Svenska Handelsbanken Ab Class A · OMXSTO:SHB_A

Svenska Handelsbanken Ab Class A — Q4 2023 Earnings Presentation

28 slides from Svenska Handelsbanken Ab Class A's earnings presentation, Feb 7, 2024

  1. Slide 1: Handelsbanken January – December 2023

    Handelsbanken January – December 2023 7 February 2024 1

  2. Slide 2: Stability, efficiency and profitability

    Stability, efficiency and profitabilty Operating profit* Total income* SEK bn SEK bn  15.9% ROE 65 65 +37% 60 +24%  37% underlying growth in operating profit 60 55 50 55  Income growing faster than expenses 45 50  37.2% C/I ratio 40 45 35  Solid asset quality 30 40 2022 2023 2022 2023  Financi

  3. Slide 3: Financial summary (full year)

    Key ratios: Financial summary Jan-Dec 2023 compared to previous year 37.2% C/I-ratio Adjusted for Full year Full year Change items affecting 2023 2022 comparability* SEK m Net interest Income 47,578 36,614 30% 28% 0.01% Net credit loss ratio Net fee and commission income 11,139 10,981 1% 1% Total in

  4. Slide 4: Financial summary (Q4 vs previous quarter)

    Key ratios: Financial summary Q4 compared with previous quarter 38.4% C/I-ratio Adjusted for Q4 2023 Q3 2023 Change items affecting comparability* SEK m Net interest Income 12,222 12,184 0% 2% 0.00% Net credit loss ratio Net fee and commission income 2,800 2,812 0% 0% Total income 15,854 16,244 -2%

  5. Slide 5: Net interest income development

    NII increase: +0.3% Net interest income development Contribution from: Q4 2023 compared to previous quarter  Volumes: -0.4%-points  Margins and funding: +2.0%-points SEK m 12,500 12,450 97 12,400 +2.0% -12 -183 12,350 12,300 245 -65 12,250 +0.3% 12,200 -44 12,150 -0.4% 12,222 12,100 12,184 12,050

  6. Slide 6: Net fee and commission income

    SEK m Net fee and 2 500 CAGR: +3% 2 000 commission income Savings related* 1 500 66% of net fee and 1 000 2 157 1 674 1 773 1 855 commissions 500 Net fee and commission income 0 Q4 Q4 Q4 Q4 2020 2021 2022 2023 SEK m SEK m 3,400 1,400 1,200 1,000 3,200 Payment fees, net 800 16% CAGR: +9% 600 3,000 40

  7. Slide 7: Savings business in Sweden

    Savings business in Sweden Accumulated net inflows in Swedish mutual fund market* SEK bn 350 Strong and persistent net inflow Handelsbanken 300 SEK +308bn 25% Market share of net 250 inflows 2011-2023 200 150 Commitment to sustainabilty 100 19 % Article 9 Peer 1-9 76 % Article 8 50 50% reduction of

  8. Slide 8: Expenses

    Expenses Q4 2023 compared to previous quarter SEK m 6,400 6% 1% 6,200 83 7% -62 -85 6,000 -1% -1% 349 2% Lower seasonal increase in Q4 5,800 ​ 115 compared to the past years 5,600 6,086 5,400 5,686 5,200 5,000 Expenses Staff costs Other expenses Depreciation, Oktogonen Foreign exchange Expenses Q3 2

  9. Slide 9: Net credit losses

    Net credit losses Credit loss ratio 1997 – 2023 Credit loss ratio 2021 – Q4 2023 % SEK m Credit loss ratio, % 1.2 -1,200 1.20 Handelsbanken Comparable Nordic banks* Other European banks** Management addon diff (total accumulated amount = SEK 604m at end of Q4 2023) 1.1 -1,100 1.10 Net credit losses,

  10. Slide 10: Different opportunities in different home markets

    Different opportunities in different home markets Norway Sweden 7% of operating profits in the group 76% of operating profits in the group 2023 vs 2022: 2023 vs 2022:  Operating profit SEK 2.6bn  Operating profit SEK 27.0bn  Operating profit yoy +9%  Operating profit yoy +35%  C/I ratio 44.4% (

  11. Slide 11: CET1 ratio and regulatory requirement

    CET1 ratio and regulatory requirement Q4 2023 SEK bn 20% 18.8% 167 19% 159 18% 150 17% 142 Target range Strong capital position with CET1 ratio: 16% 134 15.8 – 17.8% 14.8% 400 bp above the FSA minimum requirement 15% 125 14% 117 100 bp above the bank’s target range 13% 109 12% 100 11% 92 10% 84 158

  12. Slide 12: Long term value creation through the cycles

    Long term value creation through the cycles Stable and predictable value growth Better ROE than average SEK per comparable peer share 350 Accumulated dividends since 2008* 300 Adjusted equity per share 250 Cost discipline and satisfied customers 200 150 100 Strong asset quality with 50 consistent lo

  13. Slide 13: Appendix

    Appendix Handelsbanken

  14. Slide 14: The Board's proposal to the AGM 2024

    The Board’s proposal to the AGM 2024 Earnings year 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Ordinary dividend, SEK/share 6.50 5.50 5.00 4.10 5.50 5.50 5.00 4.50 4.17 3.83 3.58 3.25 Extra dividend Industrivärden, 4.30 SEK/share Extra dividend, SEK/share 6.50 2.50 2.00 1.50 1.6

