Handelsbanken Lennart Francke, Head of Accounting and Control UBS Annual Nordic Financial Service Conference August 25, 2005
UBS Annual Nordic Financial Service Conference Handelsbanken, first half-year 2005 Expansion outside of Sweden Insurance Market position in Sweden 2
Income statement, January - June Change SEK m 2005 2004 % Net interest income 7 475 7 384 1 Net commission income 3 356 2 983 13 Net gains/losses on items at fair value 1 319 1 241 6 Other income 355 347 2 Total income 12 505 11 955 5 Staff costs -3 252-3 224 1 Other expenses -2 149-1 894 13 Total expenses -5 401-5 118 6 Profit before loan losses 7 104 6 837 4 Loan losses -28-18 56 Disposal of tangible and intangible assets 4 2 100 Operating profit 7 080 6 821 4 3
Loans to the public - Sweden, quarterly Average volumes Q2 Q1 Q4 Q3 Q2 SEK bn 2005 2005 2004 2004 2004 Mortgage loans 422 416 409 402 395 Private 280 273 267 260 254 Corporate 142 143 142 142 141 Bank loans 297 288 287 283 282 Private 49 47 47 47 45 Corporate 248 241 240 236 237 Total Sweden 719 704 696 685 677 Private 329 320 314 307 299 Corporate 390 384 382 378 378 4
Lending to the general public, quarterly Average volumes Q2 Q1 Q4 Q3 Q2 SEK bn 2005 2005 2004 2004 2004 Sweden 719 704 696 685 677 Other regional banks 174 161 155 152 148 Private 67 61 56 53 50 Corporate 107 100 99 99 98 Rest of world 21 18 21 23 23 Private 2 1 2 2 2 Corporate 19 17 19 21 21 Total 914 883 872 860 848 Private 398 382 372 362 351 Corporate 516 501 500 498 497 5
Net interest margin - Variable rate household deposits SEK SEK bn 90 Average volumes Margins 2,70% 85 80 75 70 2,38% 2,47% 2,39% 2,31% 2,20% 2,04% 1,84% 1,86% 1,77% 2,50% 2,30% 2,10% 1,90% 65 1,70% 60 1,44% 1,44% 1,42% 1,41% 1,35% 1,50% 55 1,30% 50 1,10% 45 6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2002 2003 2004 2005 0,90%
Key ratios, January - June 2005 2004 Return on equity after full tax 16,6 % 16,7 % Cost/income before loan losses 43,2 % 42,8 % Net earnings per share, SEK 7:68 7:21 Moving 12-month 15:02 7
Capital base and capital ratio SEK bn 70 60 50 40 9,5% 9,9% 9,3% 10,2% 10,0% 10,0% Tier II 30 20 6,4% 6,1% 6,4% 7,3% 7,6% 7,0% Tier I 10 8 0 2000 2001 2002 2003 2004 2005 30 June
Return on shareholder s equity 1973-2004 % 30 Handelsbanken Other listed banks 25 20 15 10 5 0-5 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2004 9 Return on shareholder s equity after standard tax. As reported.
Growth and capital management Organic growth will always be first option Acquisitions will be used when suitable Financially positive on RoE/EPS 3 year basis In markets we know Easily digested Management resources available Willing target No cultural dilution Share buy-back has been and will be used as a tool for continuos fine-tuning of the capital structure 10
Performance for 50 branches opened outside Sweden 1995-2001 Average annual profit * per branch, SEKm 22 20 18 16 14 12 10 8 6 4 2 0 3rd yr of operations After 3 years a new branch reports average profit of SEK 4.6m. After 9 years the corresponding figure is SEK 21.7m. 50 branches 34 branches 27 branches 22 branches 17 branches 13 branches 10 branches 5th yr of operations 7th yr of operations 9th yr of operations * Average annual profit before loan losses. Profits 1998-2004. 11
Branches outside Sweden 1993 13 branches 1996 27 branches 1999 46 branches 2003 101 branches 2004 June 109 branches 2005 June 123 branches 12
Branch office operations outside Sweden Avergare volumes Jan-Jun Jan-Jun Change SEK bn 2005 2004 % Lending 167 146 15 Private 64 49 31 Coporate 103 97 6 Deposits 75 65 15 Private 22 21 5 Corporate 53 44 20 No. of branches 123 109 Refers to branch operations in Denmark, Finland, Norway and Great Britain incl. Handelsbanken Finans 13
Branch office operations outside Sweden lending in local currency Average volumes Jan-Jun 2005 Jan-Jun 2004 Change % Denmark, DKK bn 21 20 5 Finland, EUR bn 6,5 6,1 7 Norway, NKK bn 64 54 19 Great Britain, GBP m 1 531 1 087 41 14
Branch offices outside Sweden - Profit before loan losses Jan-Jun mnkr 2005 2004 Norway 393 336 Denmark 208 172 Finland 193 196 Great Britain 84 75 Total 878 779 15 Incl. Handelsbanken Finans
Business area Pension & Insurance, January - June SEK m 2005 2004 Administration result 26 24 Risk result 108-23 Financial result 146 57 Other 9 19 Operating profit 289 77 Pension & Insurance includes Handelsbanken Liv, Euroben and from Q3, 2004 SPP Liv Fondförsäkring AB. It also includes amortisation of intangible assets and interest expense on debenture loans.. 16
Business area Pension & Insurance excl. SPP Fondförsäkring AB SEK m Jan-jun 2005 2004 2003 2002 Administration result 25 34 21-24 Risk result 108 46-21 -70 Financial result 146 135-95 -90 Other 25 32 15 9 Operating profit 304 247-80 -175 2004 and 2005 according to IAS / IFRS. 17
The Swedish life insurance market - premium income SEK bn 120 1,1 Total market 100 80 1,9 1,3 34,2 1,2 1,4 26,7 22,1 1,6 22,8 Annual Growth 15,5% 60 40 20 0 18 0,4 7,5 5,3 1,4 11,8 5,4 1,9 19,3 5,7 1,9 27,3 10,3 13,3 15,4 17,6 20,6 40,5 8,6 31,3 51 9,2 36,6 10,9 61,8 10,4 57 9,4 9,4 61,1 63,7 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Occupational pensions Privately paid pensions Endowment insurance Private health insurances Occupational pensions Annual Growth 19%
Strong position in Sweden Market leader lending to companies market share in excess of 30% Increased market shares in household deposits and mutual funds Market leader in Structured Products in excess of 30% market share Major player in pension and life insurance products In excess of 25% market share lending to households 19
Households new savings 2000 2005 Q1 Bank deposits, traditional insurance, unit-linked insurance, mutual funds, PPM, retail bonds. Acc. new savings, SEK m 90 000 80 000 Handelsbanken 70 000 60 000 50 000 Föreningssparbanken 40 000 30 000 Nordea 20 000 10 000 SEB 0 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 20 Source: SEB Sparbarometern New savings are defined as deposits minus withdrawals for the period.