Svenska Handelsbanken Ab Class A · OMXSTO:SHB_A
Svenska Handelsbanken Ab Class A — Q3 2023 Earnings Presentation
35 slides from Svenska Handelsbanken Ab Class A's earnings presentation, Oct 18, 2023
Slide 1: Handelsbanken January – September 2023
Handelsbanken January – September 2023 18 October 2023 1
Slide 2: Stability, efficiency and profitability
Stability, efficiency and profitabilty Operating profit* Total income* SEK bn SEK bn Income growing faster than expenses 28 50 26 +48% 45 +30% 24 16.2% ROE 22 40 20 35 18 48% underlying growth in operating profit 16 30 14 25 12 36.8% C/I ratio 10 20 Jan-Sep Jan-Sep Jan-Sep Jan-Sep 2022 2023
Slide 3: Financial summary: Q3 compared with previous quarter
Key ratios: Financial summary Q3 compared with previous quarter 35.0% C/I-ratio Adjusted for Q3 2023 Q2 2023 Change items affecting comparability* SEK m Net interest Income 12,184 11,687 4% 3% 0.00% Net credit loss ratio Net fee and commission income 2,812 2,761 2% 2% Total income 16,244 15,166 7% 7
Slide 4: Financial summary: Jan-Sep 2023 compared to previous year
Key ratios: Financial summary Jan-Sep 2023 compared to previous year 36.8% C/I-ratio Adjusted for Jan-Sep Jan-Sep Change items affecting 2023 2022 comparability* SEK m Net interest Income 35,356 25,983 36% 35% 0.01% Net credit loss ratio Net fee and commission income 8,339 8,287 1% 0% Total income 4
Slide 5: Net interest income development
NII increase: +4.3% Net interest income development Contribution from: Q3 2023 compared to previous quarter Volumes: -0.4%-points Margins and funding: +2.7%-points SEK m 12,400 12,200 -26 +4.3% 299 12,000 +2.7% -37 11,800 313 -52 11,600 12,184 -0.4% 11,400 11,687 11,200 11,000 Q2 2023 Volumes in
Slide 6: Net fee and commission income
SEK m Net fee and 2,500 CAGR: +7% 2,000 commission income Savings related* 1,500 66% of net fee and 1,000 2,075 1,912 1,816 commissions 1,571 500 Net fee and commission income 0 Q3 Q3 Q3 Q3 2020 2021 2022 2023 SEK m SEK m 3,400 1,400 1,200 3,200 1,000 Payment fees, net 800 15% CAGR: +10% 3,000 600 4
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 300 Handelsbanken SEK +308bn 31% 26% Market share of net Market share of net 250 inflows inflows Jan-Sep 2023 2011-2023 200 150 Commitment to sustainabilty 100 Peer 19 % Arti
Slide 8: Expenses
Expenses Q3 2023 compared to previous quarter SEK m 5,800 1.6% 0.9% 5,700 0.8% 91 5,600 -82 43 5,500 -1.5% Staff costs and other expenses 5,400 -1.5% 5,686 5,634 5,300 5,200 5,100 5,000 Expenses Staff costs and Depreciation, Foreign exchange effects Expenses Q2 2023 other expenses amortisation and
Slide 9: Net credit losses
Net credit losses Credit loss ratio 1997 – 2023** Credit loss ratio 2021 – Q3 2023 % SEK m Credit loss ratio, % Handelsbanken* 1.2 -1,200 1.2 Comparable Nordic Management addon diff (total accumulated amount = SEK 604m at end of Q3 2023) 1.1 -1,100 1.1 banks** Net credit losses, ex. addon 1.0 -1,000
Slide 10: CET1 ratio and regulatory requirement
CET1 ratio and regulatory requirement Q3 2023 SEK bn 21% 170 Strong capital position with CET1 ratio: 20% 19.4% 162 19% 154 450 bp above the FSA minimum requirement incl. announced CCyB** 18% 146 Target range 17% 137 incl. announced 150 bp above the bank’s target range CCyB hikes: 16% 129 15.9 – 17.
