Handelsbanken's interim report January - September 2000


· Profits were SEK 8.9 billion, an increase of 41 %

· Return on shareholders' equity was 22.6 %. For the full year 1999, return on equity was 18.4 %

· Income increased by 24 %

· Net interest income in branch office operations rose by 13 %

· Net commission income rose by 52 %

· Expenses were unchanged for comparable units and excluding provision for performance-related remuneration

· Internet use for the Bank's corporate customers was around 40 %

· Once again Handelsbanken was top in Svenskt Kvalitetsindex's official survey which measures the quality of service to corporate customers

· The process has begun of converting Handelsbanken's mutual life insurance company into a profit-distributing company

· Stadshypotek presented e-bid - a new Internet-based service for the property market

Profits were SEK 8 873m (6 295), which was an increase of 41 %. Return on shareholders' equity was 22.6 % (16.9). The corresponding figure for the whole of 1999 was 18.4 %. The C/I ratio (costs in relation to income) fell to 44 % (50). The C/I ratio after loan losses decreased to 43 % (50). Earnings per share rose to SEK 9.63 (6.31) and as a 12-month moving total were SEK 12.63 (7.88).

During the second quarter, there was a positive impact of SEK 343m on operating profits when the Bank sold its shares in Svensk Exportkredit AB. Excluding this effect the result went up by 36 % to SEK 8 530m.

Income and expenses
Net interest income rose by 9 % to SEK 8 781m (8 067). Net interest income in branch office operations increased by 13 % to SEK 7 867m (6 988). The increase was mainly due to higher volumes while margins remained more or less unchanged. Net interest income includes the fee of SEK 246m (231) to the Swedish government for the deposit protection guarantee.

Net commission income rose to SEK 4 167m (2 744), an increase of 52 %. Securities-based commission still dominates. The rate of increase fell back somewhat during the third quarter as a result of decreased activity on the Stockholm Stock Exchange.

Net trading income continued to rise and was SEK 1 968m (1 245), an increase of 58 %. Trading income comprises trading-related dividends and net interest income as well as the net result on financial operations. The Bank's proprietary trading is a very small part of net trading income.

Expenses for comparable parts of the Group, excluding provision for performance-related staff costs, were practically unchanged at SEK 6 186m (6 147). Total expenses, including Bergensbanken's costs and provision for performance-related staff costs increased by 8 % and were SEK 6 796m (6 304).

The number of employees continued to decrease. Excluding Bergensbanken, the average number of employees in the Group dropped by 201. In the Swedish branch office operations, the decrease was 225 or
5 %.

Continued recoveries
Loan losses continued to be very low. For the sixth quarter in a row, recoveries exceeded loan losses for the period. Recoveries, including changes in value of repossessed property, exceeded loan losses by SEK 109m (74). The proportion of bad debts fell to 0.24 % (0.30). The volume of collateral taken over, decreased to SEK 141m (278).

Capital ratio, buyback of shares and rating
The Group's capital ratio was 9.5 %. The Tier 1 capital ratio was 6.4 %.
This interim report has not been audited by the bank's auditors and for this reason - in accordance with Finansinspektionen (the Swedish Financial Supervisory Authority) regulations - profits for the third quarter are not included in the capital ratio figures. If they had been included, the Group's capital ratio would have been 9.8 % (9.6) and the Tier 1 ratio 6.6 % (6.6).

The Bank repurchased a total of 12 652 200 shares, of which 10 987 800 were Class B shares, for a total amount of SEK 1 557m. The average price per share was SEK 123.09.

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.

Handelsbanken in top position in the Svenskt Kvalitetsindex survey
Handelsbanken's corporate objective for the past three decades has been to have higher return on shareholders' equity than comparable banks. This is to be achieved by Handelsbanken providing its customers with better service than other banks and at lower cost for the Bank.

For this reason, the Bank actively monitors various measures of the service level in the banking sector. Every year in its Satisfied Customer Index, Svenskt Kvalitetsindex measures the quality of the service delivered by Swedish banks to both private and corporate customers. The corporate sector survey was recently completed. Handelsbanken still had the largest number of satisfied customers of the major banks. This has been the case every year except one since the satisfied customer surveys started in 1989.

Handelsbanken Liv to be demutualised
Handelsbanken Liv's operations include a life insurance company, Handelsbanken Liv Försäkrings AB, which is run according to mutual principles. Starting this week, information is being sent to the company's customers to inform them of the benefits of demutualising the company. In a mutual company, the customers must maintain a collective surplus.

In connection with demutualisation, the existing surplus is distributed to the customers and Handelsbanken instead injects fresh capital. Running a company with the intention of making a profit is more efficient and advantageous for customers and society as a whole.

There is therefore good reason to say that demutualisation is beneficial for all parties involved. It is principally the customer who by voting decides whether the company should be converted. The matter must then be submitted to Finansinspektionen for a final decision.

40 % of the Bank's corporate customers have signed up for Internet banking
Many corporate customers continued to sign up for the Bank's Internet services for companies. In total around 40 % of corporate customers have signed up. The service is popular because of its flexibility and functionality. Internet is one of the main reasons for the substantial growth in productivity at the Bank. This is true both for Internet for companies and Internet for private customers.

Large numbers of customers continued to sign up for Internet services for private customers: around 10 000 per month. According to a survey carried out in the spring by an American investment bank, Handelsbanken had the greatest number of private customers linked up to Internet banking services among the Nordic banks. A Sifo survey showed that Handelsbanken's Internet private customers also use the service more regularly than the customers of other major Swedish banks.

Stadshypotek launches e-bid
During the autumn, Stadshypotek is launching a new Internet-based service, called e-bid.
E-bid simplifies and clarifies the bidding process in connection with buying and selling houses, summer cottages and apartments. The transparency of the bidding process increases and it saves time for estate agents. E-bid is a neutral marketplace based on collaboration with estate agents and where all estate agents can participate. It gives the Bank's branches the opportunity to become involved in the main property deals at an early stage, something which benefits buyers and sellers as well as estate agents.

Handelsbanken Finans acquired Spartacus A/S
After the end of the nine-month period, Handelsbanken Finans, which is already the only Nordic finance company with a complete range of products, acquired Spartacus A/S, a Danish retail sales finance company. In Sweden, Handelsbanken Finans is the market leader in retail financial services. The acquisition of Spartacus A/S in Denmark gives Handelsbanken Finans a strong foothold on the Danish market.

Stockholm, 24 October 2000

Arne Mårtensson
President and Group Chief Executive

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

For further information please contact: <br> <br>Arne Mårtensson, Group Chief Executive <br>tel: +46 8 22 92 20 <br>e-mail arma01@handelsbanken.se <br> <br>Sven Grevelius, Head of Accounting and Control <br>tel: +46 8 22 92 20 <br>e-mail svgr01@handelsbanken.se <br> <br>Lars Lindmark, Head of Corporate Communications <br>tel: +46 8 701 10 36 <br>e-mail lali12@handelsbanken.se <br> <br>Bengt Ragnå, Head of Investor Relations <br>tel: +46 8 701 12 16 <br>e-mail bera02@handelsbanken.se <br> <br> <br>This interim report has not been examined by the company's auditors. <br> <br>Highlights of the annual report for 2000 will be published on 20 February 2001. <br>Handelsbanken's interim reports and other publications are also available on the Internet (www.handelsbanken.se). <br> <br>