  15. Slide 15: Safety and stability provide flexibility

    Safety and stability provide flexibility Highest credit rating in the world Strongest asset quality Moody's S&P Fitch 0.24 Handelsbanken Aa2 AA- AA Net credit 0.18 DNB Bank 3 Aa2 AA- loss ratio* 0.14 0.15 Credit ratings Nordea Bank 2 Aa3 AA- AA- 0.13 2004-2023 SEB Bank 4 Aa3 A+ AA- % 0.05 Bank 5 Swe

  16. Slide 16: Highest credit rating globally

    Highest credit rating globally  Highest rating in Europe by Fitch and Moody’s among all peer banks  Highest rating globally when combining Fitch, Moody’s and S&P’s ratings Fitch Moody's S&P Handelsbanken AA Aa2 AA- Ratings confirmed: Bank 2 AA- Aa2 AA Bank 3 AA- Aa1 AA-  June 2023: Fitch Bank 4 A

  17. Slide 17: Income statement (full year)

    Key ratios: Income statement Compared to the previous year 37.2% Full year Full year C/I-ratio SEK m 2023 2022 Change Net interest income 47,578 36,614 30% Net fee and commission income 11,139 10,981 1% Net gains/losses on financial transactions 2,661 1,540 73% Other income Total income 871 62,249 1

  18. Slide 18: Income statement (Q4 vs Q3)

    Key ratios: Income statement Compared to previous quarter 38.4% C/I-ratio SEK m Q4 2023 Q3 2023 Change Net interest income 12,222 12,184 0% Net fee and commission income 2,800 2,812 0% Net gains/losses on financial transactions 579 1,087 -47% Other income Total income 253 15,854 161 16,244 57% -2% 0

  19. Slide 19: Change in NII from previous quarter

    Change in NII from previous quarter Net interest income continuing operations Q3 2023, SEK m 12,184 Deposit volume -23 Lending volume -18 Net effect margins and funding costs 179 Day count effect 0 Deposit guarantee fee 89 Other 24 Sweden 251 2.1% Deposit volume 9 Lending volume -12 Net effect of ma

  20. Slide 20: NFT quarterly

    NFT quarterly NFT Liquidity portfolio SEK m SEK m 1,200 1,200 1,087 1,000 Other NFT 1,000 Including market valuation 800 impacts of derivatives used for 800 hedging of funding and lending 600 570 602 579 600 534 535 472 400 429 413 395 420 393 Capital Markets 400 355 357 341 312 Effects from custome

  21. Slide 21: Expenses

    Expenses 2023 compared to previous year SEK m 24,000 2% 9% 2% 0% 0% 23,000 324 5% 80 36 515 22,000 ​ 1,015 21,000 20,000 19,000 23,182 18,000 21,212 17,000 16,000 15,000 Expenses Other Development Depreciation, Oktogonen Foreign exchange Expenses 2022 expenses expenses amortisation and effects 2023

  22. Slide 22: Asset quality

    Asset quality • • Rating migrations Better quality on new loans compared to exits -137 +44 • Expert based addon +0 • Other +78 Expected credit losses Credit losses Credit losses, net Stage 3, net SEK m SEK m -2 00 -1 50 Updated 37 macro assumptions -1 50 -1 00 -52 -1 00 -5 0 Other effects -15 -73 St

  23. Slide 23: Asset quality – a good position

    Asset quality – a good position Low probability of default (PD)* and small tail High proportion collateralized lending** 100% 100% 90% PD-ranges 90% 80% 100.00 (Default) 80% 70% 10.00 to <100.00 70% 60% 2.50 to <10.00 60% >90% Uncollateralized 50% 50% ~70% of 0.75 to <2.50 secured by 40% 40% high qu

  24. Slide 24: Lending to property management

    Lending to property management 30 largest Property management lending property management customers* Net lending in Home markets Retail, offices Interest coverage ratio (ICR) Q3 2023: SEK bn and hotels - Reported**: 3.1x Break-even - Own conservative assessment**: 2.5x interest rate* 8.1% 295 Sensit

  25. Slide 25: Low loan-to-values in property portfolio

    Low loan-to-values in property portfolio Commercial Real estate Residential Real estate SEK m SEK m 140,000 250,000 42% 120,000 200,000 58% 33% 100,000 150,000 80,000 21% 60,000 100,000 24% 40,000 50,000 11% 20,000 4% 6% 0 0 Sweden Norway UK the Netherlands Sweden UK the Netherlands Norway Home Home

  26. Slide 26: Change in CET1-ratio from previous quarter CRR/CRD IV

    Change in CET1-ratio from previous quarter CRR/CRD IV Common equity tier 1 ratio Q323, % 19,4 Change, percentage points: Common equity tier 1 capital -1,2 Earnings for the period 0,8 Deducted dividends -1,7 Of which proposed extra dividend IAS 19 0,0 Foreign exchange effects CET1 capital -0,3 Other

  27. Slide 27: Change in CET1-ratio from previous quarter

    Change in CET1-ratio from previous quarter Change in CET1-ratio, % Change in REA, SEK bn Capital REA generation effects % SEK bn 20.4 880 20.2 870 20.0 -9.8 19.8 0,8 860 19.6 -12.1 850 -2.6 19.4 5.5 -5.3 -1,7 -1.3 19.2 840 -6.5 19.0 869 830 18.8 Effective currency 0,1 19,4 18.6 hedges 0,2 -0,1 0,1 8

  28. Slide 28: Disclaimer

    Disclaimer  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

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