Svenska Handelsbanken Ab Class A · OMXSTO:SHB_A
Svenska Handelsbanken Ab Class A — Q1 2024 Earnings Presentation
27 slides from Svenska Handelsbanken Ab Class A's earnings presentation, Apr 24, 2024
Slide 1: January – March 2024
January – March 2024 24 April 2024 1
Slide 2: Q1 2024 highlights
Q1 2024 Operating profit ▪ 14% ROE SEK bn 9 8.5 8.3 ▪ SEK 8.3bn in operating profit 8 7 6.6 ▪ 42% C/I ratio 6 5.3 ▪ Net credit loss reversals 5 4.8 4 ▪ 18.8% CET1 ratio, 400bp above SREP 3 ▪ Increased business and efficiency focus with new 2 organisation 1 0 2020 2021 2022 2023 2024 Q1 Q1 Q1 Q1 Q1 2
Slide 3: Strategic priorities
▪ Balance between business support and business generation ▪ Streamline IT-development spend ▪ Communication of how and why Handelsbanken’s model stands out ▪ Step up savings business in the UK, Norway and the Netherlands ▪ Refocus Norwegian business 3
Slide 4: Key ratios (Q1 2024 vs Q4 2023)
Key ratios: 42.2% C/I-ratio Adjusted for Q1 2024 Q4 2023 Change items affecting comparability* SEK m Net interest Income 11,587 12,222 -5% -5% -0.01% Net credit loss ratio Net fee and commission income 2,754 2,800 -2% -2% Total income 15,318 15,854 -3% -3% Total expenses -6,470 -6,086 6% 4% 13.7% Pr
Slide 5: Key ratios (Jan-Mar 2024 vs 2023)
Key ratios: 42.2% C/I-ratio Adjusted for Jan-Mar Jan-Mar Change items affecting 2024 2023 comparability* SEK m Net interest Income 11,587 11,485 1% 0% -0.01% Net credit loss ratio Net fee and commission income 2,754 2,766 0% -1% Total income 15,318 14,985 2% 2% Total expenses -6,470 -5,776 12% 11% 1
Slide 6: NII change: -5%
NII change: -5% Contribution from: ▪ Volumes: -1%-points ▪ Margins and funding: -3%-points SEK m 12,400 12,200 -87 -1% 12,000 -392 11,800 23 -3% -105 12,222 -72 -5% 11,600 -22 20 11,400 11,587 11,200 11,000 Q4 2023 Volumes in Margins and Liquidity Day count Deposit Foreign Other Q1 2024 home markets
Slide 7: Net fee and commission income
SEK m 2,500 CAGR: +1% 2,000 Savings related* 1,500 68% of net fee and 1,000 1,814 1,955 1,818 1,871 commissions 500 Net fee and commission income 0 Q1 Q1 Q1 Q1 SEK m 2021 2022 2023 2024 3,400 SEK m 1,400 1,200 3,200 1,000 Payment fees, net 800 15% CAGR: +8% 600 3,000 400 200 329 378 400 413 0 2,800
Slide 8: Customer growth
Accumulated net inflows in Swedish mutual fund market* SEK bn 350 Strong and persistent net inflow 300 Handelsbanken SEK +312bn 25% Market share of net 250 inflows 2011-2024 (Mar) 200 150 Customer growth 100 Peer Private Banking customers 1-9 +16% yoy 50 Occupational pension plans 0 +20% yoy -50 201
Slide 9: Staff costs and other expenses
Staff costs Other expenses SEK m SEK m Development expenses 2,500 4,000 1% 11% 1% 2% 21 2,400 3,900 34 4% 76 3,800 2,300 150 2,200 Development expenses 3,700 3% -1 3,600 2,100 0% 3% -4% 123 -156 61 3,500 2,000 3,935 -7% 3,400 Including annual 1,900 salary revisions and 3,300 increase in FTE’s 1,80
Slide 10: Credit loss ratio
Credit loss ratio 1997 – 2023 Credit loss ratio 2021 – Q1 2024 % 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 529m at end of Q1 2024) 1.1 -1,100 1.10 Net credit losses, ex. addon 1.0 -1,
Slide 11: Strong capital position with CET1 ratio
SEK bn 20% 18.8% 172 19% 164 18% 155 17% 147 Target range Strong capital position with CET1 ratio: 16% 138 15.8 – 17.8% 14.8% 15% 129 400 bp above the FSA minimum requirement 14% 121 100 bp above the bank’s target range 13% 112 12% 103 11% 95 10% 86 9% 163 78 Outlook 2024: 8% 69 Anticipated dividend
Slide 12: Norway, Sweden, United Kingdom, The Netherlands
Norway Sweden 6% of operating profits in the group 78% of operating profits in the group 2024 Jan-Mar vs 2023 Jan-Mar: 2024 Jan-Mar vs 2023 Jan-Mar: ▪ Operating profit SEK 0.5bn ▪ Operating profit SEK 6.4bn ▪ Operating profit yoy -13% ▪ Operating profit yoy +3% ▪ C/I ratio 51.8% (45.1) ▪ C/I ratio 3