Slide 11: High customer satisfaction
High customer satisfaction Retail customers Corporate customers Business bank of the year Index Index 85 85 Handelsbanken Sector average 80 80 75 75 70 70 Sweden’s Small Enterprise 65 65 Bank 2023 60 60 55 55 12th consecutive year ”Handelsbanken has managed the [digital transition] well, and custome
Slide 12: Appendix
Appendix Handelsbanken
Slide 13: Safety and stability provide flexibility
Safety and stability provide flexibility Highest credit rating in the world Strongest asset quality Moody's S&P Fitch 0.25 Handelsbanken Aa2 AA- AA Net credit 0.19 DNB Bank 3 Aa2 AA- loss ratio* 0.14 0.15 0.15 Credit ratings Nordea Bank 2 Aa3 AA- AA- 2003-2022 SEB Bank 4 Aa3 A+ AA- % 0.06 Bank 5 Swe
Slide 14: 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- Aa1 AA- Bank 3 AA- Aa1 AA- June 2023: Fitch Bank 4
Slide 15: Income statement: compared to previous quarter
Key ratios: Income statement Compared to previous quarter 35.0% C/I-ratio SEK m Q3 2023 Q2 2023 Change Net interest income 12,184 11,687 4% Net fee and commission income 2,812 2,761 2% Net gains/losses on financial transactions 1,087 393 177% Other income Total income 161 16,244 325 15,166 -50% 7% 0
Slide 16: Income statement: compared to the previous year
Key ratios: Income statement Compared to the previous year 36.8% SEK m Jan-Sep Jan-Sep Change C/I-ratio Net interest income 35,356 25,983 36% - funding costs related to discontinued operations in Finland 125 Net fee and commission income 8,339 8,287 1% Net gains/losses on financial transactions 2,08
Slide 17: Handelsbanken Sweden
Handelsbanken Sweden C/I-ratio Operating profit* 37% SEK m 35% 8,000 33% 7,248 33.8% 31% 32.6% 7,000 +26% 29% 29.1% 6,000 5,736 27% 26.1% 25% Q3 Q3 Q3 Q3 5,000 2020 2021 2022 2023 Number of branches 206 Net interest income Average lending 4,000 SEK m SEK bn 8,000 7,713 1,650 +2% 1,625 3,000 7,500 +2
Slide 18: Handelsbanken UK
Handelsbanken UK C/I-ratio Operating profit 80% 75.0% GBP m 75% 140 70% 62.9% 65% 121 60% 55.6% 120 55% +50% 50% 46.4% 45% 100 40% Q3 Q3 Q3 Q3 81 2020 2021 2022 2023 Number of branches 162 80 Net interest income Expenses GBP m GBP m 250 -250 60 214 50 +36% 200 -200 157 40 36 150 -150 118 115 -103 -1
Slide 19: Handelsbanken Norway
Handelsbanken Norway C/I-ratio Operating profit 48% NOK m 800 46% 44% 727 42% 40.8% 700 +12% 40% 42.4% 37.3% 648 38% 36.5% 36% 591 600 34% 547 32% 30% 500 Q3 Q3 Q3 Q3 2020 2021 2022 2023 Number of branches 41 400 Net interest income Average lending NOK m NOK bn 1,200 310 306 1,155 +5% 300 1,150 +17%
Slide 20: Handelsbanken the Netherlands
Handelsbanken the Netherlands C/I-ratio Operating profit 70% 65.4% EUR m 65% 25 60% 23 55% Performance fees +69% 50% 51.1% 54.2% 46.2% 20 45% 40% Q3 Q3 Q3 Q3 2020 2021 2022 2023 15 Number of branches 27 15 14 Net interest income Average lending EUR m EUR m 45 43 9,500 10 +4% 8,692 40 8,390 8 +38% 8,
Slide 21: Change in NII from previous quarter
Change in NII from previous quarter Net interest income continuing operations Q2 2023, SEK m 11 687 Deposit volume -1 Lending volume -3 Net effect margins and funding costs 160 Day count effect 68 Deposit guarantee fee 0 Other 11 Sweden 235 2,0% Deposit volume -40 Lending volume -8 Net effect of mar
Slide 22: Stable growth
Stable growth SEK m Lending to the public* 2,500 2,000 Corporate lending CAGR 3% 1,500 1,000 Household lending 500 CAGR 6% 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 * Volume at end of period in Handelsbanken’s home markets: Sweden, Norway, UK and the Netherlan
