Handelsbanken Anders Bouvin

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1 [FOTO] Handelsbanken Anders Bouvin EVP, Head of UK Local responsibility Low credit Low costs risks Satisfied customers CA CHEUVREUX Pan Europe Forum SHB s market 16 May 2011 in London

2 Business model Financial goal focus on profitability To have a higher return on equity than a weighted average of comparable listed Nordic and British banks by having more satisfied clients and lower costs than peers Decentralisation Non-negotiable The branch is the bank No bonus Credit policy Business control system Responsibility and Accountability Customer Other features No central marketing No budget Focus on profitability not volumes Organic growth Not a mass market bank Minimise risks no macro bets 2

3 Organisation Central departments and administrative functions Central business areas and product owners Regional head offices Branches Customer

4 Handelsbanken s strengths For the past 39 years, the bank has had higher profitability than the average of its competitors Since the first independent survey was made in 1989, Handelsbanken has had the highest level of customer satisfaction of the four largest banks in Sweden For many years, Handelsbanken has been one of the most cost-efficient universal banks in Europe For a long time, Handelsbanken has had lower loan losses than its competitors 4

5 CDS levels bps y Senior CDS bps Sovereign 5y CDS Source: Reuters May 6, 2011

6 Handelsbanken has five home markets No. of branches: Sweden 461 UK 99 Denmark 54 Umeå. Finland 45 Norway 50 Oslo. Gävle.. Stockholm Helsingfors..Linköping. Göteborg Manchester..Birmingham. London. Köpenhamn.. Malmö

7 Branch operations in the UK 99 branches (incl. recruited managers) 7 new branches opened during the first quarter of 2011 (On average, a new branch is opened every tenth banking day) 99 branches, 24 new branches in past 12 months A 3rd British regional bank was started, based in Birmingham Joint management organisation in London 7

8 The Competition UK COMPETITION HANDELSBANKEN Centralised Decentralised Hierarchical Flat structure Volume Return Restructuring Proven structure Product driven Relationship driven High cost base Costs under control

9 Key elements of Handelsbanken s UK growth Selecting the right customers Better cash flow Than avarage The Branch is the Bank Relationships not transactions Universal banking Applying the long-term approach No internal targets (products, volumes etc.) No bonuses

10 The most satisfied customers in the UK Customer satisfaction Individual Customers Customer Satisfaction 2009 Corporate Customers Source: EPSI Rating 2009.

11 Branch operations in the UK Number of Branches* Mar'11 * Including branch managers recruited for new branches to be opened.

12 Huddersfield Branch an example Opened January 2008 with 4 staff Now 6 staff with banking experience of 160 years All staff live locally SME town with population of 150,000 Broke even in 18 months No. of customers

13 Income and expenses trend, new opened branches in Great Britain Refers to the average of 80 branches opened in Great Britain :Q1 SEK m per branch No. of branches opened Income, average Expenses, average yr 0 yr 1 yr 2 yr 3 yr 4 yr 5 yr 6 yr 7 yr 8 Years of operations 0 13

14 Branch operations in the UK, total income last 8 quarters m GBP 40 Total income, in local currency Q Q Q Q Q Q Q Q1 14

15 Branch operations in the UK, Profit before losses last 8 quarters m GBP Q2 Profit before loan losses, in local currency 2009 Q Q Q Q Q Q Q1 15

16 It s really a matter of basic banking Low credit risks i k Low costs Local responsibility Satisfied customers SHB SHB s market

17 but with a modern growth strategy A mature branch covers its market and generates a surplus which is used to open new branches which gradually cover their markets and generate new surpluses Surplus Surplus Repeatable Cost-effective Scaleable Low risk 17

18 Q&A Local responsi bility Low credit risks Low costs Satisfied customers SHB s market

19 Disclaimer i Certain statements made in this presentation are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance, express or implied, by the forward looking statements. Factors that might cause forward looking statements to differ materially from actual results include, among other things, regulatory and economic factors. Handelsbanken Group assumes no responsibility to update any of the forward looking statements contained herein. No representation or warranty, express or implied, is made or given by or on behalf of Handelsbanken Group or its directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions i contained in this presentation. None of Handelsbanken Group or any of its directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Handelsbanken Group, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision. 19