Interim Report January–June
2017
INTERIM REPORT JANUARY – JUNE 2017
Handelsbanken’s Interim Report JANUARY – JUNE 2017 SUMMARY JANUARY – JUNE 2017, COMPARED WITH JANUARY – JUNE 2016 • Operating profit rose by 4% to SEK 10,604m (10,244) • The period’s profit after tax for total operations decreased by 1% to SEK 8,167m (8,237) • Earnings per share for total operations decreased to SEK 4.20 (4.31) • Return on equity for total operations declined to 12.6% (13.7) • Income increased by 1% to SEK 20,274m (20,165) and by 5% after adjustment for capital gains in the period of comparison • Net interest income rose by 6% to SEK 14,402m (13,603) • Net fee and commission income rose by 9% to SEK 4,862m (4,450) • The C/I ratio decreased to 45.8% (47.2) • The loan loss ratio was unchanged at 0.04% (0.04) • The common equity tier 1 ratio increased to 23.4% (23.0) and the total capital ratio was 29.0% (28.9) SUMMARY OF Q2 2017, COMPARED WITH Q1 2017 • Operating profit fell by 2% to SEK 5,257m (5,347), but increased by 3% after adjustments for non-recurring items in the quarter of comparison • The period’s profit after tax for total operations decreased by 1% to SEK 4,056m (4,111), and earnings per share were SEK 2.09 (2.11) • Return on equity for total operations rose to 12.9% (12.4) • Income increased by 2% to SEK 10,238m (10,036) • Net interest income increased by 3% to SEK 7,321m (7,081) • The loan loss ratio was 0.04% (0.04)
2
Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Contents
Page
Group – Overview
4
Group performance
5
Group – Business segments
9
Handelsbanken Sweden
10
Handelsbanken UK
12
Handelsbanken Denmark
14
Handelsbanken Finland
16
Handelsbanken Norway
18
Handelsbanken the Netherlands
20
Handelsbanken Capital Markets
22
Other units not reported in the business segments
24
Key figures
25
The Handelsbanken share
25
Condensed set of financial statements – Group
26
Income statement
26
Earnings per share
26
Statement of comprehensive income
27
Quarterly performance
28
Balance sheet
29
Statement of changes in equity
30
Cash flow statement
31
Note 1 Accounting policies
31
Note 2 Net interest income
32
Note 3 Net fee and commission income
32
Note 4 Net gains/losses on financial transactions
33
Note 5 Other expenses
33
Note 6 Loan losses and impaired loans
34
Note 7 Discontinued operations
35
Note 8 Loans and credit exposure
35
Note 9 Derivatives
37
Note 10 Offsetting of financial instruments
38
Note 11 Goodwill and other intangible assets
39
Note 12 Due to credit institutions, deposits and borrowing from the public
39
Note 13 Issued securities
39
Note 14 Pledged assets, contingent liabilities and other commitments
39
Note 15 Classification of financial assets and liabilities
40
Note 16 Fair value measurement of financial instruments
42
Note 17 Assets and liabilities by currency
44
Note 18 Own funds and capital requirements in the consolidated situation
45
Note 19 Risk and liquidity
49
Note 20 Related-party transactions
53
Note 21 Segment reporting
53
Note 22 Events after the balance sheet date
53
Condensed set of financial statements – Parent company
54
Information on phone conference, etc.
61
Auditors’ review report
62
Share price performance and other information
63
For definitions and calculation of key figures, as well as specifications of separate items and non-recurring items, please see the Fact Book which is available at handelsbanken.se/ireng.
3
Handelsbanken
2
Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Handelsbanken Group – Overview SEK m
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Summary income statement Net interest income
7,321
7,081
3%
6,808
8%
14,402
13,603
6%
Net fee and commission income
2,508
2,354
7%
2,280
10%
4,862
4,450
9%
9,156
317
547
-42%
523
-39%
864
1,685
-49%
3,066
Risk result - insurance
53
36
47%
35
51%
89
111
-20%
142
Other dividend income
11
2
450%
222
-95%
13
225
-94%
228
Share of profit of associates
-3
-27
89%
13
Other income
31
43
-28%
41
-3%
203
Total income
10,238
10,036
2%
Staff costs
-3,242
-2,918
11%
Other expenses Depreciation, amortisation and impairment of property, equipment and intangible assets
-1,410
-1,430
-1%
-145
-150
Total expenses
-4,797
-4,498
5,441 -186
Net gains/losses on financial transactions
Profit before loan losses Net loan losses Gains/losses on disposal of property, equipment and intangible assets Operating profit Taxes Profit for the period from continuing operations Profit for the period pertaining to discontinued operations, after tax Profit for the period
27,943
-30
15
-24%
74
76
25
9,922
3%
20,274
20,165
1%
40,763
-2,952
10%
-6,160
-6,620
-7%
-12,542
-1,346
5%
-2,840
-2,649
7%
-5,401
-3%
-119
22%
-295
-244
21%
-495
7%
-4,417
9%
-9,295
-9,513
-2%
-18,438
5,538
-2%
5,505
-1%
10,979
10,652
3%
22,325
-196
-5%
-229
-19%
-382
-416
-8%
-1,724
2
5
-60%
1
100%
7
8
-13%
32
5,257
5,347
-2%
5,277
0%
10,604
10,244
4%
20,633
-1,201
-1,236
-3%
-1,091
10%
-2,437
-2,020
21%
-4,401
4,056
4,111
-1%
4,186
-3%
8,167
8,224
-1%
16,232
-
13
-1%
4,194
-3%
8,167
8,237
-1%
16,245
-
-
4,056
4,111
8
13
Summary balance sheet Loans to the public of which mortgage loans
Deposits and borrowing from the public of which households
Total equity Total assets
1,182,790
1,163,833
1,120,291 1,049,699 429,725
409,694
134,900 131,741 2,961,094 2,922,929
1% 1,937,155
4% 2,011,455 1,937,155
2%
6%
1,117,514
4% 1,963,622
1,117,514
6%
1,150,594
7% 1,134,500
-1% 1,120,291 1,134,500
-1%
829,336
5%
10%
10%
404,112
391,701
2% 129,582 1% 3,030,645
1,182,790 429,725
391,701
4% 134,900 129,582 -2% 2,961,094 3,030,645
4% 136,381 -2% 2,627,580
Summary of key figures Return on equity, total operations
12.9%
12.4%
14.2%
12.6%
13.7%
13.1%
Return on equity, continuing operations
12.9%
12.4%
14.2%
12.6%
13.7%
13.1%
C/I ratio, continuing operations
46.9%
44.8%
44.5%
45.8%
47.2%
45.2%
2.09 2.06
2.11 2.10
2.19 2.15
4.20 4.16
4.31 4.22
8.43 8.31
Earnings per share, total operations, SEK - after dilution
4
2,011,455 1,991,434
Common equity tier 1 ratio, CRR
23.4%
23.8%
23.0%
23.4%
23.0%
25.1%
Total capital ratio, CRR
29.0%
29.7%
28.9%
29.0%
28.9%
31.4%
3
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Group performance
commissions increased by 24% to SEK 1,744m (1,412), and other custody and asset management commissions grew by 13%. Brokerage income rose by 10% to SEK 507m (462), and net payment commissions decreased by 1% to SEK 908m (920). Net fee and commission income from card operations declined to SEK 572m (620). Net gains/losses on financial transactions declined to SEK 864m (1,685), because the period of comparison included capital gains from the sale of shares totalling SEK 908m. Other income decreased to SEK 146m (427). The decrease was primarily attributable to lower dividend income.
JANUARY – JUNE 2017 COMPARED WITH JANUARY – JUNE 2016
The Group’s operating profit grew by 4% to SEK 10,604m (10,244). The period’s profit after tax for total operations decreased by 1% to SEK 8,167m (8,237), and earnings per share were SEK 4.20 (4.31). The common equity tier 1 ratio increased to 23.4% (23.0), and the return on equity for total operations decreased to 12.6% (13.7). The C/I ratio decreased to 45.8% (47.2). Income Jan-Jun 2017
Jan-Jun 2016
Change
14,402
13,603
6%
4,862
4,450
9%
Net gains/losses on financial trans.
864
1,685
-49%
Other income
146
427
-66%
Total income
20,274
20,165
1%
SEK m Net interest income Net fee and commission income
Income increased by 1% to SEK 20,274m (20,165). Adjusted for capital gains on the sale of shares in the period of comparison, the increase was 5%. The effect of exchange rate movements was marginal. Net interest income rose by 6% to SEK 14,402m (13,603). Starting from 2017, the Bank defines its lending and deposit margins as the customer interest rate minus the internal interest rates which are either debited or credited to branch operations. Greater lending volumes increased net interest income by SEK 573m. At the same time, lending margins in branch operations had a negative impact of SEK -53m. Net interest income from deposit operations increased by SEK 141m. The benchmark effect in Stadshypotek decreased to SEK -39m (6), and the doubled fee to the Resolution Fund amounted to SEK -865m (-491). Including fees for various deposit guarantees, government fees increased by SEK 389m to SEK -1,043m (-654). The remainder of the improvement in net interest income was chiefly attributable to lower funding costs. Total average volume of loans to the public grew by 5% to SEK 2,002bn (1,911). Exchange rate effects increased average volumes by SEK 9bn. Household lending increased by 7% to SEK 1,047bn (980), while corporate lending grew by 3% to SEK 955bn (932). In local currencies, lending increased in all home markets. The average volumes of deposits and borrowing rose by 2% to SEK 1,000bn (985). The average volume of household deposits increased by 12% to SEK 410bn (366), while corporate deposits decreased by 5% to SEK 589bn (619). Net fee and commission income rose by 9% to SEK 4,862m (4,450), primarily due to higher fund and asset management commissions. Fund management
5
4
Expenses Jan-Jun 2017
Jan-Jun 2016
Change
Staff costs
-6,160
-6,620
-7%
Other expenses
-2,840
-2,649
7%
-295
-244
21%
-9,295
-9,513
-2%
SEK m
Depreciation and amortisation Total expenses
Total expenses decreased by 2% to SEK -9,295m (-9,513). Exchange rate effects reduced expenses by SEK 1m. Staff costs fell by 7% to SEK -6,160m (-6,620). In the first quarter, staff costs declined by SEK 239m as a result of the transition to a defined contribution pension plan in the Norwegian operations and the period of comparison including a provision of SEK -700m. Adjusted for these items, underlying staff costs rose by 8%, because of the resumption of provisions to the Oktogonen Foundation, which totalled SEK 486m (-). Variable remuneration, including social security costs and other payroll overheads, decreased to SEK -47m (-56). The average number of employees fell by 139, to 11,636 (11,775). Excluding the expanding operations in the UK and the Netherlands, the average number of employees decreased by 2%, and the ongoing work to improve efficiency continues according to plan. Other expenses rose by 7% to SEK -2,840m (-2,649), chiefly due to higher costs for IT development. Loan losses SEK m Net loan losses Loan loss ratio as a % of loans, acc. Impaired loans, net Proportion of impaired loans, %
Jan-Jun 2017
Jan-Jun 2016
Change
-382
-416
-34
0.04
0.04
0.00
2,952
3,383
-13%
0.15
0.17
-0.02
Loan losses decreased to SEK -382m (-416), and the loan loss ratio was 0.04% (0.04). Net impaired loans decreased by 13% to SEK 2,952m (3,383), equivalent to 0.15% (0.17) of lending.
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Q2 2017 COMPARED WITH Q1 2017
Expenses
Operating profit fell by 2% to SEK 5,257m (5,347), but increased by 3% after adjustments for non-recurring items in the quarter of comparison. The period’s profit after tax for total operations totalled SEK 4,056m (4,111). Earnings per share fell to SEK 2.09 (2.11), and return on equity rose to 12.9% (12.4). The C/I ratio rose to 46.9% (44.8). Q1 2017
Change
Net interest income
7,321
7,081
3%
Net fee and commission income
2,508
2,354
7%
317
547
-42%
Other income
92
54
70%
Total income
10,238
10,036
2%
Income grew by 2% to SEK 10,238m (10,036). Net interest income grew by 3%, or SEK 240m, to SEK 7,321m (7,081). Rising lending volumes contributed SEK 79m, while lending margins in the branch operations lifted net interest income by SEK 13m. Increased deposit volumes contributed SEK 21m, while deposit margins had a negative impact of SEK -20m. Exchange rate effects had a positive impact of SEK 18m on net interest income, and an extra day in the quarter contributed SEK 29m. Government fees totalled SEK -516m (-527). The benchmark effect in Stadshypotek decreased to SEK -31m (-8). The average volume of loans to the public grew by 1% to SEK 2,017bn (1,988). Household lending rose by 2%, and the average volume of corporate lending grew by 1%. The total average volume of deposits and borrowing rose by 8% to SEK 1,037bn (962). The effect of exchange rate movements was marginal. Household deposits increased by 4% and the average volume of corporate deposits increased by 11%. Net fee and commission income increased by 7% to SEK 2,508m (2,354). The increase was mainly due to rising fund management commissions and increased payment and advisory commissions. Fund management commissions increased by 5% to SEK 895m (849). Commissions on custody accounts and other asset management rose to SEK 169m (164). Net payment commissions rose by 12% to SEK 479m (429), chiefly due to an improvement in net income from card operations to SEK 306m (266). Advisory commissions increased by 88% to SEK 105m (56). Net gains/losses on financial transactions decreased to SEK 317m (547). Profits in the comparison quarter were positively impacted by market turbulence at yearend. The negative effects arising in Q4 2016 were reversed at the start of Q1 2017 when the market returned to normal. Other income equalled SEK 92m (54).
6
5
Change
Staff costs
-3,242
-2,918
11%
Other expenses
-1,410
-1,430
-1%
-145
-150
-3%
-4,797
-4,498
7%
Total expenses
Q2 2017
Net gains/losses on financial trans.
Q1 2017
Depreciation and amortisation
Income SEK m
Q2 2017
SEK m
Expenses increased by 7% to SEK -4,797m (-4,498). Exchange rate effects increased expenses by SEK 24m. Staff costs rose by 11% to SEK -3,242m (-2,918). During the first quarter, the Norwegian operations transitioned to a defined contribution pension plan. This transition involved a non-recurring item which reduced staff costs by SEK 239m in the first quarter. Adjusted for this item, staff costs rose by 3%, of which 1 percentage point was due to exchange rate movements. The provision to the Oktogonen profit-sharing foundation was SEK -243m (-243). The period’s provision for variable remuneration increased to SEK -27m (-20). The average number of employees increased to 11,687 (11,584). The number of employees is increasing outside Sweden and in IT development but decreasing slightly in the Swedish branch operations. Other expenses decreased by 1% to SEK -1,410m (-1,430), chiefly due to lower costs of premises and properties. Loan losses SEK m
Q2 2017
Q1 2017
Net loan losses
-186
-196
-10
Loan loss ratio as a % of loans
0.04
0.04
0.00
2,952
3,164
-7%
0.15
0.16
-0.01
Impaired loans, net Proportion of impaired loans, %
Change
Loan losses decreased to SEK -186m (-196), and the loan loss ratio was 0.04% (0.04). The underlying credit quality remained stable. Net impaired loans decreased to SEK 2,952m (3,164), equivalent to 0.15% (0.16) of lending. Taxes
The tax rate in the second quarter was 22.8% (23.1). A normal tax rate for the Group is 22-23%. Starting in 2017, interest expenses on subordinated loans are no longer tax-deductible. On an annual basis, this has increased the Bank’s corporate tax by about SEK 280m. FUNDING AND LIQUIDITY
Handelsbanken’s bond issues during the first six months decreased to SEK 75bn (120), consisting of SEK 65bn (93) in covered bonds and SEK 10bn (27) in senior bonds. The Bank has large volumes of liquid funds, mortgage loans and other assets that are not encumbered and therefore represent protection for the Bank’s senior lenders. At the end of the period, the ratio of non-
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
reduced the common equity tier 1 ratio by -0.5 percentage points. Conversions of the 2011 staff convertible bond increased the ratio by 0.1 percentage point. The period’s profit contributed 1.0 percentage point after a deduction for the dividend generated. Implementation of new PD models reduced the common equity tier 1 ratio by -1.8 percentage points. Higher lending volumes reduced the common equity tier 1 ratio by -0.1 percentage point, and credit risk migration in the loan portfolio had an additional impact of -0.2 percentage points. At the same time, as a result of new lending volumes having lower risk than the exposures leaving the credit portfolio (known as volume migration), the common equity tier 1 ratio increased by 0.3 percentage points. The effect of IAS 19 increased the common equity tier 1 capital ratio by 1.7 percentage points, due to both higher asset values and raised discount rates. The sale of AFS shares had a positive effect of 0.6 percentage points. Exchange rate effects were neutral, and the net effect of other factors reduced the common equity tier 1 ratio by -0.7 percentage points.
encumbered assets to all non-encumbered market funding was 236% (210% at year-end 2016). The Bank has a strong liquidity position. Cash funds and liquid assets invested with central banks amounted to SEK 489bn, while the volume of liquid bonds and other liquid assets totalled SEK 175bn. According to the current Swedish definition from January 2013, the Handelsbanken Group’s liquidity coverage ratio (LCR) at the end of the second quarter was 120% (139). In USD, the LCR was 177% (121), and in EUR it was 132% (181). The Group’s LCR, calculated according to the European Commission’s delegated act, was 136% (146). At the end of the second quarter, the net stable funding ratio (NSFR) was 106% (102% at year-end). CAPITAL
The Bank’s goal is that its common equity tier 1 ratio under normal circumstances should exceed by 1-3 percentage points the common equity tier 1 capital requirement communicated to the Bank by the Swedish Financial Supervisory Authority. At the end of March, the Swedish Financial Supervisory Authority approved the Bank’s new PD models for corporate exposures. During the second quarter, the Authority approved the Bank’s models for capital adequacy for sovereign exposures applying the IRB Approach. Capital adequacy for these exposures was previously calculated using the standardised approach and their risk weight was zero. Introduction of the new models increases the Bank’s risk exposure by SEK 9.6bn. The common equity tier 1 ratio at the end of the second quarter was 23.4%. At the end of the first quarter, the Swedish Financial Supervisory Authority’s common equity tier 1 capital requirement was 20.3%. Thus the Bank’s common equity tier 1 ratio slightly exceeded the upper limit of the target interval.
Capital situation 30 June 2017 compared with 31 March 2017
Capital situation 30 June 2017 compared with 30 June 2016 SEK m
30 Jun 2017
30 Jun 2016
Change
Common equity tier 1 ratio, CRR
23.4%
23.0%
0.4
Total capital ratio, CRR
29.0%
28.9%
0.1
Risk exposure amount CRR
504,199
474,500
6%
Common equity tier 1 capital
117,851
109,006
8%
Total own funds
146,164
137,057
7%
Capital requirement, Basel I floor
100,575
97,459
3%
Total own funds, Basel I floor
148,436
138,600
7%
Own funds increased to SEK 146bn (137), putting the Bank’s total capital ratio at 29.0% (28.9). The common equity tier 1 capital increased to SEK 118bn (109), and the common equity tier 1 ratio rose by 0.4 percentage points to 23.4% (23.0). The implementation of new models for sovereign exposures
7
6
SEK m
30 Jun 2017
31 Mar 2017
Common equity tier 1 ratio, CRR
23.4%
23.8%
-0.4
Total capital ratio, CRR
29.0%
29.7%
-0.7
Risk exposure amount CRR
504,199
489,456
3%
Common equity tier 1 capital
117,851
116,529
1%
Total own funds
146,164
145,291
1%
Capital requirement, Basel I floor
100,575
98,946
2%
Total own funds, Basel I floor
148,436
147,561
1%
Change
Own funds increased to SEK 146bn (145), and the total capital ratio declined to 29.0% (29.7). The common equity tier 1 capital increased to SEK 118bn (117), and the common equity tier 1 ratio according to CRR fell by -0.4 percentage points to 23.4% (23.8). The implementation of new models for sovereign exposures reduced the common equity tier 1 ratio by -0.5 percentage points. The period’s profit contributed 0.3 percentage points after a deduction for the dividend generated. Rising lending volumes reduced the common equity tier 1 ratio by -0.2 percentage points. Volume migration had a neutral effect, while credit risk migration had a negative impact of -0.2 percentage points. The effect of IAS 19 increased the common equity tier 1 capital ratio by 0.2 percentage points, mainly due to higher asset values. The discount rate for Swedish pension obligations was 2.30% (2.30). The effects of exchange rate movements were neutral.
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
8
Economic capital and available financial resources
RATING
Handelsbanken’s internal assessment of the capital need is based on the Bank’s capital requirement, stress tests, and the Bank’s model for economic capital (EC). Economic capital is measured in relation to the Bank’s available financial resources (AFR). The Board stipulates that the AFR/EC ratio for the Group must exceed 120%. At the end of the second quarter, EC for the Group totalled SEK 60.8bn, while AFR was SEK 155.6bn. Thus, the ratio between AFR and EC was 256%. For the parent company, EC totalled SEK 51.7bn, and AFR was SEK 129.8bn. For the consolidated situation, EC totalled SEK 33.4bn, and AFR was SEK 154.8bn.
During the first quarter, Standard & Poor’s changed their outlook for Handelsbanken to stable from negative. Otherwise, Handelsbanken’s short-term and long-term ratings with the rating agencies which monitor the Bank were unchanged.
7
Long-term
Short-term
Standard & Poor's
AA-
A-1+
Fitch
AA
F1+
Moody's
Aa2
P-1
DBRS
AA (low)
Counterparty risk assessment
Aa1
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Handelsbanken Group – Business segments January - June 2017
Home markets
Sweden
UK
Denmark
Finland
Norway
Net interest income
8,022
2,257
842
583
1,783
260
236
419
14,402
Net fee and commission income
2,175
290
229
234
205
65
1,641
23
4,862
323
94
53
27
46
5
627
-311
864
-32
-30
SEK m
Net gains/losses on financial transactions Risk result - insurance
Capital Markets
Other
Adj. & elim.
