Handelsbanken (SHB) Investor presentation summary

Business model and profitability

• Decentralised branch model unchanged for 42 years; financial goal is higher ROE than the weighted average of comparable peers, achieved every year over that period.

• Focus on profitability over volume, organic growth, local responsibility and accountability, no bonuses or budgets, and minimising risk without macro bets.

• Adjusted equity per share, including accumulated dividends since 2008, recorded a 15% CAGR through Q2 2014; profitability remained high and stable through the financial crisis.

First-half 2014 performance

• H1 post-tax net profit rose 11% YoY and operating profit rose 10%; operating profit in home markets outside Sweden increased 17%.

• ROE was 14.3% for H1 and 15.1% in Q2; segment ROE ranged from 10.6% in the Netherlands to 16.1% in Norway.

• H1 C/I ratio improved to 44.7% from 46.5% YoY; adjusted C/I ratio before loan losses and impairments was 45%, versus a 49% average for large listed Nordic peers.

• Loan losses and impaired loans decreased; average annual loan-loss ratio was 4.8 bps for 1997–H1 2014, versus 20.4 bps for other Nordic banks.

Capital and financial stability

• At 30 June 2014, CRD IV common equity tier 1 ratio was 20.1%, tier 1 ratio 21.7%, and total capital ratio 25.0%; respective year-end 2013 figures were 18.9%, 21.0% and 21.6%.

• Q2 2014 liquidity coverage ratios were 149% total, 190% in EUR, 127% in USD and 162% under CRD IV.

• Five-year senior CDS was 44 bps at 30 Aug 2014, among the lowest levels shown for the listed international peers.