Svenska Handelsbanken Ab Class A · OMXSTO:SHB_A
Svenska Handelsbanken Ab Class A — Q2 2023 Earnings Presentation
35 slides from Svenska Handelsbanken Ab Class A's earnings presentation, Jul 19, 2023
Slide 1: Handelsbanken January – June 2023
Handelsbanken January – June 2023 19 July 2023 1
Slide 2: Stability in a volatile environment
Stability in a volatile environment Operating profit* Total income* SEK bn SEK bn Income growing faster than expenses 18 36 16 +60% 31 60% underlying growth in operating profit 14 26 +35% 12 10 21 37.8% C/I ratio 8 16 6 4 11 15.6% ROE 2 6 Jan-Jun Jan-Jun Jan-Jun Jan-Jun 2022 2023 2022 2023
Slide 3: Financial summary Q2 compared with previous quarter
Key ratios: Financial summary Q2 compared with previous quarter 37.1% C/I-ratio Adjusted for Q2 2023 Q1 2023 Change items affecting comparability* SEK m Net interest Income 11,687 11,485 2% 1% 0.00% Net credit loss ratio Net fee and commission income 2,761 2,766 0% -1% Total income 15,166 14,985 1%
Slide 4: Financial summary Jan-Jun 2023 compared to previous year
Key ratios: Financial summary Jan-Jun 2023 compared to previous year 37.8% C/I-ratio Adjusted for Jan-Jun Jan-Jun Change items affecting 2023 2022 comparability* SEK m Net interest Income 23,172 16,404 41% 42% 0.01% Net credit loss ratio Net fee and commission income 5,527 5,587 -1% -2% Total income
Slide 5: Strong position in core business
Strong position in core business Financing Savings Highest customer satsifaction with the App Among large banks Best rating** Business bank of the year, SKI 2017, 2018, 2019, Dec 2022 2022 2020, 2021, 2022 Sweden’s small enterprise bank, Safest commercial 2022 bank in Europe Global Finance 2022 Best
Slide 6: Lending to the public
Lending to the public* Home markets Household Corporate SEK bn SEK bn Sustainability 1,250 +1% 1,050 +7% linked loans 1,200 CAGR: +4% 1,000 1,150 CAGR: +3% 950 1,100 1,050 900 1,000 850 950 900 800 30 Jun 2019 30 Jun 2020 30 Jun 2021 30 Jun 2022 30 Jun 2023 30 Jun 2019 30 Jun 2020 30 Jun 2021 30 Jun
Slide 7: Deposits from the public
Deposits from the public* Home markets Household Corporate SEK bn SEK bn 700 700 -2% 650 650 0% CAGR: +14% 600 600 CAGR: +9% 550 550 500 500 450 450 400 400 350 350 300 300 30 Jun 2019 30 Jun 2020 30 Jun 2021 30 Jun 2022 30 Jun 2023 30 Jun 2019 30 Jun 2020 30 Jun 2021 30 Jun 2022 30 Jun 2023 * Volum
Slide 8: Savings business in Sweden
Savings business in Sweden Assets under management +325% 2010-2023 ~46% coming from accumulated net inflows Market share of net inflows in fund market 2011-2023 26% Jan-Jun 2023 29% Assets under management in Accumulated net inflows in Handelsbanken Sweden Swedish mutual fund market* SEK bn SE
Slide 9: Net interest income development
NII increase: +2% Net interest income development Contribution from: Q2 2023 compared to previous quarter Volumes: -1% Margins and funding: +1% SEK m 11,800 11,700 +2% 20 11,600 187 +1% 11,500 -49 170 -126 11,400 -1% 11,687 11,300 11,485 11,200 11,100 11,000 Q1 2023 Volumes in home Margins and L
Slide 10: Expenses
Expenses Q2 2023 compared to previous quarter SEK m 5,900 1% 5,800 56 -36 -1% 5,700 -202 1% -2% 5,600 40 -3% 5,500 Flat underlying expenses 5,400 5,776 5,300 5,634 5,200 5,100 5,000 Expenses Other Depreciation, Oktogonen Foreign exchange Expenses Q1 2023 expenses amortisation and effects Q2 2023 wri
