Svenska Handelsbanken Ab Class A · OMXSTO:SHB_A
Svenska Handelsbanken Ab Class A — Q1 2023 Earnings Presentation
43 slides from Svenska Handelsbanken Ab Class A's earnings presentation, Apr 26, 2023
Slide 1: Handelsbanken January – March 2023
Handelsbanken January – March 2023 26 April 2023 1
Slide 2: Highlights January – March 2023
Highlights January – March 2023 Operating profit* Total income* SEK bn SEK bn Strong liquidity and capital position 9 16 15 8 14 +34% +57% Solid asset quality 7 13 6 12 11 Conservative approach to risk brings 5 10 flexibility and opportunities 4 9 8 3 7 Strong earnings growth 2 6 Jan-Mar Jan
Slide 3: Financial summary: Q1 compared with previous quarter
Key ratios: Financial summary Q1 compared with previous quarter 38.5% C/I-ratio Adjusted for Q1 2023 Q4 2022 Change items affecting comparability* SEK m Net interest Income 11,485 10,631 8% 5% 0.01% Net credit loss ratio Net fee and commission income 2,766 2,694 3% 3% Total income 14,985 14,053 7% 4
Slide 4: Financial summary: Jan-Mar 2023 compared to previous year
Key ratios: Financial summary Jan-Mar 2023 compared to previous year 38.5% C/I-ratio Adjusted for Jan-Mar Jan-Mar Change items affecting 2023 2022 comparability* SEK m Net interest Income 11,485 8,014 43% 45% 0.01% Net credit loss ratio Net fee and commission income 2,766 2,877 -4% -4% Total income
Slide 5: Stable growth
Stable growth SEK m Lending to the public* 2,500 2,000 Corporate lending CAGR 5% 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 6: Net interest income development
NII underlying: +5% Net interest income development NII reported: +8% Contribution from: Q1 2023 compared to previous quarter Volumes: -1% Margins and SEK m funding: +7% 11,800 +7% Central funding costs in continuing operations -75 +5% -143 104 related to discontinued 11,300 operations in Finlan
Slide 7: Expenses
Expenses Q1 2023 compared to previous quarter SEK m 6,000 3% 0% 4 5,900 151 -152 1% -1% 5,800 1% -126 30 30 -3% 5,700 -2% Development expenses 5,600 +1%-point 5,500 5,400 5,839 5,776 5,300 Other expenses 5,200 -2%-points 5,100 5,000 Expenses Other Development Depreciation, Oktogonen Foreign Other it
Slide 8: Customer strategy: the best of two worlds
Customer strategy: the best of two worlds The most Seamless …with a leading personal advisor… digital experience 8
Slide 9: An attractive and comprehensive offer
An attractive and comprehensive offer Personal advice Customer center Digital meeting places Easy: • On-boarding • Mortgages • Savings Support and • Everyday services advice 439 branches Physical or on-line 24/7 Norway: 41 branches • Quick response time • Authorised advisors Sweden: 205 branches UK:
Slide 10: 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 (S) AA- (S) AA (S) Net credit 0.19 Nordea Aa3 (S) AA- (S) AA- (S) loss ratio* 0.15 0.15 Credit ratings 0.14 SEB Aa3 (S) A+ (S) AA- (S) 2003-2022 % 0.06 Swedban
Slide 11: Asset quality
Asset quality Loan books split by Proportion Probability of Default (PD)* collateralized lending** Average PD: 0.4% 0.9% 1.4% 0.8% 2.6% 2.5% 100% 100% 90% 90% 80% PD-ranges 80% 70% 100.00 (Default) 70% 60% 10.00 to <100.00 60% ~80% of 2.50 to <10.00 >90% Uncollateralized 50% exposure in 50% secured
Slide 12: Lending to property management
Lending to property management 30 largest Property management lending property management customers** Net lending in Home markets Retail, offices SEK bn and hotels Interest coverage ratio (ICR) 2022: 3.5x Break-even interest rate* 8.1% Sensitivity analysis assumptions: Interest on all debt refinan
Slide 13: Net credit losses
Net credit losses Credit loss ratio 1997 – 2022 Credit loss ratio 2021 – 2023 Q1 % SEK m Credit loss ratio, % Handelsbanken* 1.2 -1,200 1.2 Comparable Nordic Management addon diff (total accumulated amount = SEK 624m at end of Q1 2023) 1.1 -1,100 1.1 banks** Net credit losses, ex. addon 1.0 -1,000 1
Slide 14: CET1 ratio and regulatory requirement
CET1 ratio and regulatory requirement Q1 2023 SEK bn 21% 170 Strong capital position with CET1 ratio: 20% 19.4% 162 400 bp above the FSA minimum requirement 19% 154 Target range incl. announced CCyB** 18% 146 incl. announced CCyB hikes: 100 bp above the bank’s target range 17% 137 16.4 – 18.4% 16% 1
Slide 15: Funding and liquidity
