Svenska Handelsbanken

Transcription

Annual Report 2001
THE ANNUAL GENERAL MEETING
OF SVENSKA HANDELSBANKEN
will be held at the Grand Hôtel, Vinterträdgården, Royal
entrance, Stallgatan 4, Stockholm, at 10.00 a.m. on Tuesday,
23 April 2002.
NOTICE OF ATTENDANCE AT ANNUAL GENERAL MEETING
Shareholders wishing to attend the Meeting must:
• be entered in the Register of Shareholders kept by VPC AB
(Swedish Central Securities Depository and Clearing
Organisation), on or before Friday, 12 April 2002, and
• give notice of attendance to the Chairman's Office at the
Head Office of the Bank, Kungsträdgårdsgatan 2,
SE-106 70 Stockholm, telephone +46 8 701 19 84, or
via the Internet www.handelsbanken.se/bolagsstamma
(Swedish only), by 3 p.m. on Wednesday, 17 April 2002.
In order to be entitled to take part in the Meeting, any shareholders whose shares are nominee-registered must also request
a temporary entry in the register of shareholders kept by the
VPC. Shareholders must notify the nominee about this well
before 12 April 2002, when this entry must have been effected.
DIVIDEND
The Board of Directors recommends that the record day for
the dividend be Friday, 26 April 2002. If the Annual General
Meeting votes in accordance with this recommendation, the
VPC expects to be able to send the dividend to shareholders
on Thursday, 2 May 2002.
PUBLICATION DATES FOR INTERIM REPORTS
January–March
January–June
January–September
22 April 2002
20 August 2002
22 October 2002
Svenska Handelsbanken AB (publ)
Registered no. 502007-7862
www.handelsbanken.se
Contents
HIGHLIGHTS OF THE YEAR
2
THE GROUP CHIEF EXECUTIVE’S COMMENTS ...........
3
HANDELSBANKEN GROUP PERFORMANCE ................. 8
HANDELSBANKEN’S SHARES ............................................... 10
OBJECTIVES, POLICY AND ORGANISATION ............... 12
Objectives and principles ...................................................... 12
Policy and organisation .......................................................... 12
Environmental issues ............................................................... 14
Social responsibility .................................................................. 15
Ethical guidelines ...................................................................... 16
Our staff..................................................................... 17
2001 IN AN ECONOMIC PERSPECTIVE
19
REVIEW OF OPERATIONS ....................................................... 20
General ........................................................................................... 20
Result and profitability ............................................................. 20
Business volume trend............................................................ 21
Loan losses and bad debts .................................................. 23
Financial risk ................................................................................ 23
Capital ratio .................................................................................. 25
Acquisition of SPP and Midtbank....................................... 26
IT development ........................................................................... 26
DIRECTORS’ REPORT
27
27
31
33
35
37
39
42
43
44
44
45
48
49
ACCOUNTING PRINCIPLES
50
PROFIT AND LOSS ACCOUNTS
52
CASH FLOW STATEMENT
54
NOTES TO THE PROFIT AND LOSS ACCOUNT
55
NOTES TO THE BALANCE SHEET
61
FIVE-YEAR REVIEW
76
REVIEW OF BUSINESS AREAS
Branch office operations
Handelsbanken Markets
Handelsbanken Securities
Handelsbanken Asset Management
Handelsbanken Finans
Handelsbanken Pension and Insurance
Stadshypotek Bank
Handelsbanken Treasury
RISK AND RISK CONTROL
Credit risk
Financial risk
Operational risk
RECOMMENDATION FOR DISTRIBUTION
OF PROFITS
78
AUDIT REPORT
79
BRANCHES IN THE NORDIC COUNTRIES
80
REGIONAL HEAD OFFICES
IN THE NORDIC COUNTRIES
82
UNITS OUTSIDE THE NORDIC COUNTRIES
84
CENTRAL HEAD OFFICE
85
BOARD OF DIRECTORS
86
SENIOR MANAGEMENT
88
AUDITORS
88
ADDRESSES
Inside back cover
DEFINITIONS
Fold-out inside back cover
Highlights of the year
Highlights of the year
■ Profits for 2001 were SEK 11.2 billion
■ Return on shareholders’ equity was 18.4%.
■ The Board proposes that the dividend be raised to
SEK 4.50
■ Handelsbanken acquired the Danish bank Midtbank A/S
■ The Bank repurchased 5.4 million shares in 2001
■ The Bank sold 5.6 million shares in connection
with the acquisition of Midtbank
■ According to the Svenskt Kvalitetsindex survey,
Handelsbanken again had the greatest proportion of
satisfied customers in Sweden – both corporate and private
■ According to an equivalent survey in Denmark,
Handelsbanken/Midtbank had the highest proportion
of satisfied private customers
■ Over 50% of corporate customers and over 30% of private
customers were linked to the Bank’s Internet services
■ Handelsbanken had the highest share of the net flows
to the Swedish mutual fund market, excluding the
PPM pension system
■ Sixteen new units were started outside Sweden: eight in
Finland, two in Denmark, two in Norway, two in the UK,
one in Poland and one in Austria
■ Handelsbanken Liv was demutualised on 1 January 2002
■ Handelsbanken was acclaimed Bank of the Year by
Privata Affärer, a Swedish periodical for private finances
2
Annual Report 2001
The group chief executive’s comments
Something else which is very
expensive is organisational
muddle. If nobody is really
responsible, there are lots of
things that will be only almost
right, almost in time. Thus,
in order to be thrifty, you need
a strong accounting and control
system. The representation of
income and expenses reported
by such a system must be seen
as fair by everyone in the organisation. This in turn means
that the system must not be
open to manipulation by central units seeking a certain goal,
however desirable this goal
may be to many people in the
organisation. The reported
expenses and revenues must be
correct. It must also be quite
clear who is responsible. The
person who is responsible must
be able to compare his or her
performance, not with something unreal like a plan or a
Our view of efficiency
budget, but with something
tangible, such as the result
Some people claim that costachieved by people with similar
efficiency and satisfied customers
responsibilities over the same
are an impossible combination.
period of time. That is why
That low costs entail a view of
benchmarking is such an
service which cannot possibly
important instrument for
simultaneously result in satisfied
Handelsbanken, where we have
customers. The fact that
survived perfectly well without
Handelsbanken has nevertheless
budgets for thirty years.
managed to combine the two is,
In a thrifty company, the
of course, practical proof of the
LARS O GRÖNSTEDT
employees must be proficient
contrary.
at many things. To be proBut I am convinced that this
ficient and knowledgeable,
incompatibility does not exist
Last year was the thirtieth year
employees need long and broad
even in theory. Proponents of
professional experience. Thus,
this theory have probably not
running that Handelsbanken could
in a thrifty company, it is
taken sufficient account of the
yet again please shareholders by
important to create the sort
fundamental difference between
turning thrifty and being thrifty.
achieving its corporate goal – higher of working conditions where
the employees are happy, want
It is true that companies wishing
return on shareholders’ equity than
to stay with the company for
to slash their costs quickly, find
a long time and are keen on
it very difficult to keep their
the average for peer banks.
learning new things. Productcustomer focus while embarkivity will then increase so that
ing on such a tough process
the thrifty company manages with fewer employees.
and thus they will almost certainly endure a period of
A thrifty company also cares about its customers.
deteriorated customer relations.
It is better to keep a satisfied customer than to rely on
But being thrifty means that you have always had to
the continuous acquisition of new customers, because
be focused. If you are thrifty, you have a strong incentive
you have lost your old ones.
to get things right the first time. Mistakes are just too
And in a company where the employees are happy,
expensive. A frugal person finds ways of getting things
it is easy for the customers to feel comfortable.
right the first time around.
Nowadays we count among our
competitors all the listed banks
in the four Nordic countries
where we are active. This is
the first time Denmark is included, since our Danish
operations are now sufficiently
large (today we are the fifth
largest bank in Denmark), that
we can safely say that we conduct full universal banking
operations there too.
Satisfied shareholders begin
with satisfied customers and
cost-efficiency. Cost-efficiency
leads to high profitability today.
Satisfied customers bring more
of their business to us and
become goodwill ambassadors
for the Bank and thus also
contribute to higher growth.
This is why it is so important
for us to ensure that we are
efficient and that our customers
are satisfied.
