Svenska Handelsbanken Third Quarter 2000 A presentation by Arne Mårtensson President and Group Chief Executive 24 October 2000
Anticipated nine-month profit: SEK 8 600m Handelsbanken Group SEK m 9 mths Profit Profit 2000 2000 2001 Average 8 600 11 192 10 931 Lowest 8 344 10 633 10 000 Highest 8 820 11 682 11 838 Median 8 611 11 150 10 875 Std-deviation 2 % 3 % 5 % Net interest income 8 568 Net comm. income 4 113 Loan losses +28 Source: SIX Market Estimates
Profit and Loss account, January - September Handelsbanken Group SEK m 2000 1999 Change % Net interest income 8 781 8 067 9 Commission, net 4 167 2 744 52 Trading, net 1 968 1 245 58 Other income 644 469 37 Total income 15 560 12 525 24 Staff costs, excl performance-related 3 566 3 424 4 Performance-related staff costs 459 157 192 Other expenses 2 771 2 723 2 Total expenses 6 796 6 304 8 Profit before loan losses 8 764 6 221 41 Net recoveries 109 74 47 Operating profit 8 873 6 295 41
Operating profit, quarterly Handelsbanken Group SEK m 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1996 1997 1998 1999 2000
Average volumes, Deposits from the general public, January September Handelsbanken Group Change SEK bn 2000 1999 % Deposits Swedish kronor 165 147 12 Households 74 73 1 Companies 91 74 23 Deposits foreign currency 73 59 24 Sweden 13 15-13 Other Nordic countries 35 23 52 Other 25 21 19
Market share SEK deposits - Households Handelsbanken Group % 18 16 14 12 10 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 30 September
Average volumes, Lending to the general public, January September Handelsbanken Group Change SEK bn 2000 1999 % Lending Swedish kronor 504 484 4 Mortgage loans 320 323-1 Bank loans 184 161 14 Lending foreign currency 144 114 26 Sweden 34 28 21 Other Nordic countries 63 37 70 Other 47 49-4
Average volumes, Lending Stadshypotek December 1999 September 2000 SEK bn 325 324 323 322 321 320 319 318 317 316 315 Dec-99 Mar-00 Jun-00 Sep-00
Interest spread - branch office operations, SEK Handelsbanken Group % 5 4 3 Handelsbanken 2 1 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1998 1999 2000 Total Mortgage Group
Commission, January September Handelsbanken Group Change SEK m 2000 1999 % Brokerage 1 370 853 61 Mutual funds and custody 1 267 808 57 Payments 727 549 32 Lending and deposits 657 520 26 Other 723 530 36 Commission expenses -577-516 12 Total 4 167 2 744 52
Expenses, January - September 2000 Handelsbanken Group Change Expenses comparable units excl performance-related staff costs < 1 % Bergensbanken + 2 % points Performance-related staff costs, mainly Investment Banking + 5 % points Total expenses 8 %
Number of employees Handelsbanken Group 2000 1999 Change Average no. of employees Jan - Sep 8558 8567-9 of which Swedish regional banks - 225 IT and development, Sweden + 43 Bergensbanken + 192 Other outside Sweden - 14 Other - 5 Change in no. of employees - 9
Average no. of employees Swedish branch office operations Decrease of 5% 5 000 4 500 4 000 3 500 4642 4417 3 000 Jan-Sept 1999 Jan-Sept 2000
Handelsbanken customers who are connected to Internet banking Approx. 40 % of corporate customers A quarter of private customers Approx. 355 000 Internet customers five websites
Percentage of various services via the Internet Handelsbanken, Sweden 40% 35% 30% 36% 25% 20% 15% 18% 27% 1998 (Dec) 2000 (Sept) 10% 5% 0% 8% 7% 11% Equities trading Mutual funds Payments
Number of custody accounts and proportion of Internet customers Number % 160 000 140 000 120 000 100 000 80 000 60 000 40 000 20 000 0 dec-98 mar-99 jun-99 sep-99 dec-99 mar-00 jun-00 sep-00 50 45 40 35 30 25 20 15 10 5 0 No of custody accts Proportion of Internet customers Four out of five new custody accounts in 2000 are linked to the Internet More than twice as many Internet-linked custody accounts during 2000
What proportion of the Bank s Internet users use the service regularly? (Private individuals) SHB SEB FSpB NB 0% 10% 20% 30% 40% 50% 60% 70% Source: SIFO and SHB
Bad debts as a percentage of total lending Handelsbanken Group % 4 3 2 1 0-93 -94-95 -96-97 -98-99 -00 30 September
