Handelsbanken (SHB) Q4 2009 earnings summary

Executive summary

• FY 2009 profit before loan losses rose 3% to SEK 17,115m; operating profit fell 10% to SEK 13,727m as net loan losses more than doubled and prior-year results included non-recurring gains.

• Return on equity was 12.6%; returns remained above 12% in every quarter during the financial crisis, without new equity issuance or state support.

• Capital ratios strengthened, liquidity reserves exceeded SEK 450bn, and the proposed dividend rose to SEK 8 per share from SEK 7.

Financial highlights

• Total income rose 8% to SEK 32,335m; net interest income increased 14% to SEK 22,000m and net fee and commission income rose 9% to SEK 7,393m.

• Expenses increased 15% to SEK 15,220m; underlying costs rose 1.4% after specified cost items and SEK 327m of FX changes were excluded.

• Net loan losses rose 111% to SEK 3,392m from SEK 1,605m; gains on financial items at fair value fell 22% to SEK 2,457m, partly reflecting the SEK 716m NCSD share-sale gain in Q4 2008.

• Q4 operating profit was SEK 3,221m, down 1% QoQ; net interest income fell 4% to SEK 5,359m while net fee income rose 11% to SEK 1,995m.

• Total-operations EPS was SEK 16.44 versus SEK 19.46; FY profit after tax fell 16% to SEK 10,244m.

Outlook and guidance

• Branch openings outside Sweden were expected to accelerate in 2010, mainly in the U.K.; eight locations had been selected and branch managers appointed.

• Further non-core International division lending reductions were largely complete; remaining volume changes were described as fine-tuning, not continued contraction.

• Management saw no year-end evidence of renewed credit deterioration; Swedish corporate lending demand remained subdued, while household demand was strong.