“
”
Annual Report 2001
3
In a world where everything seems to be measured, weighed
and computed in terms of internal return, it is easy to
forget how attractive a welcoming smile is to customers.
Of course, good service has its technical side. When
we meet our customers less often face-to-face, it becomes
increasingly important that our technology always works
and that it is smooth and user-friendly. To achieve this,
we need the best technical specialists in central positions.
But it is difficult for financial services companies to
use technology as the base for a long-term competitive
advantage, since technological advances are not patented
in the financial world. IT is also an area where it is easy
to spend a lot of money without achieving all that much
in terms of customer benefit. A thrifty company does
not adopt new ideas hastily. Thrift is also a question of
saying no, of deciding what you should not do. This is
not as easy as it sounds. In big companies there are
always plenty of ideas about how to develop operations.
Ingenious analyses of future developments are often
used to back this up, combined with arguments that it is
all desperately urgent.
“
It is possible to combine the highest
profitability in the banking sector
with the most satisfied customers
”
In this situation, a critical attitude is very beneficial to
thrift. It means that you say no to many proposals after
only a brief period of indecision. Of course, sometimes
the idea may then mature and turn into a much better
worked-out concept.
There are a few exceptions to this general rule.
For highly specialised services aimed at a small number
of customers, it is often quite profitable to be an early
innovator. You gain market share and you can also charge
a good price. Since few people are involved and, initially,
modest volumes are sold, the service can be virtually handcrafted at the outset without major initial investments.
A good example of our innovative abilities in the last
few years is in investment banking. By being first in
Sweden with a new product, such as equity-linked bonds
or equity buy-back programmes, we have been able to
take large shares in these markets and also advance our
positions in the whole investment banking field.
Our property bidding service on the Internet, “e-bud”,
is another area where we are convinced that being first
with this useful idea has contributed to our success in the
mortgage market.
But isn’t the result of all this oh-so-sensible scrimping
and saving, a sleepy, rather dull organisation? We don’t
think so. A thrifty company can least of all afford to
neglect its customers. On the contrary, the work with
customers permeates the thrifty organisation. Such an
organisation cannot afford large central units. Thus,
work with customers has much more impact on the whole
company, since a greater proportion of the staff work
directly with customers.
4
C O S T- E F F I C I E N C Y O F S O M E N O R D I C
BANKING GROUPS
31 December
Cost/
income
Expenses
expressed as
a percentage
of total assets
Handelsbanken
47
0.9
Danske Bank
56
1.1
FöreningsSparbanken
59
1.4
Nordea
62
1.4
Den norske Bank
64
2.2
SEB
79
1.9
Average excl.
Handelsbanken
66
1.6
Excl. loan losses and adjusted for items affecting comparability.
RETURN ON SHAREHOLDERS’ EQUITY AFTER STANDARD TAX
%
30
25
20
15
Other
listed banks
10
5
Standard tax
50% 1985–1988
30% 1989–1993
28% 1994–2001
0
-5
1985 1987 1989 1991 1993 1995 1997 1999
2001
HANDELSBANKEN’S SHARE PERFORMANCE
Index
300
Svenska
Handelsbanken
250
General Index
200
150
Nordix bank
index excl.
Handelsbanken
100
1997
1998
1999
2000
2001
Annual Report 2001
Sometimes, people are concerned that customers do not
like thrift. But the fact is that customers like banks who
stick to their own ideals. It is natural for banks to sing
the praises of saving money. So it is natural for them
to practice what they preach.
This is why I do not find it so surprising that it is
possible to combine the highest profitability in the
banking sector with the most satisfied customers.
Satisfied customers
Cost-efficiency leads to high profitability, and satisfied
customers lead to strong growth. In 2001, we were
named “Bank of the Year” by Privata Affärer,
a periodical for private finances. We were delighted,
since it was a public acknowledgement that we are
working in a way which our customers appreciate.
But it is important that we not only achieve this in one
single year but also sustainably over a longer period of
time. That is why the annual customer satisfaction surveys are so vital for us. They have been conducted
in Sweden since 1989, using the same methodology.
Every year we have been number one for household customers and every year but one for corporate customers.
Handelsbanken was again judged best in 2001 and we
also had the satisfaction of seeing our lead increase.
For the first time, we have also participated in a
similar survey in Denmark. Here, too, we had the most
satisfied private customers of the six major banks.
A digression on statistics might be appropriate at this
point. It is true that in this kind of survey, small banks
are normally more appreciated by their customers than
large ones. This is partly explained by the fact that the
benefits of economies of scale are often exaggerated in
banking operations. But it is also a statistical effect
where the smaller a group is, the more homogenous
it is, and the easier it is to meet the group’s demands.
Imagine for a moment a bank with just one customer
whose smallest demand can be met in every detail.
A bank like this would of course get the highest
possible ranking from its one and only customer.
And then imagine the other extreme, a bank where
everyone is a customer. In statistical terms, this bank
could never raise its ranking above the average since
it is the average.
Our insurance operations
Last year, we took two major steps in our insurance
operations. We completed the acquisition of the insurance company SPP and as of 1 January 2002, we
demutualised Handelsbanken Liv.
Handelsbanken Liv was acquired by Handelsbanken
in 1992. In 2001, Handelsbanken Liv contributed
SEK 328m to our income, through commission income
for asset management and sales.
The demutualisation is good for the Bank’s shareholders since in normal years it will contribute to the
Bank’s profits. But, above all, it is good for our insurance
customers. The risks in being a customer of a mutual
company became very apparent in autumn 2001 when
Annual Report 2001
5
almost all Swedish life insurance companies had a negative solvency margin – the reserves did not cover the
bonuses previously allocated to the insurance holders.
Furthermore, we are convinced that a hands-on,
recognisable owner runs operations more efficiently and
is more sensitive to customers’ wishes than is the case in
a mutual company. We also considered it important to
be the first company in Sweden to offer savers the right
of transfer of insurance funds if they are not satisfied
with the way we manage their money. We strongly believe
that they should have this opportunity, and we are
happy that Swedish legislation now permits it.
Since almost 80% of Handelsbanken Liv’s customers
voted in favour of demutualisation, it is obvious that
this conviction is not only our own but is also shared
by our customers.
The demutualisation was implemented without
problems on 1 January 2002.
In 2001, we completed the acquisition of SPP, thus
becoming the second biggest company in the Swedish
insurance market. With this acquisition, our assets under
management doubled to SEK 236bn.
“
Handelsbanken enjoyed
some major market successes
in 2001
”
This is in itself good, since there are considerable
economies of scale in asset management, although in
practice they are not quite as large as many people are
wont to believe. But the acquisition of a major asset
management assignment was not the main reason why
we wanted to buy SPP.
In SPP, we see good opportunities for extra sales as
we did with our acquisition of Stadshypotek. When we
bought Stadshypotek in 1997, around 30% of the
customers were already customers of Handelsbanken.
Five years after the acquisition, over 60% of Stadshypotek’s customers also used another Handelsbanken
product. This achievement is the result of a strong
brand name, competitive services and prices, but above
all the methodical work at all our Swedish branches.
Now we are using the same formula with SPP’s customers. It is true that the link between insurance and
banking is not as obvious as that between mortgages
and banking. But we have learnt quite a lot from the
years with Stadshypotek. SPP also has many more
corporate customers than Stadshypotek ever did.
We hope to be able to demutualise SPP in a few
years’ time, to the benefit of policy-holders and the
Bank’s shareholders.
Just as we assumed in the acquisition calculation,
the financial result of the SPP acquisition was slightly
negative in 2001. The cost of amortising the brand
name, financing the purchase price and the deficit in
SPP Fonder (mutual funds) were major items.
6
Our international operations
With the acquisition of the Danish bank, Midtbank,
we completed the first phase of our Nordic expansion.
We are now sufficiently large in Sweden, Norway,
Finland and Denmark to serve all customers – both
companies and households – with all the products they
demand. We can offer a wide range of services to companies across the Nordic borders, international services
which are still closely integrated with the personal
service in our local branch office network in each country.
In recent years, we have been testing our concept in
a non-Nordic country – the UK. Our non-Nordic operations had previously focused on service to customers
with a Nordic connection.
