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Svenska Handelsbanken AB Class A SHB A

Rating as of

Morningstar’s Analysis

Valuation
Currency in SEK
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Good Third Quarter for Handelsbanken as It Plans to Divest Denmark and Finland Operations

Niklas Kammer, CFA Equity Analyst

Analyst Note

| Niklas Kammer, CFA |

Narrow-moat Handelsbanken reported a good third quarter with operating profit of SEK 6.6 billion, up 4% on a sequential basis. On an underlying basis, total income increased 2%, driven primarily by a continued strong performance of its mutual funds, asset management, and insurance business. Net interested income remained stable, however, as 1% volume growth quarter-over-quarter was offset by weaker margins and foreign exchange effects. Handelsbanken continues to see a strong growth in mortgage volumes, with a market share of 17% year to date. Operating expenses declined 3% while loan loss provisions remained low at just SEK 66 million. Updating our model slightly for the strong fee and commission income and considering the time value of money since our last update, we lift our fair value estimate to SEK 112 per share from SEK 108 share.

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Company Profile

Business Description

Handelsbanken is one of the largest Swedish banks with significant exposure to the Swedish mortgage market, about 44% of total loans are tied to the Swedish real estate market. Outside of Sweden, the bank operates primarily in the U.K., Denmark, Finland, and the Netherlands. Handelsbanken generates about three quarters of its income through its interest spread based business including mortgages, household loans, as well as corporate loans to large and small enterprises. The bank increasingly offers asset management, mutual fund and private banking services to its clients.

Contact
Kungstradgardsgatan 2
Stockholm, SE-106 70, Sweden
T +46 87011000
Sector Financial Services
Industry Banks - Diversified
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type
Employees 12,322

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