plan at beginning of year Depreciation for the year Accumulated depreciation of assets sold during the year Total depreciation and write-downs NOTE 15: LEASING ASSETS Acquisition value at beginning of year Acquisition value of new assets Acquisition value of assets sold during the year Total acquisition value Accumulated depreciation according to plan at beginning of year Depreciation for the year Write-downs for the year Accumulated write-downs Accumulated depreciation of assets sold during the year Total depreciation and write-downs Residual value according to plan Of which fixed assets Of which current assets Accumulated depreciation in excess of plan Net value after depreciation in excess of plan Repossessed property Provision for probable losses Book value of repossessed property SEK 491m (1,518) of the parent company's acquisition value is leasing contracts where the basic leasing period has not started. NOTE 16: OTHER ASSETS Accounts receivable Probable loan losses Prepaid tax Claim on parent company, Group contribution Other Of which current assets NOTE 17: PREPAYMENTS AND ACCRUED INCOME Accrued interest income Other accrued income Prepaid expenses Residual value according to plan Of which fixed assets HANDELSBANKEN FINANS ANNUAL REPORT 2004 NOTES

15 NOTE 18: LIABILITIES TO CREDIT INSTITUTIONS Banks, in Swedish kronor Banks, in foreign currencies Other credit institutions, in foreign currencies Of which Group companies INFORMATION CONCERNING MATURITIES Payable upon demand Remaining maturity: maximum three months Remaining maturity: over three months but maximum one year Remaining maturity: over one year but maximum five years Remaining maturity: over five years Total Average remaining maturity (months) NOTE 19: FUNDING FROM THE GENERAL PUBLIC Funding from the general public in Swedish kronor Funding from the general public in foreign currency INFORMATION CONCERNING MATURITIES Payable upon demand Remaining maturity: maximum three months Remaining maturity: over three months but maximum one year Remaining maturity: over one year but maximum five years Remaining maturity: over five years Total Average remaining maturity (months) NOTE 20: ISSUED SECURITIES Bond loans, in foreign currency Total Of which liabilities to Group companies INFORMATION CONCERNING MATURITIES Remaining maturity: maximum one year Remaining maturity: over one year but maximum five years Remaining maturity: over five years but maximum ten years Remaining maturity: over ten years Total NOTE 21: OTHER LIABILITIES Accounts payable Others NOTE 22: ACCRUALS AND DEFERRED INCOME Accrued interest expense Other accrued expenses Deferred income NOTE 23: PROVISION FOR DEFERRED TAXES Deferred tax claim Equipment Other Deferred tax liability Equipment Tax allocation reserve Goodwill Net deferred tax liability CHANGES IN DEFERRED TAX GROUP Reported Opening via income Other Closing balance statement changes balance Equipment Tax allocation reserve Goodwill Other NOTE 24: SUBORDINATED LIABILITIES Subordinated loans in foreign currencies Of which liabilities to Group companies Specification, subordinated loans, Group Year of issue/ Original Interest Outstanding maturity nominal rate amount amount % SEK m 1995/2005 NOK 44 Float 44 Total foreign currency 44 Average remaining maturity (months) NOTES HANDELSBANKEN FINANS ANNUAL REPORT

