Handelsbanken January June 2009 21 July 2009
Summary January - June 2009 compared with January June 2008 Operating profit increased by 14% till SEK 7,251m (6,352) Return on shareholders equity increased to 13.1% (12.9) Net interest income rose by 24% to SEK 11,031m (8,893) The C/I ratio improved to 45.3% (49.0) The average volume of loans increased by 13% Household deposits rose by 21% The capital ratio increased to 18.4% (16.1) Tier 1 capital according to Basel II went up to 12.6% (10.6) The liquidity reserve exceeded SEK 450bn 2
Income statement, January - June Change SEK m 2009 2008 % Net interest income 11,031 8,893 24 Net fee and commission income 3,595 3,445 4 Net gains/losses on financial items at fair value 1,682 457 268 Other income 298 459-35 Total income 16,606 13,254 25 Staff costs -4,981-3,929 27 Other expenses -2,539-2,567-1 Total expenses -7,520-6,496 16 Profit before loan losses 9,086 6,758 34 Loan losses, net -1,835-678 171 Disposal prop. equipmt./ intang. assets 0 272-100 Operating profit 7,251 6,352 14 3
Income statement, Q2 2009 compared to Q1 2009 Change SEK m Q2 Q1 % Net interest income 5,638 5,393 5 Net fee and commission income 1,856 1,739 7 Net gains/losses on financial items at fair value 541 1,141-53 Risk result - insurance 36 57-57 Other income 149 56 166 Total income 8,220 8,386-2 Staff costs -2,539-2,442 4 Other expenses -1,297-1,242 4 Total expenses -3,836-3,684 4 Profit before loan losses 4,384 4,702-7 Net loan losses -939-896 5 Disposal prop. equipmt./ intang. assets 0 0 0 Operating profit 3,445 3,806-9 4
Key ratios, January - June 2009 2008 RoE, actual tax 13.1% 12.9% RoE, after standard tax 13.3% 12.6% C/I-ratio 45.3% 49,0% Earnings per share continuing operations, SEK 8.47 7.51 moving 12 months 20.14 15.30 5
Capital ratio and Tier I ratio, June 30 2009 2008 Change Capital ratio, Basel II 18.4% 16.1% + 2.3 Tier I ratio, Basel II 12.6% 10.6% + 2.0 Capital base, SEK m 122 105 + 17 Tier I capital, SEK m 83 69 + 14 Shareholders equity, SEK m 77 70 + 7 6
Financial strength Assets Liabilities Rating Long-term Short-term Moody s Aa1 P-1 S&P AA- A-1+ Fitch AA- F1+ Liquidity reserve >450 SEK bn Lending etc. Senior funding, deposits etc. Capital base 18.4% 7
8 6 000 5 000 4 000 3 000 2 000 1 000 0 Q2-98 Q4-98 Q2-99 Q4-99 Q2-00 Q4-00 Q2-01 Q4-01 Q2-02 Q4-02 Q2-03 Q4-03 Q2-04 Q4-04 Q2-05 Q4-05 Q2-06 Q4-06 Q2-07 Q4-07 Q2-08 Q4-08 Q2-09 Handelsbanken Group Net interest income, quarterly SEK m From 2004 according to IFRS
- Handelsbanken Group Change in net interest income, Q2 compared to Q1 SEK m Net interest income Q1 2009 5 393 Deposits in Sweden - margin -40 - volume 1 Lending in Sweden - margin 13 - volume 9 Volume & margin branch offices outside Sweden 149 Mandatory fees, deposit insurance, stability fund 46 Other 67 Change in net interest income 245 Net interest income Q2 2009 5 638 5% RR 9 3M STIBOR ref.rate in the respective quarter.