So far, I am very encouraged by the reception given
to our UK operations. Our customers there seem
overwhelmingly sympathetic to the local way we run a
bank, focusing on personal service and rapid response.
And good UK banking staff are also genuinely interested
in working our way.
Our view of growth
Handelsbanken enjoyed some major market successes
in 2001. This also applied to our Swedish core market,
where we increased our share in all important market
segments: household deposits, household credits, mortgage loans, corporate loans and mutual funds.
Achieving a specific market share is not a goal in
itself for Handelsbanken. Our corporate goal is profitability, not size. But when market shares increase,
this is proof that customers are satisfied, and that is
important.
We aim to grow organically: customer by customer,
product by product, branch by branch. Our customers
must know that wherever they meet Handelsbanken,
they meet the same fundamental principle of overall
responsibility for each customer at the customer’s own
branch. The commitment and competence of the staff
at the local branch are the keys to success in this respect.
There are no shortcuts when it comes to developing this
competence. Like so many of the good things in life,
competence matures slowly to achieve the best results.
But since our competitive advantage is mainly
cultural; in other words, more a matter of how we do
things rather than what we do; of implementation rather
than strategy, this sets limits to our growth. We cannot
grow more quickly than the pace at which we can train
and develop our employees. At first sight, it would
appear to be a troublesome constraint on growth which
otherwise would be able to proceed at a much quicker
rate. Indeed, it might seem like a constraint that is
much more serious than financial restrictions – you can
issue new shares, but nobody has yet issued a new
corporate culture.
But if we consider the development of the Swedish
banks in the past five years, several have certainly
grown more quickly than Handelsbanken in terms of
total assets and income. But their expenses have also
grown quickly. In terms of what really matters – profits
Annual Report 2001
– Handelsbanken has had by far the best growth in
earnings per share. And in the world of banking, the
bank which has built up its credit portfolio with care
and without making volume its primary goal, tends to
end up with the best portfolio. In fact, I think that some
of the vast and complex structures which have emerged
as a result of mergers and acquisitions among the world’s
banks in recent years are not sustainable in the long term,
since they do not offer sufficient benefit to the customers.
But although our fundamental strategy is organic
growth, we have also carried out a number of acquisitions during the past decade. Of the 87 branches we have
outside Sweden today, 34 were gained through acquisition and 53 we have started ourselves. Our insurance
operations are the result of two acquisitions: RKA in
1992 and SPP in 2001. And the acquisition of Stadshypotek in 1997 doubled the Bank’s credit portfolio.
“
Handelsbanken has had
by far the best growth in
earnings per share
”
We will continue with our fundamental approach –
along the path of organic growth. But if we find a company where we think we can develop the operations,
and where the price is right, we will also continue to
take advantage of such acquisition opportunities.
To develop an operation, we must have leadership
capacity and for that, we must understand the market
where we are making the acquisition. This makes it
unlikely that we would carry out a number of major
acquisitions in quick succession, or that we would move
by acquisition into a market where we lack previous
experience.
Employee input is vital
I have emphasised many times, in these, my first comments to the Annual Report as CEO, that the foundation
of so many successful years is the way we work; the
corporate culture we have built up; the way we treat
our customers and our colleagues, the approach which
we continue to build and reinforce every day. A corporate culture is not something tangible which you can put
in the balance sheet, but nor is it something so intangible
that it just lives on whatever we do. Our employees are
imbued with this culture and they actualise its value in
their daily work. So when we have succeeded better
than the rest of the banking sector, it is natural to end
these words with a tribute to the source of our success
– with my sincere thanks to all the staff for their devoted
and loyal work during 2001.
Stockholm, February 2002
LARS O GRÖNSTEDT
Ulf Hinds
Annual Report 2001
7
Handelsbanken Group performance
PROFIT AND LOSS ACCOUNT – GROUP
SEK m
Net interest income
2001
2000
Change %
13 385
11 791
14
Commission, net
5 028
5 455
–8
Trading, net
2 656
2 633
1
585
801
– 27
Total income
21 654
20 680
5
Staff costs excl. performance-related
– 5 580
– 4 844
15
– 338
– 464
– 27
17
Other income
Performance-related staff costs
Other expenses
Total expenses
Result before loan losses
Loan losses incl. change in value of repossessed property
Operating profit
– 4 376
– 3 756
– 10 294
– 9 064
14
11 360
11 616
–2
– 152
67
11 208
11 683
–4
306
797
– 62
Pension settlement
Taxes
– 3 202
– 3 353
–5
Minority interests
– 22
– 22
—
Profit for the year
8 290
9 105
–9
In order to illustrate the development of operations more clearly, the profit and loss account is shown above with the various income categories, excluding that which is generated
in the trading operation. The “Net result on financial operations” (equity-, interest rate- and currency-related) and trading-related income from other income categories are reported
under “Trading, net”. Performance-related staff costs are reported separately. The result of insurance operations has been allocated to the respective income/expense categories.
Participations in associated companies’ results are reported under “Other income”.
PROFIT AND LOSS ACCOUNT BY BUSINESS AREA – GROUP
Branch
offices
Handels- Handelsbanken
banken
Markets Securities
SEK m
Net interest income
Handelsbanken
Asset
Management
HandelsHandelsbanken
banken
Finans Pension and
Insurance
Stads- Treasury
hypotek
Bank
Other
Total
2001
Total Change
2000
%
12 355
1 506
– 121
186
499
15
87
215
– 320
2 646
218
767
900
285
171
32
– 42
51
5 028
5 455
Net result on financial
operations
274
690
499
23
–1
– 18
0
– 33
107
1 541
3 029
– 49
Other income
106
15
158
23
17
8
14
13
309
663
890
– 26
15 381
2 429
1 303
1 132
800
176
133
153
147
21 654 20 680
5
– 578 – 10 294 – 9 064
14
Commission, net
Total income
Net internal remuneration
included in income
Profit before
loan losses
41
63
518
3
259
22
—
– 6 441 – 1 071
– 947
– 572
– 450
– 110
– 110
– 15
356
560
350
66
23
138
– 431
– 423
8 940
1 358
Loan losses incl.
change in value of
repossessed property
– 232
88
– 10
–5
Operating profit
8 708
1 446
356
550
345
66
22
138
20.6
23.6
35.6
28.4
29.4
15.6
30.6
14.6
5 549
768
447
372
436
11
109
38
Return on equity, %
Average number
of employees
28
–8
906
Net internal remuneration
deducted from income
Total expenses
14 422 11 306
–1
11 360 11 616
8
– 152
–2
67
—
11 208 11 683
–4
1 509
18.4
22.3
9 239
8 574
The net amount of received/paid remunerations between the business areas is included in/deducted from the income categories for the business areas. The net amount of
received/paid remuneration is shown above. The internal remuneration is credited to the business area which is responsible for the customer and reduces the income
of the unit paying the remuneration. The remuneration is intended to cover expenses and also to distribute the profit arising on market terms.
Expenses also include the distribution of costs made internally within the Group for services rendered by business support operations.
Return on shareholders’ equity for the business areas is computed after standard tax, while for the whole Group it is computed after appropriations and full tax.
The shareholders’ equity, on which calculation of return on equity is based, is mainly distributed in accordance with the requirements of the Act on Capital Adequacy.
“Other” includes capital gains, dividends, amortisation of goodwill and Group adjustments, which are not attributable to an individual business area.
Handelsbanken Liv Fondförsäkrings AB (unit-linked) and commission income from the mutual company, Handelsbanken Liv Försäkrings AB, are included in the
Pension and Insurance business area.
