Svenska Handelsbanken Highlights of Annual Report 2000

Highlights of Annual Report 2000 Summary · Profits were SEK 11.7 billion, an increase of 36 % · Return on shareholders' equity went up to 22.2 % (18.4) · Income increased by 21 % · Net interest income rose by 10 % · Expenses for comparable units and excluding performance-related remuneration increased by 0.5 %. Total expenses rose by 5 % · Handelsbanken Liv's customers voted to demutualise the life insurance company · Handelsbanken acquired SPP Liv AB · Earnings per share were SEK 12.87, an increase of 38 % · The Board recommends that the dividend is raised to SEK 4.00 (3.00) per share · The Board recommends the repurchase of a maximum of 20 million of the Bank's shares · Strong result - also in the last quarter The operating profit of the Handelsbanken Group was SEK 11 683m (8 607), which was an increase of 36 %. The sale of the Bank's shares in Svensk Exportkredit gave rise to a one-off item of SEK 343m. Excluding this, operating profit was SEK 11 340m, an increase of 32 %. The result for the final quarter of the year was a strong SEK 2 810m. Return on shareholders' equity for the entire year increased to 22.2 % (18.4). Increased income - more or less unchanged expenses Income increased by 21 %. Net interest income rose by 10 %. For branch office operations, the increase was 13 %. This is attributable mainly to increased lending volumes while margins remained unchanged. Net commission income rose by 37 %, reaching its highest point in the first quarter of the year. Net trading income went up by 42 %. Expenses for comparable units and excluding performance-related remuneration rose by slightly more than 0.5 % to SEK 8 382m. The equivalent figure for 1998 was SEK 8 625m. This means that, over a two- year period, and disregarding the acquisition of Bergensbanken and performance-related remuneration, the Bank reduced its expenses by SEK 243m or almost 3 %. Total expenses in the Handelsbanken Group increased by 5 % to SEK 9 064m. For comparable parts of the group, the average number of staff continued to fall. There was a total reduction of 4 % or 189 in the average number of staff in the Swedish branch office operation and 105 in the entire Group. In view of the significant increase in volumes over the year, there has been a strong increase in productivity. Loan losses still low Recoveries, including changes in value of repossessed property, exceeded loan losses by SEK 67m (219). The proportion of bad debts rose to 0.33 % (0.27) of lending. The volume of collateral taken over fell to SEK 148m (152). Capital ratio, share buybacks and rating The Handelsbanken Group's capital ratio was 9.5 % (9.4) at the year-end. Tier 1 capital ratio was 6.4 % (6.5). The Bank repurchased a total of 21.5 million shares up until 31 December at an average price of SEK 137 per share. The Bank believes that the buybacks will amount to around SEK 4bn before the Annual General Meeting in 2001, i.e. the maximum amount that the Board decided on when the repurchase programme was initiated. The Board recommends that the AGM authorise the Board for the present year and up until the AGM in 2002 to repurchase up to 20 million shares. At the same time, the Board states that it intends to buy back shares for an amount of at most SEK 2bn. The AGM will also be recommended to empower the Board to use the repurchased shares to finance any future acquisitions. Handelsbanken's ratings from the leading rating agencies remained unchanged. In Europe only two of the thirty largest listed universal banks have a higher rating from Moody's than Handelsbanken. Earnings per share and dividend Net earnings per share rose to SEK 12.87 (9.31). In this calculation, the average number of outstanding shares has been used. The Board recommends a dividend on class A and B shares of SEK 4.00 per share (3.00). Internet and automation The Group had almost 400 000 Internet banking users in five countries. A quarter of the private customers had access to the Internet services and around 45 % of the corporate customers. The proportion of private customers connected to the Internet services was slightly higher in the rest of the Nordic region, compared with Sweden. The inflow of new customers to the Internet services continued to be strong during the year, and there are no signs of any slowing down in the rate of connection. The use of the Internet services was an important factor behind the strong increase in productivity in the Swedish branch office operations. While the average number of staff fell by 4 %, business volumes increased, and Handelsbanken continued to gain share in important markets. The Bank regards the Internet services as one of several means for customers to maintain contact with their local branch of Handelsbanken. Bank charges Handelsbanken chose not to charge for its Internet services when they were launched. The Bank has not changed its attitude on this point. It is part of Handelsbanken's basic philosophy that customers should not be charged fees for utilising basic services such as Internet banking, Datasvar (telephone banking), Bankomat (cash dispensers) and Privatgiro (giro payment) services. Unlike most other banks, Handelsbanken does not charge fees for these services. Nor does the Bank charge for arranging mortgage loans. Handelsbanken has the most satisfied customers In the annual survey carried out by Svenskt Kvalitetsindex, Handelsbanken again had the most satisfied customers, both private and corporate. Handelsbanken considers these surveys important and the figures are analysed carefully in the Swedish branch office operation. The results are broken down at regional level. The Bank's aim is to continue having the most satisfied customers. Handelsbanken aims to offer better services than the other banks, while at the same time having lower expenses. Other surveys confirmed the findings of the Svenskt Kvalitetsindex survey. In its annual survey of Swedish banks, Privata Affärer, a periodical for private finances, found that Handelsbanken had the most satisfied customers and is in a class of its own among the major banks. In the same survey, 38 % of the people interviewed said that they would change to Handelsbanken if they were to change banks today. Handelsbanken Liv's customers voted to demutualise the life insurance company One of the conditions that must be fulfilled before a mutual life insurance company is demutualised, is that the customers are given an opportunity to express their opinion. A ballot was held among the 260 000 customers of the company who are entitled to vote. Almost 80 % participated in the ballot. Of these, 98 % voted in favour of demutualisation and the establishment of a profit- sharing company. The Swedish Financial Supervisory Authority (Finansinspektionen) approved the proposal at the beginning of February 2001 and, it being a matter of principle, handed it over to the government for a final decision. Handelsbanken Liv plans to start operating as a demutualised company in 2002. Handelsbanken acquired SPP At the end of December, Handelsbanken acquired SPP Liv AB, the part of the mutual life insurance company SPP that was exposed to competition. Through the acquisition of SPP Liv, the Handelsbanken Group attained a fifth of the Swedish life insurance market, roughly the same level as the largest player. Stockholm, 20 February 2001 [REMOVED GRAPHICS] Arne Mårtensson President and Group Chief Executive For further information please contact: Arne Mårtensson, Group Chief tel: +46 8 22 92 20 Executive e-mail arma01@handelsbanken.se Lennart Francke, Head of Accounting tel: +46 8 22 92 20 and 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 tel: +46 8 701 12 16 Relations e-mail bera02@handelsbanken.se The Annual General Meeting of Svenska Handelsbanken AB (publ) will take place at 10 a.m. on Tuesday, 24 April 2001 in Stockholm. The interim report for the first quarter 2001 will be published on 23 April 2001. Handelsbanken's interim reports and other publications are also available on the Internet (www.handelsbanken.se/ireng). ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/02/20/20010220BIT00920/bit0001.doc The full year-end report http://www.bit.se/bitonline/2001/02/20/20010220BIT00920/bit0001.pdf The full year-end report