Svenska Handelsbanken AB Class A · OMXSTO:SHB_A
Svenska Handelsbanken AB Class A — Handelsbanken — Debt Investor Presentation (April 2019)
51 slides from Svenska Handelsbanken AB Class A's debt investor presentation, April 2019
Slide 1: Debt Investor Presentation April 2019
Handelsbanken Debt Investor Presentation April, 2019 1
Slide 2: The way we should grow profitably in the future
The way we should grow profitably in the future CB Fee and Lending NII Expenses commissions Historical Other credit losses Lending, to family owned corporates, non-property Property related ~27% lending in the bank Relationships Advisory Mortgages, ~60% Other Stadshypotek Card Simplicity Asset
Slide 3: Credit portfolio – Geographic split
Credit portfolio – Geographic split Lending to households 1183 Lending to corporates 1073 SEK bn SEK bn 100% 100% Handelsbanken Handelsbanken International International 90% 90% Handelsbanken the Handelsbanken the Netherlands Netherlands 80% 80% Handelsbanken 70% Finland Handelsbanken Finland 70% 60
Slide 4: Credit portfolio - segments
Credit portfolio - segments Lending to the public 2256 SEK Property management - Sweden 255 Property management - outside Sweden 373 bn SEK bn SEK bn 100% 100% 100% State & municipalities Other countries 90% 90% Other property 90% Other corporate companies lending 80% 80% 80% The Holding companies,
Slide 5: Significantly lower historical loan losses
Significantly lower historical loan losses Loan loss ratio Loan loss ratio 1990 – 1996 1997 – 2018 % % 11 1.1 Handelsbanken Handelsbanken 10 1.0 Swedish peer banks* Nordic peer banks** 9 0.9 8 0.8 7 0.7 6 0.6 5 0.5 4 0.4 3 0.3 2 0.2 1 0.1 0 0.0 -1 -0.1 1998 1999 2000 2001 2002 2003 2004 2005 2012 20
Slide 6: Financial stability
Financial stability CET 1 ratio 31 Mar 31 Dec Q1 2019 Capital CRR/CRD IV, % 2019 2018 Change SEK bn Capital ratio, % 20.8 21.0 -0.2% points 22% 160 Tier 1 ratio, % 18.5 18.6 -0.1% points 20% 150 CET1 ratio, % 16.4 16.8 -0.4% points 140 18% Total own funds, SEK bn 154.8 148.7 6.1 16,4% 130 Target ran
Slide 7: Buffer split and CET1
Buffer split and CET1 FSA CET1 capital requirement in Q1 2019, Reported REA % of REA CET1 ratio SEK m % 800,000 CVA and market 26 26 risks 24 24 700,000 Operational risk 22 22 Mortgage 600,000 risk 20 20 weight 22% of Other, incl conc. risk (0.4), IRRBB f loor total REA (0.3), pension risk (0), m-fa
Slide 8: Swedish mortgage risk weights at 25% is conservative
Swedish mortgage risk weights at 25% is conservative Risk Weight REA (€m) Exposure Value (€m) (%) SHB Group: Actual risk weights – IRB approach France BNP Paribas 18,110 152,773 11.9% Credit Agricole 39,781 327,481 12.1% Germany Deutsche Bank 24,511 156,709 15.6% Commerzbank 6,958 73,866 9.4% UK RBS
Slide 9: EBA 2018 transparency exercise: European perspective
9 0% 20% 50% 10% 30% 40% 60% 70% Piraeus Alpha Hellenic Bank Monte Paschi HSH Banca Pop AIB Intesa Sanpaol BOI UniCr BBVA Mediobanca Sabadell SR1 SR-Bank Santander Landsbankinn Arion KBC Non-performing exposures Raiffeisen Int Islandsbanki EBA sample European perspective BNP Rabobank Jyske Erste OP
Slide 10: EBA 2018 transparency exercise: Nordic perspective
EBA 2018 transparency exercise Nordic perspective Non-performing exposures and performing exposures with forebearance measures as % of lending 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Handelsbanken Bank 3 Bank 4 Bank 5 Bank 6 Bank 2 Handelsbanken Non-performing exposures Exposures with forebearance m
Slide 11: Handelsbanken vs Swedish peers
Handelsbanken vs Swedish peers* LT rating Standard deviation of Annual Earnings 2007-2018 79.3% Moody's S&P Fitch Handelsbanken Aa2 AA- AA Nordea Aa3 AA- AA- SEB Aa2 A+ AA- 40.9% Swedbank AA2 AA- AA- 9.9% 4.1% SHB Bank 2 Bank 3 Bank 4 Average Credit Loss Ratio 2007-2018 Stage 3 Loans / Loans to Publ