Loan losses as a percentage of lending Handelsbanken Group % 6 5 4 3 2 Handelsbanken Other Swedish Banks * 1 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 * As at 30 June 2000 September
Appropriations, Jan - Sept Handelsbanken Group SEK m 2000 1999 Operating profit 8 873 6 295 Settlement of pensions 493-66 Taxes - 2 524-1 698 Minority interests - 17-15 Net profit for the period 6 825 4 516
Balance Sheet Handelsbanken Group 30 Sept 30 Sept Change SEK m 2000 1999 % Lending to the general public 666 664 595 309 12 Lending to credit institutions 117 080 121 534-4 Interest bearing securities Financial fixed assets 3 455 1 185 192 Financial current assets 82 417 76 773 7 Other assets 169 509 103 554 64 Total assets 1 039 125 898 355 16 Deposits and funding from the general public 235 555 213 107 11 Liabilities to credit institutions 179 167 178 051 1 Issued securities etc. 404 109 327 016 24 Subordinated liabilities 19 439 19 154 1 Other liabilities 159 165 124 585 28 Shareholders equity 41 690 36 442 14 Total liabilities and shareholders equity 1 039 125 898 355 16
Capital base and capital ratio Handelsbanken Group SEK bn 50 40 10.4 % 9.8 % 9.4 % 9.8 % Tier II capital 30 10.1 % 12.6 % 13.7 % 14.2 % 12.2 % 20 10 6.8 % 8.4 % 9.3 % 10.3 % 10.0 % 6.2 % 6.3 % 6.5 % 6.6 % Tier I capital 0 1992 1993 1994 1995 1996 1997 1998 1999 2000
Key figures Handelsbanken Group January September 2000 1999 Return on equity 22.6 % 16.9 % Cost / income ratio before loan losses 43.7 % 50.3 % after loan losses 43.0 % 49.7 % Net earnings per share, SEK 9.63 6.31 12mth moving total 12.63 7.88
Return on shareholders equity after standard tax 30 September 2000 % 30 25 20 15 10 Handelsbanken Other listed commercial banks * 5 0-5 -84-87 -90-93 -96-99 * As at June 2000
C/I ratio of leading Nordic banks Costs/income after loan losses January - September 2000 % Weighted average excl. Handelsbanken SHB 44 MNB * DB * Kreditkassen * DNB * FSpB * 55 56 58 59 62 S E B * 74 * As at June 2000 Adjusted for items affecting comparability 63
Cost effectiveness of leading Nordic banks Expenses expressed as a percentage of total assets excl. loan losses 30 September 2000 % Weighted average excl. Handelsbanken SHB DB * FSpB * Kreditkassen * MNB * SEB * DNB * 0.9 1.3 1.4 1.6 1.6 1.7 2.5 * As at June 2000 1.5
Moody s rating of European universal banks Lloyds TSB Aaa UBS Aa1 Handelsbanken Aa2 ABN AMRO Aa2 Banco Bilbao Vizcaya Argentaria Aa2 Barclays Aa2 ING Bank Aa2 HSBC Aa2 NatWest Aa2 Royal Bank of Scotland Aa2 Bank of Scotland Aa3 BNP Aa3 Banco Santander Central HispanoAa3 Commerzbank Aa3 Credit Suisse Group Aa3 Deutsche Bank Aa3 Dresdner Bank Aa3 Fortis Banque Aa3 HypoVereinsbank Aa3 San Paolo-IMI Aa3 Société Generale Aa3 Unicredito Italiano Aa3 Den Danske Bank Aa3 FöreningsSparbanken Aa3 MeritaNordbanken Aa3 Unibank Aa3 Banca Intesa A1 Den norske Bank A1 Banca Nazionale del Lavoro A2 Banca di Roma A2 Credit Lyonnais A2 Standard Chartered A2 Christiania Bank A2 SEB A2 1 Lloyds TSB TSB Aaa Aaa 2 UBS UBS Aa1 Aa1 3 Handelsbanken Aa2 Long-term rating. The 30 largest listed European universal banks and other Nordic universal banks. Up-dated: 11 October 2000
Operating profit per business area January - September SEK m 2000 1999 +/-% Return on equity 2000 Branch offices 6 484 4 810 35 % 22.6 % Handelsbanken Markets 656 454 44 % 17.1 % Investment Banking 571 195 193 % 84.3 % Asset Management 517 308 68 % 40.3 % Handelsbanken Finans 257 244 5 % 24.5 % Handelsbanken Liv 87 22 295 % 26.4 % Stadshypotek Bank 12 10 20 % 17.5 % Central Treasury 146 297-51 % 11.5 % Group 8 873 6 295 41 % 22.6 %
Operating profit, January September Branch office operations SEK m 2000 1999 Change % Excl. Bergensbanken Net interest income 7 867 6 988 13 Commission, net 2 220 1 475 51 Net result on financial operations 305 233 31 Other income 32 12 167 Total income 10 424 8 708 20 of which internal commission 806 592 Total expenses 4 016 3 882 3-0.5 Result before loan losses 6 408 4 826 33 Loan losses -76 16 Operating profit 6 484 4 810 35 Return on equity 22.6 % 19.8 %
Handelsbanken Mutual Funds - Market share Proportion of net inflow to funds 13.2 % 14.1 % 1999 Jan-Sept 2000 Source: Swedish Mutual Fund Association