Slide 23: Lending to the public
Lending to the public* Home markets Household Corporate SEK bn SEK bn Sustainability 1,250 +0% 1,050 +4% linked loans 1,200 CAGR: +4% 1,000 CAGR: +4% 1,150 950 1,100 1,050 900 1,000 850 950 900 800 30 Sep 2019 30 Sep 2020 30 Sep 2021 30 Sep 2022 30 Sep 2023 30 Sep 2019 30 Sep 2020 30 Sep 2021 30 Sep
Slide 24: Deposits from the public
Deposits from the public* Home markets Household Corporate SEK bn SEK bn 700 700 -4% 650 650 0% CAGR: +12% 600 600 CAGR: +8% 550 550 500 500 450 450 400 400 350 350 300 300 30 Sep 2019 30 Sep 2020 30 Sep 2021 30 Sep 2022 30 Sep 2023 30 Sep 2019 30 Sep 2020 30 Sep 2021 30 Sep 2022 30 Sep 2023 * Volum
Slide 25: 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 600 570 602 600 534 535 472 400 429 420 357 395 393 Capital Markets 400 312 341 Effects from customer driven 200
Slide 26: Asset quality
Asset quality • • Rating migrations Better quality on new loans compared to exits -77 +10 • Expert based addon +14 • Other +72 Expected credit losses Credit losses Credit losses, net Stage 3, net SEK m SEK m -2 00 -1 50 Updated -2 macro assumptions -1 50 -1 00 -1 00 -5 0 Other effects 19 Stage 1 and
Slide 27: 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
Slide 28: 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) Q2 2023: SEK bn and hotels - Reported**: 3.1x Break-even - Own conservative assessment**: 2.5x interest rate* 8.2% 306 Sensit
Slide 29: Conservative underwriting criteria
Conservative underwriting criteria Backward looking Forward looking KPI-based risk assessment Break-even interest rate Future potential risks including • EBIT in relation to total interest bearing debt • Risks to the business model and cashflow • Highest interest rate that current level of EBIT can
Slide 30: 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 40% 120,000 34% 56% 200,000 100,000 150,000 80,000 21% 60,000 25% 100,000 40,000 50,000 11% 20,000 4% 8% 0 0 Sweden Norway UK the Netherlands Sweden UK the Netherlands Norway Home Home
Slide 31: 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 Q223, % 19.8 Change, percentage points: Common equity tier 1 capital 0.3 Earnings for the period 0.9 Deducted dividends -0.5 Foreign exchange effects CET1 capital -0.2 Other and rounding 0.1 Exposure volume incl. curren
Slide 32: 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 20.8 880 20.7 20.6 870 20.5 2.8 -0.5 2.0 20.4 860 20.3 0.9 18.9 20.2 20.1 -0.2 850 0.1 20.0 -0.3 19.9 840 Effective currency -0.7 14.4 19.8 hedges -5.3 869 19.7 830 -0.8 1
Slide 33: Funding and liquidity
Funding and liquidity Assets* Liabilities* SEK bn 3,500 3,500 Short term liabilities 714 Cash and balances at 3,000 backed by 1.7 times 870 3,000 Short term liabilities backed by central banks more short term 1.7 times more short term assets Liabilities and issued assets securities maturing 107 2,50
Slide 34: Non-encumbered assets, NEA
Non-encumbered assets, NEA September 2023 Accumulated coverage ratio in % of unsecured SEK bn NEA funding* Holdings with central banks and securities in the liquidity portfolio 825 80% Mortgage loans 796 157% Other household lending 153 172% Property company lending lowest risk class (1-3) 277 199%
Slide 35: 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
Svenska Handelsbanken — Q3 2023 Earnings Presentation on 6ix