8
Annual Report 2001
QUARTERLY PERFORMANCE – GROUP
SEK m
2001:4
2001:3
2001:2
2001:1
2000:4
Net interest income
3 529
3 392
3 224
3 240
3 010
Commission, net
1 299
1 150
1 366
1 213
1 288
Trading, net
662
532
649
813
665
Other income
155
98
179
153
157
5 645
5 172
5 418
5 419
5 120
– 1 472
– 1 449
– 1 367
– 1 292
– 1 278
– 20
– 59
– 130
– 129
–5
Other expenses
– 1 298
– 1 099
– 1 024
– 955
– 985
Total expenses
– 2 790
– 2 607
– 2 521
– 2 376
– 2 268
Profit before loan losses
2 855
2 565
2 897
3 043
2 852
Loan losses incl. change in value
of repossessed property
– 203
– 14
– 13
78
– 42
Operating profit
2 652
2 551
2 884
3 121
2 810
– 26
– 14
184
162
304
– 672
– 732
– 852
– 946
– 839
Total income
Staff costs excl. performance-related
Performance-related staff costs
Pension settlement
Taxes
Minority interests
Profit for the period
–5
–6
–5
–6
–5
1 949
1 799
2 211
2 331
2 270
2001
2000
1999
1998
1997
11 360
11 616
8 388
8 031
8 123
– 152
67
219
– 319
– 302
11 208
11 683
8 607
7 712
7 821
1 174 521
1 020 353
936 256
932 845
862 448
48 112
42 466
38 570
34 431
32 353
KEY FIGURES FOR THE HANDELSBANKEN GROUP
Profit before loan losses, SEK m
Loan losses, SEK m
Operating profit, SEK m
Total assets, SEK m
Shareholders’ equity, SEK m
Return on shareholders’ equity, %
18.4
22.3
18.4
18.6
20.2
Return on shareholders’ equity, %1)
18.4
21.6
18.4
17.9
20.2
Return on shareholders’ equity
after standard tax, %1)
17.8
19.9
17.0
16.3
18.8
Cost/income ratio before loan losses, %
47.5
43.8
50.8
52.3
48.6
Cost/income ratio after loan losses, %
48.2
43.5
49.5
54.2
50.6
Cost/income ratio before loan losses, %1)
47.5
44.6
50.8
53.4
48.6
Cost/income ratio after loan losses, %1)
48.2
44.2
49.5
55.3
50.6
Loan loss ratio, %
0.02
– 0.01
– 0.03
0.05
0.05
Bad debt reserve ratio, %
70.9
58.2
66.8
58.8
52.6
Proportion of bad debts, %
0.18
0.33
0.27
0.45
0.64
9.9
9.5
9.4
9.8
10.4
Capital ratio, %
Tier 1 capital ratio, %
Return on total assets. %
Average number of employees
Number of branches in Sweden
Number of branches in other Nordic countries
6.1
6.4
6.5
6.3
6.2
0.99
1.17
0.93
0.85
0.95
9 239
8 574
8 520
8 546
8 184
458
460
465
480
485
87
52
43
33
30
1) Adjusted for items affecting comparability.
For definitions see fold-out inside back cover.
Annual Report 2001
9
Handelsbanken’s shares
KEY FIGURES PER SHARE
Net earnings per share, SEK
2001
2000
11.99
12.89
9.31
8.41
8.38
4.00
3.00
2.67
2.17
4.50 1)
Dividend per share, SEK
1999
1998
1997
Dividend growth, %
12.50
33.3
12.4
23.0
30.0
Adjusted shareholders’ equity per share, SEK
69.50
61.35
53.97
47.56
44.66
154.00
161.50
107.00
114.00
91.00
Class A, number of shares
1 892 366
1 482 206
1 317 270
1 141 320
1 205 370
Class B, number of shares
85 252
121 059
63 101
57 434
78 078
170/132
173/94
132/91
131/83
100/61
2.9
2.5
2.8
2.3
2.4
P/E ratio
12.8
12.5
11.5
13.6
10.9
Stock exchange price/Equity, %
222
263
198
240
205
Price of class A share, 31 Dec, SEK
Average daily turnover on Stockholm Stock Exchange
Highest/lowest price paid, class A shares, SEK
Direct yield, %
1) Dividend as recommended by the Board.
Figures for 1998 and previous years have been adjusted for the 3:1 split carried out during 1999.
Adjusted to take account of current accounting principles and definitions. For definitions see fold-out inside back cover.
SHARES PER SHAREHOLDER 31 DECEMBER 2001
Number of shares
Shareholders
Number
Shareholdings
Percentage of
all shareholders
Number of shares
in thousands
Average number
per holder
1–
500 shares
45 779
53.5
8 266
1.2
181
501 –
2 500 shares
27 880
32.6
32 671
4.6
1 172
2 501 – 25 000 shares
11 106
13.0
65 865
9.2
5 931
25 001 – 250 000 shares
631
0.7
46 135
6.4
73 114
212
0.2
540 450
75.6
2 549 295
21 360
3.0
714 747
100.0
250 001 –
shares
Shares repurchased by Handelsbanken
Total
85 608
THE MAJOR SWEDISH SHAREHOLDERS 31 DECEMBER 2001
% of
votes
The Oktogonen Foundation
Industrivärden
Robur funds (29)
100.0
7.4
4.5
3.4
AMF Pension
3.2
Nordea funds (31)
2.7
Handelsbanken funds (33)
2.3
Skandia Liv
2.3
Share class
Number
% of
capital
% of
votes
Class A
649 949 619
90.93
99.01
Class B
64 797 321
9.07
0.99
259 189 284
714 746 940
100.00
100.00
2 858 987 760
Repurchases
Class A
Average prices
Repurchased
amount
Nominal
value
SEK
2 599 798 476
400
0.00
0.00
SEK 120.30
1 600
21 359 125
2.99
0.33
SEK 142.87
85 436 500
21 359 525
After repurchases
Class A
649 949 219
2.99
0.33
3 051 720 496
85 438 100
Class B
93.74
99.34
2 599 796 876
Class B
43 438 196
6.26
0.66
173 752 784
Total after
repurchases
693 387 415
100.00
100.00
2 773 549 660
Repurchased during the year
Class A
—
—
—
—
—
5 417 625
0.76
0.08
SEK 158.54
21 670 500
5 417 625
Sold during the year
Class A
1 664 000
0.76
0.08
858 930 192
21 670 500
Class B
The average number of outstanding shares
in 2001 was 691 205 879.
8 349
SHARES DIVIDED INTO SHARE CLASSES 31 DECEMBER 2001
10.1
Alecta
10
Percentage of
share capital
Class B
0.23
0.25
SEK 151.11
6 656 000
3 900 000
0.55
0.06
SEK 144.00
15 600 000
5 564 000
0.78
0.31
813 039 000
22 256 000
Annual Report 2001
SHARE PRICE PERFORMANCE AND DIVIDEND
The Bank has repurchased 21.4 million shares net.
As at 31 December 2001, the number of outstanding
shares was 693.4 million.
Class A shares each carry one vote and class B shares
carry one-tenth of a vote each. At the Annual General
Meeting, no shareholder is allowed to vote for more
than 10% of the total number of votes in the Bank.
Handelsbanken’s shares are listed on the Stockholm
Stock Exchange. One trading unit is equivalent to
100 shares.
In 2001, the Swedish stock market fell by 17%, measured by the Affärsvärlden General Index. In the same
period, Nordic bank shares, measured by the Nordix
bank index, fell by 18%. Handelsbanken’s Class A
shares, however, fell by only 5%, which was better
than any of the other major Nordic banks.
Even when comparing over a more extended period
of time, Handelsbanken’s shares outperformed the
general index. Since the beginning of 1997, Handelsbanken’s share price has risen by 138%, which is twice
as much as the General Index.
Handelsbanken’s long-term dividend policy reflects
the ambition to raise dividends at a pace which is above
the average for the banking sector. The Board recommends a dividend of SEK 4.50 for 2001, which is an
increase of 12.5% compared with the previous year.
THE SHAREHOLDERS
At the end of 2001, Handelsbanken had over 85 000
shareholders, most of them private individuals. As
shown in the adjoining table, the majority of shareholders owned only a small number of shares. The larger
shareholders included a number of asset managers
representing foreign private individuals and institutional
investors. At the end of 2001, around 30% of the shares
were owned by investors outside Sweden.
In April 2001, Handelsbanken acquired Midtbank,
a Danish bank. Each shareholder who accepted Handelsbanken’s cash offer, also received one class A share in
Handelsbanken. Around 20 000 shareholders in Midtbank received a Handelsbanken Class A share in this
way. Since these shares are collected in a custody
account in Denmark, they are not included in the adjoining table.
Just over 50% of the total number of shares were
owned by major Swedish institutional holders. These
mainly comprise insurance companies, investment companies and equity funds representing a large number of
private individuals. Holdings of the largest Swedish
shareholders are reported in the adjoining table.