Group Jan-Jun 2017
Netherlands
89
Share of profit of associates
2
89
Other income
27
0
8
10
10
0
10
22
87
Total income
10,547
2,641
1,132
854
2,044
332
2,603
121
20,274
Staff costs
-1,704
-914
-329
-194
-177
-141
-1,132
-1,461
-558
-238
-75
-86
-107
-38
-448
-1,290
-1,565
-301
-163
-151
-200
-46
23
2,403
Other expenses Internal purchased and sold services Depreciation, amortisation and impairments of property, equipment and intangible assets Total expenses Profit before loan losses Net loan losses Gains/losses on disposal of property, equipment and intangible assets Operating profit Profit allocation Operating profit after profit allocation Internal income*
-108
-6,160 -2,840
-44
-32
-7
-9
-7
-5
-40
-125
-26
-295
-3,871
-1,485
-574
-440
-491
-230
-1,597
-473
-134
-9,295
6,676
1,156
558
414
1,553
102
1,006
-352
-134
10,979
-99
-35
-70
-12
-102
0
-64
-382
0
-1
8
0
0
-
0
0
6,577
1,120
496
402
1,451
102
942
-352
624
15
48
70
44
2
-803
-
7,201
1,135
544
472
1,495
104
139
-352
166
-584
-174
-174
-1,284
-122
-1,449
3,621
Capital Markets
Other
January - June 2016
7 -134
10,604
-134
10,604
Adj. & elim.
Group Jan-Jun 2016
Home markets
Sweden
UK
Denmark
Finland
Norway
Netherlands
Net interest income
7,572
2,218
814
612
1,566
195
271
355
13,603
Net fee and commission income
2,084
251
191
195
175
11
1,513
30
4,450
374
126
35
58
68
1
578
445
1,685
SEK m
Net gains/losses on financial transactions Risk result - insurance
111
Share of profit of associates Other income
15
1
9
Total income
10,045
2,596
Staff costs
-2,526
-935
-590 -1,335
Other expenses Internal purchased and sold services Depreciation, amortisation and impairments of property, equipment and intangible assets Total expenses Profit before loan losses Net loan losses Gains/losses on disposal of property, equipment and intangible assets Operating profit Profit allocation Operating profit after profit allocation Internal income*
111 15
15
3
195
301
6
72
-
1,049
871
1,881
207
2,476
1,040
-314
-185
-321
-89
-1,207
-928
-211
-85
-120
-98
-24
-429
-1,092
-257
-138
-118
-176
-39
-22
2,085
20,165 -115
-6,620 -2,649
-37
-24
-7
-6
1
-3
-39
-129
-4,488
-1,427
-544
-429
-594
-155
-1,697
-64
-115
-9,513
-244
5,557
1,169
505
442
1,287
52
779
976
-115
10,652
-108
-67
-44
-34
-167
1
3
-416
0
2
1
0
0
-
0
5
5,449
1,104
462
408
1,120
53
782
981
-115
10,244
8
426
15
37
62
39
2
-581
5,875
1,119
499
470
1,159
55
201
981
-115
10,244
10
-677
-199
-147
-1,242
-108
-1,281
3,644
* Internal income which is included in total income comprises income from transactions between other operating segments and Other. Since interest income and interest expense are reported net as income, this means that internal income includes the net amount of the internal funding cost between segments and Other. The business segments consist of Handelsbanken Sweden, Handelsbanken UK,
commissions and payment for internal services, primarily according to the cost
Handelsbanken Denmark, Handelsbanken Finland, Handelsbanken Norway,
price principle. The part of Handelsbanken Capital Markets’ operating profit that
Handelsbanken the Netherlands and Handelsbanken Capital Markets. The
does not involve risk-taking is allocated to branches with customer responsibility.
income statements by segment include internal items such as internal interest,
9
8
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Handelsbanken Sweden Handelsbanken Sweden comprises branch operations in five regional banks, as well as the operations of Handelsbanken Finans, Ecster and Stadshypotek in Sweden. At Handelsbanken, the branches are the base of all operations, with responsibility for all customers of the Bank. The regional banks offer a full range of banking services at 423 branches throughout Sweden. Handelsbanken Finans offers finance company services and works through the Bank’s branches. INCOME STATEMENT SEK m
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Net interest income
4,076
3,946
3%
3,813
7%
8,022
7,572
6%
15,519
Net fee and commission income
1,117
1,058
6%
1,080
3%
2,175
2,084
4%
4,233
176
147
20%
242
-27%
323
374
-14%
725
Other income
16
11
45%
4
300%
27
15
80%
47
Total income
5,385
5,162
4%
5,139
5%
10,547
10,045
5%
20,524
Staff costs
-848
-856
-1%
-920
-8%
-1,704
-2,526
-33%
-3,671
Other expenses
-279
-279
0%
-310
-10%
-558
-590
-5%
-1,153
Internal purchased and sold services
-773
-792
-2%
-677
14%
-1,565
-1,335
17%
-2,645
Net gains/losses on financial transactions
Depreciation, amortisation and impairments of property, equipment and intangible assets Total expenses Profit before loan losses Net loan losses Gains/losses on disposal of property, equipment and intangible assets Operating profit Profit allocation Operating profit after profit allocation
-17
-27
-37%
-17
0%
-44
-37
19%
-67
-1,917
-1,954
-2%
-1,924
0%
-3,871
-4,488
-14%
-7,536
3,468
3,208
8%
3,215
8%
6,676
5,557
20%
12,988
-39
-60
-35%
-84
-54%
-99
-108
-8%
-416
0
0
0%
1
-100%
0
0
3,429
3,148
9%
3,132
9%
6,577
5,449
21%
12,572
330
294
12%
224
47%
624
426
46%
997
3,759
3,442
9%
3,356
12%
7,201
5,875
23%
13,569
50%
Internal income
182
-16
121
Cost/income ratio, %
33.5
35.8
35.9
Loan loss ratio, % Allocated capital
0.01
0.02
74,464
78,736
Return on allocated capital, %
15.7
13.6
Average number of employees Number of branches
3,990 423
4,006 425
0.03 -5%
68,642
0% 0%
4,300 472
166
10
116
34.7
42.9
35.0
0.02
0.02
8%
74,464
68,642
14.7
12.8
-7% -10%
3,998 423
4,356 472
15.3
0
0.03 8%
77,800
-8% -10%
4,293 435
14.7
BUSINESS VOLUMES Average volumes, SEK bn
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Loans to the public* Household of which mortgage loans Corporate of which mortgage loans
775
765
1%
736
5%
770
728
6%
725
714
2%
681
6%
719
674
7%
740 687
486
479
1%
481
1%
482
482
0%
479
280
275
2%
272
3%
278
273
2%
271
1,261
1,244
1%
1,217
4%
1,252
1,210
3%
1,219
Household
316
307
3%
291
9%
312
286
9%
295
Corporate
229
217
6%
200
15%
223
199
12%
201
Total
545
524
4%
491
11%
535
485
10%
496
Total Deposits and borrowing from the public
* Excluding loans to the National Debt Office.
10
9
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
JANUARY – JUNE 2017 COMPARED WITH JANUARY – JUNE 2016 Financial performance
Operating profit increased by 21% to SEK 6,577m (5,449). Adjusted for the staff cost provision of SEK -700m in Q1 2016, the increase was 7%. Net interest income increased by 6% to SEK 8,022m (7,572). Greater lending volumes increased net interest income by SEK 251m and improved lending margins by an additional SEK 54m. Deposit operations contributed SEK 60m thanks to volumes and SEK 16m thanks to improved margins. Fees for the Resolution Fund and the deposit guarantee rose by SEK 214m to -544m (-330), and the benchmark effect in Stadshypotek was SEK -39m (6). The remainder of the increase in net interest income was mainly due to lower funding costs. Net fee and commission income rose by 4% to SEK 2,175m (2,084). The increase was chiefly due to higher fund management, payment and insurance commissions. Net gains/losses on financial transactions declined by 14% to SEK 323m (374), mainly as a result of capital gains on equities in the period of comparison. Total expenses decreased by 14% to SEK -3,871m (-4,488), as a result of the preceding year’s staff cost provision of SEK -700m. Adjusted for the provision, staff costs decreased by 7%. The average number of employees fell by 8% to 3,998 (4,356). Expenses for services bought and sold internally increased by 17% to SEK -1,565m, mainly due to higher IT development costs. The C/I ratio improved to 34.7% (42.9). Loan losses declined to SEK -99m (-108), and the loan loss ratio was unchanged at 0.02% (0.02). Business development
At the beginning of April, Kantar Sifo presented the 2017 Company Reputation Index. This shows the degree of trust and quality that the Swedish public attaches to different companies. As in previous years, Handelsbanken was the major bank in which the general public had the most confidence. Handelsbanken is the only bank among the 10 companies with the best reputation in Sweden. In addition, confidence in the Bank increased, and Handelsbanken was given an index value of 58 (54). This can be compared with the average for the other three major banks, which went down to 31 (35).
11
10
During the first six months of the year, new savings in the Bank’s mutual funds in Sweden were SEK 10.8bn (5.5), corresponding to a market share of 18.1%. The average volume of deposits from households rose by 9% to SEK 312bn (286). The average volume of mortgage loans to private individuals increased by 7% to SEK 719bn (674), while the average volume of lending to companies was unchanged at SEK 482bn (482). During the second quarter, the Bank continued to adapt its branch operations, partly as a result of changed customer behaviour resulting from digitalisation. Handelsbanken had 423 branches (472) in Sweden. Q2 2017 COMPARED WITH Q1 2017
Operating profit increased by 9% to SEK 3,429m (3,148), and return on allocated capital rose to 15.7% (13.6). Net interest income rose by 3%, or SEK 130m, to SEK 4,076m (3,946). Increased lending volumes contributed SEK 49m, while lending margins reduced net interest income by SEK -3m. Net interest income from deposit operations increased by SEK 16m. The benchmark effect in Stadshypotek decreased to SEK -31m (-8). The average volume of mortgage loans to private individuals grew by 2% to SEK 725bn (714). The gross margin on the mortgage portfolio – before advisory and administration expenses – was unchanged at 1.06% (1.06). The average volume of corporate lending increased by 1% to SEK 486bn (479). Net fee and commission income grew by 6% to SEK 1,117m (1,058), due to increased fund management and payment commissions. Net gains/losses on financial transactions rose to SEK 176m (147), due to improved gains on bond repurchases in Stadshypotek. Expenses decreased by 2% to SEK -1,917m (-1,954), attributable to somewhat lower staff costs and reduced costs for services bought and sold. The average number of employees decreased to 3,990 (4,006). Loan losses fell to SEK -39m (-60), and the loan loss ratio fell to 0.01% (0.02).
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Handelsbanken UK Handelsbanken UK comprises branch operations in five regional banks and the asset management company Heartwood. Handelsbanken Finans’s operations in the UK are also included. At Handelsbanken, the branches are the base of all operations, with responsibility for all customers of the Bank. The regional banks offer banking services at 207 branches throughout the UK. INCOME STATEMENT SEK m Net interest income Net fee and commission income Net gains/losses on financial transactions
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
1,178
1,079
9%
1,102
7%
2,257
2,218
2%
150
140
7%
132
14%
290
251
16%
4,414 519
48
46
4%
76
-37%
94
126
-25%
219
0
1
-100%
3
5%
2,641
2,596
2%
5,155
Other income
0
0
0%
0
Total income
1,376
1,265
9%
1,310
Staff costs
-461
-453
2%
-462
0%
-914
-935
-2%
-1,849
Other expenses
-126
-112
13%
-105
20%
-238
-211
13%
-463
Internal purchased and sold services
-151
-150
1%
-137
10%
-301
-257
17%
-545
Depreciation, amortisation and impairments of property, equipment and intangible assets
-16
-16
0%
-11
45%
-32
-24
33%
-46
-754
-731
3%
-715
5%
-1,485
-1,427
4%
-2,903
Profit before loan losses
622
534
16%
595
5%
1,156
1,169
-1%
2,252
Net loan losses
-23
-12
92%
-26
-12%
-35
-67
-48%
-160
-1
2
568
5%
1,120
1,104
1%
2,094
Total expenses
Gains/losses on disposal of property, equipment and intangible assets Operating profit Profit allocation
0
-1
599
521
15%
-1
2
7
8
-13%
7
0%
15
15
0%
35
606
529
15%
575
5%
1,135
1,119
1%
2,129
Internal income
-286
-298
4%
-327
13%
-584
-677
14%
-1,195
Cost/income ratio, %
54.5
57.4
54.3
55.9
54.7
Loan loss ratio, %
0.05
0.02
0.05
0.04
0.07
12,144
12,914
18%
12,144
10,263
Operating profit after profit allocation
Allocated capital
-6%
10,263
0.08 18%
11,426
Return on allocated capital, %
15.6
12.8
14.1
16.5
Average number of employees
2,022
1,991
2%
1,957
3%
2,006
1,934
4%
1,959
207
207
0%
205
1%
207
205
1%
207
Q2 2017
Q1 2017 Change
Number of branches
17.5
55.9
15.4
BUSINESS VOLUMES Average volumes, GBP m
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Loans to the public Household
6,073
5,916
3%
5,456
11%
5,994
5,372
12%
5,527
Corporate
12,050
11,719
3%
10,847
11%
11,885
10,706
11%
11,007
Total
18,123
17,635
3%
16,303
11%
17,879
16,078
11%
16,534
Household
3,603
3,297
9%
2,425
49%
3,450
2,242
54%
2,569
Corporate
8,490
7,840
8%
7,051
20%
8,165
6,898
18%
7,218
12,093
11,137
9%
9,476
28%
11,615
9,140
27%
9,787
Deposits and borrowing from the public
Total
12
11
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
JANUARY – JUNE 2017 COMPARED WITH JANUARY – JUNE 2016 Financial performance
Operating profit increased by 1% to SEK 1,120m (1,104). Exchange rate movements reduced operating profit by SEK -69m; expressed in local currency operating profit grew by 9%. The return on allocated capital decreased to 14.1% (16.5). Income rose by 2%. In local currency, income rose by 9%. Net interest income improved by 2% to SEK 2,257m (2,218). Exchange rate movements had a negative impact of SEK -145m on net interest income, while net interest income grew by 9% expressed in local currency. Increased lending volumes contributed SEK 175m, and deposit volumes contributed SEK 55m. Lower lending margins negatively affected net interest income by SEK -66m and deposit margins by SEK -19m. Government fees which affected net interest income rose to SEK -90m (-43). Net fee and commission income rose by 16% to SEK 290m (251). In local currency, the increase was 24%, mainly due to higher payment and asset management commissions but also to higher deposit and lending commissions. Net gains/losses on financial transactions decreased to SEK 94m (126), chiefly because the period of comparison included one-off income related to the sale of Visa Europe. Expenses rose by 4% to SEK -1,485m (-1,427). In local currency, expenses were up by 11%, as a result of expanding operations as well as costs related to Brexit and preparations for the possible conversion of the UK branch into a subsidiary. The average number of employees grew by 4% to 2,006 (1,934). Loan losses fell to SEK -35m (-67), and the loan loss ratio fell to 0.04% (0.07). Business development
Business volumes continued to grow. The average volume of deposits from households climbed by 54%, and lending to households grew by 12%, compared
13
12
with the first half of 2016. Overall, the average volume of lending increased by 11% to GBP 17.9bn, while total deposits grew by 27% to GBP 11.6bn. Therefore the loan-to-deposit ratio continued to decrease and was 150% at the end of Q2 2017, compared with 172% at the end of Q2 2016. Heartwood’s assets under management totalled GBP 3.2bn, compared with GBP 2.9bn at the year-end. The number of branches in the UK was unchanged during the first six months, at 207. Q2 2017 COMPARED WITH Q1 2017
Operating profit rose by 15% to SEK 599m (521), chiefly due to improved net interest income. Exchange rate effects had a positive impact of SEK 12m on operating profit. The return on allocated capital increased to 15.6% (12.8). Income grew by 9% to SEK 1,376m (1,265). Net interest income rose by 9%, or SEK 99m, to SEK 1,178m (1,079), of which SEK 20m was attributable to exchange rate effects and SEK 11m to there being fewer days in the comparison quarter. An adjustment of interest income attributable to impaired loans increased net interest income by SEK 37m. Adjusted for these items, net interest income rose by 3%. Greater business volumes had a positive impact of SEK 34m, while lower deposit margins had an impact of SEK -10m on net interest income. Lending margins improved somewhat, increasing net interest income by SEK 2m. Net fee and commission income increased to SEK 150m (140), chiefly due to higher commissions on deposits and lending as well as on payments. Net gains/losses on financial transactions rose to SEK 48m (46). Expenses increased by 3% to SEK -754m (-731). Just over half the increase was attributable to exchange rate effects. The remainder of the increase was partly attributable to preparations for Brexit. The average number of employees rose to 2,022 (1,991). Loan losses were SEK -23m (-12), and the loan loss ratio was 0.05% (0.02).
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Handelsbanken Denmark Handelsbanken Denmark consists of the branch operations in Denmark, which are organised as a regional bank, as well as Stadshypotek’s operations in Denmark. At Handelsbanken, the branches are the base of all operations, with responsibility for all customers of the Bank. The regional bank offers a full range of banking services at 57 branches throughout Denmark. INCOME STATEMENT SEK m
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Net interest income
425
417
2%
405
5%
842
814
3%
1,686
Net fee and commission income
121
108
12%
93
30%
229
191
20%
379
29
24
21%
18
61%
53
35
51%
75
Other income
1
7
-86%
6
-83%
8
9
-11%
15
Total income
576
556
4%
522
10%
1,132
1,049
8%
2,155
Net gains/losses on financial transactions
Staff costs
-163
-166
-2%
-155
5%
-329
-314
5%
-655
Other expenses
-36
-39
-8%
-41
-12%
-75
-85
-12%
-194
Internal purchased and sold services
-83
-80
4%
-69
20%
-163
-138
18%
-287
Depreciation, amortisation and impairments of property, equipment and intangible assets
-4
-3
33%
-4
0%
-7
-7
0%
-14
-286
-288
-1%
-269
6%
-574
-544
6%
-1,150
Profit before loan losses
290
268
8%
253
15%
558
505
10%
1,005
Net loan losses
-66
-4
-38
74%
-70
-44
59%
-716
296
Total expenses
Gains/losses on disposal of property, equipment and intangible assets Operating profit Profit allocation Operating profit after profit allocation Internal income
2
6
-67%
1
100%
8
1
226
270
-16%
216
5%
496
462
7%
24
24
0%
18
33%
48
37
30%
85
250
294
-15%
234
7%
544
499
9%
381
2%
-95
9%
13%
-334
-86
-88
-174
-199
Cost/income ratio, %
47.7
49.7
49.8
48.6
50.1
Loan loss ratio, %
0.27
0.02
0.18
0.14
0.10
5,535
6,382
5,535
6,146
Return on allocated capital, %
14.1
14.4
14.3
12.8
Average number of employees
605
611
-1%
626
-3%
608
57
57
0%
57
0%
57
Allocated capital
Number of branches
7
-13%
6,146
-10%
11.9
51.3 0.85 -10%
6,221
626
-3%
624
57
0%
57
4.8
BUSINESS VOLUMES Q2 2017
Q1 2017 Change
Q2 2016 Change
Household
43.8
43.4
1%
40.1
9%
43.6
39.6
10%
40.8
Corporate
28.8
29.6
-3%
28.8
0%
29.2
28.7
2%
28.8
Total
72.6
73.0
-1%
68.9
5%
72.8
68.3
7%
69.6
Household
12.9
12.2
6%
12.0
8%
12.5
11.6
8%
11.9
Corporate
18.6
18.5
1%
13.5
38%
18.6
15.3
22%
15.7
Total
31.5
30.7
3%
25.5
24%
31.1
26.9
16%
27.6
Average volumes, DKK bn
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Loans to the public
Deposits and borrowing from the public
14 13
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
JANUARY – JUNE 2017 COMPARED WITH JANUARY – JUNE 2016 Financial performance
Operating profit grew by 7% to SEK 496m (462), as a result of increased income. Exchange rate movements had a positive impact of SEK 15m on operating profit. The return on allocated capital increased to 14.3% (12.8). Net interest income increased by 3% to SEK 842m (814). Adjusted for exchange rate movements, net interest income was more or less unchanged. Increased lending volumes contributed SEK 47m, while lower lending margins reduced net interest income by SEK -25m. Improved deposit margins and higher deposit volumes increased net interest income by SEK 3m. Fees for the Swedish Resolution Fund and the deposit guarantee increased by SEK 15m, burdening net interest income by SEK -38m (-23). Net fee and commission income rose by 20% to SEK 229m (191). The increase was attributable to a high level of customer activity in all commission areas and especially to higher brokerage income and increased asset management commissions. Exchange rate movements had a positive impact of SEK 6m on net fee and commission income. Net gains/losses on financial transactions increased to SEK 53m (35), partly a result of increased early repayment charges as well as larger earnings in the foreign exchange business. Expenses rose by 6% to SEK -574m (-544). Adjusted for the effect of exchange rate movements, the increase was 2%.
Loan losses were SEK -70m (-44), and the loan loss ratio was 0.14% (0.10).
15
14
Business development
The Bank continued to have a stable inflow of new customers, and business volumes continued to increase. During the year, the average volume of lending to households increased by 10%, and deposits from households increased by 8%. Corporate lending grew by 2%, while corporate deposits grew by 22%. Overall the average volume of lending increased by 7% to DKK 72.8bn (68.3), and deposits increased by 16% to DKK 31.1bn (26.9). Q2 2017 COMPARED WITH Q1 2017
Operating profit declined to SEK 226m (270) as a result of higher loan losses. Profit before loan losses grew by 8% to SEK 290m (268), due to higher income and lower expenses. Net interest income increased by 2% to SEK 425m (417). Adjusted for exchange rate effects of SEK 8m and a day effect of SEK 4m, net interest income fell by 1%. Lower lending volumes reduced net interest income by SEK -4m, while lending margins remained largely unchanged. Net interest income from deposits was unchanged. Net fee and commission income increased by 12% to SEK 121m (108). The increase was attributable to robust customer activity that resulted in higher brokerage income and increased payment commissions. Net gains/losses on financial transactions rose to SEK 29m (24). Expenses fell by 1% to SEK -286m (-288). Exchange rate effects increased expenses by SEK 5m. Staff costs fell by 2%, and the average number of employees fell by 1%.
Loan losses rose to SEK -66m (-4). The loan loss ratio was 0.27% (0.02).