- Handelsbanken Group Change in net interest income, January - June SEK m 2009 vs. 2008 Deposit in Sweden - margin -1 444 - volume 128 Lending in Sweden - margin 1 467 - volume 257 Volume & margin branch offices outside Sweden 1 016 Mandatory fees, deposit guarantees,stability fund -234 Other 948 Change in net interest income 2 138 10 Ref.rate 2008, 1M STIBOR and in 2009 3M STIBOR has been used
Higher interest rates provide significant potential Change in net interest income SEK m 4,500 Illustration of how changes in interest rate levels impact the net interest income generated by Swedish household deposits and the Group's equity 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 0% +0.25% +0.50% +0.75% +1.00% +1.25% +1.50% +1.75% +2.00% +2.25% +2.50% +2.75% +3.00% Change in interest rate level 11
Deposits from the public, January - June Average volumes, SEK bn 2009 2008 Change % Branch offices in Sweden Private 164 138 19 Corporate 150 138 9 Total 314 276 14 Branch offices outside Sweden Private 46 35 30 Corporate 125 104 20 Total 171 139 23 Other operations 49 72-33 Total 534 487 10 12
Loans to the public, January - June Average volumes, SEK bn 2009 2008 Change % Branch offices in Sweden Private 479 447 7 Of which mortgage loans 422 391 8 Corporate 491 464 6 Total 970 911 7 Branch offices outside Sweden Private 139 114 22 Corporate 377 285 33 Total 516 399 30 Other operations 19 18 3 Total 1 505 1 328 13 13
Fees and commissions Q2 Q1 Jan Jun 09 / SEK m 2009 2009 Jan Jun 08 Q2 09/Q2 08 Brokerage 504 445 13% Mutual funds and custody 359 348 3% Advisory services 58 51 14% Insurance 132 131 1% Payments 584 585 0% Lending & deposits 269 251 7% Guarantees 134 134 0% Other 131 94 39% Commission expenses -315-300 5% Total 1,856 1,739 7% 4% 9% 14
Equity-related commissions Q2 Q1 Q4 Q3 Q2 SEK m 2009 2009 2008 2008 2008 Brokerage 486 395 449 334 434 Mutual funds and custody 334 317 288 351 398 Corporate finance 58 51 49 58 37 Commission expenses -51-59 -60-58 -69 Total 827 704 726 685 800 Market shares OMX Stockholm Turnover, % 8,37 6,48 7,92 7,60 7,63 Number of trades, % 6,48 6,30 6,20 5,89 5,67 15
Net gains/losses on financial items at fair value SEK m 3 000 Trading* Stapel 2 Available for sale Other Liquidity portfolio 2 500 2 000 1 500 1 000 2229 500 0 1362 415 523-177 634 483 1141 541-500 -1 000-1 500 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2007 2007 2007 2008 2008 2008 2008 2009 2009 16 * Incl fair value option.
Market risks reduced by more than 50% Handelsbanken s Bankens kapitalkrav för capital marknadsrisker requirement Basel II, for mnkr market risk in Basel II, SEK m 6 000 5 500 5 000 4 500 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 jun-06 sep-06 dec-06 mar-07 jun-07 sep-07 dec-07 mar-08 jun-08 sep-08 dec-08 mar-09 jun-09 Market Marknadsrisk risk total 17
Expenses, January June Change Change Change SEK m 2009 2008 SEK m % Q2-Q1 % Staff costs -4,981-3,929 1,052 26.8 4.0 Other expenses -2,300-2,368-68 -2.9 5.0 Depreciation -239-199 40 20.1-0.8 Total expenses -7,520-6,496 1,024 15.8 4.1 %-points Oktogonen 319 4.9 0.0 Performance-related remuneration 107 1.6 5.3 IAS19 155 2.4 0.0 Exchange rate fluctuations 218 3.4-0.4 Lokalbanken 145 2.2 0.0 944 14.5 4.9 Running costs 80 1.3-0.5 18 1,024 15.8 4.1
Bad debts and loan losses as a percentage of lending Proportion of bad debts, net Loan loss ratio % % 1,0 1,0 0,8 0,8 0,6 0,6 0,4 0,4 0,2 0,2 0,0 0,0-0,2-98 -99-00 -01-02 -03-04 -05-06 -07-08 -09-0,2 19
Share of net bad debts 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% SHB bad debt / Total bad debt, SHB and peers* 14% 13% 12% 11% 10% SHB loans to the public / Total loans to the public, SHB and peers* Q1 06 Q3 06 Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 Q1 06 Q3 06 Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 20 * Peers: SEB, Nordea, Swedbank, Danske Bank and DnB NOR. The exchange rate as at 30 June 09 (EUR, DKK and NOK) has been used when converting all quarters
