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1. Company Snapshot

1.a. Company Description

Svenska Handelsbanken AB (publ) provides various banking products and services for private and corporate customers primarily in Sweden, the United Kingdom, Norway, the Netherlands, the United States, Luxembourg, China, Germany, France, and Poland.The company offers savings, transactions, business, currency, and investment accounts, as well as accounts for cash pool, and forestry and agriculture; mortgage and committed loans, and private loans; mutual funds; pension products; credit and debit cards; and payment and reconciliation services.It also provides financing for investments, such as equipment, cars, computers, and other inventories, as well as vehicle and real estate financing services; green loans and advisor services; investment and other financing services; medical care, group and health, and travel insurance products; forestry and farming banking products; and online and mobile banking services.


In addition, the company offers transaction, trade finance, cash management, risk management, and foreign exchange services, as well as various banking services for children and young people.It operates approximately 214 branches in Sweden, 196 in the Great Britain, 41 in Norway, 42 in Denmark, 27 in Finland, and 28 in the Netherlands.Svenska Handelsbanken AB (publ) was incorporated in 1871 and is headquartered in Stockholm, Sweden.

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1.b. Last Insights on SHB

Svenska Handelsbanken's recent performance was negatively impacted by a decline in income, which failed to be offset by lower costs, leading to a net profit miss in Q2. The bank's income generation capabilities have been hindered, weighing on its profitability. Furthermore, the bank's involvement in Sobi's class C shares issue, conditional upon subscription and payment, may have diverted resources and attention away from its core operations.

1.c. Company Highlights

2. Handelsbanken Delivers Resilient Q2 Performance Amidst Macro Challenges

Handelsbanken reported a solid Q2 2025 with an operating profit of SEK 7.2 billion, maintaining a robust return on equity (ROE) of 13%. Despite a 6% decline in net interest income (NII) to SEK 10.7 billion, driven by central bank rate cuts and a strong Swedish krona, the bank demonstrated resilience through disciplined cost management and a strong capital position. Fee and commission income dipped 1% to SEK 2.9 billion, reflecting lower market values in asset management, while customer-driven non-financial transactions (NFT) in home markets and the Markets division grew 10% to SEK 504 million. Notably, the bank reported a reversal of SEK 219 million in net credit losses, marking the sixth consecutive quarter of positive results. On the valuation front, the stock currently trades at a price-to-tangible book value (P/TBV) of 1.32, slightly above its historical average, while the dividend yield of 6.58% remains attractive for income-focused investors.

Publication Date: Jul -16

📋 Highlights
  • Operating Profit and ROE: Handelsbanken reported an operating profit of SEK 7.2 billion in Q2 2025, with a return on equity (ROE) of 13%, unchanged from the previous quarter.
  • Net Interest Income (NII) Decline: NII dropped 6% to SEK 10.7 billion due to central bank rate cuts and a strong Swedish krona.
  • Fee and Commission Income: Fee and commission income fell 1% to SEK 2.9 billion, primarily due to lower market values in asset management.
  • Customer-Driven Non-Financial Transactions: NFT rose 10% to SEK 504 million, though overall NFT was negatively impacted by temporary valuation effects and divestment of Ecster Finland's credit card portfolios, resulting in a loss of SEK 64 million.
  • Capital Position and Dividend: The bank maintained a robust capital position with a CET1 ratio of 18.4%, and announced a dividend of SEK 7.15 per share, representing 120% of earnings.

Revenue Performance and Margin Trends

Net interest income (NII) declined 6% year-on-year to SEK 10.7 billion, impacted by central bank rate cuts and a strong Swedish krona. Fee and commission income also fell 1% to SEK 2.9 billion, primarily due to lower market values in asset management. However, customer-driven non-financial transactions (NFT) in home markets and the Markets division rose 10% to SEK 504 million, showcasing the bank's ability to generate non-interest income. The net interest margin (NIM) compressed slightly to 1.38%, reflecting the challenging interest rate environment. As Carl Cederschiöld noted during the call, "We are focused on balancing our income sources and improving our fee business to mitigate margin pressures." This strategy appears to be bearing fruit, with the bank maintaining a stable cost-to-income ratio of 44%.

Operational Efficiency and Capital Strength

Handelsbanken's operational efficiency remains a standout feature, with expenses down 2% from Q1 when adjusted for FX effects. The cost-to-income ratio of 44% underscores the bank's disciplined approach to cost management. The capital position is robust, with a CET1 ratio of 18.4%, 50 basis points above the target range. This strong capital position has enabled the bank to maintain its dividend payout, with SEK 7.15 per share representing 120% of earnings. As Peter Grabe highlighted, "Our capital allocation reflects our confidence in the bank's long-term profitability and stability."