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Handelsbanken Finland Handelsbanken Finland consists of the branch operations in Finland, which are organised as a regional bank, as well as Handelsbanken Finans’s and Stadshypotek’s operations in Finland. At Handelsbanken, the branches are the base of all operations, with responsibility for all customers of the Bank. The regional bank offers a full range of banking services at 45 branches throughout Finland. Handelsbanken Finans offers finance company services and works through the Bank’s branches. INCOME STATEMENT SEK m
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Net interest income
291
292
0%
294
-1%
583
612
-5%
1,218
Net fee and commission income
121
113
7%
102
19%
234
195
20%
419
13
14
-7%
45
-71%
27
58
-53%
87
Other income
6
4
50%
3
100%
10
6
67%
10
Total income
431
423
2%
444
-3%
854
871
-2%
1,734
Net gains/losses on financial transactions
Staff costs
-100
-94
6%
-95
5%
-194
-185
5%
-380
Other expenses
-44
-42
5%
-50
-12%
-86
-120
-28%
-210
Internal purchased and sold services
-78
-73
7%
-60
30%
-151
-118
28%
-239
Depreciation, amortisation and impairments of property, equipment and intangible assets
-5
-4
25%
-3
67%
-9
-6
50%
-14
-227
-213
7%
-208
9%
-440
-429
3%
-843
Profit before loan losses
204
210
-3%
236
-14%
414
442
-6%
891
Net loan losses
-15
3
-11
36%
-12
-34
-65%
-36
0
0
-16%
402
408
-1%
855 131
Total expenses
Gains/losses on disposal of property, equipment and intangible assets Operating profit Profit allocation
0
-
189
213
-11%
0 225
0
38
32
19%
30
27%
70
62
13%
Operating profit after profit allocation
227
245
-7%
255
-11%
472
470
0%
986
Internal income
-87
-87
0%
-62
-40%
-174
-147
-18%
-262
Cost/income ratio, %
48.4
46.8
43.9
47.6
46.0
Loan loss ratio, %
0.05
-0.01
0.04
0.02
0.06
5,283
6,169
5,283
5,568
Return on allocated capital, %
13.4
12.4
12.9
12.7
Average number of employees
505
482
5%
496
2%
493
492
0%
491
45
45
0%
45
0%
45
45
0%
45
Allocated capital
Number of branches
-14%
5,568
-5%
14.3
45.2 0.03 -5%
6,252 13.0
BUSINESS VOLUMES Average volumes, EUR m
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Loans to the public Household
4,053
4,024
1%
3,952
3%
4,039
3,952
2%
Corporate
9,061
8,922
2%
8,733
4%
8,992
8,738
3%
8,761
13,114
12,946
1%
12,685
3%
13,031
12,690
3%
12,736
Household
1,642
1,625
1%
1,432
15%
1,633
1,406
16%
1,451
Corporate
2,556
2,771
-8%
1,766
45%
2,663
1,909
39%
1,991
Total
4,198
4,396
-5%
3,198
31%
4,296
3,315
30%
3,442
Total
3,975
Deposits and borrowing from the public
16
15
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
JANUARY – JUNE 2017 COMPARED WITH JANUARY – JUNE 2016 Financial performance
Operating profit decreased by 1% to SEK 402m (408). Exchange rate effects increased profit by SEK 12m. The return on allocated capital rose slightly to 12.9% (12.7). Income fell by 2%. Net interest income declined by 5% to SEK 583m (612). Reduced margins on lending had a negative impact of SEK -53m on net interest income. At the same time, higher lending volumes had a positive impact of SEK 8m. Government fees to the Resolution Fund and the deposit guarantee reduced net interest income by SEK -53m (-27). Exchange rate movements increased net interest income by SEK 19m. Net fee and commission income rose by 20% to SEK 234m (195), due to higher payment commissions and rising commissions on deposits and lending. The savings business also developed favourably. Net gains/losses on financial transactions decreased to SEK 27m (58), chiefly because the period of comparison included one-off income related to the sale of Visa Europe. Total expenses rose by 3% to SEK -440m (-429). Adjusted for movements in exchange rates, expenses fell 1%. Staff costs increased by 5%, equivalent to an increase of almost 3% expressed in local currency. The total of other expenses and internal costs for services bought and sold were largely unchanged. The average number of employees totalled 493 (492). Loan losses were SEK -12m (-34), and the loan loss ratio decreased to 0.02% (0.06).
Business development
The average volume of deposits from households was 16% more than in the corresponding period of the preceding year, while lending to households grew by 2%. The average volume of corporate deposits climbed by 39%, while corporate lending grew by 3% compared with the corresponding period in the preceding year. Q2 2017 COMPARED WITH Q1 2017
Operating profit decreased by 11% to SEK 189m (213), chiefly due to higher loan losses. Expressed in local currency, profit before loan losses decreased by 4%. Net interest income was largely unchanged at SEK 291m (292). Adjusted for exchange rate effects and fewer days in the comparison quarter, net interest income fell by -3%. Net fee and commission income grew by 7% to SEK 121m (113), due to higher payment commissions. Net gains/losses on financial transactions were largely unchanged at SEK 13m (14). Expenses increased by 7% to SEK -227m (-213). Adjusted for exchange rate movements, expenses expressed in local currency increased by 4%.
Loan losses were SEK -15m, compared to net recoveries of SEK 3m in the preceding quarter. The loan loss ratio was 0.05% (-0.01).
.
17
16
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Handelsbanken Norway Handelsbanken Norway consists of the branch operations in Norway, which are organised as a regional bank, as well as Stadshypotek’s operations in Norway. At Handelsbanken, the branches are the base of all operations, with responsibility for all customers of the Bank. The regional bank offers a full range of banking services at 49 branches throughout Norway. INCOME STATEMENT SEK m
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Net interest income
898
885
1%
797
13%
1,783
1,566
14%
3,355
Net fee and commission income
102
103
-1%
91
12%
205
175
17%
381
19
27
-30%
30
-37%
46
68
-32%
114
Other income
6
4
50%
68
-91%
10
72
-86%
81
Total income
1,025
1,019
1%
986
4%
2,044
1,881
9%
3,931
Net gains/losses on financial transactions
Staff costs Other expenses Internal purchased and sold services Depreciation, amortisation and impairments of property, equipment and intangible assets
-192
15
-158
22%
-177
-321
-45%
-676
-53
-54
-2%
-50
6%
-107
-98
9%
-206
-103
-97
6%
-90
14%
-200
-176
14%
-379
-7
1
19%
-491
-594
-17%
-1,269
-3
-4
-25%
4
-351
-140
151%
-294
Profit before loan losses
674
879
-23%
692
-3%
1,553
1,287
21%
2,662
Net loan losses
-56
-46
22%
-64
-13%
-102
-167
-39%
-347
0
0
1,451
1,120
30%
2,315
Total expenses
Gains/losses on disposal of property, equipment and intangible assets Operating profit Profit allocation
0
0
0%
0
618
833
-26%
628
-2%
-8
0
23
21
10%
16
44%
44
39
13%
91
641
854
-25%
644
0%
1,495
1,159
29%
2,406
Internal income
-618
-666
7%
-558
-11%
-1,284
-1,242
-3%
-2,463
Cost/income ratio, %
33.5
13.5
29.3
23.5
30.9
Loan loss ratio, %
0.09
0.08
0.12
0.08
0.16
15,521
16,808
15,521
12,870
Return on allocated capital, %
12.9
15.9
14.4
13.8
Average number of employees
662
662
0%
658
1%
662
661
0%
668
49
49
0%
50
-2%
49
50
-2%
50
Operating profit after profit allocation
Allocated capital
Number of branches
-8%
12,870
21%
15.6
31.6 0.17 21%
15,883 13.3
BUSINESS VOLUMES Average volumes, NOK bn
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Loans to the public Household
88.4
88.0
0%
85.3
4%
88.2
84.8
4%
85.9
Corporate
148.7
145.8
2%
142.7
4%
147.3
141.0
4%
143.1
Total
237.1
233.8
1%
228.0
4%
235.5
225.8
4%
229.0
Household
19.7
19.6
1%
19.1
3%
19.6
18.9
4%
19.3
Corporate
49.0
48.8
0%
44.2
11%
48.9
42.5
15%
46.3
Total
68.7
68.4
0%
63.3
9%
68.5
61.4
12%
65.6
Deposits and borrowing from the public
18
17
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
JANUARY – JUNE 2017 COMPARED WITH JANUARY – JUNE 2016 Financial performance
Operating profit increased by 30% to SEK 1,451m (1,120). It was affected by a non-recurring item in the first quarter which reduced staff costs by SEK 206m, as a result of the transition to a defined contribution pension plan in the Norwegian operations. Lower loan losses and exchange rate movements also had a positive impact on profit. The period of comparison included non-recurring items resulting from the sale of Visa Europe. Adjusted for the aforementioned items, profit before loan losses improved by 6% expressed in local currency. Return on allocated capital was 14.4% (13.8). Adjusted for exchange rate effects, income rose by 3%. Net interest income increased by SEK 217m, or 14%, to SEK 1,783m (1,566), of which SEK 88m was attributable to exchange rate movements. Lending margins rose by SEK 43m, while increased lending volumes had a positive effect of SEK 32m on net interest income. Improved deposit margins and higher deposits had a positive effect of SEK 25m on net interest income. The fees for the Swedish Resolution Fund and the deposit guarantee reduced net interest income by SEK -97m (-53). Net fee and commission income increased by 17% to SEK 205m (175). Adjusted for exchange rate movements, net fee and commission income rose by 11%, chiefly due to higher fund management commissions. Net gains/losses on financial transactions decreased by 32% to SEK 46m (68). The decrease was chiefly attributable to capital gains in the period of comparison related to the sale of Visa Europe. Adjusted for the aforementioned transition to a defined contribution pension plan, staff costs rose by SEK 62m, or 19%, of which SEK 20m was attributable to exchange rate effects. The new financial sector tax in Norway – a 5% charge payable on wage costs – had an impact of SEK -17m on staff costs. Adjusted for these effects, staff costs increased by 8% compared to the corresponding period in the preceding year. Loan losses fell to SEK -102m (-167), and the loan loss ratio fell to 0.08% (0.16).
19
18
Business development
Business volumes continued to grow during the first six months. The average volume of deposits from households climbed by 4% compared to the corresponding period in the preceding year, while lending to households grew by 4%. The average volume of corporate lending increased by 4%, while corporate deposits grew by 15%. In total, the average volume of lending rose by 4% to NOK 235.5bn (225.8), while total deposits rose by 12% to NOK 68.5bn (61.4). Handelsbanken has 49 branches (50) in Norway. Q2 2017 COMPARED WITH Q1 2017
Operating profit decreased by SEK 215m to SEK 618m (833), of which SEK 206m was attributable to the nonrecurring item in the preceding quarter that resulted from the transition to a defined contribution pension plan. Exchange rate effects had a negative impact of SEK 17m on operating profit. Adjusted for both these effects, operating profit rose by just over 1%. Net interest income rose by 1%, or SEK 13m, to SEK 898m (885). Exchange rate movements had a negative impact of SEK -19m, while fewer days in the preceding quarter had a positive impact of SEK 8m on net interest income during the second quarter. Higher lending margins contributed SEK 20m, and rising lending volumes SEK 9m. Net interest on deposits declined by SEK -9m, chiefly due to lower deposit margins. Net fee and commission income was largely unchanged at SEK 102m (103). Net gains/losses on financial transactions decreased to SEK 19m (27), chiefly as a result of weaker profits in the foreign exchange business. Expenses totalled SEK -351m (-140). Adjusted for the non-recurring item that reduced staff costs for the preceding quarter by SEK 206m and for exchange rate effects of SEK 3m, expenses increased by 2%.
Loan losses increased to SEK -56m (-46), and the loan loss ratio was 0.09% (0.08).
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Handelsbanken the Netherlands Handelsbanken the Netherlands consists of the branch operations in the Netherlands, which are organised as a regional bank, as well as asset management operations in Optimix Vermogensbeheer. The regional bank offers banking services at 27 branches throughout the Netherlands. INCOME STATEMENT SEK m Net interest income Net fee and commission income Net gains/losses on financial transactions
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
135
125
8%
100
35%
260
195
33%
438
33
32
3%
6
450%
65
11
491%
75
3
2
50%
0
5
1
400%
5
Share of profit of associates
1
1
0%
-
2
-
Other income
0
0
0%
-
0
-
Total income
172
160
7%
106
62%
332
207
60%
521
Staff costs
-74
-67
10%
-45
64%
-141
-89
58%
-210
Other expenses
-20
-18
11%
-16
25%
-38
-24
58%
-60
Internal purchased and sold services
-24
-22
9%
-19
26%
-46
-39
18%
-77
Depreciation, amortisation and impairments of property, equipment and intangible assets Total expenses Profit before loan losses Net loan losses Gains/losses on disposal of property, equipment and intangible assets Operating profit Profit allocation Operating profit after profit allocation Internal income
-3
-2
50%
-2
50%
-5
-3
67%
-7
-121
-109
11%
-82
48%
-230
-155
48%
-354
51
51
0%
24
113%
102
52
96%
167
2
-2
0
1
-100%
0
92%
167
-
-
53
49
1 -
-
53
2
0%
2
2
0%
3
27
104%
104
55
89%
170
-56
-11%
-13%
-210
2
0 49
12% -3%
-62
-60
-122
-108
68.1
75.9
68.9
74.2
Loan loss ratio, %
-0.02
0.02
-0.02
0.00
-0.01
Allocated capital
1,375
1,276
1,375
956
Return on allocated capital, %
12.4
12.0
Average number of employees
274 27
Number of branches
-
25
55
112%
102
8%
69.5
Cost/income ratio, %
1
44%
67.6 0.00
8%
956
12.2
9.2
259
6%
188
46%
266
185
44%
206
26
4%
23
17%
27
23
17%
25
8.6
44%
1,251 12.5
BUSINESS VOLUMES Average volumes, EUR m
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Loans to the public Household
1,891
1,780
6%
1,367
38%
1,836
1,302
41%
1,434
Corporate
1,717
1,695
1%
1,397
23%
1,706
1,335
28%
1,519
Total
3,608
3,475
4%
2,764
31%
3,542
2,637
34%
2,953
Deposits and borrowing from the public
20
Household
84
78
8%
58
45%
81
55
47%
62
Corporate
727
768
-5%
440
65%
748
424
76%
420
Total
811
846
-4%
498
63%
829
479
73%
482
19
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
JANUARY – JUNE 2017 COMPARED WITH JANUARY – JUNE 2016 Financial performance
Operating profit improved by 92% to SEK 102m (53), chiefly due to continuing growth in business volumes. Income rose by 60%, while expenses increased by 48%. Adjusted for exchange rate movements, operating profit improved by 83% expressed in local currency. Return on allocated capital was 12.2% (9.2). Net interest income increased by 33% to SEK 260m (195). Increased lending volumes contributed SEK 60m, while lower lending margins reduced net interest income by SEK -7m. Higher deposit volumes and improved deposit margins increased net interest income by SEK 4m. Net fee and commission income increased to SEK 65m (11), as a result of the acquisition of the Optimix asset management company, which has been a part of Handelsbanken the Netherlands since 1 September 2016 and contributed SEK 56m. Expenses rose by 48% to SEK -230m (-155), as a result of the continuing expansion, including the acquisition of the Optimix asset management company. The C/I ratio improved to 68.9% (74.2), and the average number of employees increased by 44% to 266 (185).
Loan losses were SEK 0m (1), and the loan loss ratio was 0.00% (-0.01).
21
20
Business development
The average volume of lending to households grew by 41% to EUR 1,836m (1,302), while deposits from households increased by 47% to EUR 81m (55). Corporate lending climbed 28% to EUR 1,706m (1,335). The average volume of corporate deposits rose by 76% to EUR 748m (424). Business volumes with small and medium-sized companies continued to grow. In May, the Bank opened a branch in Alkmaar, bringing the total of Handelsbanken branches in the Netherlands to 27. The Optimix asset management company was acquired on 1 September 2016. Assets under management totalled EUR 2.1bn at 30 June 2017, including the company’s own mutual funds. Q2 2017 COMPARED WITH Q1 2017
Operating profit increased by 8% to SEK 53m (49), of which SEK 1m was due to exchange rate movements. Income grew by 7% to SEK 172m (160). Net interest income rose by 8% to SEK 135m (125). Net fee and commission income increased by 3% to SEK 33m (32). Expenses rose by SEK 12m, or 11%, to SEK -121m (-109); this was attributable to a SEK 7m increase in staff costs. The average number of employees grew by 6% to 274 (259). Loan losses consisted of net recoveries and equalled SEK 2m (-2). The loan loss ratio was -0.02% (0.02).
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Handelsbanken Capital Markets Handelsbanken Capital Markets consists of Markets & Asset Management, Pension & Life, Handelsbanken International and Business Support. It has employees in 21 countries. Markets & Asset Management offers a full range of products and services linked to risk management, securities, derivatives, mutual funds, research, debt capital markets and corporate finance, as well as co-ordinating the Bank’s offering in the savings area. Pension & Life comprises the Handelsbanken Liv subsidiary and offers pension solutions and other insurance solutions for private and corporate customers. Handelsbanken International encompasses the Bank’s branches and representative offices in 16 countries outside the Bank’s home markets, as well as the units for Financial Institutions (global banking collaborations) and Transaction Banking (cash management, trade finance and export finance). A large part of the income from Handelsbanken Capital Markets’ products, including asset management commissions and income from currency conversions, is booked directly in branch operations at the branch with customer responsibility, and is thus not included in the income statement below. INCOME STATEMENT SEK m
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Net interest income
118
118
0%
134
-12%
236
271
-13%
557
Net fee and commission income
859
782
10%
771
11%
1,641
1,513
8%
3,081
Net gains/losses on financial transactions
228
399
-43%
338
-33%
627
578
8%
984
53
36
47%
35
51%
89
111
-20%
142
Other income
3
7
-57%
1
200%
10
3
233%
8
Total income
1,261
1,342
-6%
1,279
-1%
2,603
2,476
5%
4,772
Staff costs
-588
-544
8%
-597
-2%
-1,132
-1,207
-6%
-2,368
Other expenses
-225
-223
1%
-217
4%
-448
-429
4%
-871
4
19
-79%
-22
23
-22
Risk result - insurance
Internal purchased and sold services Depreciation, amortisation and impairments of property, equipment and intangible assets Total expenses Profit before loan losses Net loan losses Gains/losses on disposal of property, equipment and intangible assets Operating profit Profit allocation Operating profit after profit allocation Internal income Cost/income ratio, %
-22
-18
22%
-19
16%
-40
-39
3%
-76
-831
-766
8%
-855
-3%
-1,597
-1,697
-6%
-3,371
430
576
-25%
424
1%
1,006
779
29%
1,401
11
-75
-64
3
0
-
441
501
-424 17
-7 0
0
0
6%
942
782
-297
43%
-803
120
-86%
139
-702
0%
-1,449
-12%
417
-379
12%
122
-86%
-699
-750
7%
-581
38%
-1,342
201
-31%
10
-1,281
-13%
-2,851
99.3
79.5
87.1
88.7
89.6
0.67
0.06
0.28
-0.01
Allocated capital
4,478
4,972
-11%
4,478
5,038
4.6
6.3
-3%
1,635
1,700
Average number of employees
1.1
7.7
1,627
1,643
5,038
-1%
1,681
7.5
0 1,352
-0.10
-10%
-49
20%
Loan loss ratio, % Return on allocated capital, %
-56
98.3 0.10 -11%
5,033
-4%
1,678
0.2
For more financial information about the different business areas within Handelsbanken Capital Markets, please see the Fact Book that is available at handelsbanken.se/ireng.
22
21
Handelsbanken
Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
JANUARY – JUNE 2017 COMPARED WITH JANUARY – JUNE 2016 Financial performance
Operating profit increased by 20% to SEK 942m (782). Total income grew by 5% to SEK 2,603m (2,476). Net fee and commission income grew by 8% to SEK 1,641m (1,513), driven mainly by higher mutual fund commissions. Net gains/losses on financial transactions went up by 8% to SEK 627m (578). Total expenses decreased by 6% to SEK -1,597m (-1,697). The decrease was mainly attributable to staff costs falling by 6% to SEK -1,132m (-1,207), partly as a result of a 4% fall in the average number of employees to 1,635 (1,700). Loan losses amounted to SEK -64m (3), corresponding to a loan loss ratio of 0.28% (-0.01). Business development
Asset management operations continued to show a strong performance. In Sweden, net savings in Handelsbanken’s mutual funds during the first six months of 2017 amounted to SEK 10.8bn, corresponding to a market share of 18.1%. Net savings in the Bank’s mutual funds elsewhere in the Nordic region showed strong growth, increasing to SEK 4.4bn. Total net savings in the Group’s funds amounted to SEK 15bn. Xact Kapitalförvaltning remained the largest player as regards Nordic exchange-traded funds. The total fund volume, including exchange-traded funds, increased by 10% from the beginning of the year to SEK 468bn (425). Total assets under management in the Group rose during the same period by 7% to SEK 582bn (542). Morningstar, a mutual fund research company, ranked Handelsbanken’s mutual funds highest of the Nordic banks when it evaluated the 30 largest fund managers on the Swedish market. In addition, during the year, Lipper Fund Awards ranked four of the Bank’s funds as the best in their respective categories. The Pension & Life business area showed positive performance, with its income increasing and expenses decreasing. The occupational pension area showed particularly strong performance, with a 30% increase in
23
premiums paid in. The net flow during the first six months was SEK 3.1bn. In the first half of 2017, the volume of assets under management by Handelsbanken Liv grew to SEK 133bn (122). As of 1 July 2017, all the Bank’s global index funds track new, more sustainable indexes. This change of indexes means, among other things, that a large number of companies are excluded as investment alternatives for mutual funds. Corporate Finance business showed a strong performance, and according to Mergermarket, the Bank was No.1 for M&A transactions involving Swedish companies. The Bank’s business volumes in terms of capital market funding also showed strong performance. The Bank arranged a total of 69 bond issues during the quarter for a value of EUR 8.3bn. The average volume of lending in Handelsbanken International, i.e. the operations outside the Bank’s home markets, totalled SEK 33.7bn (35.1). During the same period, deposits rose by 11% to SEK 49.0bn (44.2). Q2 2017 COMPARED WITH Q1 2017
Operating profit fell by 12% to SEK 441m (501), due to lower income and higher expenses than in the preceding quarter. Total income fell by 6% to SEK 1,261m (1,342), as a result of higher net gains/losses on financial transactions during the quarter of comparison. During the first quarter, net profit was positively affected by the market turbulence around the turn of the year, as the negative effects arising in Q4 2016 were reversed in early 2017 when the market returned to normal. Total expenses rose by 8% to SEK -831m (-766), chiefly due to higher staff costs. Staff costs rose by 8%, mainly due to a non-recurring item in the preceding quarter that reduced staff costs in Norway due to the transition to a defined contribution pension plan. The average number of employees totalled 1,627 (1,643). Loan losses consisted of net recoveries, and totalled SEK 11m (-75), corresponding to a loan loss ratio of -0.10% (0.67).
