SVNLF - Svenska Handelsbanken AB (SVNLF) Q4 2023 Earnings Call Transcript

2024-02-07 16:07:10 ET

Svenska Handelsbanken AB (SVNLF)

Q4 2023 Results Conference Call

February 07, 2024 3:00 AM ET

Company Participants

Peter Grabe - Head, IR

Michael Green - CEO

Carl Cederschiöld - CFO

Conference Call Participants

Magnus Andersson - ABG SC

Nicolas McBeath - DNB

Andreas Hakansson - SEB

Sofie Peterzens - JPMorgan

Namita Samtani - Barclays

Rickard Henze - Nordea

Johan Ekblom - UBS

Riccardo Rovere - Mediobanca

Markus Sandgren - Kepler Cheuvreux

Andrew Coombs - Citi

Jacob Kruse - Autonomous

Presentation

Operator

Welcome. For those of you who want to follow the presentation simultaneously translated into English, please choose English in the top right menu. [Foreign Language]

Unidentified Company Representative

Presentation of Handelsbanken's result for the full year and for Q4 2023. We put behind us a tumultuous year with escalating geopolitical instability, raising interest rates, and also runway inflation and the business cycle in decline. I find that the year for Handelsbanken 2023 can be described as stable. ROE was up to close to 16%, driven of an underlying growth of 37%, income outperformed expenses and contributed to our C/I ratio.

As expected, our customers show good resilience in spite of an environment with higher interest rates and the credit quality remains to be strong with credit losses amounting to only 0.01%. The capital position of the bank is very solid with a CET1 ratio of 18.8 percentage points, which is 1 percentage point above the target ratio of the bank under normal circumstances, that is 1.3 percentage points above regulatory requirements.

The robust financial position makes it possible for the Board to propose a total dividend of SEK 13 per share, 50% of that, SEK 6.5 per share, is an extraordinary dividend. Over the year 2023, we've offered our customer -- strengthened our customer offering in physical digital channels we have in our local branches, expanded our competencies, capacities, and mandate. And at the same time, we're improving our app and the web. The customer satisfaction we see in the ratings that we have, and it has gone up even further according to independent external service. Not the least, the bank's robust business model, credit quality, and financial position is reflected in the ranking as being one of the most stable banks according to leading rating agencies. So the bank has a position of strength.

Looking at results for the full year 2023, we can find that ROE was up to just under 16%. Total income was up with 24%, mainly due to the high interest rate situation, which has led to return on equity and liquidity reserves going up as the Swedish Riksbank increased its interest rates in spite of lower margins for mortgages. Expenses underlying 8%, and that is explained with development capacity is increasing and, well, since end of 2022, it's been stable. We've also increased our resources within AML and cyber risk. And of course, 2023 has been a year with a generally high inflation and increased costs in all our home markets. C/I ratio was down to 37.2%, credit losses low, SEK 141 million, and that corresponds to a credit loss ratio of 0.01. All in all, we had operating profit up with 37% to some SEK 36 billion, which is the highest ever for the bank.

Continuing with the Q4 2023, the profit was down somewhat compared to Q3. This is due to seasonal higher costs, ROE 15.2%, NII 2%, adjusted for FX, net fee commission income stayed more or less the same. Total income adjusted for FX was down with 1%. And compared to the previous quarter, we have to remember that NFT was unusually strong. Expenses were up 7% due to seasonal variations and the C/I ratio was up to 38%....

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