Slide 13: Even more Handelsbanken
Even more HandelsbankKen: Higher profitability More satisfied customers Lower costs Our way 13 Handelsbanken
Slide 14: Appendix
Appendix Handelsbanken
Slide 15: Strongest asset quality, highest credit rating
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 Bank 2 Nordea Aa3 AA- AA- 0.13 2004-2023 Bank 4 SEB Aa3 A+ AA- % 0.05 Bank 5 Swedbank Aa3 A+ AA- Bank 6 Bank Danske A1 AA
Slide 16: Credit ratings vs peers
▪ 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 AA- Aa1 AA- Bank 5 AA- Aa1 AA- ▪
Slide 17: Key ratios (Q1 2024 vs Q4 2023)
Key ratios: 42.2% C/I-ratio SEK m Q1 2024 Q4 2023 Change Net interest income 11,587 12,222 -5% Net fee and commission income 2,754 2,800 -2% Net gains/losses on financial transactions 750 579 30% Other income 227 255 -11% -0.01% Total income 15,318 15,854 -3% Net credit loss ratio Staff costs, excl.
Slide 18: Key ratios (Jan-Mar 2024 vs 2023)
Key ratios: 42.2% Jan-Mar Jan-Mar C/I-ratio SEK m 2024 2023 Change Net interest income 11,587 11,485 1% Net fee and commission income 2,754 2,766 0% Net gains/losses on financial transactions 750 602 25% Other income 227 133 71% -0.01% Total income 15,318 14,985 2% Net credit loss ratio Staff costs,
Slide 19: Net effect of margins and funding costs
Net interest income continuing operations Q4 2023, SEK m 12,222 Deposit volume -21 Lending volume -31 Net effect margins and funding costs -315 Day count effect -66 Deposit guarantee fee -66 Other -79 Sweden -578 -4.7% Deposit volume -30 Lending volume -5 Net effect of margins and funding costs Net
Slide 20: NFT and liquidity portfolio
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 800 750 hedging of funding and lending 600 570 602 579 600 534 535 472 429 400 395 420 393 Capital Markets 400 357 341 312 Effects from customer driven 200 activ
Slide 21: Expected credit losses
• Expert based addon +75 • Rating migrations -49 • Better quality on new loans compared to exits +24 • Other (incl. effects from change in loan durations and migrations to stage 3) +80 Expected credit losses Credit losses Credit losses, net Stage 3, net SEK m SEK m -200 -150 Updated macro assumption
Slide 22: Low probability of default and collateralized lending
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% ~65% of 0.75 to <2.50 secured by 40% 40% high quality Financial guarantees expos
Slide 23: Property management lending
30 largest Property management lending property management customers* Net lending in Home markets Retail, offices Interest coverage ratio (ICR) Q4 2023: SEK bn and hotels - Reported**: 2.8x Break-even - Own conservative assessment**: 2.3x interest rate* 8.3% 292 Sensitivity analysis assumptions: LTV
Slide 24: Commercial and residential real estate
Commercial Real estate Residential Real estate SEK m SEK m 140,000 250,000 42% 120,000 58% 200,000 100,000 31% 150,000 80,000 22% 60,000 100,000 25% 40,000 50,000 11% 20,000 5% 6% 0 0 Sweden Norway UK the Netherlands Sweden UK the Netherlands Norway Home Home markets markets LTV 45% 51% 40% 46% 46%
Slide 25: Common equity tier 1 ratio change
Common equity tier 1 ratio Q423, % 18.8 Change, percentage points: Common equity tier 1 capital 0.6 Earnings for the period 0.7 Deducted dividends -0.3 Foreign exchange effects CET1 capital 0.3 Other and rounding -0.1 Exposure volume incl. currency effect -0.3 Volume change -0.1 Foreign exchange eff
Slide 26: Change in CET1 ratio and REA
Change in CET1-ratio, % Change in REA, SEK bn Capital REA generation effects % SEK bn 19.6 870 19.4 -0.2 6.0 -0.3 0.3 860 3.2 -2.6 -0.1 19.2 -0.2 10.0 0.7 850 7.1 -7.3 Currency 19.0 hedges -0.2 10.3 0.0 840 -0.1 0.1 -0.1 18.8 863 830 18.6 Credit risk migrations -0.1% offset by floor 820 18.4 18.8 18
Slide 27: 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 pe
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