16 NOTE 25: UNTAXED RESERVES Accumulated depreciation in excess of plan Leasing assets Goodwill on the purchase of net assets Tax allocation reserve NOTE 26: SHAREHOLDERS' EQUITY Unres- Profit Restricted tricted for the Group Equity reserves reserves year Total Opening shareholders' equity according to adopted balance sheet Shift between restricted and unrestricted equity Change of price difference in financing of net investment in subsidiaries Change of foreign currency component Group contribution received Tax effect of Group contribution Profit for the year Closing shareholders' equity Unres- Profit Statutory tricted for the Parent company Equity reserve reserves year Total Opening shareholders' equity Group contribution received Tax effect of group contribution Profit for the year Closing shareholders' equity Share capital: 1,550,000 shares at nominal SEK 100 each The parent company's equity share of untaxed reserves is SEK 9,263m. NOTE 27: OTHER COMMITMENTS Interest rate swaps (nominal) Interest-rate related contracts Credits granted but not yet drawn Other commitments Total commitments Contracted future leasing charges stating the periods during which they fall due for payment Total Other disclosures CONTINGENT ASSETS AND CONTINGENT LIABILITIES Handelsbanken Finans is currently conducting a number of tax disputes. The total amount in dispute is approximately SEK 288m excluding interest. Handelsbanken Finans has partly won the cases in the County Administrative Court and the tax authority has repaid some SEK 220m. For reasons of prudence, Handelsbanken Finans has entered the amounts as liabilities, i.e. not reported them as income, since the tax authority has appealed the ruling of the County Administrative Court. This item is included in Others under note 21, Other liabilities. Handelsbanken Finans is not involved in any disputes which qualify as contingent liabilities. DISCLOSURES ABOUT FAIR VALUE The balance sheet has been valued by comparing book value with a discounted present value (fair value). In this respect, no significant discrepancy was found. GEOGRAPHIC DISTRIBUTION OF INCOME Group Sweden Finland Denmark Norway UK Total Interest income Leasing income Commission income Net result on financial operations Other operating income Total income Parent company Sweden Finland Denmark Norway UK Total Interest income Leasing income Commission income Net result on financial operations Other operating income Total income BAD DEBTS ACCORDING TO CATEGORY Non-performing Bad debts Provision Bad debts Group Credits Provision gross Collective Individual net Private individuals Construction Retailing Manufacturing Transport Other Total HANDELSBANKEN FINANS ANNUAL REPORT 2004 NOTES AND OTHER DISCLOSURES

17 INTEREST RATE RISKS Interest rate adjustment periods for assets and liabilities, 31 December 2004 Group -3 m 3-6 m 6-12 m 1-5 y 5 y- Total Lending to credit institutions Lending to the general public and leasing assets Total interest-bearing assets Liabilities to credit institutions Funding from the general public Issued securities Total interest-bearing liabilities Off-balance-sheet items, net Difference assets and liabilities including off-balance-sheet items Accumulated difference Accumulated difference as a percentage of total assets 34% 31% 30% 30% 30% Parent company -3 m 3-6 m 6-12 m 1-5 y 5 y- Total Lending to credit institutions Lending to the general public and leasing assets Total assets Liabilities to credit institutions Funding from the general public Total liabilities Off-balance-sheet items, net Difference assets and liabilities including off-balance-sheet items Accumulated difference Accumulated difference as a percentage of total assets 30% 27% 26% 26% 26% CAPITAL ADEQUACY ANALYSIS Capital base Tier 1 capital Tier 2 capital 43 - Total Capital requirement Risk-weighted amount, credit risks (and volume before risk-weighting) Group A (0%) 0 (34 084) 0 (34 980) Group B (20%) 7 (36) 1 (7) Group C (50%) 4 (7) 4 (7) Group D (100%) (15 470) (11 494) Total risk-weighted amount (49 597) (46 488) Capital ratio, % ASSETS AND LIABILITIES IN FOREIGN CURRENCY Other Group USD EUR DKK NOK GBP currencies Assets Lending to credit institutions Lending to the general public Liabilities Liabilities to credit institutions Deposits and funding from the general public Issued securities Subordinated liabilities Other assets and liabilities Net foreign currency positions OTHER DISCLOSURES HANDELSBANKEN FINANS ANNUAL REPORT