Slide 11: Net credit losses
Net credit losses Credit loss ratio 1997 – 2023** Credit loss ratio 2021 – Q2 2023 % SEK m Credit loss ratio, % Handelsbanken* 1.2 -1,200 1.2 Comparable Nordic Management addon diff (total accumulated amount = SEK 618m at end of Q2 2023) 1.1 -1,100 1.1 banks** Net credit losses, ex. addon 1.0 -1,000
Slide 12: CET1 ratio and regulatory requirement
CET1 ratio and regulatory requirement Q2 2023 SEK bn 21% 170 19.8% Strong capital position with CET1 ratio: 20% 162 19% 154 430 bp above the FSA minimum requirement Target range incl. announced CCyB** 18% 146 incl. announced 17% 137 CCyB hikes: 130 bp above the bank’s target range 15.5% 16.5 – 18.5%
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: Appendix
Appendix Handelsbanken
Slide 15: 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 Ratings confirmed: Handelsbanken AA Aa2 AA- Bank 2 AA- Aa1 AA- June 2023: Fitch Bank 3 AA- Aa1 AA- Bank 4
Slide 16: Income statement, compared to previous quarter
Key ratios: Income statement Compared to previous quarter 37.1% SEK m Q2 2023 Q1 2023 Change C/I-ratio Net interest income 11,687 11,485 2% Net fee and commission income 2,761 2,766 0% Net gains/losses on financial transactions 393 602 -35% Other income 325 132 146% Total income 15,166 14,985 1% 0.0
Slide 17: Income statement, compared to the previous year
Key ratios: Income statement Compared to the previous year Jan-Jun Jan-Jun 37.8% SEK m 2023 2022 Change C/I-ratio Net interest income 23,172 16,404 41% - funding costs related to discontinued operations in Finland 125 Net fee and commission income 5,527 5,587 -1% Net gains/losses on financial transa
Slide 18: Handelsbanken Sweden
Handelsbanken Sweden C/I-ratio Operating profit* 39% 37.5% SEK m 37% 35.9% 36.2% 7,000 6,569 35% 33% 6,000 31% 28.7% +61% 29% 5,000 27% 4,426 Q2 Q2 Q2 Q2 4,088 2020 2021 2022 2023 Number of branches 206 4,000 3,853 Net interest income Average lending SEK m SEK bn 3,000 8,000 1,650 1,628 7,478 +4% 7,
Slide 19: Handelsbanken UK
Handelsbanken UK C/I-ratio Operating profit 87% GBP m 77% 73.1% 140 68.0% 67% 57.4% 57% 120 117 48.3% 47% +71% 37% 100 27% Q2 Q2 Q2 Q2 2020 2021 2022 2023 Number of branches 162 80 68 Net interest income Expenses GBP m GBP m 250 -250 60 207 200 -200 +47% 39 38 140 40 150 -150 120 116 -100 +18% -110
Slide 20: Handelsbanken Norway
Handelsbanken Norway C/I-ratio Operating profit 47% 45.4% NOK m 45% 800 43% 41.0% 41% 37.9% 685 39% 700 36.1% 37% 649 -4% 623 35% 33% 600 31% 29% 27% 500 Q2 Q2 Q2 Q2 2020 2021 2022 2023 Number of branches 41 400 401 Net interest income Average lending NOK m NOK bn 1,150 310 306 300 1,093 +6% 1,100 +
Slide 21: Handelsbanken the Netherlands
Handelsbanken the Netherlands C/I-ratio Operating profit 75% 70.6% EUR m 70% 25 65% 58.7% 59.1% 60% 22 55% Performance fees +94% 48.5% 50% 20 45% 40% Q2 Q2 Q2 Q2 2020 2021 2022 2023 Number of branches 27 15 12 Net interest income Average lending 11 EUR m EUR m 45 42 9,500 10 +6% 8,653 40 +39% 8,500
Slide 22: Funding and liquidity
Funding and liquidity Assets* Liabilities* SEK bn 3,500 3,500 774 Short term liabilities 896 3,000 3,000 Cash and balances at backed by 1.7 times Short term liabilities backed by central banks more short term Liabilities and issued 1.7 times more short term assets 101 assets securities shorter 2,500