MARKET CAPITALISATION
As at 31 December 2001, the market capitalisation of
Handelsbanken’s shares was SEK 106bn, a decrease of
5%. The Bank’s market capitalisation was almost seven
times more than at the start of 1990.
THE SHARES
In the first quarter of 2001, Handelsbanken repurchased
5.4 million shares. At the Annual General Meeting in
April 2001, the board of the Bank was authorised to
repurchase up to 20 million shares during the year until
the next Meeting, and to be able to sell shares which had
already been repurchased for the purpose of financing
any future acquisitions. Since then, Handelsbanken has
not repurchased any shares, but has sold 5.6 million
shares in connection with the acquisition of Midtbank.
HANDELSBANKEN’S SHARE PERFORMANCE
MARKET CAPITALISATION 31 DECEMBER 1996–2001
NET EARNINGS AND DIVIDEND PER SHARE
Index
SEK
Mdkrbn
120
SEK
14
300
Svenska
Handelsbanken
110
Net earnings per share
100
12
Dividend per share (For 2001,
as recommended by the Board)
90
250
80
10
70
General Index
60
8
50
200
40
6
30
25
4
20
150
15
Nordix bank
index excl.
Handelsbanken
2
10
5
100
0
1997
1998
1999
2000
2001
Annual Report 2001
1996
1997
1998
1999
2000
2001
1996
1997
1998
1999
2000
2001
11
Objectives, policy and organisation
OBJECTIVES AND PRINCIPLES
Handelsbanken’s overall objective is to have higher
profitability than a weighted average of the other listed
Nordic banks.
The quality of the Group’s services should meet the
expectations of demanding customers. Handelsbanken
should charge a fair price for its services. The cost level
should be lower than in other banks.
Profitability must always be given higher priority
than volumes. When granting credit, this means that the
quality of the credits must never be neglected in favour
of a large lending volume.
Higher profitability should benefit the shareholders
via greater growth in dividends than the average for
other Swedish banks.
Handelsbanken aims to have more satisfied customers
than other banks.
The Bank seeks to employ young, well-educated staff
and train them within the Group. As far as possible,
managers should be recruited internally.
The Bank’s activities should benefit its customers,
the Bank itself and society as a whole.
At Handelsbanken, we work within the formal and
ethical frameworks which apply to banking operations,
taking into account environmental responsibility.
POLICY
Overall customer responsibility close to the customer
The business operations of the Handelsbanken Group
are strongly decentralised. The most important means
of control are a basic corporate policy which is deeply
rooted throughout the entire Group and an efficient
financial control system.
The main concept is that the organisation and methods
of work should be based on the branches’ responsibility
for individual customers and not on the central units’
responsibility for product areas or market segments.
The Bank assigns overall responsibility for each individual customer to a single place in the Group, as close
to the customer as possible – at the customer’s local
branch. Responsibility for providing the customer with
expert and co-ordinated services from all units in the
12
Handelsbanken Group lies there, as does the responsibility for all loans held in the Group by each individual
person, company or group of companies. There, too,
lies the responsibility for profitability within the Group
for the overall business relationship with the customer.
This also means that the responsibility for the
Group’s marketing is held by the individual branch.
There is no central marketing department. The Bank
does not make central marketing plans or control the
branches’ marketing activities at central level by giving
priority to customer categories or product areas.
For many years, Handelsbanken has consistently and
successfully applied and developed this basic concept. It
has proved to work flexibly and efficiently during major
changes in the conditions affecting banking operations.
Universal banking operations expand gradually
Handelsbanken aims to be a universal bank, i.e to cover
the entire banking area: traditional corporate transactions, investment banking, as well as consumer banking
including life insurance.
With 458 branches, Handelsbanken is strong in the
Swedish market. During the past ten years, the Bank
has expanded universal banking operations into the
other Nordic countries. Handelsbanken has a total of
87 branches in the Nordic countries outside Sweden.
Norway, Finland and Denmark are natural domestic
markets where Handelsbanken can apply its experience
of running profitable universal banking operations.
The Bank will gradually be able to continue using its
experience from the Nordic countries in markets outside
the region. In the UK, operations have been expanded
to offer retail banking services to individual customers
and local companies.
Apart from this, the Bank’s network of units outside
the Nordic countries is adapted to give Nordic customers
good service and to do Nordic-related business with
international customers.
ORGANISATION
Handelsbanken’s organisation aims at promoting the
interplay between strong branches, highly-trained
specialists and efficient support functions.
Annual Report 2001
THE HANDELSBANKEN GROUP’S
Central
ORGANISATION
Head Office
Regional
Central
Head Office
Branches
Head Offices
and subsidiaries
Regional
Head Offices
Customer
Branches
in Sweden
458
GROUP MANAGEMENT
BUSINESS OPERATION
DEPARTMENTS
Asset Management
Markets
BUSINESS SUPPORT
DEPARTMENTS
Administration
Asset Management
Auditing
Business Development
Control and Accounting
Corporate Communications
Credits
Human Resources
IT Operations
Legal
Markets
Treasury
NORTHERN NORRLAND
Umeå
SOUTHERN NORRLAND
Gävle
STOCKHOLM CITY
Stockholm
CENTRAL SWEDEN
Stockholm
EASTERN SWEDEN
Linköping
WESTERN SWEDEN
Göteborg
SOUTHERN SWEDEN
Malmö
DENMARK
Subsidiaries
Handelsbanken Fonder
Handelsbanken Liv
SPP
Stadshypotek
– Handelsbanken
Hypotek
Stadshypotek Bank
Annual Report 2001
Copenhagen
FINLAND
Helsinki
The other Nordic
countries
Denmark (32)
Finland (28)
Norway (27)
Units outside the
Nordic countries
Austria
China
Estonia
France (2)
Germany (2)
Hong Kong
Luxembourg
Poland
Russia
Singapore
Spain
Switzerland
Taiwan
U.K. (6)
U.S.A
NORWAY
Oslo
See inside back cover for addresses.
13
On the preceding page, the Handelsbanken Group’s
organisation is presented as a combined unit focusing
on the individual customer and with the individual
branch office at the forefront.
ENVIRONMENTAL ISSUES
Environmental policy
Environmental issues are a vital element in the Handelsbanken Group’s operations. This applies both to the
Bank’s responsibility for the environment in its own
operations and consideration of environmental risks
when granting credits.
Handelsbanken aims to promote long-term sustainable development and to take measures to minimise any
negative impact on the environment, as far as technically and financially possible, and to the extent that it
is compatible with the Bank’s undertakings. Consistent
and long-term improvements will generate benefits to
the environment and cost savings. An important principle
is to reduce any environmental damage from the Bank’s
operations and purchased goods and services. Key concepts in the Bank’s environmental work are “thrift –
renewability – biodegradability – recyclability”.
Handelsbanken has signed and complies with voluntary
agreements, such as the ICC Business Charter for Sustainable Development and the UN Environment Programme
– Banks and the Environment.
Environmental responsibility and work organisation
As with other areas at Handelsbanken, responsibility is
decentralised for environmental issues on a practical
level. All managers in the Handelsbanken Group have
primary responsibility for environmental issues at their
units and all employees have a responsibility for the
environment as part of their duties.
An environmental manager has been appointed at all
regional banks, subsidiaries and at various units at the
Central Head Office. The managers are responsible for
environmental issues at their respective unit. For the
Group as a whole, internal environmental issues are coordinated by the Central Administration Department and
business-related environmental issues are co-ordinated
by the Central Credit Department.
Environmental training
The staff of the Bank and its subsidiaries have been
trained in environmental issues with internal material
based on information from the Swedish Business Development Agency and the Swedish Environmental Protection
Agency. Environmental issues are now included in the
introduction programme for new employees. Environmental issues are also a natural component of the Bank’s
training programme in the area of loan operations.
IT reduces negative impact on the environment
The opportunity for customers to carry out banking
transactions on the Internet and for employees of the
Bank to use IT tools has contributed to more efficient
work, reduced use of paper and transport, and thus
reduced negative impact on the environment.
Conference calls and video conferencing are used
extensively to reduce the number of business trips for
meetings and conferences. Some 75% of the approximately 400 different forms used in branch office operations have been converted to electronic forms. This
work will continue in 2002.