Handelsbanken
22
Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Other units not reported in the business segments Reported below are the income and expenses related to Treasury and the central staff functions, and also provisions to the Oktogonen profit-sharing foundation. Capital gains/losses, dividends, and other income and expenses that are not attributable to any of the segments are also reported here. INCOME STATEMENT SEK m Net interest income
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
200
219
-9%
163
23%
419
355
18%
5
18
-72%
5
0%
23
30
-23%
-199
-112
-78%
-226
12%
-311
445
Share of profit of associates
-4
-28
86%
13
Other income
10
12
-17%
181
-94%
12
109
-89%
136
-763
-698
9%
-459
-627
-663
-5%
1,208
1,195
1%
Net fee and commission income Net gains/losses on financial transactions
Total income Staff costs Other expenses Internal purchased and sold services Depreciation, amortisation and impairments of property, equipment and intangible assets
Full year 2016 756 69 857
-32
15
22
195
-89%
23
-91%
121
1,040
-88%
1,971
66%
-1,461
-928
57%
-2,335
-557
13%
-1,290
-1,092
18%
-2,244
1,074
12%
2,403
2,085
15%
4,228
-10%
-3%
-248
266
-60
-65
-8%
-67
-125
-129
Total expenses
-242
-231
5%
-9
-473
-64
-599
Profit before loan losses
-230
-122
-89%
127
-352
976
1,372
Net loan losses Gains/losses on disposal of property, equipment and intangible assets Operating profit
0
0
0%
0
0
5
23
-230
-122
-89%
127
-352
981
1,395
Profit allocation
-
-
0
-
0
-
-230
-122
-89%
127
-352
981
1,395
Internal income
1,656
1,965
-16%
1,679
-1%
3,621
3,644
-1%
7,199
Average number of employees
2,003
1,930
4%
1,810
11%
1,966
1,821
8%
1,840
Operating profit after profit allocation
JANUARY – JUNE 2017 COMPARED WITH JANUARY – JUNE 2016
Operating profit in other units not reported in the business segments amounted to SEK -352m (981). The provision for the Oktogonen profit-sharing foundation was resumed in the first quarter, and for the first six months it amounted to SEK 486m (-). Capital gains from the sale of shares totalling SEK 812m were included in the comparison period. The average number of employees rose to 1,966 (1,821), chiefly due to increased activity in IT development.
24
23
Q2 2017 COMPARED WITH Q1 2017
Operating profit declined to SEK -230m (-122), chiefly due to lower net gains/losses on financial transactions at Treasury, where the market turbulence around the turn of the year had a positive effect on the comparison period. The average number of employees totalled 2,003 (1,930).
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
KEY FIGURES – GROUP Q2 2017
Q1 2017
Q2 2016
Jan-Jun 2017
Jan-Jun 2016
Return on equity, total operations
12.9%
12.4%
14.2%
12.6%
13.7%
Return on equity, continuing operations
12.9%
12.4%
14.2%
12.6%
13.7%
C/I ratio, continuing operations
46.9%
44.8%
44.5%
45.8%
47.2%
C/I ratio, continuing operations, incl. loan losses
48.7%
46.8%
46.8%
47.7%
49.2%
2.09 2.06
2.11 2.10
2.19 2.15
4.20 4.16
4.31 4.22
Adjusted equity per share, SEK
68.82
66.77
62.83
68.82
62.83
Common equity tier 1 ratio, CRR
23.4%
23.8%
23.0%
23.4%
23.0%
Total capital ratio, CRR
29.0%
29.7%
28.9%
29.0%
28.9%
Own funds in relation to capital requirement according to Basel I floor
148%
149%
142%
148%
142%
Earnings per share, total operations, SEK - after dilution Ordinary dividend, SEK Total dividend
Average number of employees, continuing operations
11,687
11,584
11,716
11,636
11,775
Number of branches, Sweden
423
425
472
423
472
Number of branches outside Sweden
398
397
393
398
393
In addition to financial definitions according to IFRS, alternative performance measures are used to describe the performance of the underlying operations and to increase comparability between periods. For definitions and calculation of these performance measures, please see the Fact Book which is available at handelsbanken.se/ireng.
THE HANDELSBANKEN SHARE Q2 2017
Q1 2017
Q2 2016
Jan-Jun 2017
Jan-Jun 2016
Number of converted shares
-
22,151
28,800,955
22,151
28,800,955
Number of repurchased shares
-
-
-
-
-
Holding of own shares in trading book, end of period
-
-
-
-
-
Number of outstanding shares after repurchases and deduction for trading book, end of period
1,944,173,551 1,944,173,551 1,935,847,037 1,944,173,551 1,935,847,037
Number of outstanding shares after dilution, end of period
1,975,025,212 1,975,278,248 1,975,789,501 1,975,025,212 1,975,789,501
Average number of shares converted during the period Average holdings of own shares (repurchased and holdings in trading book) Average number of outstanding shares - after dilution
17,718
12,852,916
19,947
6,426,458
-
-
-
-
-
1,944,173,551 1,944,169,118 1,919,898,998 1,944,171,347 1,913,472,540 1,975,278,248 1,974,290,244 1,976,193,169 1,974,290,244 1,972,745,117
Share price SHB class A, end of period, SEK
120.60
122.90
101.80
120.60
101.80
Share price SHB class B, end of period, SEK
119.20
123.40
105.70
119.20
105.70
234
239
197
234
197
Market capitalisation, end of period, SEK bn
25
22,151
24
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Condensed set of financial statements – Group INCOME STATEMENT – GROUP Q2 2017
SEK m
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Interest income
10,398
10,210
2%
9,451
10%
20,608
19,787
4%
39,950
Interest expense
-3,077
-3,129
-2%
-2,643
16%
-6,206
-6,184
0%
-12,007 27,943
Net interest income
Note 2
7,321
7,081
3%
6,808
8%
14,402
13,603
6%
Net fee and commission income
Note 3
2,508
2,354
7%
2,280
10%
4,862
4,450
9%
9,156
Net gains/losses on financial transactions
Note 4
317
547
-42%
523
-39%
864
1,685
-49%
3,066
Risk result - insurance
53
36
47%
35
51%
89
111
-20%
142
Other dividend income
11
2
450%
222
-95%
13
225
-94%
228
Share of profit of associates
-3
-27
89%
13
-30
15
Other income
31
43
-28%
41
-24%
74
76
-3%
203
Total income
10,238
10,036
2%
9,922
3%
20,274
20,165
1%
40,763
Staff costs
-3,242
-2,918
11%
-2,952
10%
-6,160
-6,620
-7%
-12,542
-1,410
-1,430
-1%
-1,346
5%
-2,840
-2,649
7%
-5,401
Other expenses Depreciation, amortisation and impairment of property, equipment and intangible assets
Note 5
Total expenses Profit before loan losses Net loan losses Gains/losses on disposal of property, equipment and intangible assets
Note 6
Operating profit Taxes Profit for the period from continuing operations Profit for the period pertaining to discontinued operations, after tax
Note 7
Profit for the period
25
-145
-150
-3%
-119
22%
-295
-244
21%
-495
-4,797
-4,498
7%
-4,417
9%
-9,295
-9,513
-2%
-18,438
5,441
5,538
-2%
5,505
-1%
10,979
10,652
3%
22,325
-186
-196
-5%
-229
-19%
-382
-416
-8%
-1,724
2
5
-60%
1
100%
7
8
-13%
32
5,257
5,347
-2%
5,277
0%
10,604
10,244
4%
20,633
-1,201
-1,236
-3%
-1,091
10%
-2,437
-2,020
21%
-4,401
4,056
4,111
-1%
4,186
-3%
8,167
8,224
-1%
16,232
-
-
-
13
4,056
4,111
-1%
4,194
8 -3%
8,167
8,237
-1%
16,245
13
4,056
4,111
-1%
4,194
-3%
8,167
8,236
-1%
16,244
0
0
0
1
Attributable to Shareholders in Svenska Handelsbanken AB Minority interest
0
1
EARNINGS PER SHARE – GROUP Q2 2017 Profit for the year, attributable to shareholders in Svenska Handelsbanken AB
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
4,056
4,111
-1%
4,194
-3%
8,167
8,236
-1%
16,244
-18
-31
-42%
-41
-56%
-49
-87
-44%
-139
Average number of outstanding shares, million
1,944.2
1,944.2
1,919.9
1,944.2
1,913.5
1,927.1
Average number of outstanding shares after dilution, million
1,975.3
1,974.3
1,976.2
1,974.3
1,972.7
1,972.7
2.09 2.06
2.11 2.10
4.20 4.16
4.30 4.21
-
-
-
0.01 0.01
2.09 2.06
2.11 2.10
4.20 4.16
4.31 4.22
- of which interest expense on convertible subordinated loan after tax
Earnings per share, continuing operations, SEK - after dilution Earnings per share, discontinued operations, SEK - after dilution Earnings per share, total operations, SEK - after dilution
-1% -2%
2.18 2.14
-4% -4%
0.01 0.01 -1% -2%
2.19 2.15
-5% -4%
-2% -1%
8.42 8.30 0.01 0.01
-3% -1%
8.43 8.31
Earnings per share after dilution are calculated by taking into account the effects of a conversion of outstanding convertible debt instruments. This means that the average number of shares is adjusted by potential shares and that the period’s earnings are adjusted by the period’s interest expense on the outstanding convertible debt instruments after tax.
26
25
Handelsbanken
Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
STATEMENT OF COMPREHENSIVE INCOME – GROUP SEK m
Q2 2017
Q1 2017 Change
Q2 2016 Change
Profit for the period
4,056
4,111
-1%
4,194
1,013
2,318
-56%
-223
-511
790
1,807
-1,070
336
21
37
-869 -24
-3%
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
8,167
8,237
-1%
16,245
-2,597
3,331
-1,096
3,993
56%
568
-734
240
-876
-56%
-2,029
2,597
-856
3,117
-734
4,968
-3,145
58
-572
-1,160
Other comprehensive income Items that may not subsequently be reclassified to profit or loss Defined benefit plans Taxes on items that cannot be reclassified into profit or loss Total items that may not subsequently be reclassified to profit or loss
Items that can be reclassified into profit or loss Cash flow hedges Available-for-sale instruments Translation differences for the period
529
-1,310
34%
1,063
-795
97%
-10
230
99
132%
228
-74
of which hedging net investment in foreign operations Taxes on items that can be reclassified into profit or loss of which cash flow hedges of which available-for-sale instruments
-96% -140%
-2,179
45
-819
-218
329
-988
833
154
-1,093
692
-2
0%
-1
-100%
-4
57
175
-98%
2
100%
179
48
-1,688
-838
-101%
2,718
-2,526
3,453
Total comprehensive income for the period
-142
-316
4
Total other comprehensive income for the period
1,183 -276%
-317
-2
of which hedging net investment in foreign operations Total items that can be reclassified into profit or loss
1,442 -43%
689
110 273%
31 -2,289
-898
969
71
2,597
-97%
828
3,158
5,080
-38%
4,883
-35%
8,238
10,834
-24%
17,073
3,158 0
5,080 0
-38% 0%
4,883 0
-35% 0%
8,238 0
10,833 1
-24% -100%
17,072 1
Attributable to Shareholders in Svenska Handelsbanken AB Minority interest
In the first half of 2017, other comprehensive income totalled
items are measured at market value. The impact on profit/loss of the
SEK 71m (2,597) after tax. In individual periods, the results of all
market valuation is reported under cash flow hedges. Over time,
items within other comprehensive income may fluctuate due to
these values become zero at maturity for each individual hedge, but
changes in the discount rate, exchange rates and inflation.
lead to volatility in other comprehensive income during their term.
At year-end, net pensions, net of pension obligations and plan assets, were a liability. At the end of the second quarter, net pensions were an asset. During the January–June period, other comprehensive income increased by SEK 2,597m (-856) after tax, related to defined benefit pension plans. The main reason for the change during the period is that the plan assets have increased in value since 31
an effect on other comprehensive income of SEK -580m (3,875) after tax. The value changes derived partly from exchange rate movements, but above all from increasing discount rates in foreign currency. During the period, SEK -4m (24) was reclassified to the income statement as a result of ineffectiveness.
December 2016. This has been offset to a certain extent by the
Unrealised changes in the value of financial assets classified as
pension obligations increasing as a result of a decrease in the
available for sale had an effect on other comprehensive income of
discount rate for the Swedish pension obligations, to 2.30% from
SEK 54m (-515) after tax during the year. The preceding year’s
2.40%, since 31 December 2016.
negative result was mainly due to gains from selling shares having
Most of the Group’s long-term funding is hedged using derivatives,
27
Changes in the value of hedge derivatives in cash flow hedges had
been recognised in the income statement.
where all cash flows are matched until maturity. Cash flow hedging
Unrealised exchange rate effects related to the restatement of foreign
manages the risk of variations in the cash flows related to changes in
branches and subsidiaries to the Group’s presentation currency and
variable interest rates and currencies on lending and funding. The
the effect of hedging of net investments in foreign operations have
underlying funding and the asset which is being funded are measured
affected other comprehensive income by SEK -2,000m (93) after tax
at amortised cost, while the derivatives which are hedging these
during the year.
26
Handelsbanken
Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
QUARTERLY PERFORMANCE – GROUP Q2 2017
Q1 2017
Q4 2016
Interest income
10,398
10,210
10,220
9,943
9,451
Interest expense
-3,077
-3,129
-2,921
-2,902
-2,643
SEK m
Q3 2016
Q2 2016
Net interest income
7,321
7,081
7,299
7,041
6,808
Net fee and commission income
2,508
2,354
2,447
2,259
2,280 523
Net gains/losses on financial transactions
317
547
269
1,112
Risk result - insurance
53
36
6
25
35
Other dividend income
11
2
2
1
222
Share of profit of associates
-3
-27
0
10
13
Other income
31
43
102
25
41
Total income
10,238
10,036
10,125
10,473
9,922
Staff costs
-3,242
-2,918
-2,981
-2,941
-2,952
Other expenses Depreciation, amortisation and impairment of property, equipment and intangible assets
-1,410
-1,430
-1,518
-1,234
-1,346
-145
-150
-114
-137
-119
Total expenses
-4,797
-4,498
-4,613
-4,312
-4,417
5,441
5,538
5,512
6,161
5,505
-186
-196
-832
-476
-229
Profit before loan losses Net loan losses Gains/losses on disposal of property, equipment and intangible assets Operating profit Taxes Profit for the period from continuing operations Profit for the period pertaining to discontinued operations, after tax Profit for the period Earnings per share, continuing operations, SEK - after dilution Earnings per share, discontinued operations, SEK - after dilution Earnings per share, total operations, SEK - after dilution
28
2
5
18
6
1
5,257
5,347
4,698
5,691
5,277
-1,201
-1,236
-1,254
-1,127
-1,091
4,056
4,111
3,444
4,564
4,186
-
-
-
-
8
4,056
4,111
3,444
4,564
4,194
2.09 2.06
2.11 2.10
1.77 1.76
2.36 2.32
2.18 2.14
-
-
-
-
0.01 0.01
2.09 2.06
2.11 2.10
1.77 1.76
2.36 2.32
2.19 2.15
Handelsbanken
27
Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
BALANCE SHEET – GROUP SEK m
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
436,848
387,092
52,718
79,245
199,362
353,680
501,744
25,527
103,113
119,603
97,262
81,267
97,205
119,532
117,753
Assets Cash and balances with central banks Other loans to central banks
Note 8
Interest-bearing securities eligible as collateral with central banks Loans to other credit institutions
Note 8
33,526
34,542
31,347
41,410
48,479
Loans to the public
Note 8
2,011,455
1,991,434
1,963,622
1,965,649
1,937,155
33
31
35
51
45
Bonds and other interest-bearing securities
Value change of interest-hedged item in portfolio hedge
61,243
65,436
63,909
53,855
46,223
Shares
21,353
23,397
20,412
35,964
52,541
212
218
255
259
257
128,870
123,595
118,646
115,532
107,004
61,940
73,111
82,633
78,688
92,381
9
9
9
10
10
9,579
9,460
9,393
9,293
8,450
Property and equipment
2,353
2,363
2,387
2,323
2,264
Current tax assets
1,379
518
38
2,409
1,575
Deferred tax assets
436
534
962
1,978
1,979
Net pension assets
1,368
379
-
-
-
Assets held for sale
3
3
1
2
-
12,302
29,034
5,615
19,496
25,810
Investments in associates Assets where the customer bears the value change risk Derivative instruments
Note 9,10
Reinsurance assets Intangible assets
Note 11
Other assets Prepaid expenses and accrued income Total assets
5,864
5,266
6,222
5,691
5,708
2,961,094
2,922,929
2,627,580
2,908,935
3,030,645
Liabilities and equity Due to credit institutions
Note 12
202,681
205,971
178,781
205,274
207,312
Deposits and borrowing from the public
Note 12
1,120,291
1,049,699
829,336
1,009,427
1,134,500
128,962
123,653
118,745
115,600
107,054
Issued securities
Note 13
1,264,536
1,295,668
1,261,765
1,315,684
1,320,083
Derivative instruments
Note 9,10
31,654
24,297
31,738
33,296
37,283
7,876
11,753
1,572
11,441
8,581
562
599
574
583
591
Current tax liabilities
1,388
809
514
1,657
1,008
Deferred tax liabilities
7,749
7,842
7,875
9,788
10,006
426
615
731
734
773
-
-
2,161
6,547
6,544
Liabilities where the customer bears the value change risk
Short positions Insurance liabilities
Provisions Net pension liabilities Other liabilities
13,851
21,684
9,427
16,452
18,817
Accrued expenses and deferred income
13,436
15,399
14,580
15,359
15,608
Subordinated liabilities Total liabilities Minority interest
32,782
33,199
33,400
33,008
32,903
2,826,194
2,791,188
2,491,199
2,774,850
2,901,063
6
6
6
6
5
Share capital
3,013
3,013
3,013
3,008
3,001
Share premium
5,629
5,629
5,628
5,410
5,081
Reserves
9,339
10,237
9,268
10,639
11,037
Retained earnings Profit for the period, attributable to shareholders in Svenska Handelsbanken AB
108,746
108,745
102,222
102,222
102,222
8,167
4,111
16,244
12,800
8,236
Total equity
134,900
131,741
136,381
134,085
129,582
2,961,094
2,922,929
2,627,580
2,908,935
3,030,645
Total liabilities and equity
29
Handelsbanken
28
Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
STATEMENT OF CHANGES IN EQUITY – GROUP Share capital
Share premium
Defined benefit plans
3,013
5,628
1,656
2,487
Other comprehensive income
2,597
Total comprehensive income for the period
2,597
January - June 2017 SEK m Opening equity
Fair Hedge value reserve reserve
Translation reserve
Retained earnings
Minority
Total
974
4,151
118,466
6
136,381
8,167
0
8,167
-580
54
-2,000
0
71
-580
54
-2,000
0
8,238
Profit for the period
Dividend Effects of convertible subordinated loans
-9,721 0
1
3,013
5,629
4,253
Share capital
Share premium
Defined benefit plans
2,956
3,204
-1,461
4,940
Other comprehensive income
3,117
Total comprehensive income for the period
3,117
January - December 2016 SEK m Opening equity
1,907
Fair Hedge value reserve reserve
Translation reserve
Retained earnings
Minority
Total
2,024
2,937
113,664
4
128,268
16,244
1
16,245
-2,453
-1,050
1,214
0
828
-2,453
-1,050
1,214
1
17,073 -11,442
2,424
2,481 1,656
Share capital
Share premium
Defined benefit plans
2,956
3,204
-1,461
4,940
2,487
Other comprehensive income
-856
Total comprehensive income for the period
-856
0
1
1 136,381
974
4,151
118,466
6
Fair Hedge value reserve reserve
Translation reserve
Retained earnings
Minority
Total
2,024
2,937
113,664
4
128,268
3,875
-515
93
3,875
-515
93
Profit for the period
8,236
Dividend
8,236
1
8,237
0
2,597
1
10,834
-11,442 45 3,001
-11,442
1,877
1,922
Change of minority interests Closing equity
16,244 -11,442
57
5,628
Effects of convertible subordinated loans
134,900
6
3,013
Opening equity
1
116,913
Change of minority interests
January - June 2016 SEK m
0
2,151
Dividend
Closing equity
1 1,028
Profit for the period
Effects of convertible subordinated loans
-9,721
1
Change of minority interests Closing equity
8,167
5,081
-2,317
8,815
1,509
3,030
0
0
0
110,458
5
129,582
During the January–June 2017 period, convertibles for a nominal value of SEK 1m (1,951) relating to subordinated convertible bonds were converted into 22,151 class A shares (28,800,955). At the end of the period, the number of Handelsbanken shares in the trading book was 0 (0).
30
Handelsbanken
29
Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
CASH FLOW STATEMENT, CONDENSED – GROUP Jan-Jun 2017
Jan-Jun 2016
Full year 2016
10,604
10,286
20,674
1,300
-1,371
89
-2,909
-3,591
-5,544
Changes in the assets and liabilities of operating activities
252,433
299,035
-11,167
Cash flow from operating activities
261,428
304,359
4,052
SEK m Operating profit, total operations Adjustment for non-cash items in profit/loss Paid income tax
Aquisition / disposal of subsidiaries
-
-
-408
Change in shares
7
1,026
5,462 1,003
Change in interest-bearing securities
-
1,000
Change in property and equipment
-164
563
385
Change in intangible assets
-355
-207
-546
Cash flow from investing activities
-512
2,382
5,896
Repayment of subordinated loans
-
1,951
-2,512
Issued subordinated loans
-
-
-
Dividend paid
-9,721
-11,442
-11,442
Cash flow from financing activities
-9,721
-9,491
-13,954
Liquid funds at beginning of the period
199,362
202,630
202,630
Cash flow for the period
251,195
297,250
-4,006
Exchange rate difference on liquid funds
-13,709
1,864
738
Liquid funds at end of the period*
436,848
501,744
199,362
* Liquid funds are defined as Cash and balances with central banks.
