Handelsbanken's interim report January - June 2001

Handelsbanken's interim report January - June 2001 Summary · Profits were SEK 6 005m (5 755), an increase of 4 % excluding last year's one-off income from the sale of the shares in Svensk Exportkredit · Income increased by 6 % to SEK 10 837m · Net interest income rose by 10 % · Equity-market related commission fell but payment and lending commission rose · Net trading income went up by 13 % · Comparable expenses, excluding exchange rate effects, were up by 3 % · The acquisition of Danish Midtbank A/S was completed · The Group Profits higher Profits were SEK 6 005m (5 755), an increase of 4 %. During the second quarter of last year, the Bank sold its holding in Svensk Exportkredit which had a positive one-off impact on the result amounting to SEK 343m. All comparisons with last year exclude this one-off effect. Return on shareholders' equity was 20.9 % (21.9). For the whole of 2000, return on shareholders' equity was 21.6 %. The cost/income ratio before loan losses was 45.2 % (44.4) and 44.6 % (44.0) after loan losses. Earnings per share were SEK 6.59 (6.12) and as a 12-month moving total SEK 12.91 (10.99) per share. Income continued to rise - strong growth in lending Net interest income rose by 10 % to SEK 6 464m (5 888). The increase was mainly due to higher lending volumes. Margins remained more or less unchanged. Lending to the general public rose by 16 %. The rate of increase was almost identical for households and companies. Net commission income fell by just over 9 % and was SEK 2 579m (2 847). Brokerage income fell by 38 % to SEK 590m while both lending and payment commission increased substantially. Payment commission was higher than brokerage income. Net trading income continued to be stable and was SEK 1 462m (1 297), an increase of 13 %. Total income rose by 6 %. Expenses well under control Expenses were SEK 4 897m (4 560), an increase of 7 %. Comparable expenses increased by 3 % which was mainly due to investments in the branch office network in the Nordic countries outside Sweden, and IT development. The acquisitions of SPP and Midtbank and exchange rate effects represented four percentage points of the increase in costs. The average number of employees in the Swedish branch office operations was marginally lower while for the whole Group, the number increased by 471. Of these, 131 are Midtbank employees. Low loan losses Recoveries, including the change in value of repossessed property, exceeded loan losses and the net figure was SEK 65m (45). The proportion of bad debts amounted to 0.31 % (0.24) of lending. The proportion of bad debts fell compared to the previous quarter. The volume of collateral taken over was SEK 135m (132). Capital ratio, buy-back of shares and rating The Group's capital ratio was 9.3 % (9.4). The Tier 1 capital ratio was 5.9 % (6.6). At the Annual General Meeting in 2001, the board of the Bank was authorised to repurchase up to 20 million shares during the year until the next AGM and to sell shares which had already been repurchased for the purpose of financing possible acquisitions. Handelsbanken has not repurchased any shares since the 2001 AGM, but has sold 5.5 million shares in connection with the acquisition of Midtbank. The number of outstanding shares is 693.4 million. Handelsbanken's ratings from the rating agencies remained unchanged. In Europe, only one of the thirty largest listed universal banks has a higher rating from Moody's than Handelsbanken. Handelsbanken - best bank in the Nordic region As long as independent surveys of customer satisfaction have been made in Sweden, Handelsbanken has been at the top. Having the most satisfied customers is of utmost importance to Handelsbanken and is one of the pillars on which the Bank's strategy is based. During the year, a couple of business journals have also drawn attention to Handelsbanken. Euromoney and The Banker have acclaimed Handelsbanken best bank. Euromoney has given the Bank the "Euromoney Awards for Excellence" as the best bank in the Nordic and Baltic regions, and also in Sweden. The Banker has acclaimed Handelsbanken "Bank of the Year" in Sweden. Among the motivations for these awards are the Bank's consistent philosophy of decentralisation, its well thought-out Internet strategy, the e-bud (electronic house bidding) drive, the fact that all branches have their own home pages and strategic acquisitions such as SPP and Midtbank. Acquisition of SPP The acquisition of the life insurance company, SPP, was completed in March. The impact of cross-sales - mainly of bank products to SPP customers - represented a significant part of the calculation on which the acquisition was based. One of the assumptions in the acquisition calculation was that approximately 30 % of SPP's customers were also customers of Handelsbanken. A detailed examination revealed that of all private individuals who are customers of SPP, 34 % were also customers of the Handelsbanken Group. Of private individuals in the high-income bracket (over SEK 370 000 per annum), as many as 44 % were customers of Handelsbanken. Handelsbanken had a customer relationship with almost 30 % of SPP's corporate customers. The overall assessment of SPP's customer base provides good support for the calculation regarding cross-sales on which the acquisition was based. The information confirms Handelsbanken's strong market position among white-collar workers, and not least among high- income earners. The work on cross sales is currently being carried out and organised by all branches. In general, this work follows the same pattern as the successful sale of banking services to the customers of Stadshypotek who did not already have a relationship with the Bank when Stadshypotek was acquired. Midtbank A/S On 11 April, Handelsbanken made a bid for Midtbank A/S, a medium-sized regional bank in Denmark, based in Jutland. The total value of the bid was around SEK 2.5bn. The bid was well-received and on 10 July, Handelsbanken had 100 % of the votes at its disposal. Midtbank A/S was delisted from the Copenhagen Stock Exchange on 23 July. Midtbank's result is included in the Group from 15 May. Handelsbanken has conducted banking operations in Denmark since 1992 and at the time of the acquisition had seven branches, total assets of around SEK 18bn and 175 employees. Through the acquisition of Midtbank, the Bank gained a very strong position in the Jutland region with a total of 26 branches, a strong brand name and customers within a profitable and expanding market segment. The acquisition also gave Handelsbanken access to the Danish mutual fund market via the fund management company Midtinvest. Following the acquisition, Handelsbanken has 31 branches in Denmark, around 600 employees and total assets of some SEK 30bn. Government gives go-ahead for demutualisation of Handelsbanken Liv At the end of April, the government made a resolution to approve the demutualisation of the Bank's life insurance company, Handelsbanken Liv. As a result of the resolution, all the formal requirements for demutualisation have been fulfilled. Handelsbanken acquired real estate The Bank acquired two properties in central Stockholm, where most of the Bank's head office is situated. The sellers were Alecta and SEB and the purchase price for both properties was SEK 452m. The Bank is already one of the main tenants in the acquired properties. Stockholm, 21 August 2001 [REMOVED GRAPHICS] Lars O Grönstedt President and Group Chief Executive For further information please contact: Lars O Grönstedt, Group Chief Executive tel: +46 8 22 92 20 e-mail lagr03@handelsbanken.se Lennart Francke, Head of Accounting and tel: +46 8 22 92 20 Control e-mail lefr01@handelsbanken.se Lars Lindmark, Head of Corporate tel: +46 8 701 10 36 Communications e-mail lali12@handelsbanken.se Bengt Ragnå, Head of Investor Relations tel: +46 8 701 12 16 e-mail bera02@handelsbanken.se The interim report for the third quarter of 2001 will be published on 23 October 2001. Handelsbanken's interim reports and other publications are also available on the Internet (http://www.handelsbanken.se/ireng). ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/21/20010821BIT00680/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/08/21/20010821BIT00680/bit0001.pdf The full report