Since February 2001, most of a customer’s statements of accounts are collected together so that he/she
receives only one envelope per dispatch date regardless
of the number of accounts. This results in cost savings
as well as reduced impact on the environment. For
newly-opened accounts, the number of statements of
account dispatched has declined by 50%.
Purchasing
Environmental requirements are always made on suppliers
when procuring goods and services. Environmental considerations are included in decisions on all investments
and purchases. Handelsbanken maintains an ongoing
dialogue with the Bank’s suppliers to promote and
develop environmental issues.
Environmentally-adapted guidelines are applied in
planning the Bank’s buildings, premises and furnishings.
The Bank requires declarations of environmental and
material content. Materials and components must be
long-life, recyclable and low-energy.
UJ
14
Annual Report 2001
Energy and climate issues
Environmental issues associated with granting loans
Handelsbanken constantly seeks to reduce the amount of
freons in the cooling systems of its buildings. In addition,
all electricity used at the head office in Stockholm and
the regional main offices in Malmö is labelled Bra
Miljöval (Good environmental choice).
The Bank saves energy by optimising operations for
computer equipment and heat and cooling plants,
recycling energy, and using low-energy products. Energy
utilisation is continuously monitored. To reduce the
amount of energy used in cooling plants and to comply
with the Swedish Environmental Protection Agency’s
requirements for removing freons, the Bank has arranged
nationwide service agreements for its cooling plants.
The Bank is designing routines for work with climate
issues, for example, in the areas of electricity and heating.
This purpose of this is to monitor and report carbon
dioxide emissions generated from the purchase of these
services.
Banking operations have a limited impact on the environment. However, the Bank can influence the environment
in a broader perspective in the application of its loan
policy. Even though such traditional business economic
factors as earnings capacity, equity ratios, business
plans and goal achievement are core elements in a bank’s
credit analysis, environmental issues play an important
role. In concrete terms, this means that environmental
issues will be taken into consideration in the yearly evaluation of credit commitments and for each customer,
an assessment is made of the economic consequences
of potential environmental hazards. This is, of course,
especially important when taking into account the
repayment capacity of a customer engaged in environmentally hazardous activities or who sells products that
involve environmental or health risks. The assessment
might concern the required governmental authorisations,
adherence to the prescribed limits for emissions, and
that the products in question remain competitive after
environmental and health risks are taken into account.
Of course, the customer is responsible for how operations are conducted, but repayment capacity and thus
the Bank’s credit risk is affected by the customer’s desire
or ability to manage these risks.
Waste separation, recycling, recovery and reuse,
and destruction
In support of local measures, the Bank has entered into
a number of central nationwide agreements on recycling,
reuse and recovery, and destruction. These agreements
cover electronic equipment – PCs and office machines –
toner cassettes, paper, plastic packaging, light sources
and other environmentally hazardous waste. Refuse,
paper and environmentally hazardous waste are separated
at the workplace. Disposable material and items are
used as little as possible. Glass and paper are recycled,
while batteries, fluorescent lights and chemicals are
returned to be destroyed. Only eco-labelled cleaning
materials, floor-cleaning products, paper and returnable
cassettes are used.
In Stockholm, there is an internal environmental
group comprising various business areas at the Bank.
The group works on a co-ordinated and joint strategy
for handling, separating, recycling and destroying
waste, paper and environmentally hazardous waste.
City of Göteborg International Environment Prize
The Western Sweden Regional Bank, together with
other major companies in western Sweden and the City
of Göteborg, award the City of Göteborg International
Environment Prize (GIMP). The prize for 2001 was
awarded to KRAV, a Swedish control organisation that
certifies products from organic farming, and to the
International Forestry Stewardship Council, which promotes responsible use of the world’s forests with respect
to environmental, social and ecological issues. By participating in GIMP, Handelsbanken supports environmental work and makes clear its social responsibility.
Annual Report 2001
SOCIAL RESPONSIBILITY
The success of Handelsbanken in the market derives
from the trust it enjoys from the public and authorities.
The Bank’s work methods are based on a fundamental
human outlook characterised by trust and respect. All
employees are clearly responsible for their actions professionally as well as in social and ethical issues. Therefore, it is important that business decisions at the Bank
can be also justified from a social and ethical perspective.
Working conditions and union rights
Handelsbanken complies with the laws and agreements
on working hours in each country. In the Nordic
countries, where 95% of the Bank’s employees work,
Handelsbanken adheres to the collective bargaining
agreements which clearly regulate working hours, overtime, rest periods, breaks and vacations. The Handelsbanken Group has established a fixed set of employee
rights throughout the Group, such as a minimum wage.
Child labour is not accepted at Handelsbanken.
All employees in the Handelsbanken Group have the
right to organise and join a union. Employees are represented in the central Board of Directors through the
Oktogonen profit-sharing foundation. Employee representatives are also found on the local boards of directors
of the regional banks.
At Handelsbanken, all individuals with the same
competence have the same right to employment, promotion, salary and professional development, regardless of
gender, age, ethnic background or sexual orientation.
15
ETHICAL GUIDELINES
Equality
Handelsbanken’s Equal Opportunity Policy states that
equal conditions shall apply for men and women for
personal development within the Handelsbanken
Group. An important element of equal opportunity
work takes place at the recruiting stage, where the same
demands exist for competence, skills and education
regardless of gender. At Handelsbanken, work on
equality is carried out with the union organisations.
The Handelsbanken Group’s long-term goals are:
• that the proportion of women managers corresponds
to the proportion of women in the total staff force;
• the same demands for education apply to women as
for men in the recruitment of new staff members;
• to employ an equal share of men and women;
• that men and women receive the same salary for
similar work, taking into account experience and
competence.
Handelsbanken’s ethical guidelines establish that all
operations at the Bank are to be characterised by high
ethical standards. Bank employees must conduct themselves in a manner that upholds confidence in the Bank.
The ethical guidelines are laid down by the Central Board.
A basic, self-evident rule is that the Bank and its
employees must comply with the laws and regulations
that govern its operations in various ways. General
recommendations and statements from Finansinspektionen
(Swedish Financial Supervisory Authority) and other
authorities must be observed and incorporated into
routines and instructions as necessary.
Economic crime
The Bank must not participate in transactions involving
funds which may be suspected of originating from criminal activities, nor must it participate in transactions, the
Each year, every regional bank, central unit, and subsidiary establishes a local equal opportunity plan that
describes the short-term and long-term goals and how
these are to be achieved.
Sexual harassment is unacceptable at Handelsbanken.
All employees have access to Handelsbanken’s guidelines
for preventing sexual harassment.
implication of which its employees do not understand.
It is the duty of managers to keep employees regularly
informed of the content of the principal laws that deal
with combating economic crime. The legal requirements
for the prevention of money laundering must be given
special emphasis. For example, the Bank must not
participate in securities transactions which
can be perceived as assisting tax evasion.
Work environment, health and security
Customer relations
Handelsbanken has supplemented the Swedish Work
Environment Act and its provisions and recommendations with a work environment agreement made between
the Bank and the local union committees. This states
that the Bank will provide the necessary resources for
investigating and removing work environment problems.
The Bank also ensures that the work environment does not
expose employees to unhealthy conditions or accidents.
Responsibility for the work environment has been
delegated to managers/supervisors at the workplace
level. Handelsbanken’s health services and recreational
club provide specialist courses in the work environment
area. Handelsbanken’s goal is that employees can influence their work assignments so that they enjoy their
work and gain a sense of well-being.
Handelsbanken is a drug-free and alcohol-free workplace. A position at Handelsbanken cannot be combined
with drug abuse. It is the manager’s responsibility to
ensure that action is taken concerning alcohol and drug
abuse problems which have been identified. Guidance
and treatment in some form are always offered to an
employee with alcohol or drug abuse problems.
Financial advice must always be based on the customer’s
needs, financial position and risk propensity. It is
important that the employee makes certain that the
customer understands the implications of the decisions
that he/she takes. The advice given aims to provide the
customer with the most suitable product from the
Bank’s range, irrespective of whether it is best for the
Bank in the short term.
It is especially important in relations with private
customers that the Bank does not take advantage of its
greater expertise and financial position. Sound business
practices, acting in a consistent manner and fair treatment of customers are key concepts at the Bank.
Customers must be treated with respect. There must
be no discrimination of customers on such grounds as
gender, age or ethnic background.