18 Changeover to new IAS-IFRS accounting standards From 1 January 2005, listed companies in the EU must harmonise their consolidated accounts with the accounting standards of the IASB (International Accounting Standards Board). Handelsbanken Finans, which is not a listed company, has elected to apply the IAS/IFRS standards in its consolidated accounts starting in Applied accounting principles have been harmonised with the accounting recommendations (IAS or IFRS) which the IASB has issued and the EU has adopted. Work is ongoing within the EU to adopt further accounting standards. In addition, work is ongoing within the IASB to adapt IAS 39 (classification and measurement principles for financial assets and liabilities), partly so that the EU is able to approve the recommendation in its entirety. It is still unclear when this harmonisation work will be completed, and whether further accounting standards will be adopted by the EU in Thus the expected effects on opening shareholders equity in 2005 are preliminary. Therefore, minor adjustments to the effects on earnings and shareholders equity stated here may be made before the annual accounts for 2005 are adopted. The impact on opening shareholders equity is SEK 79m. A summary of the main effects is shown in the tables below. CHANGES IN ACCOUNTING PRINCIPLES Consolidated financial statements New standards for establishing acquisition balance sheets have been applied. The most important changes are that the acquisition balance sheet must be more detailed than in the past and that goodwill is no longer amortised. In future, acquisition balance sheets must include all types of intangible assets which can be distinguished and valued separately, reported at the assessed fair values. This must be performed in the acquisition balance sheet without fulfilment of the normal requirements where intangible assets should be recognised as assets. The intangible assets must be divided into assets with a definable useful life and assets with an indefinable useful life. The latter category also includes goodwill. For intangible assets without a definable useful life, no amortisation is to be made. Another new feature is that various types of offbalance sheet commitments (such as ongoing legal disputes) must be recognised as a liability in the balance sheet at an assessed fair value. For acquisitions before 2004, the acquisition balance sheets have been reviewed in order to identify intangible assets which could not be recognised as assets according to the old accounting standards. This review has not identified any new intangible assets in the old acquisition balance sheets. Goodwill and other intangible assets The previous accounting regulations assumed that goodwill and other intangible assets did not have a useful period exceeding 20 years. This assumption has now been removed, and goodwill must not be amortised in the future. Intangible assets are to be divided up into two main categories: those with an indefinable useful life, and those for which a useful life may be assessed. Those for which a useful life may be assessed are subject to amortisation in the same way as before. There should be regular reassessment of whether the set period of useful life is still reasonable, and of whether there are indications that the asset s value in use may have dropped below the booked residual value. For assets with an indefinable useful life, an impairment test must be carried out at least once a year. Classification and measurement principles for financial assets and liabilities The previous accounting standard (RR 6:99) allowed for financial leasing agreements entered into before 1997 to be recognised as leasing assets while agreements entered into after this date are recognised as lending. According to IAS 17, financial leasing agreements must be recognised as lending regardless of when the agreement was entered into. The EU-adapted version of IAS 39 has been adopted. Figures from previous years are not revised. Instead, the effect of the revaluation of financial assets and liabilities is recognised directly against shareholders equity. Hedge accounting Previously, hedge accounting packages were recognised either at amortised cost or fair value. IAS 39 stipulates that derivatives are always recognised at fair value, even in cases where they are designated as hedging instruments. Hedge accounting is now divided into two hedge categories depending on the purpose of the hedge: fair value hedges or cash flow hedges. At Handelsbanken only cash flow hedges are used. In the case of cash flow hedges, the derivatives are recognised at fair value while the hedged item is carrried at amortised cost. For the effective portion of hedges, the change in value of the derivative is recognised in equity. An effective hedge means that the cash flows on the hedged item correspond to the cash flows in the hedging instrument. The ineffective portion of the derivative s change in fair value is recognised directly in the income statement. The change in fair value is then transferred from equity to the income statement at the same rate as the cash flows of the hedged item are recognised in the income statement. Impact on shareholders equity from changeover to IAS/IFRS SEK m Shareholders equity Closing balance 2004 according to annual report for Impact in 2004 of changeover to IFRS: Reversal of goodwill amortisation 6 Recalculated closing balance Changes in opening equity 2005 due to changeover to IAS 39: Net impact of changeover to measuring at fair value according to IAS Opening balance 2005 after recalculation Main impact on items in the income statement and balance sheet 2004 accor Impact of ding to adopted according to changed balance sheet new accounting accounting and income SEK m principle principles statement INCOME STATEMENT Net interest income Leasing income Net commission income Other income Total income Other costs Depreciations and writedowns of tangible and intangible assets Total expenses Credit losses Operating profit Taxes Profit for the year BALANCE SHEET Lending to credit institutions Lending to the general public Goodwill Equipment Leasing assets Other assets Total assets Liabilities to credit institutions Funding from the general public Other liabilities Shareholders equity Total liabilities and shareholders equity The main impact relating to 2004 is the reclassification of financial leasing agreements entered into before These are classified as operational leasing agreements which means that net leasing income is transferred to net interest income. Net interest income thus increases by SEK 56m compared to the adopted income statement, comprising leasing income of SEK 176m and leasing depreciation of SEK -120m. Net interest income is also affected by the transfer of arrangement fees from net commission income and other income, totalling SEK 74m In the balance sheet, the reclassification of leasing agreements has led to a transfer from leasing assets to lending to the general public amounting to SEK 854m. An adjustment has also been made of amortised arrangement fees for SEK 35m from accruals and deferred income to prepayments and accrued income. This has been done so that the book value of the loan is equivalent to the amortised cost value. Depreciations and writedowns of tangible and intangible assets are also affected by goodwill no longer being amortised. The Group s profits rise by a total of SEK 6m relating to the reversal of goodwill amortisation for the year. This has affected both goodwill and shareholders equity in the balance sheet. 18 HANDELSBANKEN FINANS ANNUAL REPORT 2004 NEW ACCOUNTING STANDARDS

