Handelsbanken's Q2 Shows Mixed but Decent Underlying Performance; Loan Losses Low Again

Narrow-moat Handelsbanken reported operating profits SEK 5,246 million for its second quarter, down 20% versus last quarter. However, cleaned for a SEK 1,059 million one-off sales gain during the first quarter, operating profit only declined about 5%. Net losses on financial transactions of SEK 147 million versus a gain of SEK 240 million last quarter further weighed on an otherwise decent but mixed underlying performance. We have marginally increased our fair value estimate to SEK 115 per share from SEK 112 after refreshing our model as we did not see a cause to materially change our assumptions after this earnings release. The primary driver of the slight increase in fair value estimate was the time value of money since our last model update.