Loan loss ratio second quarter 2009 % Sweden 0.31 Norway 0.09 Finland 0.13 Denmark 0.31 Great Britain 0.13 International 0.12 Group 0.24 21
Loan losses as a percentage of lending % 1,75 1,50 1,25 1,00 0,75 0,50 0,25 0,00 Handelsbanken Other Swedish banks* -0,25 1994 1997 2000 2003 2006 2009** 22 Q2 2009: Average of SEB and Swedbank. ** Nordea is included with figures for Q1 2009
Sum of interest income and loan losses Handelsbanken Peers * SEK m 5 000 SEK m 40 000 4 000 35 000 30 000 3 000 25 000 20 000 2 000 15 000 10 000 1 000 5 000 0 Q2 06 Q4 06 Q2 07 Q4 07 Q2 08 Q4 08 Q2 09 0 Q2 06 Q4 06 Q2 07 Q4 07 Q2 08 Q4 08 ** Q2 09 23 * SEB, Nordea, Swedbank, Danske Bank and DnB NOR ** Q2 09: Danske Bank and Nordea are included with figures for Q1 2009
Branch office operations in Sweden January June 2009 Operating profit SEK 4,516m RoE 17.5% Income increased by 5% Net interest income increased by 10% C/I ratio before loan losses 36.1% Number of branch offices 461 Average number of employees 4,489 Average volumes, SEK bn Loans 970 Deposits 314 24
Branch operations in Sweden increased productivity The average working hours spent on talking to customers has increased by 51% since 2006 Index 2006 = 100 150 +51% 151 The goal of increasing the time spent with customers by 50% between 2006 and 2010 was already achieved in 2009 There is potential for even more improvement 100 50 0 100 2006 2009 25
Loans to corporates in Sweden SEK bn, end of period Dec 2008 May 2009 New loans Handelsbanken 425.6 428.1 +2.5 Other banks 1 207.4 1 188.4-19.0 Total market 1 633.0 1 616.5-16.5 26 Refers to bank and mortgage loans to non-financial companies in Sweden
Branch operations in Sweden Active customers Private customers, thousands 2 000 Corporate customers, thousands 170 1 900 160 150 1 800 140 1 700 130 1 600 2004 2005 2006 2007 2008 2009 120 2004 2005 2006 2007 2008 2009 27 All values as of June 30 in the respective year.
Branch office operations outside Sweden January June 2009 Operating profit SEK 1,583m RoE 8.6% - excl. operating deficit 10.3% Total income increased by 31% Net interest income increased by 40% C/I ratio 54.0% Number of branch offices 245 Average number of employees 3,013 Average volumes, SEK bn Loans 516 Deposits 171 28
Handelsbanken had 62 branches in Great Britain January June 2009 Net interest income rose by 24% (Q2/Q1 +25%) Lending volumes rose by 18% Loan loss ratio: 0.12% 29 1988 London 1988 London 1989 Manchester 1989 Manchester 1994 Birmingham 1994 Birmingham 2000 Nottingham 2000 Nottingham 2001 Leeds 2001 Reading Leeds Reading 2002 Bristol 2002 Newcastle Bristol upon Tyne Newcastle upon Tyne 2003 Cardiff 2003 Southampton Cardiff Southampton 2004 Norwich 2004 Guildford Norwich Chelmsford Guildford Stoke Chelmsford Hull Stoke Hull 2005 Liverpool 2005 Bournemouth Liverpool Plymouth Bournemouth Maidstone Plymouth Cambridge Maidstone Cambridge 2006 Slough 2006 Sheffield Slough Wolverhampton Sheffield Oxford Wolverhampton Leicester Oxford Swindon Leicester Swindon 2007 Doncaster 2007 Brighton Doncaster Preston Brighton Bath Preston Tees Bath Valley Croydon Tees Valley Portsmouth Croydon London Portsmouth West End Milton London Keynes West End Northampton Milton Keynes Wakefield Northampton Enfield Wakefield Coventry Enfield Basingstoke Coventry Carlisle Basingstoke Chester Carlisle Chester 2008 Exeter 2008 Swansea Exeter St Swansea Albans Crawley St Albans Bradford Crawley Grimsby Bradford Dartford Grimsby Kingston Dartford Shrewsbury Kingston Harrogate Shrewsbury Lincoln Harrogate Scarborough Lincoln Stockport Scarborough Tunbridge Stockport Wells Tunbridge Wells 2009 Derby 2009 Huddersfield Derby Warrington Huddersfield Harrow Warrington Glasgow Harrow Edinburgh Glasgow Edinburgh
Net interest income outside Sweden, quarterly SEK m 2 000 1 800 1 600 1 400 1 200 1 000 800 600 400 200 0 No 210 200 190 180 170 160 150 140 130 120 110 100 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Branch offices outside Sweden Number of branch offices within regional banks outside Sweden 30 * Lokalbanken s 14 branch offices are included from October 21 2008.
