Unformatted text preview: Annual Report 2019 This is Handelsbanken
Handelsbanken was founded in 1871. The Bank has a nationwide branch network
in Sweden, the UK, Norway, Denmark, Finland and the Netherlands. We have
a decentralised way of working with a strong local presence and a long-term
approach to our customer relations. Our goal is to have better profitability than
the average of peer competitors in our home markets. We mainly achieve this
goal by having more satisfied customers and lower costs. Handelsbanken
was founded in 1871 More satisfied
than the sector average in
all six of our home markets.* Over 750 branches in our
six home markets.
SATISFIED CUSTOMERS IN ALL
SIX HOME MARKETS
Every year, EPSI Rating – which includes SKI
(Swedish Quality Index) – carries out independent surveys of customer satisfaction. This year’s
surveys showed that Handelsbanken has more
satisﬁed private and corporate customers than
the average for the banking sector in all six of the
Bank’s home markets.
In addition, the survey shows that Handelsbanken’s customers are signiﬁcantly more loyal
than the customers of other competitors, and
that they give the Bank’s digital services high
marks. The fact that digital customer meetings
are perceived positively is important for fostering
long-term, strong customer relationships, and
contributes to reinforcing the Bank’s strong
position in terms of customer satisfaction.
In Sweden, Handelsbanken has had the most
satisﬁed private customers for 30 years running,
according to SKI.* HANDELSBANKEN’S CREDIT RATING
IS TOP OF GLOBAL BANKS
No other bank in the world has a higher rating
than Handelsbanken in terms of bank ratings from
Fitch, Moody’s and Standard & Poor’s.
The Bank’s newly formed UK subsidiary,
Handelsbanken Plc, has been assigned the same
high rating as Handelsbanken by Fitch and
Standard & Poor’s.
CONTINUED ORGANIC GROWTH
Satisﬁed customers result in more business.
Which is why Handelsbanken is a growing bank.
In total, the average volume of loans to the public
increased by 5 per cent, while the average volume
of deposits from the public increased by 6 per
cent. Business volumes increased during the year
in all six home markets: in the UK, lending grew by
5 per cent and deposits grew by 10 per cent; in
Norway, the corresponding increases were 5 and
8 per cent, respectively; and in Denmark, 3 and * According to EPSI Rating/SKI (Swedish Quality Index). Since SKI surveys started in 1989, Handelsbanken has had the most
satisﬁed private customers among the four major Swedish banks – Handelsbanken, Nordea, SEB and Swedbank. 5 per cent, respectively. In Finland, lending rose by
4 per cent while deposits grew by 5 per cent, and
in the Netherlands, the average volume of lending
increased by 14 per cent while the average volume
of deposits was up by 18 per cent. But it is not just
in our home markets outside Sweden that Handelsbanken is growing.
In Sweden, where Handelsbanken was founded
in 1871, 2019 was another year marked by growth
and large inﬂows of new business volumes – in
terms of both savings and lending. For the third
consecutive year, Handelsbanken was the largest
player for new savings on the mutual fund market
in Sweden. New savings in the Bank’s mutual funds
in Sweden amounted to SEK 27 billion, equivalent
to a market share of just over 21 per cent, to be
viewed in the light of the Bank’s share of the total
managed volume in the Swedish mutual fund market, of 11.2 per cent. At the same time, Handelsbanken’s market share of household deposits in
Sweden increased. Highlights of the year
Operating profit fell by 1 per cent to
SEK 21,796 million (22,013). Adjusted for
foreign exchange effects, non-recurring
items and special items, operating profit
grew by SEK 55 million.
Return on equity decreased to
11.9 per cent (12.8).
The period’s profit after tax declined by
2 per cent to SEK 16,925 million (17,357).
Earnings per share decreased to
SEK 8.65 (8.93).
Income grew by 2 per cent to SEK 44,564
million (43,770). Adjusted for foreign
exchange effects and non-recurring
items, income increased by 3 per cent.
Net interest income rose by 3 per cent
to SEK 32,135 million (31,286). Net fee and commission income rose by
4 per cent to SEK 10,697 million (10,247).
Expenses rose by 4 per cent to SEK
-21,743 million (-20,890). Adjusted for
foreign exchange effects, non-recurring
items and special items, expenses grew
by 5 per cent.
The C/I ratio rose to 48.8 per cent (47.7).
Adjusted for foreign exchange effects,
non-recurring items and special items,
the C/I ratio was 48.3% (47.3).
The credit loss ratio was 0.04 per cent
The common equity tier 1 ratio
increased to 18.5 per cent (16.8).