Funding and liquidity Assets* Liabilities* SEK bn 3,500 3,500 Liquidity reserve SEK 765bn 3,000 685 3,000 Cash and balances at 851 Short term liabilities backed by central banks Liabilities and issued Short term liabilities 1.7 times more short term assets 80 securities shorter backed by 1.7 times t
Slide 16: Appendix
Appendix Handelsbanken
Slide 17: Income statement: compared to previous quarter
Key ratios: Income statement Compared to previous quarter 38.5% SEK m Q1 2023 Q4 2022 Change C/I-ratio Net interest income 11,485 10,631 8% - funding costs related to discontinued operations in Finland -295 Net fee and commission income 2,766 2,694 3% Net gains/losses on financial transactions 602 5
Slide 18: Income statement: compared to previous year
Key ratios: Income statement Compared to the previous year Jan-Mar Jan-Mar 38.5% SEK m 2023 2022 Change C/I-ratio Net interest income 11,485 8,014 43% - funding costs related to discontinued operations in Finland 125 Net fee and commission income 2,766 2,877 -4% Net gains/losses on financial transac
Slide 19: Handelsbanken Sweden
Handelsbanken Sweden C/I-ratio Operating profit* 39% SEK m 36.8% 36.3% 36.2% 37% 7,000 35% 6,191 33% 6,000 31% 29.8% +49% 29% 5,000 27% Q1 Q1 Q1 Q1 4,143 4,168 2020 2021 2022 2023 Number of branches 205 4,000 3,710 Net interest income Average lending SEK m SEK bn 3,000 7,500 7,265 1,650 1,631 7,000
Slide 20: Handelsbanken UK
Handelsbanken UK C/I-ratio Operating profit 87% GBP m 77% 71.2% 140 67.6% 67% 63.0% 118 57% 120 46.2% 47% +167% 37% 100 27% Q1 Q1 Q1 Q1 2020 2021 2022 2023 Number of branches 162 80 Net interest income Expenses GBP m GBP m 250 -250 60 202 49 200 -200 44 +64% 41 40 150 -150 126 123 115 -96 -97 +6% -1
Slide 21: Handelsbanken Norway
Handelsbanken Norway C/I-ratio Operating profit 47% 45.1% NOK m 45% 800 43% 41% 37.9% 688 39% 36.5% 700 35.5% 37% 35% 607 612 33% 600 +21% 31% 29% 504 27% 500 Q1 Q1 Q1 Q1 2020 2021 2022 2023 Number of branches 41 400 Net interest income Average lending NOK m NOK bn 1,150 320 1,117 301 300 1,100 +11%
Slide 22: Handelsbanken the Netherlands
Handelsbanken the Netherlands C/I-ratio Operating profit 77% 72% 67.8% EUR m 67% 25 58.9% 62% 54.6% 57% 22 52% 45.9% Performance fees +69% 47% 42% 20 37% 32% 27% Q1 Q1 Q1 Q1 2020 2021 2022 2023 15 Number of branches 27 13 Net interest income Average lending 11 EUR m EUR m 45 9,000 8,631 41 10 +14% 4
Slide 23: Change in NII from previous quarter
Change in NII from previous quarter Net interest income continuing operations Q4 2022, SEK m 10,631 Deposit volume -36 Lending volume 42 Net effect margins and funding costs 480 Day count effect -109 Deposit guarantee fee 43 Other -17 Sweden 403 3.8% Deposit volume -88 Lending volume -2 Net effect o
Slide 24: Change in NII from previous year
Change in NII from previous year Net interest income continuing operations Jan-Mar 2022, SEK m 8,014 Deposit volume 31 Lending volume 213 Net effect margins and funding costs 2,185 Day count effect 0 Deposit guarantee fee -18 Other 56 Sweden 2,467 30.8% Deposit volume -29 Lending volume 17 Net effec
Slide 25: Net interest income development
NII underlying: +45% Net interest income development NII reported: +43% Contribution from: Jan-Mar 2023 compared to previous year Volumes: +3% Margins and SEK m funding: +42% 12,000 +42% +45% -110 4 132 11,000 10,000 3,338 9,000 11,485 +3% 8,000 232 Negative central funding costs in continuing o
Slide 26: Net interest income – sequential contributions
Net interest income – sequential contributions Net interest income, sequential contribution Q1 2021 – Q1 2023 SEK m 350 1,185 1,161 300 757 250 200 150 104 100 48 50 0 -12 -50 -100 -84 -75 -179 -150 Volumes in Net effect margins Liquidity portfolio Day count effect Foreign exchange Deposit guarantee
Slide 27: Lending to the public
Lending to the public* Home markets Household Corporate SEK bn SEK bn Sustainability linked loans 1,250 1,050 1,200 CAGR: +4% 1,000 CAGR: +4% 1,150 950 1,100 1,050 900 1,000 850 950 900 800 31 Mar 2019 31 Mar 2020 31 Mar 2021 31 Mar 2022 31 Mar 2023 31 Mar 2019 31 Mar 2020 31 Mar 2021 31 Mar 2022 31
Slide 28: Deposits from the public
Deposits from the public* Home markets Household Corporate SEK bn SEK bn 700 700 650 650 CAGR: +11% 600 600 CAGR: +7% 550 550 500 500 450 450 400 400 350 350 300 300 31 Mar 2019 31 Mar 2020 31 Mar 2021 31 Mar 2022 31 Mar 2023 31 Mar 2019 31 Mar 2020 31 Mar 2021 31 Mar 2022 31 Mar 2023 * Volume at en