19 Proposed distribution of earnings The Group's unrestricted equity according to the consolidated balance sheet is SEK 1,455 million. No allocations to restricted reserves are required. The amount at the disposal of the annual general meeting according to the balance sheet for the parent company is: Profit brought forward SEK 621,834,812 Profit for the year SEK -657,272,129 SEK -35,437,317 The board of directors recommends that the accumulated deficit of SEK 35,437,317 be carried forward. Stockholm, 21 February 2005 THOMMY MOSSINGER JAN LÖFGREN PETRI HATAKKA LENNART FRANCKE BJÖRN G. OLOFSSON M. JOHAN WIDERBERG Chairman Employee representative Audit report To the general meeting of the shareholders of Handelsbanken Finans AB (publ) Corporate identity no We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board of directors and the chief executive of Handelsbanken Finans AB (publ) for the year These accounts and the administration of the company and the application of the Annual Accounts Act for Credit Institutions and Securities Companies when preparing the annual accounts and the consolidated accounts are the responsibility of the board of directors and chief executive. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit. We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. During the year, the internal auditing department of Handelsbanken has continuously examined the internal controls and accounts. We have received the reports that have been prepared. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the board of directors and the chief executive and significant estimates made by the board of directors and the chief executive when preparing the annual accounts and consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the chief executive. We also examined whether any board member or the chief executive has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act for Credit Institutions and Securities Companies or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below. The annual accounts and the consolidated accounts have been prepared in accordance with the Annual Accounts Act for Credit Institutions and Securities Companies, and thereby give a true and fair view of the company's and the Group's financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts. We recommend to the general meeting of shareholders that the income statements and balance sheets of the parent company and the Group be adopted, that the loss of the parent company be dealt with in accordance with the proposal in the directors report and that the members of the board of directors and the chief executive be discharged from liability for the financial year. Stockholm, 15 March 2005 YONNIE BERGQVIST Chief Executive KPMG Bohlins AB Stefan Holmström Authorised Public Accountant Ulla Nordin Buisman Authorised Public Accountant Appointed by Finansinspektionen (the Swedish Financial Supervisory Authority) PROPOSED DISTRIBUTION OF EARNINGS AND AUDIT REPORT HANDELSBANKEN FINANS ANNUAL REPORT

