Svenska Handelsbanken Earnings: A Decent Period and Negligible Loan Losses Again

Handelsbanken reported fourth-quarter operating profits of SEK 9.06 billion, down 7% sequentially. The decline was driven primarily by higher development expenses of which Handelsbanken tends to book a greater share toward the end of each year. Excluding this seasonally higher charge, performance was good. Net interest income increased 1% to SEK 12.22 billion excluding a better-than-expected state deposit guarantee scheme fee, supported by higher margins on interest rates. Net fee and commission income was flat. Loan losses of SEK 52 million were again low. Although we view Handelsbanken as one of the best run banks in Europe, with one of the lowest risk profiles, we are surprised how little of its loans Handelsbanken has to write off each quarter.