Svenska Handelsbanken's interim report January - June 2000

Summary

· The result was SEK 6.1 billion, an increase of 39 % compared with the first six months of 1999

· Return on shareholders' equity was 23.4 %. For the full year 1999, return on equity was 18.4 %

· The sale of the Bank's shares in Svensk Exportkredit AB had a positive impact on the result. Excluding this one-off item, the result was SEK 5.8 billion, an increase of 31 %

· Income increased by 22 %

· Net interest income in branch office operations rose by 10 %

· Net commission income rose by 57 %

· The expenses for comparable units, excluding performance-related staff costs within Investment Banking, decreased by 2 %

· The Bank's Internet service for corporate customers, together with four non-Nordic banks, was acclaimed best in Europe by the international magazine Global Finance

· More than one-third of the Bank's corporate customers were connected to the Internet service and almost a quarter of private customers

· According to a survey by Merrill Lynch, Handelsbanken had a higher Internet penetration than any other Nordic bank


Operating profit was SEK 6 098m (4 393), which was an increase of 39 %. Return on shareholders' equity was 23.4 % (17.9). The corresponding figure for the whole of 1999 was 18.4 %. The C/I ratio before loan losses decreased to 43 % (49). The C/I ratio after loan losses also dropped to 43 % (49). Earnings per share were SEK 6.56 (4.43) and as a 12-month moving total SEK 11.43 (8.01).

In the second quarter, the Bank sold its share in Svensk Exportkredit AB. This had a positive effect of SEK 343m (0) on the result. The rise in profits excluding this one-off item was 31 %, bringing the result to SEK 5 755m (4 393).

Income and expenses
Net interest income rose by 7 % to SEK 5 888m (5 514). Net interest income in branch office operations increased by 10 % to SEK 5 247m (4 771). The increase was attributable to higher volumes - margins remained unchanged. Net interest income includes the fee of SEK 164m (154) to the Swedish government for the deposit protection guarantee.

Net commission income rose to SEK 2 847m (1 810), an increase of 57 %. Securities-based commission continued to rise sharply, while other categories of commission also performed well.

The Bank's trading income went up by 31 % to SEK 1 297m. Trading income includes trading-related dividends and net interest income as well as the net result on financial operations.

The expenses for comparable units at the Group, excluding performance-related staff costs, dropped by 2 % to SEK 4 121m (4 194). Bergensbanken has been included as part of the Handelsbanken Group as from November 1999. Including Bergensbanken, costs increased by just under 1 % to SEK 4 221m (4 194). Total expenses, including performance-related staff costs, amounted to SEK 4 560m (4 293), an increase of 6 %.

The number of employees continues to fall. Excluding Bergensbanken, the average number of employees in the Group dropped by 264. This was most noticeable at the Swedish regional banks where there were 248 or 5 % fewer employees. Including Bergensbanken the decrease was 71 employees.


Very low loan losses
Loan losses continued to be very low. Recoveries, including change in value of repossessed property, exceeded loan losses by SEK 45m (12). The proportion of bad debts went down to 0.24 % (0.33). The volume of collateral taken over was SEK 132m (277).


Capital ratio and rating
The Group's capital ratio was 9.4 % (9.7). The Tier 1 capital ratio increased to 6.6 % (6.5).
Handelsbanken continues to have the highest rating of the Nordic banks. In Europe, only two listed universal banks have received a higher rating from Moody´s.


Strong business area results
Almost all business areas reported increased return on equity. The result of branch office operations rose by SEK 1 091m to SEK 4 322m. This was an increase of 34 %, and branch office operations represented slightly more than 70 % of the Group's operating result. The result of Handelsbanken Investment Banking (equity and corporate finance operations), which is reported as a separate business area as from this quarter, increased to SEK 448m (132).
The improvement was attributable partly to favourable market conditions and partly to the Bank's strong position in certain product areas. Handelsbanken Asset Management and Handelsbanken Liv continued to develop well. Handelsbanken's market share of new savings (net) in mutual funds was 14.5 %. Handelsbanken Liv increased its market share of new savings in traditional insurance and unit-linked insurance from 10.9 % for the full year 1999 to 13.1 % for the first half of 2000. Handelsbanken Liv's operating profit increased threefold compared with the first half of 1999.

Handelsbanken's Internet service for companies receives international award
On the basis of its own appraisals and its contacts with analysts, consultants, people in the business and Internet experts, Global Finance, an international periodical, has ranked the banks with the best Internet services for companies and private persons. The criteria include the range of products offered, penetration of the customer base and the web site's appearance and functionality. Handelsbanken's Internet service for companies was acclaimed best in Europe together with those of four other European banks who were ranked equal with Handelsbanken. No other Nordic banks were mentioned by Global Finance in its appraisal.


Branch office operations and the Internet
Customers have continued to stream to the Bank's Internet service. More than one-third of the Bank's corporate customers were connected to the Internet service and almost a quarter of private customers. According to an analysis carried out by the American investment bank Merrill Lynch, Handelsbanken has a higher proportion of private customers connected to its Internet service than any other Nordic bank and the second highest compared with other European banks. Handelsbanken does not consider its success in this respect as an end in itself but a means of providing customers with the services they require. The Bank does not regard its widening range of Internet services as a threat to its traditional branch office operations but as a complement.


Stockholm, 22 August 2000

Arne Mårtensson
President and Group Chief Executive

The full interim report including tables is available to download from the enclosed link.

For further information please contact: <br> <br>Arne Mårtensson, Group Chief Executive tel: +46 8 22 92 20 <br>e-mail arma01@handelsbanken.se <br> <br>Sven Grevelius, Head of Accounting and Control tel: +46 8 22 92 20 <br>e-mail svgr01@handelsbanken.se <br> <br>Lars Lindmark, Head of Corporate Communications tel: +46 8 701 10 36 <br>e-mail lali12@handelsbanken.se <br> <br>Bengt Ragnå, Head of Investor Relations tel: +46 8 701 12 16 <br>e-mail bera02@handelsbanken.se <br> <br>The interim report for the third quarter of 2000 will be published on 24 October 2000. <br>Handelsbanken's interim reports and other publications are also available on the Internet (www.handelsbanken.se). <br>

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