NOTES
Note 1 Accounting policies Accounting policies This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. The consolidated accounts have been prepared in accordance with international financial reporting standards (IFRS) and interpretations of these standards as adopted by the EU. The accounting policies also follow the Swedish Annual Accounts Act for Credit Institutions and Securities Companies (1995:1559), and the regulations and general guidelines issued by the Swedish Financial Supervisory Authority, FFFS 2008:25 Annual reports in credit institutions and securities companies. RFR 1 Supplementary accounting rules for groups as well as statements
losses, and not on incurred loan losses as in the current IAS 39 regulations. The provisions will also be based on a probabilityweighted outcome, unlike the current IAS 39 where the provision is based on the most expected outcome. All in all, in the transition to IFRS 9, this may entail higher provisions for loan losses. This regulatory change may lead to an adjustment of equity. No final decision has yet been taken as to how these effects will be dealt with as regards the relationship between the expected loan loss provisions in accounting terms and the expected loan losses in capital adequacy terms. The Bank is currently analysing the financial effects of the new standard in more detail.
from the Swedish Financial Reporting Board are also applied in the
IFRS 15 Revenue from Contracts with Customers has also been
consolidated accounts.
adopted for application in the EU. The standard will be applied as of
The interim report for the parent company has been prepared in accordance with the Swedish Annual Accounts Act for Credit Institutions and Securities Companies, and the regulations and general guidelines issued by the Swedish Financial Supervisory Authority, FFFS 2008:25 Annual reports in credit institutions and securities companies. The parent company also applies RFR 2 Accounting for legal entities, as well as statements issued by the Swedish Financial Reporting Board. The interim report of the Group and the parent company has been prepared in accordance with the same accounting policies and calculation methods that were applied in the annual report for 2016. Future regulatory changes IFRS 9 Financial Instruments, which is to replace IAS 39 Financial Instruments: Recognition and Measurement, has been adopted for application by the EU. The standard will be applied as of the 2018 financial year. The standard encompasses three areas: classification and measurement, impairment, and general hedge accounting. The
the 2018 financial year. IFRS 15 introduces a five-step model to establish how and when revenue must be recognised. However, the standard does not apply to financial instruments, insurance contracts or leases. IFRS 15 also contains increased disclosure requirements relating to revenue. The Bank’s assessment is that the new standard will not have any material impact on Handelsbanken’s financial reports, capital adequacy or large exposures. IFRS 16 Leases has also been published by the IASB. Assuming that IFRS 16 is adopted by the EU, and the date of implementation proposed by the IASB is not changed, this standard will be applied as of the 2019 financial year. The main change due to the new standard is that all lease contracts (with the exception of short-term and minor lease contracts) must be recognised as an asset (right-of-use asset) and as a liability in the lessee’s balance sheet. The lease payment must be reported as depreciation and interest expense. There are also increased disclosure requirements. For lessors, the requirements are largely unchanged. The Bank is analysing the financial effects of the new standard.
forthcoming regulations on impairment are based on expected loan
31
Handelsbanken
30
Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
In addition, IFRS 17 Insurance contracts has been published by the
change in how insurance contracts are reported and measured.
IASB. Assuming that IFRS 17 is adopted by the EU, and the date of
The Bank is analysing the financial effects of the new standard.
implementation proposed by the IASB is not changed, this standard
None of the other changes in the accounting regulations issued
will be applied as of the 2021 financial year. IFRS 17 will mean a
for application are expected to have any material impact on Handelsbanken’s financial reports, capital adequacy, large exposures or other circumstances under the applicable operating rules.
Note 2 Net interest income SEK m
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Interest income Loans to credit institutions and central banks Loans to the public Interest-bearing securities eligible as collateral with central banks Interest-bearing securities Derivative instruments Other interest income
522
347
50%
391
34%
869
872
0%
1,422
9,750
9,695
1%
9,759
0%
19,445
19,571
-1%
39,333 229
43
57
-25%
109
-61%
100
227
-56%
164
176
-7%
232
-29%
340
425
-20%
783
-380
-326
-17%
-1,218
69%
-706
-1,637
57%
-2,629
359
320
12%
329
9%
679
640
6%
1,317
10,458
10,269
2%
9,602
9%
20,727
20,098
3%
40,455
60
59
2%
151
-60%
119
311
-62%
505
10,398
10,210
2%
9,451
10%
20,608
19,787
4%
39,950
Due to credit institutions and central banks
-309
-299
3%
-261
18%
-608
-543
12%
-1,086
Deposits and borrowing from the general public
-398
-294
35%
-382
4%
-692
-786
-12%
-1,423
Total interest income Of which interest income reported in Net gains/losses on financial transactions Interest income according to income statement Interest expense
Issued securities
-4,023
-4,157
-3%
-4,582
-12%
-8,180
-8,974
-9%
-17,740
Derivative instruments
2,454
2,432
1%
3,210
-24%
4,886
5,423
-10%
10,771
Subordinated liabilities
-356
-360
-1%
-384
-7%
-716
-773
-7%
-1,534
State fees
-516
-527
-2%
-318
62%
-1,043
-654
59%
-1,300
Other interest expense Total interest expense Of which interest expense reported in Net gains/losses on financial transactions Interest expense according to income statement Net interest income
-19
-28
-32%
-124
-85%
-47
-195
-76%
-279
-3,167
-3,233
-2%
-2,841
11%
-6,400
-6,502
-2%
-12,591
-90
-104
-13%
-198
-55%
-194
-318
-39%
-584
-3,077
-3,129
-2%
-2,643
16%
-6,206
-6,184
0%
-12,007
7,321
7,081
3%
6,808
8%
14,402
13,603
6%
27,943
The derivative instrument rows include net interest income related to hedged assets and liabilities. These may have both a positive and a negative impact on interest income and interest expense.
Note 3 Net fee and commission income SEK m
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Brokerage and other securities commissions
246
261
-6%
229
7%
507
462
10%
916
Mutual funds
895
849
5%
717
25%
1,744
1,412
24%
3,023
Custody and other asset management fees
169
164
3%
148
14%
333
295
13%
623
Advisory services
105
56
88%
98
7%
161
202
-20%
317
Insurance
168
160
5%
151
11%
328
309
6%
634
Payments
847
760
11%
795
7%
1,607
1,513
6%
3,185
Loans and deposits
308
301
2%
290
6%
609
570
7%
1,172
Guarantees Other Total fee and commission income Securities Payments Other Total fee and commission expense Net fee and commission income
32
99
97
2%
108
-8%
196
207
-5%
422
125
124
1%
127
-2%
249
246
1%
488
2,962 -70
2,772 -72
7% -3%
2,663 -70
11% 0%
5,734 -142
5,216 -136
10% 4%
10,780 -260
-368
-331
11%
-293
26%
-699
-593
18%
-1,289
-16
-15
7%
-20
-20%
-31
-37
-16%
-75
-454
-418
9%
-383
19%
-872
-766
14%
-1,624
2,508
2,354
7%
2,280
10%
4,862
4,450
9%
9,156
Handelsbanken
31
Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Note 4 Net gains/losses on financial transactions SEK m Trading, derivatives, FX effect etc Other financial instruments at fair value in profit/loss of which interest-bearing securities of which loans Financial instruments at amortised cost of which loans of which liabilities Financial instruments available for sale Hedge accounting of which net gains/losses on fair value hedges
Q2 2017
Q1 2017 Change
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
439
706
-38%
-90
1,145
-357
832
-132 -123 -9
-139 -129 -10
5% 5% 10%
447 455 -8
-13%
-271 -252 -19
1,030 1,040 -10
466 502 -36
32
13
146%
56
-43%
45
92
-51%
182
86
84
2%
127
-32%
170
213
-20%
446
-54
-71
24%
-71
24%
-125
-121
-3%
-264
4
2
100%
89
-96%
6
916
-99%
1,689
3
-10
36
-92%
-7
36
-3
6
-6
10
-40%
-
12
-8
-90%
of which cash flow hedge ineffectiveness
-3
-4
25%
26
-7
24
Gains/losses on unbundled insurance contracts
-29
-25
-16%
-15
-93%
-54
-32
-69%
-100
5
Total
317
547
-42%
523
-39%
864
1,685
-49%
3,066
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Note 5 Other expenses SEK m
Q1 2017 Change
Property and premises
-290
-318
-9%
-303
-4%
-608
-611
0%
-1,234
External IT costs
-489
-478
2%
-420
16%
-967
-828
17%
-1,698
Communication
-75
-84
-11%
-80
-6%
-159
-165
-4%
-317
Travel and marketing
-88
-68
29%
-85
4%
-156
-153
2%
-306
-317
-318
0%
-298
6%
-635
-562
13%
-1,159
-38
-48
-21%
-43
-12%
-86
-88
-2%
-173
-113
-116
-3%
-117
-3%
-229
-242
-5%
-514
-1,410
-1,430
-1%
-1,346
5%
-2,840
-2,649
7%
-5,401
Purchased services Supplies Other administrative expenses Other expenses
33
Q2 2017
32
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Note 6 Loan losses and impaired loans Loan losses Q2 2017
Q1 2017 Change
Q2 2016 Change
-165
-301
-45%
-297
-44%
-466
-641
-27%
64
61
5%
76
-16%
125
133
-6%
377
-101
-240
-58%
-221
-54%
-341
-508
-33%
-1,522
-67
6
-4
-61
3
-62
-3
1
0
-2
1
-10
-70
7
-4
-63
4
-72
Losses on off-balance-sheet items
0
-1
-2
-1
-4
-75%
-16
Reversal of previous losses on off-balance-sheet items
9
1
2
350%
10
2
400%
2
-9
12
-10
-10%
3
5
-40%
-26
0
12
-100%
-10
12
3
300%
-40
-253
-410
-38%
-142
78%
-663
-1,357
-51%
-2,183
195
396
-51%
114
71%
591
1,309
-55%
1,863
5%
34
24%
SEK m
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
Specific provision for individually assessed loans Provision for the period Reversal of previous provisions Total
-1,899
Collective provisions Net provision for the period for individually assessed loans Net provision for the period for homogeneous loans Total Off-balance-sheet items
Change in collective provision for off-balance-sheet items Total Write-offs Actual loan losses for the period Utilised share of previous provisions Recoveries Total Value change for the period Net loan losses
42
40
82
133
-38%
230
-16
26
6
10
85
-88%
-90
1
-1
-
-
-
-186
-196
-382
-416
-8%
-1,724
-5%
-229
-19%
-
Impaired loans Impaired loans includes all loans in respect of which all contracted cash flows will probably not be fulfilled. The full amount of all loans which give rise to a specific provision is included in impaired loans, including amounts which are covered by collateral. This means that the impaired loans reserve ratio is stated without taking into account collateral received. Thus, this key figure may vary substantially between the quarters, even though the provisioning policies are unchanged. SEK m Impaired loans Specific provision for individually assessed loans Provision for collectively assessed homogeneous groups of loans with limited value Collective provisions for individually assessed loans
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
7,303
7,594
7,746
7,710
7,427
-3,840
-3,985
-4,188
-3,972
-3,671
-108
-105
-107
-107
-94
-403
-340
-348
-310
-279
2,952
3,164
3,103
3,321
3,383
Total impaired loans reserve ratio
59.6%
58.3%
59.9%
56.9%
54.4%
Proportion of impaired loans
0.15%
0.16%
0.16%
0.17%
0.17%
Impaired loans reserve ratio excl. collective provisions
54.1%
53.9%
55.4%
52.9%
50.7%
Loan loss ratio as a % of loans, acc.
0.04%
Impaired loans, net
0.04%
0.04%
0.09%
0.06%
Loans past due > 60 days
4,067
3,925
4,123
4,928
4,629
Loans past due > 60 days, which are not impaired
1,116
946
1,061
1,381
1,229
For definitions and calculation of key figures, please see the Fact Book which is available at handelsbanken.se/ireng.
34
33
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Impaired loans and loans which are past due by more than 60 days, by sector 30 June 2017
Impaired loans Loans past due > 60 days, which are not impaired 657
SEK m
Gross
Provisions
Net*
Of which past due >60 days
Private individuals
1,306
-708
598
411
39
-19
20
4
27
1,782
-611
1,171
323
278
Housing co-operative associations Property management Manufacturing
640
-474
166
19
27
Retail
349
-187
162
57
24
Hotel and restaurant
111
-38
73
71
-
1,564
-1,020
544
0
-
Passenger and goods transport by sea Other transport and communication
53
-36
17
10
2
Construction
225
-150
75
40
47
Electricity, gas and water
260
-104
156
56
-
76
-41
35
7
17 28
Agriculture, hunting and forestry Other services
259
-211
48
21
Holding, investment and insurance companies, funds etc.
572
-307
265
14
2
67
-42
25
22
7
Other corporate lending Credit institutions Total
-
-
-
-
-
7,303
-3,948
3,355
1,055
1,116
Loans past due > 60 days, which are not impaired 721
* Book value after deduction of specific provisions.
31 December 2016
Impaired loans
SEK m
Gross
Provisions
Net*
Of which past due >60 days
Private individuals
1,405
-745
660
435
41
-20
21
5
-
1,793
-691
1,102
263
240
Manufacturing
719
-522
197
26
18
Retail
457
-270
187
45
0
96
-32
64
64
6
1,849
-1,244
605
0
-
52
-36
16
7
5 13
Housing co-operative associations Property management
Hotel and restaurant Passenger and goods transport by sea Other transport and communication Construction
269
-161
108
46
Electricity, gas and water
68
-39
29
4
9
Agriculture, hunting and forestry
53
-31
22
11
2 18
Other services
214
-113
101
94
Holding, investment and insurance companies, funds etc.
601
-316
285
30
6
Other corporate lending
129
-75
54
14
23
Credit institutions Total
-
-
-
-
-
7,746
-4,295
3,451
1,044
1,061
* Book value after deduction of specific provisions.
Note 7 Discontinued operations The Bank divested its ownership of Plastal Industri AB in Q2 2016. Discontinued operations refer to the results from the Plastal Industri AB subsidiary for the time before the divestment, as well as the profits from the divestment of the company.
Note 8 Loans and credit exposure SEK m Loans to the public of which reverse repos Loans to other credit institutions of which reverse repos Other loans to central banks of which reverse repos
35
34
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
2,011,455
1,991,434
1,963,622
1,965,649
1,937,155
8,322
11,182
7,493
14,041
11,360
33,526
34,542
31,347
41,410
48,479
11,175
10,805
4,088
16,984
19,330
52,718 -
79,245 1,003
25,527 -
103,113 -
81,267 -
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Loans to the public, by sector 30 June 2017
SEK m Private individuals
31 December 2016
Loans gross
Provisions
Loans net
Loans gross
Provisions
Loans net
1,009,125
-708
1,008,417
982,640
-745
981,895
of which mortgage loans
821,232
-37
821,195
800,092
-33
800,059
of which other loans with property mortgages
122,856
-132
122,724
120,121
-146
119,975
65,037
-539
64,498
62,427
-566
61,861
Housing co-operative associations
195,283
-19
195,264
187,016
-20
186,996
of which mortgage loans
163,882
-12
163,870
156,835
-12
156,823
Property management
548,610
-611
547,999
540,194
-691
539,503
Manufacturing
25,923
-474
25,449
27,633
-522
27,111
Retail
23,775
-187
23,588
21,947
-270
21,677
Hotels and restaurants
8,482
-38
8,444
8,516
-32
8,484
Passenger and goods transport by sea
8,506
-1,020
7,486
9,375
-1,244
8,131
of which other loans to private individuals
Other transport and communication
15,461
-36
15,425
14,614
-36
14,578
Construction
18,600
-150
18,450
18,103
-161
17,942
Electricity, gas, water
24,078
-104
23,974
25,224
-39
25,185
Agriculture, hunting and forestry
11,757
-41
11,716
11,727
-31
11,696
Other services
18,935
-211
18,724
19,608
-113
19,495
Holding, investment, insurance, funds, etc.
72,507
-307
72,200
66,730
-316
66,414
Government and municipalities
13,361
-
13,361
15,891
-
15,891
Other corporate lending
21,403
-42
21,361
19,047
-75
18,972
2,015,806
-3,948
2,011,858
1,968,265
-4,295
1,963,970
Total loans to the public, before collective provisions
Collective provisions Total loans to the public
-403
-348
2,011,455
1,963,622
Specification of Loans to the public – Property management 30 June 2017
31 December 2016
Loans gross
Provisions
Loans net
Loans gross
Provisions
Loans net
State-owned property companies
4,427
-
4,427
3,228
-
3,228
Municipal-owned property companies
8,999
-
8,999
9,771
-
9,771
101,706
-24
101,682
99,598
-26
99,572
SEK m Loans in Sweden
Residential property companies of which mortgage loans Other property management of which mortgage loans
88,507
-
88,507
85,134
-1
85,133
128,088
-129
127,959
127,578
-130
127,448
55,094
-2
55,092
52,925
-2
52,923
243,220
-153
243,067
240,175
-156
240,019
Denmark
20,269
-100
20,169
19,755
-118
19,637
Finland
35,948
-4
35,944
33,891
-4
33,887
Total loans in Sweden Loans outside Sweden
36
Norway
101,267
-100
101,167
103,767
-108
103,659
UK
116,519
-251
116,268
111,800
-289
111,511 23,194
The Netherlands
24,635
-
24,635
23,194
-
Other countries
6,752
-3
6,749
7,612
-16
7,596
Total loans outside Sweden
305,390
-458
304,932
300,019
-535
299,484
Total loans - Property management
548,610
-611
547,999
540,194
-691
539,503
35
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Credit risk exposure SEK m Loans to the public of which reverse repos Loans to other credit institutions of which reverse repos Interest-bearing securities eligible as collateral with central banks
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
2,011,455
1,991,434
1,963,622
1,965,649
1,937,155
8,322
11,182
7,493
14,041
11,360
33,526
34,542
31,347
41,410
48,479
11,175
10,805
4,088
16,984
19,330 117,753
119,603
97,262
97,205
119,532
Bonds and other interest-bearing securities
61,243
65,436
63,909
53,855
46,223
Derivative instruments*
61,940
73,111
82,633
78,688
92,381
Contingent liabilities
75,293
80,481
78,530
82,361
78,459
of which guarantees, credits
10,088
9,839
9,643
10,110
10,440
of which guarantees, other
58,620
64,512
63,108
67,122
63,551
6,585
6,130
5,779
5,129
4,468
441,532
427,927
425,267
431,564
425,390
of which letters of credit Other commitments of which unutilised part of granted overdraft facilities
131,721
132,366
128,967
128,930
130,525
of which loan commitments
290,250
273,876
272,729
274,810
268,866
19,561 2,804,592
21,685 2,770,193
23,571 2,742,513
27,824 2,773,059
25,999 2,745,840
436,848
387,092
199,362
353,680
501,744
52,718
79,245
25,527
103,113
81,267
3,294,158
3,236,530
2,967,402
3,229,852
3,328,851
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016 66,498
of which other Total Cash and balances with central banks Other loans to central banks Total * Refers to the total of positive market values.
Note 9 Derivatives SEK m Positive market values Trading
35,432
37,290
44,703
53,324
Fair value hedges
133
96
79
15
22
Cash flow hedges
48,394
60,151
64,905
60,986
62,328
-22,019
-24,426
-27,054
-35,637
-36,467
61,940
73,111
82,633
78,688
92,381 63,037
Amounts set off Total Negative market values Trading
37,676
40,050
47,824
58,556
Fair value hedges
78
91
82
146
129
Cash flow hedges
15,651
8,512
9,689
8,264
8,096
-21,751
-24,356
-25,857
-33,670
-33,979
31,654
24,297
31,738
33,296
37,283 3,390,582
Amounts set off Total Nominal value Trading
3,610,265
3,665,721
3,167,735
3,370,296
Fair value hedges
59,903
53,248
42,228
26,073
24,725
Cash flow hedges
1,080,938
1,092,773
1,058,071
925,397
891,575
-1,621,005
-1,967,179
-1,747,179
-1,671,455
-1,575,310
3,130,101
2,844,563
2,520,855
2,650,311
2,731,572
Amounts set off Total
Derivative contracts are presented gross in the table. Amounts set off on the balance sheet consist of the set-off market value of contracts for which the Bank has the legal right and intention to settle contractual cash flows net (including cleared contracts). These contracts are presented on a net basis on the balance sheet per counterparty and currency.
37
36
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Note 10 Offsetting of financial instruments 30 June 2017 SEK m
Derivatives
Repurchase agreements, securities borrowing and similar agreements
Total
Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements Gross amount Amounts set off Carrying amount on the balance sheet
83,959
25,068
109,027
-22,019
-4,701
-26,720
61,940
20,367
82,307
Related amounts not set off on the balance sheet Financial instruments, netting arrangements
-16,938
-
-16,938
Financial assets received as collateral
-33,025
-20,358
-53,383
Total amounts not set off on the balance sheet
-49,963
-20,358
-70,321
11,977
9
11,986
Net amount Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements
53,405
5,033
58,438
-21,751
-4,701
-26,452
31,654
332
31,986
-16,938
-
-16,938
-4,310
-332
-4,642
-21,248
-332
-21,580
10,406
0
10,406
Derivatives
Repurchase agreements, securities borrowing and similar agreements
Total
Gross amount
109,687
13,427
123,114
Amounts set off
-27,054
-1,030
-28,084
82,633
12,397
95,030
Gross amount Amounts set off Carrying amount on the balance sheet Related amounts not set off on the balance sheet Financial instruments, netting arrangements Financial assets pledged as collateral Total amounts not set off on the balance sheet Net amount
31 December 2016 SEK m Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements
Carrying amount on the balance sheet Related amounts not set off on the balance sheet Financial instruments, netting arrangements
-20,643
-
-20,643
Financial assets received as collateral
-42,238
-12,397
-54,635
Total amounts not set off on the balance sheet
-62,881
-12,397
-75,278
19,752
-
19,752
Net amount Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements Gross amount Amounts set off Carrying amount on the balance sheet
57,595
1,032
58,627
-25,857
-1,030
-26,887
31,738
2
31,740
-20,643
-
-20,643
-3,807
-2
-3,809
-24,450
-2
-24,452
Related amounts not set off on the balance sheet Financial instruments, netting arrangements Financial assets pledged as collateral Total amounts not set off on the balance sheet
7,288 7,288 Net amount Derivative instruments are set off on the balance sheet when the settlement of two or more derivatives reflects the Bank’s anticipated cash flows. Repurchase agreements and reverse repurchase agreements with central counterparty clearing houses are set off on the balance sheet when this reflects the Bank's anticipated cash flows in the settlement of two or more agreements. This occurs when the Bank has both a contractual right and intention to settle the agreed cash flows with a net amount. The remaining counterparty risk in derivatives is reduced through netting agreements if payments are suspended, i.e. netting positive values against negative values in all derivative transactions with the same counterparty in a bankruptcy situation. Handelsbanken’s policy is to sign netting agreements with all bank counterparties. Netting agreements are supplemented with agreements for issuing collateral for the net exposure. The collateral used is mainly cash, but government securities are also used. Collateral for repurchase agreements and borrowing and lending of securities is normally in the form of cash or other securities.