In some cases, for example securities trading, where
the Bank is acting on behalf of both customers and
itself, a conflict of interests may arise. Operations must
be directed in such a way as to avoid such conflicts. If
a conflict of interests nonetheless should arise, it must
never be used to the customer’s disadvantage.
Conduct of employees
It is important that the Bank’s employees are not
suspected of taking improper advantage of knowledge
about the financial markets which they obtain in the
course of their work. All employees must be familiar
16
Annual Report 2001
Elisabeth Ohlson
with the local insider trading laws and observe the
Bank’s own rules governing employees’ private securities
and currency transactions.
In their work at the Bank and in their private affairs,
employees must refrain from business transactions that
violate the Bank’s rules or the legislation in force. An
employee must not handle matters in which the employee
or a relative has a personal interest or acts for a company,
in which the employee or a relative has a material
interest. An employee must also refrain from transactions
or other commitments that may seriously jeopardise
his/her financial position.
To avoid incurring personal obligations to customers
and suppliers, employees must observe the Bank’s regulations regarding receiving and giving personal gifts and
entertainment.
Employees must notify the Bank of assignments outside the Bank for approval. These rules also apply to
secondary occupations and posts in clubs and societies,
etc. Remuneration for being a member of a board on
behalf of the Bank must be paid to the Bank.
Doubtful cases
Employees who are in doubt when applying the Bank’s
ethical guidelines and dealing with related issues, must
contact their immediate superior to find out what is
ethically acceptable. Employees are encouraged to ask
themselves: “Can I account for my actions to the other
employees at the Bank, to the public authorities, the
press and other media and the general public without
feeling the slightest doubt as to whether my conduct
was ethically acceptable?”
OUR STAFF
Many companies stress that their employees are their
most important asset. The truth of this is particularly
evident in a service company which is as strongly
decentralised as Handelsbanken. Handelsbanken’s basic
philosophy, which focuses on the individual customer’s
requirements, is dependent on every employee taking
responsibility for the customer relationship and the
quality of the service offered. An overview of the
Handelsbanken Group’s range of products is also vital.
This not only places great demands on the skills and
judgement of the staff but also on the interaction
between and within the various units of the Bank.
Competence development
Handelsbanken defines competence as the ability to
acquire, use, develop and exchange knowledge, skills
and experience. All employees must take responsibility
for their own competence and skills development and
also for sharing their own competence with both colleagues
and customers. Handelsbanken stresses the importance
of learning in daily work. The working organisation
and tasks should be designed to facilitate natural
Annual Report 2001
17
individual employee is based on respect and trust in
the individual. From this follows that individual salary
discussions are held with all employees. The Bank views
the individual salary discussions as a means of increased
motivation for employees to work and develop. Here
the key words are a professional attitude, a proactive
approach, sound judgement and quality.
Promoting equality
Handelsbanken works continually to promote equality
between men and women. Tangible results of this are
that the Bank now offers the opportunity for subsidised
household and family services for all staff who have
children under the age of eight and also the opportunity
to have flexible working hours. Handelsbanken stresses
that staff on parental leave must have the same right to
salary development as all other employees. The Bank
also guarantees 80% of the salary for staff on parental
leave – including that part of the salary which exceeds
the national insurance office’s ceiling.
Oktogonen – the Bank’s profit-sharing system
development of the employees’ skills. The Bank’s various
skills development programmes are considered very
important. There is a continuous process of finding
solutions to employees’ development requirements
where courses are just one of many learning methods.
Other development opportunities are moving to a different area of the Bank, specialisation, broadening skills
or becoming a manager.
Managers as leaders
Managers should be leaders with the ability to delegate
responsibility to their colleagues. Apart from development programmes for current managers, the Bank has
also implemented programmes for employees who are
prepared to take on managerial responsibility in the
future. Almost all activities for enhancing competence
take place within the Bank and 90% of all managers
are recruited through internal promotion.
Planning dialogues and salary discussions
The planning dialogues/performance reviews between
manager and employee are the link between the unit’s
operational plan and the employee’s personal goals.
The dialogue focuses on the present situation and development requirements against the background of a business-oriented overall picture. It is then formulated in an
individual action plan. These dialogues are an important
investment which the Bank considers to have very high
priority. Handelsbanken’s decentralised corporate philosophy with a high degree of responsibility for the
18
Every year since 1973, the Bank has allocated part of
its profit to a profit-sharing system for its employees.
The only exception was 1992 when no dividend was
paid to the shareholders. The funds are managed by
the Oktogonen Foundation. The main condition for an
allocation to be made is that the Handelsbanken Group
has higher return on shareholders’ equity after standard
tax than other banks, which is the overall goal laid down
for the Bank’s operations. A certain part of the extra
result can be allocated to the employees in accordance
with the regulations for the foundation. The amount
allocated is always limited to 25% of the Bank’s dividend
to its shareholders. All employees receive an equal part
in the allocated amount. Disbursement can be made
when the employee reaches the age of 60. One of the
fundamental concepts in managing the foundation is
that a considerable part of the funds is invested in shares
in Handelsbanken. Oktogonen is the Bank’s largest
shareholder.
Apart from all staff in Sweden, the profit-sharing
system has included staff in Norway since the beginning
of 1995 and from 1997, the staff in Finland. From
2001, it covers all employees in the Nordic countries
since employees in Denmark are now included.
The profit-sharing system is based on the idea that
the Bank’s employees should receive a portion of the
extra earnings which they have played such a large part
in generating. Over the years, this has increased in
importance as an incentive to the staff. However, the
most important source of motivation and personal
development can be found in the decentralised customer
and profit responsibility itself. The Bank places great
emphasis on always keeping this basic philosophy alive
in its daily work and making sure that it is applied in
all activities.
Annual Report 2001
Economic perspective
2001 in an economic perspective
The business cycle is always full of surprises and 2001
was no exception. Back in spring 2000, most experts
agreed that the booming US economy would soon enter
a downturn. After the stock market slump in 2001,
more and more people forecast a crash-landing for the
finances of American households, resulting in increased
savings and lower consumption. But this did not happen.
It turned out that households were the mainstay of an
increasingly weaker economy, while the growth base in
the 1990s – investments – started to weaken because of
dashed profit expectations.
USA
The surprisingly strong growth in consumption was
related to two factors. Bond yields fell sharply during
autumn 2000 as growth expectations wound down.
This gave American households substantially more
money in their pockets in the form of sharply lower
interest costs. This particular market effect completely
overshadowed the impact on consumption of the
dramatic stock market fall. The other positive factor
for households was the strong public finances, which
opened up for major tax cuts. The impact of the Fed’s
sharp interest rate cuts in 2001 was not felt until the
autumn in the shape of significantly lower financing
costs for cars, for example. The result was an all-time
high for auto sales in October. The terrorist attacks of
September 11 troubled households and made them
more cautious, but low interest rates and promised
tax cuts softened the impact this might have had on
consumption. As for stock markets, the surprisingly
high spending levels had a favourable impact on
consumption-related shares.
While US households continued to act as the motor
of the economy, companies went into reverse gear as
their profits fell. The sharp drop in profits was not just
the effect of weaker sales figures. It also reflected an
overheated labour market where profits ended up in
the pockets of employees rather than shareholders. The
rapid reaction of American companies in 2001, with
heavy cutbacks, paves the way for higher profits and
investments in 2002. At the same time, household
consumption will be hampered by a weaker labour
market and smaller wage rises. Early signs of an upturn
in corporate investments led to a recovery for technology
stocks during the autumn. The fall in bond yields
simultaneously came to an abrupt end and expectations
of continued relaxed monetary policy subsided.
Europe
economy. These hopes were dashed at an early stage
when it turned out that both Germany and Italy had
negative GDP growth during the second quarter of
2001, in other words before the US suffered the same
fate. After the terrorist attacks, business cycle barometers in Europe plunged as fast as in America. The UK
was the shining light in the European economic gloom.
Growth remained at amazingly high levels despite the
strong pound’s negative influence on industry. Interest
rate cuts proved to be a better medicine in the British
Isles than on the Continent.
The weak global economy exposed financial weaknesses in a number of economies. The Japanese banking
system was again under pressure. Problems for Turkish
banks led to devaluation of the lira. Argentina was forced
to give up its defence of the peso. These factors pressed
down the price of bank shares in Europe.