Continued issuance of bonds in a turbulent market SEKm 30,000 25,000 20,000 LEH files for Chapter 11 Fed takes 80% stake in AIG in exchange for a $85bn loan Global fall in order intake SHB opens the Hybrid T1 market EUR 1.25bn 5 y First Nordic unguaranteed issue since Lehman s collapse Economic problems in the Baltics GBP 550 mn 7 y First unguaranteed, non- UK financial bond issue in 2009 Private placements in SEK and NOK USD 1.25bn 5 y 144A/Reg S offering Private placements in SEK and NOK 15,000 10,000 5,000 0 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Covered bonds, net Senior bonds Hybrid bonds 31 Source: Bloomberg, Handelsbanken.
Net lending in SEK in the Swedish interbank market 28 January 2008 30 June 2008, weekly At quarter-end, liquidity reserves of over SEK 450 bn Handelsbankens nettoutlåning i SEK på den svenska interbankmarknaden SEKm Mnkr 100 000 90 000 80 000 70 000 60 000 50 000 40 000 30 000 20 000 10 000 0 V1 V4 V8 V12 V16 V20 V24 V28 V32 V36 V40 V44 V48 V52 V1 V4 V8 V12 V16 V20 V24 V27 2008 2009 32
Summary second quarter 2009 Branch operations Active customers Private customers, thousands 2 300 Corporate customers, thousands 220 2 200 2 100 210 200 190 2 000 180 1 900 170 1 800 2004 2005 2006 2007 2008 2009 160 2004 2005 2006 2007 2008 2009 33 All values as of June 30 in the respective year.
Summary During April and May, Handelsbanken s lending to Swedish companies increased by SEK 2.3bn, while the total market decreased by SEK 28.5bn The Bank had 39% of new lending to Swedish companies during the period June 2008 to May 2009 The Bank took one-third of new Swedish household deposits from January to May Great Britain: Net interest income increasing, new branches opening, loan loss ratio 0.13% in the second quarter During the second quarter, SEK 91bn was issued in new long-term bond funding, without a government guarantee The liquidity reserve is sufficient to fund the Bank for more than 2 years without access to the capital markets The loan loss ratio outside Sweden was 0.13% during the second quarter Swedish branch operations have increased the time spent with customers by 51% since 2006 34 The number of active customers is increasing
35 Appendix
- Regional banks in Denmark, Finland, Norway and Great Britain Income and expenses trend 153 branches opened 1995-2009 SEK, m Average per branch* 40 35 30 25 20 15 10 5 Number of branch offices Income Expenses Number of branch offices, June 2009 40 35 30 25 20 15 10 5 0 ** Y 0 Y 1 Y 2 Y 3 Y 4 Y 5 Y 6 Y 7 Y 8 Y 9 Y 10 Y 11 Y 12 Y 13 0 36 * Refers to figures for 2000-2008 ** Refers to the period January June 2009
Income statement, five quarters Q2 Q1 Q4 Q3 Q2 SEK m 2009 2009 2008 2008 2008 Net interest income 5,638 5,393 5,474 4,856 4,494 Net fee and commission income 1,856 1,739 1,694 1,656 1,706 Net gains/losses on financial items at fair value 541 1,141 2,229 483 634 Risk result - insurance 36 57 50 55 71 Other income 149 56 65 74 294 Total income 8,220 8,386 9,512 7,124 7,199 Staff costs -2,539-2,442-2,170-2,015-1,946 Other expenses -1,297-1,242-1,430-1,118-1,249 Total expenses -3,836-3,684-3,600-3,133-3,195 Profit before loan losses 4,384 4,702 5,912 3,991 4,004 Loan losses, net -939-896 -696-231 -571 Disposal prop. equipmt./ intang. assets 0 0 0-2 0 Operating profit, continuing operations 3,445 3,806 5,216 3,758 3,433 Operating profit, discontinued operations 0 15 61 70 68 Operating profit, incl. discont. op. 3,445 3,821 5,277 3,828 3,501 37