The Board proposes a dividend of
SEK 5.50 per share (5.50), and that the
existing mandate to repurchase shares
is extended for a further year. Average growth in equity
2007–2019* Total return since the start of the financial crisis
30 June 2007–31 December 2019 SEK
250 175 200 150 150 125 100 100 Bank of Ireland Unicredit Commerzbank Deutsche Euro STOXX Banks UBS Credit Suisse Lloyds Barclays Soc Gen ING BBVA Santander Erste Danske BNP KBC Natixis SEB Swedbank HSBC Nordea DNB Q4 2019 Q4 2018 Q4 2017 Q4 2016 Q4 2015 * Including dividends. Credit Agricole Adjusted equity per share
Accumulated dividends since 2008 Q4 2014 Q4 2013 Q4 2012 Q4 2011 Q4 2010 -100 Q4 2009 0 Q4 2008 0
Q4 2007 50
25 Handelsbanken 50 75 Source: SNL, as at 31 December 2019 (dividends reinvested). H AN DELSBAN KEN | AN N U AL REPORT 2019 1 Brief information
Handelsbanken’s Annual General Meeting 2020
Location: Grand Hôtel, Winter Garden, Stallgatan 4, Stockholm.
Time: Wednesday, 25 March 2020 at 9:30 a.m.
Notice of attendance
Shareholders wishing to attend the AGM must be entered in the register of shareholders kept by
Euroclear Sweden AB, by Thursday, 19 March 2020 at the latest. Notice of attendance is to be made
to handelsbanken.com/en/about-the-group/annual-general-meeting, telephone +46 8 701 19 84 or
to Handelsbanken Group Governance, SE-106 70 Stockholm, Sweden, by Thursday, 19 March 2020
at the latest.
To be entitled to take part in the meeting, shareholders whose shares are nominee-registered must
also request a temporary entry in the register of shareholders kept by Euroclear. Shareholder must
inform the nominee of this well before Thursday, 19 March 2020, by which date this entry must have
The Board proposes that the record day for the dividend be Friday, 27 March 2020, which means that
Handelsbanken’s shares will be traded ex-dividend on Thursday, 26 March 2020. If the meeting resolves
in accordance with the proposal, Euroclear expects to distribute the dividend on Wednesday, 1 April 2020. Financial calendar 2020
21 October Highlights of Handelsbanken’s Annual Report 2019
Annual General Meeting
Interim report January – March 2020
Interim report January – June 2020
Interim report January – September 2020 Financial information
The following reports can be downloaded or ordered from handelsbanken.com/ir:
• annual reports
• interim reports
• risk and capital management reports
• corporate governance reports
• fact books
• sustainability reports. Distribution
The Annual Report can be ordered from Investor Relations, phone +46 (0)8 701 10 00 or at
handelsbanken.com/ir. Handelsbanken’s Sustainability Report 2019
In addition to Handelsbanken’s Annual Report 2019, Handelsbanken also publishes a separate Sustainability Report. The Sustainability Report is a separate publication covering activities and results in 2019.
The report is prepared in accordance with the ‘Core’ level of the Global Reporting Initiative (GRI) Standards for sustainability reporting and has been examined by the Bank’s external auditors. Handelsbanken
reports the Group’s sustainability activities annually, and the Sustainability Report provides information
about the entire Group, unless otherwise stated.
The report constitutes Handelsbanken’s Communication on Progress for the
UN Global Compact.