Slide 12: Handelsbanken
12 Handelsbanken
Slide 13: Summary January – March 2019
Summary January – March 2019 Operating profit increased by 18% to SEK 6,110m (5,161). The Board has assessed the development of the Bank in 2018 and has decided that there will be no provision to the profit-sharing scheme Oktogonen for 2018. The earlier made provision to Oktogonen for 2018, SEK
Slide 14: Income statement
Income statement Compared to the previous year Jan-Mar Jan-Mar Volume effect: SEK +395m SEK m 2019 2018 Change Net effect of margins in home markets and funding costs: SEK -257m Net interest income 7,934 7,648 4% Mandatory government fees: SEK +161m Net fee and commission income 2,512 2,461 2% Curre
Slide 15: NII growth driven by business volumes
NII growth driven by business volumes Q1 2019 compared to the previous quarter Including: Net effect changed margins in home markets and funding costs: SEK -56m SEK m Implementation IFRS 16: SEK -18m 8,200 91 8,100 -33 135 8,000 -131 23 11 7,900 57 7,800 7,934 7,700 7,872 7,600 7,500 NII Q418 Vo
Slide 16: Lending growth in home markets
Lending growth in home markets Local currency, average volume per quarter Index=100 Q1 2017 140 136 130 120 120 111 109 110 106 105 100 90 80 Sweden UK Finland Norway Denmark The Netherlands Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 16
Slide 17: Stable growth in net fee and commissions
Stable growth in net fee and commissions Net fee and commission income Net fee and commission income Q1 2016 – Q1 2019 Q1 2016 – Q1 2019 SEK m SEK m 2,600 2,600 2,500 -1 0 2,500 -61 72 -29 31 2,400 2,400 330 2,300 2,300 2,200 2,200 2,512 2,512 2,100 2,100 2,000 2,000 2,170 2,170 1,900 1,900 1,800 1,
Slide 18: New savings in the Swedish mutual funds market
New savings in the Swedish mutual funds market Accumulated net inflows into Swedish mutual funds Market share net inflows in Swedish mutual fund market: SEK bn 180 169 2019 until March: 24% 160 Since 2010: 23% 140 Handelsbanken 120 110 Bank 1Fonder Nordea Market share in Sweden of 100 outstandin
Slide 19: Net inflows in other Nordic countries
Net inflows in other Nordic countries Sweden Finland Norway Denmark SEK bn SEK bn 500 26 28 28 0.2 490 24 26 1.8 26 480 24 24 22 30.0 470 22 22 20 460 20 20 18 0.2 11.0 0.8 450 18 18 -1.0 27 487 16 25 440 4.0 16 16 14 430 14 14 19 18 446 12 16 420 12 12 13 410 10 10 10 400 8 8 8 Mutual Net Value Mut
Slide 20: Development in growth markets
Development in growth markets Handelsbanken UK Handelsbanken the Netherlands SEK m SEK m 1 800 250 1 600 225 200 72m 1 400 663m 175 1 200 150 1 000 125 800 100 600 288m 75 400 18m 50 200 25 0 0 Q113 Q114 Q115 Q116 Q117 Q118 Q119 Q113 Q114 Q115 Q116 Q117 Q118 Q119 Income Expenses* Income Expenses * A
Slide 21: Cost development
Cost development Q1 2019 compared to the previous year +3.3% -15.5% SEK m 5,400 1.9% -21.1% 5,200 1.7% -1.3% 0.9% 97 87 -65 47 5,000 4,800 -1,060 4,600 5,014 2.8% -12.2% 4,400 2.8% 142 4,200 141 4,403 4,000 Non-recurring items** UK and the Netherlands* Development costs (incl. amort. & depr.) AML Ok
Slide 22: Funding
Funding Handelsbanken
Slide 23: 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- RBC AA Aa2 AA- DZ Bank AA- Aa1 AA- Oversea-Chinese Banking Corp AA- Aa1 AA- United
Slide 24: Group funding strategy - Handelsbanken and Stadshypotek
Group funding strategy - Handelsbanken and Stadshypotek Access domestic and international markets Actively developed debt investor relations Diversify sources of funding in wholesale as widely as possible Covered Maintain low interest rate risk level bonds Covered Bonds MTN Covered bonds –