Fee to the Stabilisation fund, January June SEK bn 2009 Total liabilities and equity 2 304 reduction for total equity, untaxed reserves and subordinated loans -145 reduction for intercompany liabilities -201 Base for calculation of fee* 1 958 SEK m Fee 0.036% 705 reduction 50% during 2009 and 2010-352 Total fee 2009 353 Accrued fee Jan-Jun 177 38 * Applies to credit institutions within the Group affected by the new Stabilisation fund law
39 Handelsbanken Group Oktogonen quarterly 2004 2009 300 200 100 0-100 -200-300 Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q3 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 SEK m Expense Adjust for previous yr
Effective tax burden Corporation tax on the profit for banking operations No tax on the administration result and the risk result in the insurance operations, except for outright risk insurance The yield split has already been taxed Corporation tax on yield on shareholders equity in the insurance operations Effective tax burden January-June 2009 was 27.1% and Q2 2009 26.6%, Q1 2009 27.6% and Q2 2008 29.2% 40
Balance sheet, June 30 Change SEK bn 2009 2008 % Loans to the public 1,499 1,369 9 Loans to credit institutions 221 185 19 Interest-bearing securities 115 139-17 Other assets 320 204 57 Total assets 2,155 1,897 14 Deposits and borrowing from the public 566 494 15 Due to credit institutions 209 283-26 Issued securities 1,006 783 28 Other liabilities 297 267 11 Shareholders equity 77 70 10 Total liabilities and equity 2,155 1,897 14 41
Loans to the public, quarterly Average volumes Q2 Q1 Q4 Q3 Q2 SEK bn 2009 2009 2008 2008 2008 Branch offices in Sweden 971 970 960 938 921 Branch offices outside Sweden 513 520 489 447 410 Private 140 139 131 121 115 Corporate 373 381 358 326 295 Other operations 17 19 13 14 15 Total 1 501 1 509 1 426 1 399 1 346 Private 622 615 602 586 568 Corporate 879 894 860 813 778 42
Lending outside Sweden, January - June Average volumes 2009 2008 Change % *Denmark, DKK bn 39.9 32.4 23 Finland, EUR m 10,463 9,325 12 Norway, NOK bn 154.4 136.3 13 Great Britain, GBP m 5,392 4,554 18 Rest of the world, SEK bn 91 55 65 43 * Lokalbanken included from October 21 2008
Deposits from the public, quarterly Average volumes Q2 Q1 Q4 Q3 Q21 SEK bn 2009 2009 2008 2008 2008 Branch offices in Sweden 313 314 303 283 278 Private 165 162 157 147 141 Corporate 148 152 146 136 137 Branch offices outside Sweden 174 168 157 142 139 Private 46 46 41 38 37 Corporate 128 122 116 104 102 Other operations 49 50 47 54 62 Total 536 532 507 479 479 Private 211 208 199 185 177 Corporate 325 324 308 294 302 44
Loans to the public Branch offices in Sweden, quarterly Average volumes Q2 Q1 Q4 Q3 Q2 SEK bn 2009 2009 2008 2008 2008 Mortgage loans 588 574 563 552 540 Private 426 418 413 406 396 Corporate 162 156 150 146 144 Bank loans 383 396 396 385 380 Private 57 58 58 59 57 Corporate 326 338 338 327 323 Total Branch offices in Sweden 971 970 960 938 921 Private 483 476 472 465 454 Corporate 488 494 488 473 467 45
Conditional bonus* in relation to total insurance assets SEK m 2009:Q2 2008 2007 2006 2005 2004 Conditional bonus 1,757 3,327 4,824 5,713 4,874 3,552 % of total insurance assets 7.1 12.8 18.0 21.7 20.3 16.7 46 * Refers to conditional bonus from a customer perspective