Geographic Performance and Strategic Outlook

The bank's home markets in Sweden and Norway delivered strong performances, with Sweden achieving a 16% ROE and Norway improving its cost-to-income ratio to 42%. However, the UK and Netherlands faced margin pressures, with the latter experiencing deteriorated profitability. Management emphasized its focus on cost control and customer-centric strategies to drive future growth. The bank's liquidity buffer of approximately SEK 900 billion, representing 25% of the balance sheet, further underscores its financial stability. With a dividend yield of 6.58% and a ROE of 13.76%, Handelsbanken continues to offer an attractive risk-reward profile for investors seeking both income and capital preservation.

3. NewsRoom

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Svenska Handelsbanken (OM:SHB A): Exploring Valuation After a Year of Steady Share Price Growth

Nov -12

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How Analysts See the Story Changing for Svenska Handelsbanken After Recent Developments

Nov -11

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HLPartnership expands lender panel with Handelsbanken addition

Nov -11

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Q&A with Mattias Bergkvist, CEO of Aixia Group | OTC Nordic Investor Day 2025

Nov -04

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Handelsbanken net profit exceeds estimates amid loan loss reversals

Oct -22

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Handelsbanken (OM:SHB A): Exploring Valuation After a Year of Strong Returns

Sep -09

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The Board Systemair resolves on share buyback

Sep -02

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Sobi has completed issues of class C shares

Aug -21

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.56%)

6. Segments

Home Markets - Sweden

Expected Growth: 5.5%

Svenska Handelsbanken AB's home market operations in Sweden are expected to grow driven by increasing household income, low unemployment rates and a strong housing market, as well as the bank's strong brand and well-established market position.

Home Markets - UK

Expected Growth: 5.2%

Svenska Handelsbanken AB's UK home markets operations will benefit from the country's economic growth, driven by increasing consumer spending and a robust labour market. The bank's strong brand and extensive branch network will enable it to capitalise on these trends, driving growth in its mortgage and deposit businesses.

Home Markets - Norway

Expected Growth: 6.1%

Strong fundamentals in Norway, supported by Handelsbanken's solid market position, contribute to the growth, driven by increasing lending and deposit volumes.

Home Markets - The Netherlands

Expected Growth: 5.5%

Svenska Handelsbanken's corporate banking services in the Netherlands will grow driven by increasing demand for cash management and trade finance solutions from large corporates, as well as the bank's strong relationships with local businesses.

Capital Markets

Expected Growth: 7.1%

Svenska Handelsbanken AB's capital markets segment growth is driven by increasing demand for corporate finance and asset management services, as well as the bank's strong brand reputation and growing presence in the Nordic region.

Other

Expected Growth: 6.4%

Svenska Handelsbanken AB's miscellaneous segment is expected to grow driven by increasing demand for digital payment solutions, rising e-commerce activities, and expanding presence in the Nordic region.

7. Detailed Products

Corporate Banking

Svenska Handelsbanken AB (publ) offers a range of corporate banking services, including cash management, trade finance, and lending solutions, to large corporations and institutions.

Transaction Banking

Handelsbanken provides transaction banking services, including payment and account services, to corporate clients, enabling efficient and secure financial transactions.

Markets

Handelsbanken offers a range of markets services, including foreign exchange, interest rates, and commodities, to corporate and institutional clients.

Asset Management

Handelsbanken provides asset management services, including investment management and wealth management, to institutional and individual clients.

Private Banking

Handelsbanken offers private banking services, including wealth management and investment advice, to high net worth individuals and families.

Retail Banking

Handelsbanken provides retail banking services, including personal loans, credit cards, and savings accounts, to individual customers.

8. Svenska Handelsbanken AB (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Svenska Handelsbanken AB (publ) is moderate due to the presence of alternative banking services and digital payment platforms.

Bargaining Power Of Customers

The bargaining power of customers is low due to the bank's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the bank's dependence on technology providers and other third-party vendors.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the banking industry, including regulatory requirements and capital requirements.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the banking industry, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 92.17%
Debt Cost 6.93%
Equity Weight 7.83%
Equity Cost 6.93%
WACC 6.93%
Leverage 1177.29%

11. Quality Control: Svenska Handelsbanken AB (publ) passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
HSBC

A-Score: 8.0/10

Value: 7.7

Growth: 7.3

Quality: 6.3

Yield: 8.8

Momentum: 9.5

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
ING

A-Score: 7.2/10

Value: 6.4

Growth: 5.7

Quality: 5.0

Yield: 9.4

Momentum: 8.5

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Barclays

A-Score: 7.1/10

Value: 9.0

Growth: 7.2

Quality: 5.8

Yield: 5.0

Momentum: 9.5

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
Handelsbanken

A-Score: 6.7/10

Value: 5.5

Growth: 3.8

Quality: 5.4

Yield: 9.4

Momentum: 8.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Standard Chartered

A-Score: 6.3/10

Value: 7.9

Growth: 5.7

Quality: 5.0

Yield: 3.8

Momentum: 10.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
UBS

A-Score: 5.2/10

Value: 4.2

Growth: 4.0

Quality: 3.9

Yield: 5.6

Momentum: 7.0

Volatility: 6.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

132.2$

Current Price

132.2$

Potential

-0.00%

Expected Cash-Flows