The amount set off for derivative assets includes set-off cash collateral of SEK 2,438m (3,565), derived from the balance sheet item deposits and borrowing from the public. The amount set off for derivative liabilities includes set-off cash collateral of SEK 914m (2,367), derived from the balance sheet item loans to the public.
38
37
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Note 11 Goodwill and other intangible assets
SEK m Opening residual value Additional during the period
Jan-Jun 2017
Goodwill Jan-Jun 2016
Full year 2016
Other intangible assets Jan-Jun Jan-Jun Full year 2017 2016 2016
6,761
6,460
6,460
2,632
1,794
1,794
9,393
8,254
8,254
-
-
147
355
219
1,070
355
219
1,217 -198
Jan-Jun 2017
Total Jan-Jun Full year 2016 2016
The period's amortisation
-
-
-
-130
-86
-198
-130
-86
The period's impairments
-
-
-
-9
-1
-1
-9
-1
-1
Foreign exchange effect
-24
90
154
-6
-26
-33
-30
64
121
Closing residual value
6,737
6,550
6,761
2,842
1,900
2,632
9,579
8,450
9,393
Note 12 Due to credit institutions, deposits and borrowing from the public SEK m Due to credit institutions of which repos Deposits and borrowing from the public of which repos
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
202,681
205,971
178,781
205,274
207,312
-
1,003
-
450
912
1,120,291 332
1,049,699 4,861
829,336 2
1,009,427 5,559
1,134,500 4,522
Note 13 Issued securities
SEK m Issued securities at beginning of year
Jan-Jun 2017
Jan-Jun 2016
1,261,765
1,245,367
Issued
641,229
717,771
Repurchased
-34,557
-21,664
-566,205
-625,066
Matured Foreign exchange effect etc. Issued securities at end of period
-37,696
3,675
1,264,536
1,320,083
Note 14 Pledged assets, contingent liabilities and other commitments SEK m Assets pledged for own debt
39
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
812,294
852,739
839,982
822,426
829,996
Other pledged assets
31,755
53,558
33,375
38,286
34,969
Contingent liabilities Other commitments
75,293 441,532
80,481 427,927
78,530 425,267
82,361 431,564
78,459 425,390
38
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Note 15 Classification of financial assets and liabilities The tables show valuation categories for financial instruments in accordance with IAS 39.
30 June 2017
SEK m
At fair value in income statement divided into
Trading
Other
Derivatives identified as hedge instruments
Investments held to maturity
Financial assets available for sale
Total carrying amount
Fair value
436,848
436,848
436,848
52,718
52,718
52,718
119,603
119,603
Loans and other receivables
Other financial liabilities
Assets Cash and balances with central banks Other loans to central banks Interest-bearing securities eligible as collateral with central banks
9,203
109,258
1,142
Loans to other credit institutions Loans to the public
664
Value change of interest-hedged item in portfolio hedge
33,526
33,526
33,491
2,010,791
2,011,455
2,023,367
33
33
Bonds and other interest-bearing securities
18,783
36,998
5,462
61,243
61,243
Shares Assets where the customer bears the value change risk
18,732
947
1,674
21,353
21,353
128,870
128,870
Derivative instruments
15,865
61,940
61,940
12,302
12,302
Other assets Prepaid expenses and accrued income
Total financial assets
128,813
57 46,075
25 152 62,760
12,277 478
277,158
46,075
5,230
4
5,864
5,864
2,551,480
8,282
2,945,755
2,957,599
Investments in associates
212
Other non-financial assets
15,127 2,961,094
Total assets Liabilities Due to credit institutions Deposits and borrowing from the public Liabilities where the customer bears the value change risk Issued securities Derivative instruments
128,902 5,722 17,158
Short positions
7,876
Other liabilities
29
Accrued expenses and deferred income
Other non-financial liabilities
Total liabilities
40 39
202,681
204,582
1,120,291
1,120,284
60
128,962
128,962
1,258,814
1,264,536
1,280,830
31,654
31,654
14,496
7,876
7,876
13,822
13,851
13,851
50
13,386
13,436
13,436
30,835
32,782 2,641,836
32,782 2,816,069
2,835,693
Subordinated liabilities
Total financial liabilities
202,681 1,120,291
128,902
14,496
34,218
10,125 2,826,194
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
31 December 2016
SEK m
At fair value in income statement divided into
Trading
Other
Derivatives identified as hedge instruments
Investments held to maturity
Financial assets available for sale
Total carrying amount
Fair value
199,362
199,362
199,362
25,527
25,527
25,527
97,205
97,205
Loans and other receivables
Other financial liabilities
Assets Cash and balances with central banks Other loans to central banks Interest-bearing securities eligible as collateral with central banks
13,000
83,458
747
Loans to other credit institutions Loans to the public
926
Value change of interest-hedged item in portfolio hedge
31,347
31,347
31,148
1,962,696
1,963,622
1,978,834
35
35
Bonds and other interest-bearing securities
22,328
36,117
5,464
63,909
63,909
Shares
17,727
1,067
1,618
20,412
20,412
118,646
118,646
82,633
82,633
5,616
5,616
Assets where the customer bears the value change risk Derivative instruments Other assets Prepaid expenses and accrued income
Total financial assets
118,588 19,742
58 62,891
32
5,584
170
520
72,999
240,676
62,891
-
5,528
4
6,222
6,222
2,230,137
7,833
2,614,536
2,629,514
Investments in associates
255
Other non-financial assets
12,790
Total assets
2,627,581
Liabilities Due to credit institutions
178,781
178,781
180,648
Deposits and borrowing from the public
829,336
829,336
829,303
Liabilities where the customer bears the value change risk Issued securities Derivative instruments
118,687 5,763 23,272
118,745
118,745
1,261,765
1,280,523
31,738
31,738
1,572
1,572
8,466
Short positions
1,572
Other liabilities
21
9,407
9,428
9,428
2
14,578
14,580
14,580
Accrued expenses and deferred income Subordinated liabilities
Total financial liabilities Other non-financial liabilities
Total liabilities
41
58 1,256,002
40
30,630
118,687
8,466
33,400
33,400
35,330
2,321,562
2,479,345
2,501,867
11,855 2,491,200
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Note 16 Fair value measurement of financial instruments 30 June 2017 SEK m
Level 1
Level 2
Level 3
Total
117,526 -
2,077
-
119,603
648
16
664
57,188
4,055
-
61,243
13,061
6,522
1,770
21,353
128,359
-
454
128,813
Assets Interest-bearing securities eligible as collateral with central banks Loans to the public Bonds and other interest-bearing securities Shares Assets where the customer bears the value change risk Derivative instruments Total financial assets at fair value
286
61,654
-
61,940
316,420
74,956
2,240
393,616
128,448
-
454
128,902
-
5,722
-
5,722
413
31,241
-
31,654
Liabilities Liabilities where the customer bears the value change risk Issued securities Derivative instruments Short positions Total financial liabilities at fair value
31 December 2016 SEK m
7,799
77
-
7,876
136,660
37,040
454
174,154
Level 1
Level 2
Level 3
Total
95,511
1,694
-
97,205
-
909
17
926
61,514
2,395
-
63,909
11,528
7,047
1,837
20,412
117,826
-
762
118,588
Assets Interest-bearing securities eligible as collateral with central banks Loans to the public Bonds and other interest-bearing securities Shares Assets where the customer bears the value change risk Derivative instruments Total financial assets at fair value
408
82,225
-
82,633
286,787
94,270
2,616
383,673
117,925
-
762
118,687
-
5,763
-
5,763
443
31,295
-
31,738
Liabilities Liabilities where the customer bears the value change risk Issued securities Derivative instruments Short positions Total financial liabilities at fair value
Valuation process The risk control function checks that the Group’s financial instruments are correctly valued. As far as is possible, the valuations are based on externally generated data.
475
-
1,572
37,533
762
157,760
shown as levels 1–3 in the tables. Financial instruments which are valued at the current market price are categorised as level 1. These financial instruments mainly comprise government instruments and other interest-bearing securities that are traded actively, listed shares and short-term positions in corresponding assets. Level 1 also
Financial instruments for which price information is easily available,
includes the majority of shares in mutual funds and other assets
and which are representative of real and frequently occurring
which are related to unit-linked insurance contracts and similar
transactions, are valued at their current market price. The current bid
agreements and the corresponding liabilities. Financial instruments
price is used for financial assets and the current ask price is used for
which are valued using valuation models which substantially are
financial liabilities. For groups of financial instruments which are
based on market data are categorised as level 2. Level 2 mainly
managed on the basis of the Bank’s net exposure to market risk, the
includes interest-bearing securities and interest- and currency-related
current market price is presumed to be the same as the price which
derivatives. Financial instruments whose value to a material extent is
would be received or paid if the net position were divested.
affected by input data that cannot be verified using external market
For financial instruments where there is no reliable information about
information are categorised as level 3.
market prices, fair value is established using valuation models. These
The categorisation is based on the valuation method used on the
models can, for example, be based on price comparisons, present
balance sheet date. If the category for a specific instrument has
value calculations or option valuation theory depending on the nature
changed since the previous balance sheet date (31 December 2016),
of the instrument.
the instrument has been moved between the levels in the table.
Valuation hierarchy In the tables, financial instruments at fair value have been categorised in terms of how the valuations have been carried out and the extent of market data used in the valuation. The categorisation is
42
1,097 119,465
41
During the January–June 2017 period, some of the volumes were moved between level 1 and level 2, as a result of a new assessment of market activity. On the assets side, equities worth SEK 68m were moved from level 2 to level 1. Derivatives with a value of SEK 5m
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY JUNE 2017 INTERIM REPORT JANUARY – JUNE–2017
were moved from level 1 to level 2. On the liabilities side, derivatives
Differences between the transaction price and the value
with a value of SEK 30m were transferred from level 1 to level 2.
produced using a valuation model
The holdings in level 3 mainly comprise unlisted shares and holdings
The models use input data in the form of market prices and other
in private equity funds. Holdings in private equity funds are valued
variables that are deemed to affect pricing. The models and input
using valuation models mainly based on a relative valuation of
data which form the basis of the valuations are regularly validated to
comparable listed companies in the same sector. The performance
ensure that they are consistent with market practice and established
measurements used in the comparison are adjusted for factors which
financial theory. In cases where there are material positive differences
distort the comparison between the investment and the company
between the value calculated with the help of a valuation model at
used for comparison. Subsequently, the valuation is based on
initial recognition and the transaction price (day 1 gain/loss), the
earnings multiples, e.g. P/E ratios. Most of these holdings represent
difference is distributed over the maturity period of the financial
investment assets in the Group’s insurance operations. Value
instrument. Such differences occur when the applied valuation model
changes on the investment assets are included in the basis for
does not fully capture all the components which affect the value of the
calculating the yield split in the insurance operations and are
instrument.
therefore not reported directly in the income statement.
As a consequence of the application of this principle, SEK 63m (76)
The Group’s holdings of unlisted shares consist mainly of the Bank’s
has been amortised in net gains/losses on financial transactions
participating interests in various types of jointly owned operations
during the January–June 2017 period. At the end of the period, non-
which are related to the Bank’s business. For example, these may be
recognised day 1 gains/losses amounted to SEK 601m; at the
participating interests in clearing organisations and infrastructure
previous year-end, the corresponding figure was SEK 585m.
collaboration on Handelsbanken’s home markets. In general, such holdings are valued at the Bank’s share of the company’s net asset value, or alternatively at the price of the last completed transaction. In all material respects, unlisted shares are classified as available for sale. Value changes for these holdings are thus reported in other comprehensive income.
The Bank regularly conducts separate valuations of the total credit risk component (own credit risk as well as counterparty risk) in outstanding model-valued derivatives. Changes in fair value due to changed credit risk are recognised in profit/loss to the extent that the overall effect exceeds non-recognised day 1 gains/losses.
Reconciliation of financial instruments in level 3
January – June 2017 SEK m Carrying amount at beginning of year
Shares
Loans to the public
Assets where the customer bears the value change risk
Liabilities where the customer bears the value change risk -762
1,837
17
762
Acquisitions/issues
11
-
-
-
Repurchases/sales
-54
-
-312
312
-
-2
-
-
-68
-
4
-4
Matured during the period Unrealised value change in income statement
44
-
-
-
Transfer from level 1 or 2
Unrealised value change in other comprehensive income
-
1
-
-
Transfer to level 1 or 2
-
-
-
-
1,770
16
454
-454
Shares
Loans to the public
Assets where the customer bears the value change risk
Liabilities where the customer bears the value change risk
Carrying amount at end of period
January – December 2016 SEK m Carrying amount at beginning of year
1,283
10
732
-732
Acquisitions/issues
14
-
-
-
Repurchases/sales
-90
-
-
-
-
-2
-
-
Unrealised value change in income statement
-55
0
30
-30
Unrealised value change in other comprehensive income
685
1
-
-
Transfer from level 1 or 2
-
8
-
-
Transfer to level 1 or 2
-
-
-
-
1,837
17
762
-762
Matured during the period
Carrying amount at end of period
43
Handelsbanken
42
Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Note 17 Assets and liabilities by currency 30 June 2017 SEK m
SEK
EUR
NOK
DKK
GBP
Other USD currencies
Total
Assets 167
113,121
4,169
1,752
95,545
220,625
1,469
Other loans to central banks
Cash and balances with central banks
4,774
64
25,116
22,175
429
-
160
52,718
Loans to other credit institutions
1,658
7,090
750
38
938
21,160
1,892
33,526 2,011,455
Loans to the public
436,848
1,264,946
192,936
228,488
90,496
199,777
26,045
8,767
of which corporates
479,876
130,075
139,198
33,585
133,080
25,788
7,904
949,506
of which households
785,070
62,861
89,290
56,911
66,697
257
863
1,061,949 119,603
Interest-bearing securities eligible as collateral with central banks
93,925
6,747
-
11
-
17,991
929
Bonds and other interest-bearing securities
44,427
2,340
1,173
-
1,668
11,635
-
Other items not broken down by currency Total assets
245,701 1,655,598
61,243 245,701
322,298
259,696
114,472
298,357
297,456
13,217
2,961,094
Liabilities Due to credit institutions Deposits and borrowing from the public
74,025
65,955
6,305
15,901
14,614
19,756
6,125
202,681
554,035
103,244
72,713
40,510
145,862
198,543
5,384
1,120,291
of which corporates
223,411
85,483
51,814
23,753
104,966
196,231
4,909
690,567
of which households
330,624
17,761
20,899
16,757
40,896
2,312
475
429,724
436,694
254,931
24,262
442
86,677
425,266
36,264
1,264,536
8,308
14,432
-
-
-
10,042
-
Issued securities Subordinated liabilities Other items not broken down by currency, incl. equity Total liabilities and equity
340,804 1,413,866
32,782 340,804
438,562
103,280
56,853
247,153
653,607
47,773
116,415
-156,285
-57,490
-51,084
356,199
34,600
151
131
129
120
48
44
623
SEK
EUR
NOK
DKK
GBP
Other USD currencies
Total
6,199
Other assets and liabilities broken down by currency (net) Net foreign currency position
2,961,094
31 December 2016 SEK m Assets 140
99,547
Other loans to central banks
Cash and balances with central banks
4,820
-
Loans to other credit institutions
7,630
6,983
Loans to the public
360
102
61,774
30,463
1,137
20,269
394
-
44
199,362 25,527
5
976
14,127
1,266
31,347 1,963,622
1,220,175
187,649
232,704
92,299
192,953
28,636
9,206
of which corporates
460,084
128,416
139,985
36,741
128,371
28,413
8,287
930,297
of which households
760,091
59,233
92,719
55,558
64,582
223
919
1,033,325
Interest-bearing securities eligible as collateral with central banks
72,683
6,431
-
11
-
17,344
736
97,205
Bonds and other interest-bearing securities
43,464
2,181
1,329
-
1,701
15,234
-
63,909
1,595,520
302,791
240,592
112,686
257,798
105,804
12,389
2,627,580
178,781
Other items not broken down by currency Total assets
246,608
246,608
Liabilities Due to credit institutions
36,630
73,200
4,454
17,700
4,775
27,768
14,254
503,890
78,736
59,761
34,733
122,374
23,181
6,661
829,336
of which corporates
192,720
61,542
38,662
19,051
86,076
21,003
6,170
425,224
of which households
311,170
17,194
21,099
15,682
36,298
2,178
491
404,112
463,704
240,231
30,826
324
84,338
405,286
37,056
1,261,765
8,230
14,355
-
-
-
10,815
-
Deposits and borrowing from the public
Issued securities Subordinated liabilities Other items not broken down by currency, incl. equity Total liabilities and equity Other assets and liabilities broken down by currency (net) Net foreign currency position
44
43
324,298 1,336,752
33,400 324,298
406,522
95,041
52,757
211,487
467,050
57,971
103,917
-145,364
-59,815
-46,342
361,349
45,650
186
187
114
-31
103
68
2,627,580
627
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Note 18 Own funds and capital requirements in the consolidated situation The requirements for the calculation of own funds and capital requirements are regulated in Regulation (EU) No 575/2013 (CRR) and Directive 2013/36/EU, which comprise the EU’s implementation of the international Basel III regulations. All references to CRR in this interim report refer to these regulations in their entirety, regardless of legislative form (regulation, directive, executive decree or national implementation). Figures reported in this section refer to the minimum capital requirements under Pillar 1 and meet the requirements for publication of information relating to capital adequacy in CRR Part Eight, as well as in the Swedish Financial Supervisory Authority’s regulation FFFS 2014:12.
Own funds SEK m TIER 1 CAPITAL Equity, Group Accrued unpaid dividend last year Accrued dividend current year
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
134,900
131,741
136,381
134,085
129,582
-
-
-
-
-
-5,127
-2,595
-9,721
-6,400
-4,118
Adjustment of Group result
-429
-195
3,829
-162
34
Adjustment of Group equity
3,289
3,267
-593
3,532
3,518
Minority interests
-6
-6
-6
-6
-5
132,627
132,212
129,890
131,049
129,011
-9,513
-9,409
-9,355
-9,268
-8,433
-477
-633
-645
-637
-685
-2,272
-2,270
-1,527
-1,567
-1,543
Positions in securitisation
-
-
-
-
-
Net pension assets
-
-
-
-
-
-607
-622
-636
-593
-529
-1,907
-2,749
-2,487
-7,850
-8,815
-
-
-
-
-
117,851
116,529
115,240
111,134
109,006
Capital contributions to unconsolidated financial entities >10% CET1
-
-
-
-
-
Deferred tax assets >10% CET1
-
-
-
-
-
Amount of capital contributions and deferred tax assets >15%
-
-
-
-
-
117,851
116,529
115,240
111,134
109,006
12,011
12,598
12,768
12,156
12,045
Total tier 1 capital
129,862
129,127
128,008
123,290
121,051
TIER 2 CAPITAL Subordinated loans
17,431
17,293
17,354
17,392
17,135
Equity (consolidated entities) Deducted items Goodwill and other intangible assets Value adjustments (fair value) Special deduction for IRB institutions
Own shares Adjustments in accordance with stability filter Cash flow hedges Unrealised accumulated gains, shares Common equity tier 1 capital, gross Threshold deductions
Common equity tier 1 capital Additional tier 1 instruments
Deducted items Tier 2 contribution in unconsolidated financial entities Total tier 2 capital Total own funds
45
44
-1,129
-1,129
-1,129
-1,129
-1,129
16,302
16,164
16,225
16,263
16,006
146,164
145,291
144,233
139,553
137,057
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Capital ratios and buffers 30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
Common equity tier 1 ratio, CRR
23.4%
23.8%
25.1%
24.0%
23.0%
Tier 1 ratio, CRR
25.8%
26.4%
27.9%
26.6%
25.5%
Total capital ratio, CRR
29.0%
29.7%
31.4%
30.1%
28.9%
Risk exposure amount CRR
504,199
489,456
458,787
463,675
474,500
Own funds in relation to capital requirement according to Basel I floor
148%
149%
148%
144%
142%
Institution-specific buffer requirements*
6.6%
6.6%
6.4%
6.4%
6.4%
of which capital conservation buffer requirement
2.5%
2.5%
2.5%
2.5%
2.5%
of which countercyclical capital buffer requirement
1.1%
1.1%
0.9%
0.9%
0.9%
3.0% 18.9%
3.0% 19.3%
3.0% 20.6%
3.0% 19.5%
3.0% 18.5%
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
of which systemic risk buffer requirement Common equity tier 1 capital available for use as a buffer * Information is only provided regarding the buffer requirements which have come into force.