Slide 29: Net fee and commission income
SEK m Net fee and 2,000 CAGR: +7% 1,500 commission income Savings related* 66% 1,000 1,814 1,956 1,818 of net fee and 1,501 commissions 500 0 Net fee and commission income Jan-Mar Jan-Mar Jan-Mar Jan-Mar SEK m 2020 2021 2022 2023 SEK m 3,000 2,000 2,900 1,500 Payment fees, net 2,800 CAGR: +5% 14% 1,
Slide 30: Savings business
Savings business Market share Accumulated net inflow in Sweden since 2010* in the Swedish mutual funds market % SEK bn 13% 300 12.3% Handelsbanken 45% 12% 250 Share of net inflow 2023 11% 200 10% 150 9.1% 9% 100 Peer 8% 50 1-9 7% 0 Best rating** Dec 2022 6% -50 2011 2013 2015 2017 2019 2021 2023 201
Slide 31: NFT quarterly
NFT quarterly NFT Liquidity portfolio SEK m SEK m 1,200 1,200 1,000 1,000 800 Other NFT 800 Including market valuation 600 impacts of derivatives used for 600 570 602 534 535 hedging of funding and lending 472 400 429 413 395 420 400 355 357 341 312 260 271 Capital Markets 200 Effects from customer
Slide 32: Expenses: Jan-Mar compared to previous year
Expenses Jan-Mar compared to previous year SEK m 6,000 2% 0% 12% 5,800 0% 25 3% 115 5,600 22 6% 138 5,400 329 Development expenses 5,200 +3%-points 5,000 5,776 4,800 4,600 5,147 Other expenses 4,400 +6%-points 4,200 4,000 Expenses Other Development Depreciation, Oktogonen Foreign Expenses Jan-Mar ex
Slide 33: Expenses
Expenses SEK m 3,500 CAGR: 3,000 -1% 2,852 2,500 2,000 CAGR: 1,456 1,500 +6% 1,000 CAGR: 812 +29% CAGR: +4% 500 454 202 0 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Staff costs excl. one-offs, 2020 Other admin. expenses excl. 2023 2020 Development expenses excl. 2023 2020 Depreciation and write downs 2023 2020 O
Slide 34: Asset quality
Asset quality • • Rating migrations Better quality on new loans compared to exits -46 +10 • Addon -3 • Other +15 Expected credit losses Credit losses Credit losses, net Stage 3, net SEK m SEK m -200 -150 Updated -2 -150 macro assumptions -100 -100 Other effects -50 -24 -30 -46 Stage 1 and Stage 2 -5
Slide 35: Lowest share of non performing loans
Lowest share of non performing loans* 7% Nordic peers 6% 1.7% 1.6% 1.1% 5% 0.5% 0.5% 0.3% 4% 3% 2% 1% 0% Handelsbanken Non performing loans Performing loans past due >30 days * EBA transparency excercise 2022 (data per June 2022). Including banks with gross loan volumes > EUR 50bn. 35
Slide 36: Property management exposures
Property management exposures • The Bank is always restrictive – in all activities Diversified • Property markets are heterogeneous – in both a segment as a geographical perspective risk • Property lending is collateralised • Overall assessment of the client’s repayment ability (cash flow oriented)
Slide 37: 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 • Ph
Slide 38: Low loan-to-values in property portfolio
Low loan-to-values in property portfolio Commercial Real estate Residential Real estate SEK m SEK m 140,000 200,000 57% 41% 180,000 120,000 33% 160,000 100,000 140,000 120,000 80,000 21% 100,000 25% 60,000 80,000 40,000 60,000 10% 40,000 8% 20,000 5% 20,000 0 0 Sweden Norway UK the Netherlands Swede
Slide 39: 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 Q422, % 19.6 Change, percentage points: Common equity tier 1 capital 0.3 Earnings for the period 0.8 Deducted dividends -0.4 Foreign exchange effects CET1 capital 0.0 Other and rounding -0.1 Exposure volume incl. curren
Slide 40: Change in CET1-ratio from previous quarter
Change in CET1-ratio from previous quarter Change in CET1-ratio, % Change in RWEA, SEK bn Capital RWEA generation effects % SEK bn 20.5 860 PD-increase from IRB-overhaul on retail exposures 20.4 Offset by lower REA impact from risk weight floors 20.3 850 20.2 -0.4 20.1 840 20.0 0.8 34.4 -31.9 83
Slide 41: Non-encumbered assets, NEA
Non-encumbered assets, NEA March 2023 Accumulated coverage ratio in % of unsecured SEK bn NEA funding* Holdings with central banks and securities in the liquidity portfolio*** 765 82% Mortgage loans 822 170% Other household lending 156 187% Property company lending lowest risk class (1-3) 301 220% O
Slide 42: 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- Oversea-Chinese Banking Corp AA- Aa1 AA- United Overseas Bank AA- Aa1 AA- TD Bank A
Slide 43: 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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