Svenska Handelsbanken's interim report January - March 2000
Summary
· The Handelsbanken Group's profits increased by 34 % to SEK 2.9bn
· Return on shareholders' equity was 22.3 %. For the full year 1999, return on equity was 18.4 %
· Income increased by 18 %
· Net interest income increased by 8 % to SEK 2.9bn
· Net commission income increased by 73 % to SEK 1.5bn
· Costs, excluding performance-related staff costs, were unchanged
· Loan losses continued to be very low. Recoveries exceeded loan losses reported for the period
· The number of customers linked to the Internet has increased by more than 20 % since the year-end
· Handelsbanken is the first bank to offer a wide range of WAP services and will distribute WAP phones specially designed for Handelsbanken
Very large rise in profits
Profits were SEK 2 905m (2 173), which was an increase of 34 %.
Return on equity was 22.3 % (18.0 %). For the full year 1999, return on equity was 18.4 %.
The I/E ratio rose to 2.29 (2.00). Earnings per share were SEK 3.10 (2.21) and as a 12-month moving total SEK 10.20 (8.10).
Income and expenses
Net interest income, excluding the part attributable to trading operations, increased by 8 % to SEK 2 904m. Net interest income in branch office operations rose by 12 % to SEK 2 583m mainly due to higher volumes. Net interest income includes the fee of SEK 82m (72) to the Swedish government for the deposit protection guarantee.
Commission income rose by 73 % and totalled SEK 1 498m. Securities-related commission represented most of the increase. Other commission income also reported high increases.
Trading income comprises trading-related dividends and net interest income as well as the net result on financial operations. The Bank's trading income went up by 12 % to SEK 676m.
Expenses rose by nearly 6 %. The whole of this increase in costs is due to provisions for performance-related staff costs. Excluding this effect, the cost level was unchanged.
The number of employees continued to decrease. Compared to the end of the first quarter last year, there were 320 fewer employees, excluding Bergensbanken. Including Bergensbanken the decrease was 126. At the Swedish regional banks, there were 271 fewer employees or 6 %. One of the reasons behind this reduction is the customers' increased use of the Bank's Internet services.
The substantial increase in profits is partly due to high turnover on the stockmarket and partly to an increase in net interest income and other commission. A general assessment shows that around half of the increase in profits was directly related to the high turnover on the stockmarket.
Loan losses still at a very low level
Recoveries, including changes in value of repossessed property, exceeded loan losses by
SEK 32m (-25). The proportion of bad debts fell to 0.29 % (0.4) of lending. The volume of collateral taken over was SEK 131m (258). There are no signs at present of an imminent rise in loan losses.
Capital ratio and rating
The Group's capital ratio was 9,3 %. The Tier 1 capital ratio was 6.4 %. Profits for the period are not included in the above calculations. If they are included, the capital ratio was 9.7 % (9.9) and the Tier 1 ratio 6.7 % (6.4). Handelsbanken still has a higher rating than any other Nordic bank. In Europe, only two listed universal banks have received a higher rating from Moody's.
Healthy growth for both Handelsbanken Asset Management and Handelsbanken Liv
Handelsbanken's drive in the field of long-term savings has been very successful in the first quarter of the year. During this period, the Bank's share of new savings in mutual funds (net) was 17.3 % (14.4), which is much higher than the Bank's share of the total market and also higher than Handelsbanken's share throughout 1999. Premium income in the unit-linked company went up by 140 % to over SEK 2.6bn. The combined result for the two business areas Handelsbanken Liv and Handelsbanken Asset Management went up by SEK 122m or 118 %.
Handelsbanken reinforces its position as one of the world's leading Internet banks
The Bank's investments in the Internet and Internet-based services continue at a fast rate. Over 20 % of the Bank's transactions are done via the Internet. The inflow of new customers continued to be very strong. More than one-third of corporate customers were linked to the Internet and over one-fifth of private customers. Handelsbanken is the only bank which offers Internet services in all the Nordic countries.
Handelsbanken launches WAP services and enters into collaboration with GEAB
Starting on 17 April 2000, Handelsbanken is launching a wide range of WAP services aimed at the general public. Via WAP phones it will be possible to perform most of the transactions which at present are possible via the telephone response system Datasvar. The services offered are checking transactions and balances and making transfers between the customer's own accounts and pre-defined accounts. It is also possible to follow share prices and access financial news. Handelsbanken was the first Nordic bank to demonstrate functioning banking services on WAP phones and is now the first bank to launch a wide range of WAP-adapted services. In connection with this, the Bank is starting a close collaboration with mobile phone retailer GEAB for distribution of WAP phones whereby Handelsbanken's customers are offered the opportunity of buying specially-designed WAP phones.
Stockholm, 13 April 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> <br>This interim report has not been examined by the company's auditors <br> <br>The interim report for the first half of 2000 will be published on 22 August 1999. <br>Handelsbanken's interim reports and other publications are also available on the Internet (www.handelsbanken.se). <br>