Capital requirement SEK m Credit risk according to standardised approach Credit risk according to IRB Approach
6,609
6,330
6,472
6,336
6,186
27,560
26,334
23,950
24,476
25,603
Market risks
800
936
873
817
711
Credit valuation adjustment risk (CVA)
438
627
594
650
645
Operational risk Total capital requirement Adjustment according to Basel I floor
4,929
4,929
4,815
4,815
4,815
40,336
39,156
36,704
37,094
37,960
60,239
59,790
61,531
61,134
59,499
Capital requirement, Basel I floor
100,575
98,946
98,235
98,228
97,459
Total own funds, Basel I floor
148,436
147,561
145,760
141,120
138,600
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
Risk exposure amount SEK m Credit risk according to standardised approach Credit risk according to IRB Approach Market risk Credit valuation adjustment risk (CVA) Operational risk Total risk exposure amount
82,608
79,126
80,896
79,204
77,323
344,497
329,180
299,370
305,951
320,041
10,004
11,705
10,910
10,216
8,890
5,477
7,832
7,429
8,122
8,064
61,613
61,613
60,182
60,182
60,182
504,199
489,456
458,787
463,675
474,500
Capital requirement credit risks, standardised approach**
SEK m Sovereign and central banks Municipalities Multilateral development banks International organisations Institutions
Exposure amount 30 Jun 31 Dec 2017 2016
Risk-weighted exposure amount 30 Jun 31 Dec 2017 2016
Capital requirement 30 Jun 31 Dec 2017 2016
Average risk weight, % 30 Jun 31 Dec 2017 2016
98
255,748
0
77
0
6
0.0
1
54,908
0
22
0
2
0.0
0.0 0.0
592
636
0
0
0
0
0.0
0.0
0
49
0
0
0
0
0.0
0.0
6,257
4,215
373
343
30
27
6.0
8.1
Corporates
11,458
10,640
11,348
10,017
908
801
99.0
94.1
Households
16,990
17,042
12,703
12,737
1,016
1,019
74.8
74.7
Collateral in real estate
97,700
92,087
35,095
33,316
2,808
2,665
35.9
36.2
255
199
333
258
27
21
130.6
129.6
Past due items Collective investment undertakings Equities Other items Total
88
0
88
0
7
0
100.0
0.0
6,784
6,796
16,114
16,126
1,289
1,290
237.5
237.3
7,148
8,571
6,554
8,000
524
641
91.7
93.4
147,371
450,891
82,608
80,896
6,609
6,472
56.1
17.9
** Information about capital requirements for the exposure classes where there are exposures.
46
45
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Credit risks IRB
SEK m
Exposure amount 30 Jun 31 Dec 2017 2016
Risk-weighted exposure amount 30 Jun 31 Dec 2017 2016
Average risk weight, % 30 Jun 31 Dec 2017 2016
Sovereign and central banks
581,859
Corporate
840,765
821,000
230,800
194,650
18,464
15,572
27.5
23.7
Corporate lending
818,366
798,330
226,639
190,709
18,131
15,257
27.7
23.9
of which other loans foundation approach *
109,110
116,048
30,858
35,946
2,469
2,876
28.3
31.0
of which other loans advanced approach *
709,256
682,282
195,781
154,763
15,662
12,381
27.6
22.7
149,881
126,774
55,131
57,176
4,411
4,574
36.8
45.1
of which large companies of which medium-sized companies of which property companies
Retail Private individuals of which property loans
772
1.7
78,803
81,640
37,042
32,486
2,963
2,599
47.0
39.8
480,572
473,868
103,608
65,101
8,288
5,208
21.6
13.7
22,399
22,670
4,161
3,941
333
315
18.6
17.4
186,293
187,897
8,871
7,555
710
604
4.8
4.0
1,000,376
982,270
71,523
72,398
5,722
5,792
7.1
7.4
Counterparty risk Housing co-operative associations
9,659
Capital requirement 30 Jun 31 Dec 2017 2016
974,568
955,346
64,412
65,258
5,153
5,221
6.6
6.8
897,973
874,253
50,295
48,178
4,024
3,854
5.6
5.5
76,595
81,093
14,117
17,080
1,129
1,367
18.4
21.1
25,808
26,924
7,111
7,140
569
571
27.6
26.5
7,317
7,650
1,846
1,706
148
137
25.2
22.3 28.2
of which other loans Small companies of which property loans
18,491
19,274
5,265
5,434
421
434
28.5
Institutions
of which other loans
86,065
105,185
14,007
17,397
1,121
1,392
16.3
16.5
Lending to institutions
15,523
20,066
5,128
6,175
410
494
33.0
30.8 13.2
Counterparty risk
70,542
85,119
8,879
11,222
710
898
12.6
of which repos and securities loans
18,069
14,070
312
631
25
50
1.7
4.5
of which derivatives
52,473
71,049
8,567
10,591
685
848
16.3
14.9 370.0
Equity exposures
2,128
1,340
7,262
4,959
581
397
341.2
of which listed shares
766
-
2,220
-
178
-
290.0
-
of which other shares
1,362
1,340
5,042
4,959
403
397
370.0
370.0
2,353
2,387
2,353
2,387
188
191
100.0
100.0
21
22
22
24
2
2
106.0
105.9
21
22
22
24
2
2
106.0
105.9
Non credit-obligation assets Securitisation positions of which Traditional securitisation of which Synthetic securitisation Total IRB Approach
-
-
-
-
-
-
-
-
2,699,860
2,100,101
344,497
299,370
27,560
23,950
12.8
14.3
* The foundation approach means the IRB Approach without own estimates of LGD and CCF. The advanced approach means the IRB Approach with own estimates of LGD and CCF.
The capital requirement for credit risk is calculated according to the
Handelsbanken Finans AB, Ecster AB, and retail exposures in
standardised approach and the IRB Approach in accordance with
Sweden, Norway, Finland and Denmark, as well as in the
CRR. There are two different IRB Approaches: the IRB Approach
subsidiaries Stadshypotek AB, Handelsbanken Finans AB, Ecster
without own estimates of LGD and CCF, and the IRB Approach with
AB, and Rahoitus Oy.
own estimates of LGD and CCF.
the total risk-weighted exposure amount for credit risk. For the
Bank uses its own method to determine the probability of the
remaining credit risk exposures, the capital requirement is calculated
customer defaulting within one year (PD), while the other parameters
using the standardised approach.
are set out in CRR rules. In the IRB Approach with own estimates of LGD and CCF, the Bank uses its own methods to calculate the loss given default (LGD) and the exposure amount.
Repos and securities loans for institutions are reported separately in the Credit risk exposures approved for the IRB Approach table, since they give rise to very low capital requirements, while the volumes
Handelsbanken uses the IRB Approach without own estimates of
vary considerably over time. The low capital requirement is due to the
LGD and CCF for exposures to institutions and for certain product
exposure being reported gross and being secured.
and collateral types for corporate exposures and, starting from Q2 2017, for sovereign exposures in the whole of the regional banking operations and in the following subsidiaries: Stadshypotek AB, Handelsbanken Finans AB, Ecster AB, Handelsbanken Finans (Shanghai) Financial Leasing Co. Ltd and Rahoitus Oy. The IRB Approach with own estimates of LGD and CCF is applied to the majority of exposures to large corporates, medium-sized companies, property companies and housing co-operative associations in regional bank operations (excluding the Netherlands), Handelsbanken Capital Markets, Stadshypotek AB and
47
At the end of the quarter, the IRB Approach was applied to 81% of
In the IRB Approach without own estimates of LGD and CCF, the
46
The total average risk weight for exposures approved for the IRB Approach decreased during the quarter, amounting to 12.8% (15.6). The reason why the average risk weight has decreased is that sovereign exposures began to be reported in accordance with the IRB Approach during the quarter, and these have an average risk weight of 1.7%. Credit quality is good. Of Handelsbanken’s corporate exposures, 97% were customers with a repayment capacity assessed as normal or better than normal, i.e. with a rating grade between 1 and 5 on the Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Bank’s ten-point risk rating scale. The IRB Approach is based on
The level of the risk weight in the corporate exposures reflects the
historical losses from both the financial crisis of recent years and the
portfolio composition and how various loans are classified into
Swedish banking crisis in the early 1990s. These risk weights reflect
different exposure classes.
the fact that Handelsbanken has reported low loan losses over a long period. The risk measurements applied contain margins of conservatism to ensure that the risk is not underestimated.
The capital requirement for equity exposures in the IRB Approach is calculated according to a simplified risk weight method.
Capital requirement market risks 30 Jun 2017
31 Mar 2017
31 Dec 2016
Position risk in the trading book
793
928
864
810
703
Interest rate risk
784
917
855
801
694
SEK m
30 Sep 2016
30 Jun 2016
of which general risk
497
616
598
651
534
of which specific risk
287
300
256
149
158
of which positions in securitisation instruments
-
-
-
-
-
0
1
1
1
2
Equity price risk
9
11
9
9
9
of which general risk
1
2
1
1
1
of which specific risk
4
4
3
4
3
of which mutual funds
1
0
0
0
1
of which non-delta risk
3
5
5
4
4
Exchange rate risk
-
-
-
-
-
of which non-delta risk
-
-
-
-
-
Commodities risk
7
8
9
7
8
of which non-delta risk
0
0
0
0
0
Settlement risk
0
-
0
0
0
800
936
873
817
711
of which non-delta risk
Total capital requirement for market risks
The capital requirement for market risks is calculated for the Bank’s consolidated situation. The capital requirement for interest rate risks and equity price risks is, however, only calculated for positions in the trading book. When calculating the capital requirement for market risks, the standardised approach is applied.
Capital requirement operational risk Handelsbanken uses the standardised approach, to calculate the capital requirement for operational risk. According to the standardised approach, the capital requirement is calculated by multiplying a factor specified in the regulations by the average operating income during the last three years of operation. Different factors are applied in different business segments.
Leverage ratio The provisions of CRR include a reporting requirement regarding a non-risk-based leverage ratio. The measurement is to undergo evaluation and no decision to make it mandatory has yet been taken. SEK m Balance sheet according to accounting regulations Deduction for assets not included in the banking group
30 Jun 2017 2,961,094
31 Mar 2017 2,922,929
31 Dec 2016 2,627,580
30 Sep 2016 2,908,935
30 Jun 2016 3,030,645
-123,620
-120,443
-114,858
-112,161
-103,215
Adjustment for differences between carrying amount and leverage ratio exposure – derivatives
-21,485
-26,092
-20,341
-27,185
-24,710
Adjustment for differences between carrying amount and leverage ratio exposure – repos and securities loans
3,342
3,860
4,436
5,295
6,252
500,667
485,559
492,788
494,872
486,570
-321,387
-312,461
-314,413
-313,706
-309,195
Assets reported off the balance sheet, net
179,280
173,098
178,375
181,166
177,375
Additional adjustment
-14,775
-15,683
-14,650
-19,915
-21,106
2,983,836
2,937,669
2,660,542
2,936,135
3,065,241
129,862
129,127
128,008
123,290
121,051
4.4%
4.4%
4.8%
4.2%
3.9%
Assets reported off the balance sheet, gross (before adjustment for conversion factor) Deduction from assets off the balance sheet after application of conversion factor
Assets on which the leverage ratio is calculated Capital on which the leverage ratio can be calculated Tier 1 capital Leverage ratio Leverage ratio calculated on tier 1 capital
48
Handelsbanken
47
Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Information in this section relates to Handelsbanken’s material risks and capital requirements at the time that this interim report is published. A full description of the Bank’s risk and capital management can be found in Handelsbanken’s Annual Report and in Handelsbanken’s Risk and Capital Management – Information according to Pillar 3.
Note 19 Risk and liquidity Figures reported in this section meet the requirements for publication of information relating to risk and capital management in CRR Part Eight.
Risk and uncertainty factors Handelsbanken provides credit through its branch operations,
The situation with regard to regulatory developments continues to
exercising a low risk tolerance. The credit process is based on the
evolve rapidly. The UK’s decision to leave the EU means there is
conviction that a decentralised organisation with local presence
uncertainty regarding the regulations that will apply to the Bank’s
ensures high quality in credit decisions. Handelsbanken’s exposure
British operations. The Bank is preparing for the implementation of
to market risks is also low. Essentially, market risks in the banking
Brexit in close consultation with public authorities in both Sweden
operations are only taken as part of meeting customers’ investment
and the UK. The Bank’s low tolerance of risk, sound capitalisation
and risk management needs. During the past few years, the Bank
and strong liquidity situation mean that Handelsbanken is also well-
has worked actively to reduce the market risks on its balance sheet.
equipped to operate under substantially more difficult market
One result of this is that a much smaller part of the Bank’s earnings
conditions than those experienced during the last few years. The
comes from net gains/losses on financial transactions.
Bank’s liquidity position is described in more detail below under the heading Liquidity and funding.
Liquidity and funding Handelsbanken has a strong liquidity position. For many years, the
For many years, the Bank has worked on extending the maturities of
Bank has actively worked with liquidity measures and has adopted a
its funding by increasing bond issues and ensuring that liquidity risks
conservative approach. Part of this work has involved centralising
are included in internal pricing. Handelsbanken’s funding programme
liquidity management with the purpose of strengthening control of the
covers the maturities in all currencies that the Bank needs to fund its
liquidity risks and of guaranteeing and optimising the Bank’s funding
lending and enables the Bank to issue in all currencies of relevance
in all scenarios.
to the Bank.
Funding programmes/limits as at 30 June 2017 – Group Currency
Programme size
Utilised amount
Countervalue SEK m
ECP*
EUR
15,000
5,981
57,602
ECP (Stadshypotek)*
EUR
4,000
-
-
French Commercial Paper
EUR
7,500
1,839
17,706
Programme (in millions)
Swedish Commercial Paper
SEK
25,000
-
-
Swedish Commercial Paper (Stadshypotek)
SEK
90,000
-
-
USCP
USD
15,000
5,462
46,063
AMTN
AUD
5,000
1,275
8,266
AMTCN (Stadshypotek)
AUD
5,000
750
4,863
EMTN*
USD
50,000
20,983
176,964
EMTCN (Stadshypotek)*
EUR
20,000
10,002
96,327
US 144A/3(a)(2)
USD
20,000
10,650
89,819
Stadshypotek US 144A
USD
15,000
5,000
42,169
Samurai
JPY
400,000
160,700
12,084
MTN*
SEK
100,000
10,979
10,979 29,071
General funding >1 Y*
USD
15,000
3,447
Extendible Notes
USD
15,000
-
Total Total programme (or limited) amounts, SEK m
1,854,124
Unutilised amount, SEK m
1,262,211
Available amount
591,913
68%
* Under these programmes it is possible to issue in other currencies than the original programme currency. Currency conversion takes place at the time of issue.
49
48
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017
INTERIM REPORT JANUARY – JUNE 2017
Balances with central banks and banks, as well as securities that are
issue amount for covered bonds and other liquidity-creating
eligible as collateral with central banks, totalled SEK 664bn as at 30
measures.
June 2017 (see table below). In addition, there was an unutilised
Balances with central banks and banks, and securities holdings in the liquidity reserve Market value SEK m Cash and balances with and other lending to central banks Balances with banks and the National Debt Office, overnight Securities issued by governments and public entities Covered bonds
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
489,210
465,038
224,533
456,491
582,590
1,555
2,301
7,712
803
1,807
123,699
99,652
96,217
106,938
104,133 50,101
48,011
53,093
53,647
53,458
Securities issued by non-financial companies
934
287
27
797
614
Securities issued by financial companies
106
301
124
242
142
Total
663,515
620,672
382,260
618,729
739,387
of which in SEK
135,228
151,277
126,241
192,224
160,997
of which in EUR
122,095
123,353
108,380
135,707
83,698
of which in USD of which in other currencies
246,228 159,964
195,289 150,753
47,449 100,190
179,920 110,878
366,669 128,023
30 June 2017 Market value, SEK m Cash and balances with and other lending to central banks Balances with other banks and the National Debt Office, overnight Securities issued by governments Securities issued by municipalities and other public entities Covered bonds, external issuers Own covered bonds Securities issued by non-financial companies Securities issued by financial companies Total
50
49
SEK
EUR
USD
Other
Total
4,773
113,069
220,621
150,747
489,210
1,380
26
22
127
1,555
88,338
6,829
19,565
-
114,732
2,927
-
6,020
20
8,967
33,710
2,092
-
9,070
44,872 3,139
3,139
-
-
-
899
35
-
-
934
62
44
-
-
106
135,228
122,095
246,228
159,964
663,515
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Maturities for financial assets and liabilities 30 June 2017 SEK m
Up to 1 mth
1 - 6 mths 6 - 12 mths
1 - 2 yrs
2 - 5 yrs
5 yrs -
Unspec. maturity
Total
-
-
-
-
489,566 119,603
Assets Cash and balances with central banks
489,566
Interest-bearing securities eligible as collateral with central banks
-
-
119,603
-
-
-
-
-
-
Bonds and other interest-bearing securities
61,243
-
-
-
-
-
-
61,243
Loans to credit institutions
26,897
1,282
1,256
129
1,627
2,335
-
33,526
-of which reverse repos
11,175
-
-
-
-
-
-
11,175
Loans to the public
45,187
239,645
179,395
176,293
373,101
997,834
-
2,011,455
8,322
-
-
-
-
-
-
8,322
Other
29,361
-
-
-
-
-
216,340
245,701
-of which shares and participating interests
21,353
-
-
-
-
-
-
21,353
8,008
-
-
-
-
-
-
8,008
771,857
240,927
180,651
176,422
374,728
1,000,169
216,340
2,961,094
119,339
53,237
1,774
4,612
281
4,864
18,574
202,681
-
-
-
-
-
-
-
0
-of which deposits from central banks
34,140
28,576
518
-
-
-
1,722
64,956
Deposits and borrowing from the public
192,488
44,486
4,863
754
2,346
5,806
869,548
1,120,291
332
-
-
-
-
-
-
332
98,518
307,128
178,904
183,164
417,331
79,491
-
1,264,536
-
11,464
108,556
114,238
287,725
48,220
-
570,203
-of which certificates and other securities with original maturity of less than one year
81,484
271,853
37,952
-
-
-
-
391,289
-of which senior bonds and other securities with original maturity of more than one year
17,034
23,811
32,396
68,926
129,606
31,271
-
303,044
-
2,971
-
19,787
10,024
-
-
32,782
12,518
-
-
-
-
-
328,286
340,804 7,876
-of which reverse repos
-of which claims on investment banking settlements
Total Liabilities Due to credit institutions -of which repos
-of which repos
Issued securities -of which covered bonds
Subordinated liabilities Other -of which short positions
7,876
-
-
-
-
-
-
-of which investment banking settlement debts
4,642
-
-
-
-
-
-
4,642
422,863
407,822
185,541
208,317
429,982
90,161
1,216,408
2,961,094
Total
The table shows holdings of bonds and other interest-bearing securities in the time intervals in which they can be converted to liquidity if they are pledged as collateral or sold. This means that the table does not reflect the actual maturities for the securities included. In “Other”, assets and liabilities are reported as maturing in the time intervals that correspond to the contractual maturity dates, taking into account contractual amortisation plans. Sight deposits are reported under “Unspecified maturity”. “Other” includes market values in derivative transactions.
For maturity tables in SEK, EUR and USD, please see the Fact Book which is available at handelsbanken.se/ireng.
51
50
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Liquidity coverage ratio (LCR) 30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
EUR
132
178
136
178
181
USD
177
236
322
164
121
Total*
120
148
126
162
139
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
Liquidity coverage ratio (LCR), %
* In accordance with the Swedish Financial Supervisory Authority's directive FFFS 2012:6.
Liquidity coverage ratio (LCR) - decomposition, SEK m Liquid assets
650,117
606,507
290,058
416,189
433,824
Liquid assets level 1
613,808
565,626
251,189
375,318
394,887
Liquid assets level 2
36,309
40,881
38,869
40,871
38,937
Cash outflows
593,185
489,050
359,659
514,967
697,349
Deposits from customers
242,608
220,330
173,496
191,610
169,582
Market funding
308,352
228,791
151,735
284,083
486,320
Other cash flows
42,225
39,929
34,428
39,274
41,447
Cash inflows
50,132
79,554
129,176
258,526
384,619
Inflows from maturing lending to non-financial customers
14,486
22,186
21,146
18,618
26,985
Other cash inflows
35,646
57,368
108,030
239,908
357,634
The components are defined in accordance with the Swedish Financial Supervisory Authority's regulations and requirements for the liquidity coverage ratio and reporting of liquid assets and cash flows (FFFS 2012:6). Liquid assets level 1 corresponds to Chapter 3, Section 6. Liquid assets level 2 corresponds to Chapter 3, Section 7. Deposits from customers corresponds to Chapter 4, Sections 4-9. Market funding corresponds to Chapter 4, Sections 10-13. Other cash flows corresponds to Chapter 4, Sections 14-25. Loans to non-financial customers corresponds to Chapter 5, Section 4. Other cash inflows corresponds to Chapter 5, Sections 6-12.
As of 1 October 2015, due to the European Commission’s delegated
the same regulation, was 132% during the first six months. The
act, there is a European minimum requirement for banks’ liquidity in
Bank’s LCR, calculated according to the European Commission’s
the form of a short-term liquidity buffer: liquidity coverage ratio (LCR).
delegated act, was 136%.
The minimum requirement in 2017 is 80%, and this will be raised to 100% by 2018, when the delegated act will be fully implemented. However, according to the delegated act, the LCR is based on the less stringent LCR proposed by the Basel Committee in 2013 and certain EU-specific changes, for example, that the liquidity reserve may include a higher proportion of covered bonds. By making requirements for a short-term liquidity buffer in FFFS 2012:6 as early as 2013, Sweden has moved more quickly than required by the EU. The requirement amounts to 100%, but the definition of what comprises a short-term liquidity buffer differs from what applies at EU level. The LCR which the Swedish Financial Supervisory Authority has implemented is a stricter LCR measurement, mainly in terms of deposit outflow assumptions and the composition of the liquidity portfolio. The minimum requirement for the net stable funding ratio is expected to be introduced in the EU
Stress test with liquidity-creating measures The Bank’s liquidity position is regularly subjected to stress tests. In these tests, the Bank’s cash flows are stressed, based on certain defined assumptions. For example, in the stress test aimed at demonstrating resistance to more long-term market disruptions, it is assumed that the Bank is unable to obtain funding in the financial markets at the same time as it experiences a gradual disappearance of 10% of deposits from households and companies over the first month. It is further assumed that the Bank continues to conduct its core activities, i.e. loans to households and companies, and that committed loan offers and other credit facilities are partly utilised by customers. Account is also taken of the fact that holdings with central banks are utilised and that the Group Treasury liquidity portfolio can provide immediate additional liquidity. In addition, liquidity-creating
in 2018 at the earliest.
measures – for example, unutilised facilities to issue covered bonds –
At the end of the second quarter, Handelsbanken’s LCR according to
of the stress test shows that the liquidity reserves, even in a stressed
the Swedish Financial Supervisory Authority’s regulation FFFS 2012:6 was 120%, which shows that the Bank has high resistance to short-term disruptions in the funding market. This also applies in USD
are used in order to gradually provide liquidity to the Bank. The result scenario, cover the Bank’s liquidity requirement for over three years, even if access to new funding in the markets were to disappear.
and EUR. The LCR, as an average of daily observations according to
52
Handelsbanken
51
Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Non-encumbered assets, NEA 30 June 2017 SEK bn
NEA
Accumulated coverage ratio in % of unsecured funding*
Holdings with central banks and securities in the liquidity portfolio
664
74%
Mortgage loans
553
136%
Other household lending
185
156%
Property company lending lowest risk class (1-3)
265
186%
Other corporate lending lowest risk class (1-3)
150
203%
28
206%
249
234%
Loans to credit institutions lowest risk class (1-3) Other corporate lending Other assets Total non-encumbered assets (NEA) Encumbered assets without underlying liabilities** Encumbered assets with underlying liabilities Total assets, Group
23
236%
2,117
236%
57 787 2,961
31 December 2016 SEK bn
NEA
Accumulated coverage ratio in % of unsecured funding*
Holdings with central banks and securities in the liquidity portfolio
382
46%
Mortgage loans
470
102%
Other household lending
182
124%
Property company lending lowest risk class (1-3)
260
155%
Other corporate lending lowest risk class (1-3)
144
172%
32
176%
241
205%
Loans to credit institutions lowest risk class (1-3) Other corporate lending Other assets Total non-encumbered assets (NEA) Encumbered assets without underlying liabilities** Encumbered assets with underlying liabilities Total assets, Group
44
210%
1,755
210%
61 812 2,628
* Issued short and long non-secured funding and liabilities to credit institutions. ** Over-collateralisation in cover pool (OC).