Market share of active choice in PPM (premium pension system) as at 20 October 2000 Robur 21.0 % AMF 11.6 % SPP 9.9 % Folksam 9.7 % Handelsbanken 8.1 % Länsförsäkringar 6.1 % Nordbanken 4.9 % Skandia/Carlsson 4.9 % SEB 3.4 % Others 20.4 %
Result in the other Nordic countries January - September SEK m 2000 1999 Norway 389 156 Denmark 25 8 Finland 210 133 Total 624 297
Result in the other Nordic countries 1990 - September 2000 SEK m 624 538 259 257-1 -53 28 76 80 106 164 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000, Jan - Sep
Expanding branch office operations in the Nordic countries Our domestic market Norway 23 branches Sweden 461 branches Denmark 7 branches September 2000 Finland 18 branches
Handelsbanken s retail banking in the UK for individual and corporate customers Business established today Edinburgh Establishment planned within a 1-3 year period Leeds Manchester Nottingham Birmingham Cambridge Bristol Reading London
Handelsbanken Finans acquires Spartacus A/S Founded 1983 Profitable company in retail financial services 20 % market share for caravan financing Also vehicles and agricultural machinery Platform for expanding into new sectors Credit volume, approx SEK 500m
The Nordic countries our domestic market - Spartacus A/S completes the picture Leasing/ Conditional sales Collaboration with vendors Factoring and invoice services Debt collection Retail financing X X X X X X X Kronos A/S Bergen Kronos A/S Bergen X X X X X X X X X X Spartacus Nykøbing
Demutualisation of Handelsbanken Liv Good response from customers, the press and other interested parties As the first company SHB will be introducing the right to to transfer Customers decide - last day 15 December 2000
E-bid - a new mortgage service from Stadshypotek - to be launched in November Major drive in collaboration with estate agents Using the Internet, solves the problem of bidding for houses, apartments and second homes Includes branch offices at an early stage in the process where the customer decides mortgage loans and choice of bank
10 Why e-bid? Real-time bidding Immediate information Transparent bidding process - reduces uncertainty Simplifies administration 10 Why Stadshypotek? Established mortgage company in Sweden - confidence Largest player Neutral vis-a-vis estate agents Local presence via the Bank s branches
Share price performance- Jan-Sept 2000 59 European banks 1 Julius Julius Baer Baer + 86.4 86.4 % 2 Handelsbanken + 44.9 44.9 % 3 Royal Royal Bank Bank of of Scotland Scotland + 40.6 40.6 % 4 BHW BHW Holding Holding + 40.2 40.2 % 5 Nordic Nordic Baltic Baltic Holding Holding + 38.0 38.0 % 7 SEB SEB + 35.5 35.5 % 8 Den Den Danske Danske Bank Bank + 31.2 31.2 % 12 12 Christiania Christiania Bank Bank + 22.3 22.3 % 15 15 Den Den Norske Norske Bank Bank + 20.1 20.1 % 25 25 FöreningsSparbanken + 9.6 9.6 % 58 58 Real Real Danmark Danmark -- 25.8 25.8 % Source: SchroderSalomonSmithBarney - European Banks in Q3
Share price performance until 30 September 2000 Index SHB AFV General index Bank index excl. SHB 700 600 500 400 300 200 100 0 1990-91 -92-93 -94-95 -96-97 -98-99 -00 30 Sep -00
10.8 % Average annual earnings growth per share 1990-2000
Annual growth - profit per share % 1996-2000 SHB 14.9 14.9 NBH ** 7.4 7.4 FSpB 6.1 6.1 SEB SEB 5.4 5.4 * For EUR/SEK conversion the same rate has been used for all measurements In accordance with the banks interim reports, adjusted for items affecting comparability
Continuity in management, long standing tradition Group Group Chief Chief Executive 1970-1978 Jan Wallander 1978-1991 Tom Hedelius (employed 1967) 1967) 1991-2001 Arne Mårtensson (employed 1972) 1972) 2001- Lars O Grönstedt (employed 1983) 1983) Chairman 1966-1978 Tore Browaldh 1978-1991 Jan Wallander 1991-2001 Tom Hedelius 2001- Arne Mårtensson
Lars O Grönstedt - new Chief Executive Education - BA Stockholm University - MBA Stockholm School of Economics Svenska Handelsbanken - Product development cash management - Equity Sales - Branch office - Regional Bank Stockholm City, head of Administration - Handelsbanken Markets, head of Equity and Custody - Executive Vice President, CIO and head of Business Development