Handelsbanken (SHB) Q1 2021 earnings summary

Executive summary

• Highest Q1 operating profit to date on an adjusted basis; reported operating profit rose 9% YoY to SEK 5,612m.

• Profit for the period increased 11% YoY to SEK 4,381m, while return on equity rose to 10.6% from 10.3%.

Financial highlights

• Total income rose 1% YoY to SEK 11,292m, or 3% adjusted for FX; net interest income fell 5% and net fee and commission income rose 10%.

• Net gains on financial transactions increased to SEK 397m from SEK 130m; risk result from insurance rose to SEK 69m from SEK 41m.

• Total expenses rose 3% YoY to SEK 5,683m, or 2% adjusted for FX and Oktogonen; adjusted underlying increase was SEK 115m, driven by development costs.

• Earnings per share increased to SEK 2.21 from SEK 1.99; profit before credit losses was SEK 5,609m versus SEK 5,672m.

Outlook and guidance

• Targeting a sustainable annual cost base of SEK 20bn by end-2022, from SEK 21.9bn in Q2 2020; underlying cost-base reduction initiatives total SEK 3.3bn.

• Measures corresponding to SEK 1bn had been decided or initiated since Q3 2020, with SEK 200m of positive profit effects achieved; cost-cutting programme proceeding to plan.