Slide 25: Balance sheet Q1 2019
Balance sheet Q1 2019 Substantial 1-year cash 20% of deposits leave day 1 flow surplus despite No new market funding obtained assuming severe stress: No liquidity generating measures taken SEK bn Assets Liabilities SEK bn 3,500 3,500 Cash and balances Liabilities to banks with central banks <
Slide 26: Market funding
Market funding Funding mix Covered bonds 100% 100% 90% 90% Finnish cover pool in Certificates EUR 80% 80% 70% 70% Subordinated debt Norwegian cover pool 60% 60% in NOK 50% 50% 40% 40% Senior bonds Swedish cover pool in other currencies 30% 30% 20% 20% Covered bonds 10% 10% Swedish cover pool in SEK
Slide 27: Long-term bond funding – market activity
Long-term bond funding – market activity Q1 Q1 Long-term bond issuance, SEK bn 2019 2018 Change Senior bonds 2 8 -6 Covered bonds 56 53 3 Subordinated loans 5 8 -3 Total 63 69 -6 International bond issues in Q1 2019 Issue Date Issuer Currency Amount (m) Coupon Maturity Deal type Feb 14, 2019 Svenska
Slide 28: International bond issues 2017-18
International bond issues 2017-18 Issue Date Issuer Currency Amount (m) Coupon Maturity Deal type Feb 14, 2017 Stadshypotek EUR 500 0.41% Feb 21, 2024 Covered bond Finnish pool Feb 20, 2017 Svenska Handelsbanken EUR 1,000 0.25% Feb 27, 2022 Senior unsecured Mar 29, 2017 Stadshypotek USD 1,250 2.500%
Slide 29: Maturity profile long-term funding
Maturity profile long-term funding March 31 2019 SEK bn 300 250 200 150 100 50 0 2019 2020 2021 2022 2023 Covered Senior Subordinated loans 29
Slide 30: Maturity profile of senior long-term funding
Maturity profile of senior long-term funding March 31 2019 SEK bn 80 70 60 50 40 30 20 10 0 2019 2020 2021 2022 2023 30
Slide 31: Non-encumbered assets, NEA
Non-encumbered assets, NEA March 31 2019 Accumulated coverage ratio in % of unsecured SEK bn NEA funding* Cash with central banks and securities in the liquidity portfolio*** 607 61% Mortgage loans 625 123% Other household lending 194 142% Property company lending lowest risk class (1-3) 305 173% Ot
Slide 32: Large share of senior funding remaining after fulfilling MREL
Large share of senior funding remaining after fulfilling MREL 31 March 2019 SEK bn 250 Estimated MREL issuance corresponds to around 35-40% of outstanding stock of senior bonds 200 with remaining maturity >1 year Total senior 150 funding >1 year outstanding 100 Estimated MREL requirement based on cu
Slide 33: Substantial headroom before capital restrictions
Substantial headroom before capital restrictions SEK bn 70 62,1 60 50 40 35,9 39x 30 22x 20 10 1,6 1,6 0 Distance to trigger* Average annual credit Distance to MDA** Average annual credit losses 1991-2018 losses 1991-2018 * Trigger level of 8% of REA on Group level applies to outstanding AT1-instrum
Slide 34: Stadshypotek and Housing market
Stadshypotek and Housing market 34
Slide 35: Lending market growth has cooled down – still > 5% yoy
Lending market growth has cooled down – still > 5% yoy House prices and lending, y-o-y 35 Source: Macrobond
Slide 36: Market share new lending in Swedish mortgage market
Market share new lending in Swedish mortgage market Q2 2016 – Q1 2019* 50% Market share of outstanding volume Market share of net inflow 40% 30% Stable market share 20% in the Swedish mortgage market 10% 0% -10% Handelsbanken Swedbank SEB Nordea Danske, LF, Skandiabanken, SBAB Source: Statistics Swe
Slide 37: The household mortgage – increased availability, improved functionality
The household mortgage – increased availability, improved functionality for the customer – more efficient for the bank Uncomplicated loans – fully Application Commitment Decision Payment digitalised process 2018 2019 2020 2021 Today Customers seeking Local branch advice 37