Information in this section relates to Handelsbanken’s material risks and risk management at the time that this interim report is published. A full description of the Bank’s risk and capital management can be found in Handelsbanken’s Annual Report and in Handelsbanken’s Risk and Capital Management – Information according to Pillar 3.
Note 20 Related-party transactions There have been no business transactions of material importance with related parties during the period.
Note 21 Segment reporting Information about the Bank’s segment reporting is provided on pages 9-23.
Note 22 Events after the balance sheet date No significant events occurred after the balance sheet date.
53
52
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Condensed set of financial statements – Parent company INCOME STATEMENT – PARENT COMPANY SEK m
Q2 2017
Q1 2017 Change
Net interest income
4,131
3,845
Dividends received
1,043
-3
Net fee and commission income
1,731
1,620
Net gains/losses on financial transactions
263
Other operating income
419
Total income
7%
Q2 2016 Change
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
3,644
13%
7,976
7,233
10%
15,011
2,481
-58%
1,040
4,783
-78%
17,045
7%
1,665
4%
3,351
3,228
4%
6,509
602
-56%
469
-44%
865
1,667
-48%
3,076
394
6%
392
7%
813
775
5%
1,647
7,587
6,458
17%
8,651
-12%
14,045
17,686
-21%
43,288
Staff costs
-3,122
-2,631
19%
-2,604
20%
-5,753
-5,661
2%
-10,427
Other administrative expenses
-1,372
-1,379
-1%
-1,310
5%
-2,751
-2,555
8%
-5,224
Depreciation, amortisation and impairment of property, equipment and intangible assets Total expenses before loan losses Profit before loan losses Net loan losses Impairment of financial assets Operating profit Appropriations Profit before tax Taxes Profit for the period
-261
-270
-3%
-133
96%
-531
-265
100%
-591
-4,755
-4,280
11%
-4,047
17%
-9,035
-8,481
7%
-16,242
2,832
2,178
30%
4,604
9,205
-46%
27,046
-188
3%
-259
-38% -25%
5,010
-194
-382
-435
-12%
-1,730
-
-
-
-
2,638
1,990
4,628
8,770
-47%
25,296
33%
4,345
-39%
-20
29
28
4%
13
123%
57
50
14%
-193
2,667
2,018
32%
4,358
-39%
4,685
8,820
-47%
25,103
-447
-527
-15%
-432
3%
-974
-775
26%
-4,503
2,220
1,491
49%
3,926
-43%
3,711
8,045
-54%
20,600
Jan-Jun 2017
Jan-Jun 2016 Change
Full year 2016
STATEMENT OF COMPREHENSIVE INCOME – PARENT COMPANY Q2 2017
Q1 2017 Change
Q2 2016 Change
2,220
1,491
49%
3,926
-286
1,010
21
37
-43%
536
-850
-1,187
28%
686
-2,037
-467
-336%
-18
-802
98%
29
-820
-174
-371%
57
-48
-226
9
-546
of which cash flow hedges
55
-222
-219
-167
-641
of which available-for-sale instruments
-2
-2
0%
0
-4
57
SEK m Profit for the period
-43%
3,711
8,045
-54%
724
2,913
-75%
58
-564
20,600
Other comprehensive income Items that may subsequently be reclassified to profit or loss Cash flow hedges Available-for-sale instruments Translation differences for the period of which hedging net investment in foreign operations Tax related to other comprehensive income
996 -96%
of which hedging net investment in foreign operations Total items that may subsequently be reclassified to profit or loss
4
176
-98%
-7
180
38
-1,058
-188
-463%
1,992
-1,246
1,336
Total other comprehensive income for the period
-1,058
-188
-463%
1,992
-1,246
1,336
1,162
1,303
-11%
5,918
2,465
9,381
Total comprehensive income for the period
-80%
-1,882 -1,152 387 -65 538
74%
414 110
374%
14 -2,109 -2,109
-74%
18,491
Comment on results for parent company, January – June 2017 compared with January – June 2016 The parent company’s accounts cover parts of the operations that, in organisational terms, are included in branch operations within and outside Sweden, Capital Markets, and central departments and staff functions. Although most of Handelsbanken’s business comes from the local branches and is co-ordinated by them, in legal terms a sizeable part of business volumes are outside the parent company in wholly-owned subsidiaries – particularly in the Stadshypotek AB mortgage institution. Thus, the performance of the parent company is not equivalent to the performance of business operations in the Group as a whole. The parent company’s operating profit decreased by 47% to SEK 4,628m (8,770), chiefly owing to reduced dividends, as well as lower net gains/losses on financial transactions. Profit for the period decreased by 54% to SEK 3,711m (8,045). Net interest income rose by 10% to SEK 7,976m (7,233), and net fee and commission income increased by 4% to SEK 3,351m (3,228). Since the start of the year, the parent company’s equity has decreased to SEK 109,358m (116,642).
54 53
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
BALANCE SHEET – PARENT COMPANY 30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
Cash and balances with central banks Interest-bearing securities eligible as collateral with central banks
436,848
387,092
199,362
353,680
501,696
116,399
94,096
94,236
116,301
114,485
Loans to credit institutions
692,429
670,211
593,125
684,565
638,845
Loans to the public
SEK m Assets
779,600
778,918
763,567
781,690
770,214
Bonds and other interest-bearing securities
57,779
61,788
60,311
50,394
42,794
Shares Shares in subsidiaries and investments in associates
20,400
22,363
19,339
34,838
51,704
47,205
46,358
46,363
46,382
45,773
4,079
3,969
4,172
3,860
3,743
66,804
77,322
87,061
82,232
96,260
Intangible assets
2,428
2,336
2,268
2,146
2,056
Property, equipment and leasing assets
2,911
2,914
2,970
1,101
1,081
Current tax assets
1,313
448
-
2,322
1,484
Assets where the customer bears the value change risk Derivative instruments
Deferred tax assets Other assets Prepaid expenses and accrued income Total assets
310
365
425
472
471
8,968
12,727
16,713
13,307
20,061
4,139
3,761
4,792
4,075
4,068
2,241,612
2,164,668
1,894,704
2,177,365
2,294,735
212,715
209,637
189,176
218,830
217,291
1,118,658
1,048,659
827,753
1,007,257
1,132,359
Liabilities and equity Due to credit institutions Deposits and borrowing from the public Liabilities where the customer bears the value change risk Issued securities Derivative instruments Short positions Current tax liabilities Deferred tax liabilities Provisions Other liabilities Accrued expenses and deferred income
4,027
4,271
3,927
3,793
674,987
648,977
712,465
707,071
48,645
44,266
54,491
57,377
59,539
7,876
11,753
1,572
11,441
8,581
-
-
184
-
-
932
1,066
1,066
2,026
2,234
328
307
429
426
455
12,909
20,939
8,786
12,931
14,383
7,717
6,841
7,164
8,343
8,614
32,782
33,199
33,400
33,008
32,903
2,131,520
2,055,681
1,777,269
2,068,031
2,187,223
734
762
793
535
539
Share capital
3,013
3,013
3,013
3,008
3,001
Share premium
5,629
5,629
5,628
5,410
5,081
Subordinated liabilities Total liabilities Untaxed reserves
Other funds Retained earnings Profit for the period Total equity Total liabilities and equity
55
4,166 684,792
54
8,218
9,156
9,242
12,056
12,456
88,787
88,936
78,159
78,285
78,390
3,711
1,491
20,600
10,040
8,045
109,358
108,225
116,642
108,799
106,973
2,241,612
2,164,668
1,894,704
2,177,365
2,294,735
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
CHANGE IN SHAREHOLDER’S EQUITY – PARENT COMPANY Restricted equity
January – June 2017 SEK m Opening equity
Share capital
Statutory reserve
Fund for internally developed software
3,013
2,682
1,766
Unrestricted equity Share premium 5,628
Hedge Fair value reserve * reserve *
Translation reserve *
Retained earnings 98,759
-119
974
3,939
Other comprehensive income
557
54
-1,857
Total comprehensive income for the period
557
54
-1,857
Profit for the period
3,711
Dividend Group contributions provided Tax effect on Group contribution Effects of convertible subordinated loans
0
Closing equity
2,682 Restricted equity
January – December 2016 SEK m Opening equity
Share capital
Statutory reserve
2,956
2,682
1,988
Fund for internally developed software
5,629
438
1,028
Share premium 3,204
Hedge Fair value reserve * reserve *
Retained earnings 91,367
Total 107,112
20,600
20,600
-1,468
-1,042
401
Total comprehensive income for the period
-1,468
-1,042
401
Dividend 57
Restricted equity
18,491
-11,442
-11,442
Share capital
Statutory reserve
2,956
2,682
1,766
Fund for internally developed software
-1,766 5,628
-119
974
3,939
98,759
Translation reserve *
Retained earnings 91,367
Share premium 3,204
Hedge Fair value reserve * reserve * 2,016
3,538
Other comprehensive income
2,272
-507
-429
Total comprehensive income for the period
2,272
-507
-429
Profit for the period
8,045
Dividend 45
2,682
1,535
8,045
8,045
9,381
-11,442
-11,442 1,922
1,535 3,001
Total 107,112 1,336
1,877
Fund for internally developed software
116,642
Unrestricted equity
1,349
Closing equity
20,600
2,481
1,766 2,682
109,358
-2,109
2,424
Fund for internally developed software
Effects of convertible subordinated loans
8
Translation reserve *
Other comprehensive income
Opening equity
-37
8
Unrestricted equity
Profit for the period
January – June 2016 SEK m
-9,721
-37
92,498
3,538
3,013
-9,721
2,082
2,016
Closing equity
2,465
-222
1,349
Effects of convertible subordinated loans
3,711
1
222 3,013
3,711 -1,246
1
Fund for internally developed software
Total 116,642
-1,535 5,081
3,621
1,509
3,109
86,435
106,973
* Included in fair value fund.
During the January–June 2017 period, convertibles for a nominal value of SEK 1m (1,951) relating to subordinated convertible bonds were converted into 22,151 class A shares (28,800,955). At the end of the period, the number of Handelsbanken shares in the trading book was 0 (0).
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Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
CASH FLOW STATEMENT, CONDENSED – PARENT COMPANY SEK m
Jan-Jun 2017
Jan-Jun 2016
Full year 2016
Operating profit
4,628
8,770
25,296
Adjustment for non-cash items in profit/loss
1,465
-1,554
-12,351
Paid income tax
-2,477
-3,132
-5,281
Changes in the assets and liabilities of operating activities
246,605
290,041
-11,861
Cash flow from operating activities
250,221
294,125
-4,197
Acquisition / divestment of subsidiaries Change in shares Change in interest-bearing securities Change in property and equipment Change in intangible assets
-
-
-408
-843
950
5,437
-
1,000
1,000
-363
-149
-2,257
-319
-204
-598
-1,525
1,597
3,174
Repayment of subordinated loans
-
1,951
-2,512
Issued subordinated loans
-
-
-
Dividend paid
-9,721
-11,442
-11,442
Received group contributions
12,220
10,971
10,971
2,499
1,480
-2,983
Cash flow from investing activities
Cash flow from financing activities Liquid funds at beginning of the year
199,362
202,630
202,630
Cash flow for the period
251,195
297,202
-4,006
Exchange rate difference on liquid funds
-13,709
1,864
738
Liquid funds at end of year
436,848
501,696
199,362
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Handelsbanken
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Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
OWN FUNDS AND CAPITAL REQUIREMENT – PARENT COMPANY
Own funds and capital ratios – Parent company 30 Jun 2017
31 Mar 2017
31 Dec 2016
Common equity tier 1 capital
101,639
101,698
102,883
96,742
95,408
Total tier 1 capital
113,650
114,296
115,651
108,898
107,453
SEK m
Total tier 2 capital
30 Sep 2016
30 Jun 2016
16,302
16,164
16,225
16,263
16,006
129,952
130,460
131,876
125,161
123,459
Common equity tier 1 ratio, CRR
21.8%
22.3%
23.4%
21.8%
20.8%
Tier 1 ratio, CRR
24.4%
25.0%
26.3%
24.5%
23.5%
Total capital ratio, CRR
27.9%
28.5%
30.0%
28.2%
27.0%
Total own funds Capital ratios and buffers
Risk exposure amount, CRR
466,443
456,975
439,657
444,468
457,600
Own funds in relation to capital requirement according to transitional rules
255%
258%
260%
244%
241%
Institution-specific buffer requirements
3.7%
3.6%
3.4%
3.4%
3.4%
of which capital conservation buffer requirement
2.5%
2.5%
2.5%
2.5%
2.5%
of which countercyclical capital buffer requirement
1.2%
1.1%
0.9%
0.9%
0.9%
-
-
-
-
-
17.3%
17.8%
18.9%
17.3%
16.3%
SEK m
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
Credit risk according to standardised approach
11,367
11,136
11,258
11,390
11,190
Credit risk according to IRB Approach
21,317
20,466
19,043
19,295
20,657
Market risk
800
936
873
817
711
Credit valuation adjustment risk (CVA)
438
627
594
650
645
3,393
3,393
3,405
3,405
3,405
Total capital requirement
37,315
36,558
35,173
35,557
36,608
Adjustment according to Basel I floor
14,421
14,686
16,010
16,137
15,147
Capital requirement, Basel I floor
51,736
51,244
51,183
51,694
51,755
131,739
132,262
133,016
126,315
124,606
of which systemic risk buffer requirement Common equity tier 1 capital available for use as a buffer
Capital requirement – Parent company
Operational risk
Total own funds, Basel I floor
Capital requirement credit risks, standardised approach * – Parent company SEK m
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016 5
Sovereign and central banks
0
14
6
4
Municipalities
0
2
2
3
1
Multilateral development banks
0
0
0
0
0
0
0
0
0
0
Institutions
International organisations
65
61
64
65
58
Corporates
903
771
783
917
818
Households
995
992
1,011
957
938
2,808
2,762
2,665
2,574
2,487
27
26
21
19
19
6,115
6,111
6,111
6,354
6,372
Collateral in real estate Past due items Equities Other items Total
455
397
595
497
492
11,367
11,136
11,258
11,390
11,190
* Information about capital requirements for the exposure classes where there are exposures.
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Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Capital requirement credit risks IRB – Parent company SEK m Sovereign and central banks
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016 15,314
587
Corporates
16,429
15,875
14,512
15,107
Households
2,050
2,261
2,265
2,343
2,335
1,575
1,779
1,788
1,847
1,831
of which property loans
845
821
812
836
830
of which other loans
730
958
976
1,011
1,001
Private individuals
475
482
477
496
504
Institutions
Small companies
1,121
1,443
1,392
1,301
1,381
Equity exposures
1,038
794
780
456
1,541
of which listed shares
-
-
-
-
949
of which other shares
1,038
794
780
456
593
90
91
92
88
86
2
2
2
0
0
21,317
20,466
19,043
19,295
20,657
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
793
928
864
810
703
784
917
855
801
694
Non credit-obligation assets Securitisation positions Total IRB
Capital requirement market risks – Parent company SEK m Position risk in the trading book Interest rate risk
-
-
-
-
0
Equity price risk
of which positions in securitisation instruments
9
11
9
9
9
Exchange rate risk
-
-
-
-
-
Commodities risk
7
8
9
7
8
Settlement risk Total capital requirement for market risks
0
-
0
0
0
800
936
873
817
711
30 Jun 2017
31 Mar 2017
31 Dec 2016
30 Sep 2016
30 Jun 2016
Leverage ratio – Parent company SEK m
2,241,612
2,164,668
1,894,704
2,177,365
2,294,735
Adjustment for differences between carrying amount and leverage ratio exposure - derivatives
Balance sheet according to accounting regulations
-23,522
-24,891
-12,825
-18,977
-16,621
Adjustment for differences between carrying amount and leverage ratio exposure - repos and securities loans
3,342
3,856
4,440
5,447
8,471
541,924
530,052
539,468
539,151
531,167
-352,673
-345,307
-348,431
-347,254
-343,000
189,251
184,745
191,037
191,897
188,167
-619,930 1,790,753
-574,506 1,753,872
-572,136 1,505,220
-563,981 1,791,751
-8,361 2,466,391
113,650
114,296
115,651
108,898
107,453
6.3%
6.5%
7.7%
6.1%
4.4%
Assets reported off the balance sheet, gross (before adjustment for conversion factor) Deduction from assets off the balance sheet after application of conversion factor Assets reported off the balance sheet, net Additional adjustment Assets on which the leverage ratio is calculated Capital on which the leverage ratio can be calculated Tier 1 capital Leverage ratio Leverage ratio calculated on tier 1 capital
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Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
We hereby declare that this half-yearly report provides a true and fair view of the Bank’s and the Group’s operations, financial position and performance and describes material risks and uncertainty factors faced by the Bank and the companies that are part of the Group. Stockholm, 18 July 2017
Pär Boman Chairman of the Board
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Fredrik Lundberg Vice Chairman
Karin Apelman Board Member
Jon Fredrik Baksaas Board Member
Kerstin Hessius Board Member
Jan-Erik Höög Board Member
Ole Johansson Board Member
Lise Kaae Board Member
Benthe Rathe Board Member
Charlotte Skog Board Member
Anders Bouvin Group Chief Executive
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Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017
INTERIM REPORT JANUARY – JUNE 2017
PRESS AND TELEPHONE CONFERENCE
A press and analyst conference is being arranged at the Bank’s head office at 9 a.m. (CET) on 18 July. A phone conference will be held at 10:30 a.m. (CET) on 18 July. Press releases, presentations, the Fact Book and a recording of the telephone conference will be available at handelsbanken.se/ireng. The interim report for January–September 2017 will be published on 18 October 2017.
For further information, please contact: Anders Bouvin, President and Group Chief Executive Tel: +46 (0)8 22 92 20 Rolf Marquardt, CFO Tel: +46 (0)8 22 92 20 Mikael Hallåker, Head of Investor Relations Tel: +46 (0)8 701 29 95,
[email protected]
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Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Auditors’ review report To the Board of Svenska Handelsbanken AB (publ), corporate identity number 502007-7862 INTRODUCTION
We have reviewed the interim report for Svenska Handelsbanken AB (publ) as at 30 June 2017 and for the six-month period then ended. The Board of Directors and the Chief Executive are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act for Credit Institutions and Securities Companies. Our responsibility is to express a conclusion on this interim report based on our review. SCOPE OF THE REVIEW
We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope
Ernst & Young AB Jesper Nilsson, Authorised Public Accountant
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than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. CONCLUSION
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act for Credit Institutions and Securities Companies regarding the Group, and in accordance with the Swedish Annual Accounts Act for Credit Institutions and Securities Companies regarding the parent company.
Stockholm, 18 July 2017
PricewaterhouseCoopers AB Johan Rippe, Authorised Public Accountant
Handelsbanken Handelsbanken
INTERIM REPORT JANUARY – JUNE 2017 INTERIM REPORT JANUARY – JUNE 2017
Share price performance and other information The Swedish stock market grew by 6% during the first six months of the year. The Stockholm stock exchange’s bank index rose by 1%. Handelsbanken’s class A shares closed at SEK 120.60, a decline of 5%, but including the dividend paid amounting to SEK 5.00, the total return was -1%. Since 1 January 2000, Handelsbanken’s share price has increased by 238%, excluding dividends, while the Stockholm stock exchange has risen by 34%. SHARE PRICE PERFORMANCE SINCE 31 DEC 1999 Index 100 = 31 December1999 450 400 350 300 250 200 150 100 50
SHB A
OMX Stockhom Banks
Dec-16
Dec-15
Dec-14
Dec-13
Dec-12
Dec-11
Dec-10
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
Dec-02
Dec-01
Dec-00
Dec-99
0
OMX Stockholm 30 Index
ANALYSTS WHO MONITOR THE BANK Company
Analyst
Email address
ABG SUNDAL COLLIER
Magnus Andersson
[email protected]
ARCTIC SECURITIES
Roy Tilley
[email protected]
AUTONOMOUS
Jacob Kruse
[email protected]
BARCLAYS
Paulina Sokolova
[email protected]
BERENBERG BANK
Adam Barrass
[email protected]
CARNEGIE
Jens Hallen
[email protected]
CITIGROUP
Ronit Ghose
[email protected]
CREDIT SUISSE
Jan Wolter
[email protected]
DANSKE BANK
Matti Ahokas
[email protected]
DEUTSCHE BANK
Benjamin Goy
[email protected]
DNB
Nicholas McBeath
[email protected]
EVLI
Jaakko Tyrväinen
[email protected]
EXANE BNP PARIBAS
Andreas Håkansson
[email protected]
BANK OF AMERICA MERRILL LYNCH
GOLDMAN SACHS
Willis Palermo
[email protected]
JEFFERIES INTERNATIONAL
Kapilan Pillai
[email protected]
J P MORGAN
Vivek Gautam
[email protected]
KEEFE, BRUYETTE & WOODS
Karl Morris
[email protected]
MACQUARIE SECURITIES
Edward Firth
[email protected]
MEDIOBANCA
Riccardo Rovere
[email protected]
MORGAN STANLEY
Alice Timperley
[email protected]
NORDEA
Maths Liljedahl
[email protected]
PARETO
Robin Rane
[email protected]
REDBURN
Amal Shah
[email protected]
ROYAL BANK OF CANADA
Adrian Cighi
[email protected]
SEB ENSKILDA EQUITIES
Peter Kessiakoff
[email protected]
SOCIETE GENERALE
Geoff Dawes
[email protected]
SPAREBANK 1 MARKETS
Odd Weidel
[email protected]
SWEDBANK
Bengt Kirkøen
[email protected]
UBS
Anton Kryachok
[email protected]
Svenska Handelsbanken AB (publ), Corporate identity no. 502007-7862 SE-106 70 Stockholm, Sweden, Telephone: +46 (0)8-701 10 00, handelsbanken.com
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Handelsbanken Handelsbanken
handelsbanken.com | +46 (0)8 701 10 00 | SE-106 70 Stockholm, Sweden