Svenska Handelsbanken's interim report January - June 1999


· The result was SEK 4.4 billion, an increase of 9 % compared with the first six months of 1998 excluding items affecting comparability

· Net interest income rose by 5 %

· Net commission income rose by 4 %

· Expenses rose by 1 %

· Raised rating from Moody's. Handelsbanken now has a higher rating than any other bank in the Nordic countries. Only two banks in Europe have a higher rating

· For the tenth consecutive year, Handelsbanken has the most satisfied customers according to an official survey, Svenskt kvalitetsindex. The Bank's lead over the other banks has increased on both corporate and private markets since the last survey

· Bid for Bergensbanken accepted by shareholders representing 97 % of the capital

· Handelsbanken starts bank in Poland

Result continues to be strong
The Handelsbanken Group's profits for January - June 1999 amounted to SEK 4 393m (4 384). The result for the first quarter of 1998 included a capital gain of SEK 338m from sales of properties. Excluding this, the result improved by 9 %.

Return on shareholders' equity was 17.7 % (18.5). Return on shareholders' equity is calculated as operating profit in relation to average shareholders' equity after standard tax and with an adjustment made for items affecting comparability. The corresponding figure for the whole of 1998 was 16.4 %.

Income and expenses
Operating income amounted to SEK 8 674m (8 766), an increase of 3 %, excluding the capital gain in the first quarter of 1998.

Net interest income increased by 5 % to SEK 6 050m. A fee of SEK 154m (143) to the Swedish government for the deposit protection guarantee has been charged to net interest income.

The spread between lending rates and deposit rates in the Handelsbanken Group was slightly improved.

Net commission income increased by 4 % to SEK 1 810m (1 735). Securities commission in the shape of brokerage and fund management fees developed well. The net result on financial operations fell by SEK 190m to SEK 384m. This decrease is compensated for by higher income in the form of net interest income and dividends, mainly from the trading operation.

Expenses increased by 1 % compared with the first half of 1998 to SEK 4 293m (4 248) but decreased by 6 % compared with the second half of 1998.

The I/E ratio after loan losses rose to 2.03 (1.92).

Loan losses still at low level
Loan losses, including changes in the value of repossessed property, continued to fall and recoveries on previously reported loan losses exceeded loan losses by SEK 12m.

The proportion of bad debts fell to 0.3 % (0.5) of lending. The volume of collateral taken over fell to SEK 277m (375).

Capital ratio and rating
The Handelsbanken Group's capital ratio was 9.7 % (9.8). The Tier 1 capital ratio increased to 6.5 % (6.1).

During the period, Handelsbanken's long-term rating was raised to Aa2 by Moody's Investors Services. Handelsbanken has a higher long-term rating than any other Nordic bank. In Europe, only two listed universal banks have received a higher rating from Moody's.

Bid for Bergensbanken accepted by shareholders
By the end of the stipulated offer period, Handelsbanken's bid for the shares in Bergens-banken, made public on 3 May, had been accepted by shareholders representing 97 % of the share capital. Handelsbanken has applied to the authorities for permission to carry through the acquisition. A decision is expected before the end of the year.

Large proportion of active Internet users
Handelsbanken has offered Internet services to private customers since autumn 1997 and to corporate customers since autumn 1998. It is now possible to access account information, make payments and transfers, and buy and sell shares and mutual fund units over the Internet. Handelsbanken has grown faster than any other Swedish bank on the Internet in the past year - by 225 % - and 150 000 customers are now linked to the Bank's Internet service. But more important than the number of subscribers is the high proportion of customers who actually use the service. It is only if the customer is an active user that it leads to savings in costs for the Bank. According to a SIFO survey, 13 % of Handelsbanken's customers are active users of the Bank's Internet services. This means that Handelsbanken has the second highest proportion of active Internet users among the Swedish banks. Around 12 % of the total number of payments and 14 % of share transactions at the Bank are made via the Internet.

Handelsbanken's Internet service is not a separate operation but an integral part of the branch office operations. The customer remains a customer of his or her branch office and, via the Internet service, has rapid, simple and effective access to the branch and his/her accounts. For the Bank, the Internet is a highly cost-effective means of carrying out customer transactions.

Most satisfied customers
An official survey, Svenskt kvalitetsindex for 1998/99, has once again identified Handelsbanken as the major bank with the most satisfied customers in both private and corporate markets. The survey is organised by Statistics Sweden and the Stockholm School of Economics, among others. It is carried out in co-operation with the leading European quality organisations and with the support of the European Commission.

It is the tenth consecutive year that Handelsbanken has more satisfied customers than the average in the Swedish banking sector, both for corporate and private customers. The Bank's lead over the other banks, which narrowed after the financial crisis, has again begun to increase on both the corporate and private markets.

Best bank in Sweden and the Nordic region
Handelsbanken has been nominated the best bank in the Nordic region, as well as the best bank in Sweden, by the international magazine Euromoney and awarded the Euromoney Award for Excellence 1999.

Euromoney's decision was based on the fact that Handelsbanken is the only bank with a significant pan-Nordic presence and has the strongest brand name in Nordic banking.
The magazine also points out that Handelsbanken has succeeded in expanding outside Sweden mainly through organic growth, without any major acquisitions, and with good, long-term profitability on all its markets. They also point out that the Bank's branch office network covers almost all towns in the four Nordic countries with a population of over 50 000.

Euromoney also emphasises the fact that Handelsbanken has lower expenses than most other banks and never sacrifices quality to achieve lending volumes.

The finance magazine Global Finance has also recently named Handelsbanken the best bank in Sweden.

Handelsbanken starts bank in Poland
In mid-1997, Handelsbanken was the first Swedish bank to start a representative office in Warsaw. On the basis of its experience in Poland, Handelsbanken has now decided to start full banking operations there. Handelsbanken will therefore be the first Nordic bank to apply to the Polish authorities for permission to start a wholly-owned banking operation.

The millennium shift
The Bank's preparations for year 2000 are running according to plan. In June, more than 99 % of the central application systems, technical platforms, PC systems and embedded systems that will be used over and after the millennium shift had been analysed, adapted, tested and launched into production. A far-reaching contingency plan for dealing with unforeseen interruptions has been drawn up.

Due to the ongoing extensive development of the Bank's Internet service, supplementary tests will be made on the systems that handle the Internet. It is expected that these will be completed during October.

Information about Handelsbanken's year 2000 project is published and regularly updated at the Bank's Internet site.

Stockholm, 24 August 1999

Arne Mårtensson
President and Group Chief Executive

The full Interim Report including tables can be downloaded from the enclosed link.

For further information please contact Arne Mårtensson, Group Chief Executive of Svenska Handelsbanken, <br>or Sven Grevelius, Head of Accounting and Control, tel: +46 8 22 92 20 <br> <br>Lars Lindmark, Head of Corporate Communications tel: +46 8 701 10 36 <br>Gustaf Elmstedt, Head of Investor Relations tel: +46 8 701 51 42 <br> <br>The interim report for the first nine months of 1999 will be published on 26 October 1999. <br>Handelsbanken's interim reports and other publications are also available on the Internet ( <br>

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