Svenska Handelsbanken Earnings: Raised Dividend and Progress on Staff Reductions Are Positives

We maintain our fair value estimate of SEK 137 per share for Handelsbanken after its release of fourth-quarter results. Further progress on staff reductions and loan loss reversals stood out positively in the quarter. Handelsbanken proposed a SEK 7.50 per share ordinary dividend and a SEK 7.50 per share special dividend. Given its capital position and our views of profitability going forward, we anticipate the special dividend to shrink over the coming years but not disappear altogether. We think an 80% payout ratio, including both ordinary and special dividends, is maintainable over the next five years. Our narrow economic moat rating is unchanged.