20 Five-year summary (SEK m) PARENT COMPANY INCOME STATEMENT Leasing income Other operating income Total operating income Expenses Credit losses Total operating expenses Operating profit Appropriations Taxes Profit for the year BALANCE SHEET ASSETS Lending to credit institutions Lending to the general public Equipment Leasing assets Other assets Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities to credit institutions Funding from the general public Issued securities etc Other liabilities Total liabilities Untaxed reserves Shareholders' equity Total liabilities and shareholders' equity Income statements and balance sheets have been adjusted to take into account current accounting principles 20 HANDELSBANKEN FINANS ANNUAL REPORT 2004 FIVE-YEAR SUMMARY

21 (SEK m) GROUP INCOME STATEMENT Leasing income 1) Other operating income 1) Total operating income Expenses Credit losses Total operating expenses Operating profit Taxes Profit for the year BALANCE SHEET ASSETS Lending to credit institutions Lending to the general public 1) Equipment Leasing assets 1) Other assets Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities to credit institutions Funding from the general public Issued securities etc Other liabilities Total liabilities Shareholders' equity Total liabilities and shareholders' equity ) Financial leasing agreements initiated 1997 and later have been reported at Group level as Lending to the general public instead of as Leasing assets. No changes were made with respect to contracts from previous years. SUPPLEMENTARY DISCLOSURES GROUP INCOME STATEMENT FIVE-YEAR SUMMARY. In order to provide a comparable view of the Handelsbanken Finans Group s income and expenses performance, the following supplementary disclosures are provided: In the following five-year summary, both financial and operating leasing income and leasing depreciation are reported net in the Group s income. In the above five-year summary, which is prepared in accordance with sound accounting practices, operating leases are reported gross, i.e. leasing income under income and leasing depreciation under expenses. GROUP Income Costs Credit losses Operating profit Taxes Profit for the year FIVE-YEAR SUMMARY HANDELSBANKEN FINANS ANNUAL REPORT

22 Addresses Handelsbanken Finans AB in Sweden Postal address: SE Stockholm Sweden Telephone: Fax: Street address: Mäster Samuelsgatan 42 handelsbankenfinans@handelsbanken.se Handelsbanken Finans branch in Denmark Vestergade 2, DK-7430 Ikast Denmark Telephone: Fax: handelsbankenfinans.dk@handelsbanken.dk Solbjergvej 10, DK-2000 Frederiksberg Denmark Telephone: Fax: handelsbankenfinans.dk@handelsbanken.dk Spartacus A/S Postal address: Postboks 32, DK-7900 Nykøbing Mors Denmark Telephone: Fax: Street address: Kirketorvet mail@spartacus.dk Handelsbanken Finans branch in Finland and Handelsbanken Rahoitus Oyj Postal address: PB 900, FI Helsinki Finland Telephone: Fax: Street address: Glogatan 6 A myyjayhteistyo@handelsbanken.fi Handelsbanken Finans branch in Norway and Handelsbanken Finans AS Postal address: Postboks 1342 Vika, NO-0113 Oslo Norway Telephone: Fax: Street address: Rådhusgaten 27 leasing@handelsbanken.no salgsfinansiering@handelsbanken.no Handelsbanken Finans branch in Great Britain Trinity Tower 9 Thomas More Street London E1W 1GE Great Britain Telephone: Fax: handelsbankenfinansuk@handelsbanken.se Design and production: Kai Petri/Handelsbanken Finans Copy and translation: Handelsbanken Finans/Handelsbanken Photography: Pelle Nilsson/Matton Printed by: Redners, Stockholm HANDELSBANKEN FINANS ANNUAL REPORT 2004 ADDRESSES

23 Handelsbanken Finans