Handelsbanken’s statutory sustainability reporting can be found on pages 43 to 61
of this Annual Report. A more detailed report on the Bank’s sustainability work and
associated results is provided in Handelsbanken’s separate Sustainability Report,
which is available from handelsbanken.com/en/sustainability. 2 H A N D E L S B A N K EN | ANNUAL R E PO RT 2 0 1 9 Contents
The Group Chief
Executive’s comments In a time of change 4 ADMINISTRATION REPORT
Contents 6 Concept and goal 7 Goal achievement 8 Our concept 10 Organisation and working
methods 12 FINANCIAL REPORTS
Contents 77 Income statement, Group 78 Statement of comprehensive
income, Group 79 Balance sheet, Group 80 Statement of changes in equity,
Group 81 Cash ﬂow statement, Group 83 Notes, Group 84 Enhanced focus – reﬁned offering 14
Review of operations Financial overview 2019 16 Review of operations 17 Five-year overview, Group 20 Key ﬁgures per year 22 Quarterly performance 23 Business segments 24 Handelsbanken Sweden ADMINISTRATION REPORT
PARENT COMPANY 189 FINANCIAL REPORTS
Contents 190 Income statement,
Parent company 191 26 Statement of comprehensive
income, Parent company 192 Handelsbanken UK 28 Balance sheet, Parent company 193 Handelsbanken Norway 30 Handelsbanken Denmark 32 Statement of changes in equity,
194 Handelsbanken Finland 34 Handelsbanken the Netherlands 36 Handelsbanken Capital Markets 38 The Handelsbanken share and
shareholders 40 Sustainability reporting Sustainability Report 2019 43 Corporate Governance
Report Corporate Governance Report
2019 63 Signatures of the Board and
the Group Chief Executive Corporate Governance structure 64 AUDITOR’S REPORT The Board 74 Auditor’s report 238 Executive management 76 Auditor’s report on
the sustainability reporting and
statutory Sustainability Report 241 Cash ﬂow statement,
Parent company 196 Five-year overview,
Parent company 197 Notes, Parent company 199 SIGNATURES OF THE BOARD
AND THE GROUP CHIEF
237 CONTACT DETAILS
Contents 243 Contact details 244 Branches and branch managers 246
Boards of subsidiaries 253 OTHER
Deﬁnitions and explanations 254 Svenska Handelsbanken AB (publ)
Corporate identity number: 502007-7862
Registered ofﬁce: Stockholm
handelsbanken.com This report is also available in Swedish. Every care has been taken in this
translation into English. In the event of discrepancies, the Swedish original
takes precedence over the English version. 3 THE GROUP CHIEF EXECUTIVE’S COMMENTS In a time of change
• Handelsbanken’s operating profit for 2019 was SEK 21,796 million, a one per cent decrease
compared to the previous year.
• The trend of significantly increasing costs, seen for a number of years, slowed down in 2019.
In 2018, expenses grew by 10 per cent, while in the past year the increase was only 4 per cent.
• In the summer of 2019, Handelsbanken started a major project to concentrate operations to
the Bank’s core business. This entails full focus on profitable products and services for the
Bank’s core customers.
• The change initially involves costs and in the past year, the profit was burdened with
a restructuring cost of SEK 930 million.
• In the long run, however, the change to a more focused, concentrated bank is expected
to lead to considerably improved potential for stable profits and growth.
• The Board proposes a dividend of SEK 5.50 per share (5.50). For me, the 2020s started with skiing on New Year’s Day, sparkling snow
on the slopes, in the middle of Sweden. But just one hour by car to the
south, the ground was bare. Here, not even snow guns could keep the
pistes open at the ski resorts. While a snowless winter is deﬁnitely not one
of humanity’s greatest problems, it’s a reminder of something that may
very well become that: global climate change.
If the 2010s was the decade when more and more people became
aware of the issue and started talking about it, I believe that the 2020s will
be when we actually take action. This absolutely necessary transition to
a society which is more sustainable in the long term will affect everything
and everybody, what we do and how we do it. And of course this also
applies to Handelsbanken.
Sometimes it’s easy to get lost in what’s happening at present. Here
at Handelsbanken, we have spent the past year working very hard to step
up the pace of our digitalisation. The main part of this is in new solutions
for customers, new services and interfaces. But there is also integration
with external systems and – particularly – new applications to speed up
internal processes, business and control systems. A lot is happening,
things are moving quickly, and over time there will be a major transition,
both internally and for our customers.
At the same time, I don’t believe that this transition is what we will
remember when looking back at the 2020s. Instead, I hope that the decade ahead will be marked much more by how all of us – our customers,
we employees of the Bank and the rest of the world’s population – change
from wastefulness and a short-term approach to more sustainable solutions for energy, water supply, transport solutions and more.
I‘m very much of an optimist, both in terms of the wider community and
Handelsbanken in particular. In fact, for our Bank, a long-term approach and
sustainability are not new. On the contrary, they are very natural parts of our
way of working. We have a simple, well-established idea of how to run our
bank, with lower costs and more satisﬁed customers than our competitors.
The foundation of this is our highly decentralised working method,
where each branch has a high degree of autonomy, with practically all
important business decisions being made locally. Since every branch
manager is responsible for their market and ﬁnancial results, this creates
commitment, good administrative order and good control of costs.
Decentralisation also leads to strong local commitment, and consequently
more satisﬁed customers. Our customers like meeting the person who 4 H A N D E L S B A N K E N | ANNUAL R E PO RT 2 0 1 9 makes the decision, someone who knows them well, knows their
business and knows the local market.