Slide 38: Stadshypotek – Swedish cover pool
Stadshypotek – Swedish cover pool 31 March 2019 Current available pool size SEK 1040bn (EUR 100bn) LTV distribution 25% Assets utilized SEK 643bn (EUR 62bn) 20% Loans secured by mortgages. Loans to or Asset types guaranteed by public sector in Sweden 15% (state & municipalities) 10% 99,2% Residentia
Slide 39: Geographical distribution Swedish cover pool
Geographical distribution Swedish cover pool 31 March 2019 5% 8% 9% 42% Greater Stockholm East Sweden West Sweden North Sweden 10% Greater Gothenburg South Sweden Greater Malmoe 12% 14% 39
Slide 40: Stadshypotek – Norwegian cover pool
Stadshypotek – Norwegian cover pool 31 March 2019 Current available pool size NOK 84bn (EUR 9bn) LTV distribution Assets utilized NOK 31bn (EUR 3bn) 30% 25% Asset types Loans secured by mortgages 20% 15% 100% Residential, 0% Public, 0% Asset distribution Agricultural, 0% Commercial 10% Throughout No
Slide 41: Stadshypotek – Finnish cover pool
Stadshypotek – Finnish cover pool 31 March 2019 Current available pool size EUR 4.6bn LTV distribution Assets utilized EUR 1.8bn 30% 25% Asset types Loans secured by mortgages 20% 15% 90,9% Residential, 9,1% Public, 0% Asset distribution Agricultural, 0% Commercial 10% Throughout Finland with a conc
Slide 42: Housing market recovered in 2018
Housing market recovered in 2018 - positive trend in 2018, continues in the beginning of 2019 - 4 % lower compared to peak at national level – slightly more in Stockholm area 42 Sources: Valueguard and Macrobond
Slide 43: Transaction activity high
Transaction activity high - Number of sold units slightly lower Q1 2019 compared to 2018 43 Sources: Svensk Mäklarstatistik and Macrobond
Slide 44: Elevated supply of unsold flats
Elevated supply of unsold flats 44 Sources: Hemnet and Macrobond
Slide 45: Stable supply of housing units for sale
Stable supply of housing units for sale - Increase has levelled out since slowing down of housing starts - Previous increase in supply driven by new construction 45
Slide 46: Construction cooling down – supply effect in 2-3y
Construction cooling down – supply effect in 2-3y Building permits, Total Construction starts, Total 46
Slide 47: Limited rental market in Stockholm
Limited rental market in Stockholm Active applicants for rental apartment in Stockholm area – 652 303 in total 70,000 60,000 Number of housing units starts: 50,000 2018: 8,018 2017: 13,504 40,000 30,000 20,000 10,000 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 20
Slide 48: Moderate interest burden despite rate hikes
Moderate interest burden despite rate hikes Debt to income and interest cost (to disposable income) 250 12.00 10.00 200 8.00 150 6.00 100 4.00 Repo rate: 1.00 50 2.00 Repo rate: -0.50 0 0.00 Debt ratio Interest cost ratio (right) Sources: The Riksbank and Statistics Sweden
Slide 49: Strong balance sheets of Swedish households
Strong balance sheets of Swedish households SEKbn 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Q196 Q197 Q103 Q104 Q105 Q106 Q112 Q113 Q114 Q115 Q198 Q199 Q100 Q101 Q102 Q107 Q108 Q109 Q110 Q111 Q116 Q117 Q118 Liquid financial assets Private, Occupational & PPM pension savings Household debt Source:
Slide 50: Contacts
Contacts Investor Relations Lars Höglund, Head of IR Tel: + 46 8 701 5170, +46 70 345 5170 (mobile), laho01@handelsbanken.se Lars Kenneth Dahlqvist, IR Tel: + 46 8 701 1018, lada01@handelsbanken.se Peter Grabe, IR Tel: + 46 8 701 1167, pegr08@handelsbanken.se Andreas Skogelid, IR Tel: + 46 8 701 568
Slide 51: 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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