Slide 23: Change in NII from previous quarter
Change in NII from previous quarter Net interest income continuing operations Q1 2023, SEK m 11,485 Deposit volume -54 Lending volume -8 Net effect margins and funding costs 128 Day count effect 62 Deposit guarantee fee 0 Other 85 Sweden 213 1.9% Deposit volume -67 Lending volume 3 Net effect of mar
Slide 24: 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 5% 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 25: Net fee and commission income
SEK m Net fee and 4,000 CAGR: +8% 3,000 commission income Savings related* 66% 2,000 3,712 3,750 3,683 of net fee and 2,896 commissions 1,000 0 Net fee and commission income Jan-Jun Jan-Jun Jan-Jun Jan-Jun SEK m 2020 2021 2022 2023 SEK m 5,800 2,000 CAGR: +6% 1,500 5,600 Payment fees, net 14% 1,000
Slide 26: Expenses, Jan-Jun compared to previous year
Expenses Jan-Jun compared to previous year SEK m 12,000 1% 11% 11,500 1% 1% 3% 112 58 65 6% 282 11,000 10,500 620 Development expenses +3%-points 10,000 11,410 9,500 9,000 10,273 Other expenses +6%-points 8,500 8,000 Expenses Other Development Depreciation, Oktogonen Foreign exchange Expenses Jan-
Slide 27: Asset quality
Asset quality • • Rating migrations Better quality on new loans compared to exits -176 +11 • Expert based addon +6 • Other +15 Expected credit losses Credit losses Credit losses, net Stage 3, net SEK m SEK m -2 00 -1 50 Updated 27 macro assumptions -1 50 -1 00 -58 -1 00 -5 0 Other effects -144 Stage
Slide 28: 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% ~80% of >90% Uncollateralized 50% 50% exposure in 0.75 to <2.50 secured by 40%
Slide 29: Lending to property management
Lending to property management 30 largest Propertymanagement Property management lending lending property management customers** Net lending in Home markets Retail, offices SEK bn and hotels Interest coverage ratio (ICR) Q1 2023: 3.0x Break-even interest rate* 8.1% Sensitivity analysis assumptions:
Slide 30: 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 31: 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 56% 40% 180 000 120 000 33% 160 000 100 000 140 000 120 000 80 000 22% 100 000 26% 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 32: 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 Q123, % 19.4 Change, percentage points: Common equity tier 1 capital 0.6 Earnings for the period 0.8 Deducted dividends -0.4 Foreign exchange effects CET1 capital 0.4 Other and rounding -0.2 Exposure volume incl. curren
Slide 33: 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 20.5 860 20.4 20.3 0.2 850 20.2 -0.5 20.1 -16.0 18.7 20.0 -0.4 0.4 -0.4 0.4 840 19.9 1.9 -0.1 -1.6 19.8 0.8 830 19.7 Effective currency 14.8 19.6 hedges -7.5 19.5 820 838
Slide 34: Non-encumbered assets, NEA
Non-encumbered assets, NEA June 2023 Accumulated coverage ratio in % of unsecured SEK bn NEA funding* Holdings with central banks and securities in the liquidity portfolio 880 83% Mortgage loans 816 159% Other household lending 159 174% Property company lending lowest risk class (1-3) 304 203% Other
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 — Q2 2023 Earnings Presentation on 6ix