Over the years, this has proved to be a very effective way of running
a bank in terms of resources. The decisions don’t have to go through
time-consuming roundabout routes, and no more people than necessary
are involved, which makes the decisions just that little bit better. Because
of this, for a number of years, Handelsbanken has not only had more
satisﬁed customers than the sector average, but also lower credit losses,
particularly in times of ﬁnancial turbulence.
Our zero tolerance of credit losses is not only a question of avoiding
unnecessary costs. A personal tragedy often lies behind many credit
losses, with major consequences for the individual. Credit losses also
tie up large resources, both within and outside the Bank.
We started the 2010s in the aftermath of a global ﬁnancial crisis, with
great strain on the public economy. In Europe, not only banks, but also
a couple of countries were at risk of ﬁnancial collapse. Huge efforts were
required both by governments and central banks. One of extremely few
banks worldwide that didn’t need support, either from central banks or its
shareholders, was Handelsbanken.
This is why I think that our approach to granting credits, with a low risk
tolerance, is also an important component in our ambition to run a bank
that adopts a long-term approach to sustainability. This is also sustainability for us – that in bad times too, Handelsbanken will never be part of the
problem. It will be part of the solution.
For many years, we have therefore built up stable ﬁnances with signiﬁcant reserves that provide us with staying power over time, regardless
of the market situation. The major rating agencies, independent judges
of banks’ ﬁnancial endurance, also rank Handelsbanken as one of the
world’s strongest banks.
In other words, more satisﬁed customers, lower credit losses and
strong ﬁnances that are sustainable in the long term are the actual result
of an idea, consistently executed for almost half a century.
The idea that the independent local branch is the Bank, has sometimes been described as a bit old-fashioned – although strikingly often
by people who tend to have a somewhat old-fashioned view of what a
branch actually does. It doesn’t reﬂect the actual situation.
In fact, Handelsbanken’s branches are modern meeting places that
support – and also initiate – local business. In many ways, the branch of THE GROUP CHIEF EXECUTIVE’S COMMENTS today is very different from a branch in the early 2010s. In the years ahead,
this development will continue: stafﬁng, skills and work tasks will change
ever more rapidly. But with their unique knowledge of customers and the
local market, our branches will continue to build long-term, personal
customer relationships. I do not believe that personal meetings will ever
become a thing of the past.
But various products and services may.
We have previously aimed to be a universal bank, offering all conceivable
types of ﬁnancial solutions to our customers. This ambition has become
increasingly demanding of resources at a time when ﬁnancial services are
increasing in number and becoming more complex, while new regulations
are making even more extensive demands. An obvious consequence is
that trying to be best at everything is a sureﬁre path towards failing to excel
at anything. And just as important, let’s not forget that there has been
extremely little demand for some of our products and services.
So, in summer 2019, we decided to focus completely on the products
and services that our customers actually want, with solutions and markets
where we have good earnings and an acceptable level of risk, while closing down the parts with low demand, high risk or where we don’t have a
competitive offering. What remains is our core business, above all in lending and asset management, where we already have very high levels of
skills and demand.
And of course our idea of how to run our bank with a decentralised work
method remains. Our corporate goal is just as ﬁxed: to attain higher proﬁtability than the average of our competitors, with more satisﬁed customers
and lower costs. Handelsbanken remains Handelsbanken, but just that bit
more effective, and more focused on what we are really good at.
At the time we presented this, our costs were developing in a direction
that we weren’t happy with. So this focus on our core business could be
perceived as part of a savings programme. But it isn’t – even if all our key
ﬁgures had been perfect, we would have done the same.
It’s not difﬁcult to justify this: in addition to the conditions for long-term,
stable earnings, it also frees up resources, so that we can develop the
Bank even more quickly.
Not only can more resources be devoted to digitalisation, but we can
also concentrate our development efforts to a more streamlined selection
of products and services. This gives us more time and more focus for each
individual area, which will speed up the development of new solutions and boost the quality of existing ones. This applies particularly to adaptations
and improvements using new technical solutions to be developed in the
2020s – which include 5G and artiﬁcial intelligence.
But not only are we moving away from products and services with low
demand, high risk and poor earnings, we are also rejecting what we consider
is not sustainable in the long term for other reasons. One example is our
asset management, where in principle all Handelsbanken’s funds are
managed with what are known as enhanced exclusion criteria. This means
that the funds don’t invest in companies involved in, for example, arms
manufacture, cannabis, tobacco or fossil fuels.
Throughout the Bank we are also working to identify the environmental
consequences that our business operations might entail...
View Full Document
- Fall '16
- Handelsbanken, Svenska Handelsbanken AB