Nordic countries
The Nordic economies followed the global trend. Both
Finland and Sweden suffered in the wake of the burst
telecom bubble in Europe, but strong public finances
and good financial strength in companies and households were stabilising factors. In Norway, monetary
tightening achieved the desired result in the form of a
slower economy and lower inflation figures. In Sweden,
inflation climbed much higher than the Riksbank
expected. This is an indication that monetary policy
should have been tightened much more during the
upswing and it contributed to Swedish bond yields
rising relatively more than European yields.
Currency market
Currency markets were also affected by the changes in
the business cycle perspective. At the beginning of the
year, most people thought that the days of the dollar
were numbered and that the falling euro trend would
turn. But as soon as there were signs of a downturn in
the EMU area, the dollar strengthened again. There was
a similar situation following the events of September 11.
Initially, many people thought that the negative effects
of the terrorist attacks would be concentrated to the US,
and this caused the dollar to fall. When it became apparent that Euroland would not escape the aftermath, the
dollar recovered. The Swedish krona fell sharply against
both the dollar and the euro as foreign investors sold off
some of their Swedish shareholdings. The recovery in the
stock market in the autumn and signs that the bottom
had been reached for the US technology sector revived
the krona.
Developments below the surface thus led to both negative
and positive surprises in the US economy in 2001. In
Europe, there was disappointment that the economic
trend for most countries was similar to the US trend.
The general sentiment in early 2001 was that Europe
would achieve good growth in spite of a weak US
Annual Report 2001
19
Review of operations
RESULT AND PROFITABILITY
Handelsbanken is a Nordic universal bank – including
insurance operations – with a highly decentralised organisation. The heart of the Bank is its large branch office
network. The branches are totally
responsible for customers within
their local area of operations. The
branch office co-ordinates the central
and/or regional resources which are
sometimes needed to offer customers
the best possible service. Handelsbanken prioritises high-quality service
combined with the lowest expenses
compared with other Nordic banks.
Operating profit was SEK 11 208m (11 683). The
previous year’s result was affected by the one-off effect
arising when the Bank sold its shares in Svensk Exportkredit AB (Swedish Export Credit Corporation). This
one-off effect was SEK 343m and when excluded, the
previous year’s operating profit was SEK 11 340m. All
comparisons with the previous year exclude this one-off
effect. Net interest income and net trading income increased, while net commission income fell. Expenses for
comparable units and excluding exchange rate changes
increased by 7%. The profit and loss accounts for
1997–2001 are shown on pages 76–77.
Ulf Hinds
GENERAL
BRANCH OFFICE OPERATIONS consist of
ten regional banks – seven in Sweden
and one each in Norway, Finland
and Denmark.
OPERATING PROFIT
is responsible
for trading in the money and foreign
exchange markets, for trade finance
and financial institutions, and banking
operations outside the Nordic
countries. It also includes the Bank’s
unit for economic research.
Net interest income
HANDELSBANKEN SECURITIES is responsible for corporate finance and equity
sales and trading. Handelsbanken
Securities is organisationally part of
Handelsbanken Markets but its
results are reported separately.
Performance-related
staff costs
HANDELSBANKEN MARKETS
HANDELSBANKEN ASSET MANAGEMENT
comprises fund management, discretionary management and institutional
custody services.
HANDELSBANKEN PENSION AND INSURANCE
offers a full range of life insurance
and pension products marketed by
Handelsbanken Liv and SPP.
offers a complete range of finance company services
in all the Nordic countries.
HANDELSBANKEN FINANS
offers a selection
of bank and insurance services for
customers who do not need the
branches’ broad range of products
and customised service.
STADSHYPOTEK BANK
manages
the Group’s Swedish kronor liquidity,
funding in the capital markets, and
funding and clearing through the
Riksbank.
UJ
HANDELSBANKEN TREASURY
20
2001
2000
SEK m
Excl. items Change
affecting
%
comparability
13 385
11 791
11 791
14
Commission, net
5 028
5 455
5 455
–8
Trading, net
2 656
2 633
2 633
1
585
801
458
28
Total income
21 654
20 680
20 337
6
Staff costs excl.
performance-related
– 5 580
– 4 844
– 4 844
15
– 27
Other income
Other expenses
Total expenses
Result before loan losses
Loan losses incl.
change in value of
repossessed property
Operating profit
– 338
– 464
– 464
– 4 376
– 3 756
– 3 756
17
– 10 294
– 9 064
– 9 064
14
11 360
11 616
11 273
1
– 152
67
67
11 208
11 683
11 340
–1
Income
Income increased by just over 6%. Net interest income
rose by 14% to SEK 13 385m (11 791). Margins were
essentially unchanged, and the increase in net interest
income was therefore mainly due to higher volumes.
Net commission income fell by 8% to SEK 5 028m
(5 455). Equity-market related commission decreased,
while both lending and payment commission increased.
Net trading income continued to increase to SEK 2 656m
(2 633). Money market and foreign exchange trading
were the most important factors behind this increase.
Expenses
For comparable parts of the Group and excluding
foreign currency effects, expenses increased by 7%.
Total expenses were SEK 10 294m (9 064), which was
an increase of just under 14%. Five percentage points
of this increase derived from the acquisitions of Midtbank and SPP and two percentage points from foreign
exchange fluctuations. The remaining cost increase was
Annual Report 2001
due to higher IT expenses and a large increase in the
number of branches outside Sweden. The Bank opened
16 new branches outside Sweden, which led to SEK 87m
in increased expenses. IT expenses were SEK 2.6bn (2.3).
The C/I ratio before loan losses was 47.5% (44.6)
and after loan losses 48.2% (44.2).
Profitability
COST/INCOME RATIO
2001
2000
Before loan losses
47.5%
44.6%
After loan losses
48.2%
44.2%
SENSITIVITY ANALYSIS OF THE HANDELSBANKEN GROUP’S RESULT
Return on shareholders’ equity calculated after full tax
was 18.4% (21.6), while calculated after standard tax,
it was 17.8% (19.9).
Change
Impact on
operating
profit
Impact on
earnings
per share
SEK
0.05
Commission, net
+/– 1%
+/– 49
RETURN ON SHAREHOLDERS’ EQUITY AFTER STANDARD TAX
Number of employees
+/– 100
–/+ 64
0.07
%
25
Salaries
+/– 1%
–/+ 54
0.06
Other general
administrative expenses
+/– 1%
–/+ 33
0.03
20
15
ASSETS
Other
listed banks
10
31 December
5
2001
Standard tax
50% 1985–1988
30% 1989–1993
28% 1994–2001
0
-5
1985
1987
1989
1991
1993
1995
1997
1999
2000
Change
%
128 347
88 262
45
Lending to the general public 800 068
689 106
16
94 677
– 25
SEK m
Interest-bearing securities
2001
Lending to credit institutions
70 857
Other assets
175 249
148 308
18
Total assets
1 174 521
1 020 353
15
2001
2000
Change
%
11
Appropriations and tax
The Bank received compensation of SEK 400m (974) in
pension settlement from the Bank’s pension foundation.
The assets in the Bank’s pension foundation and the
pension fund exceeded the commitments by SEK 9bn
(15). The Group’s tax expense was SEK 3 202m (3 353).
This is equivalent to an effective tax rate for the Group
of 27.8%. Specifications of deviations from the nominal
tax rate are reported under Note 14, page 60.
BUSINESS VOLUME TRENDS
Balance sheet, lending and deposits
Total assets increased by 15% to SEK 1 175bn (1 020).
The increase is due to higher lending to the general
public, which increased by 16% to SEK 800bn (689).
In addition to the increase in lending, the Bank’s holdings
of interest-bearing instruments also rose by SEK 40bn
to SEK 128bn (88).
There was a large demand for loans from both
companies and households. Lending growth peaked
during the summer. Lending to households grew by
14% and to companies by 18%. Corporate lending
totalled SEK 505bn and household lending was
SEK 295bn. Mortgage lending represented almost 45%
or SEK 350bn (326) of lending to the general public.
Mortgage lending to households increased by 11% to
Annual Report 2001
LIABILITIES AND SHAREHOLDERS’ EQUITY
31 December
SEK m
Deposits and funding
from the general public
283 692
255 350
Liabilities to credit institutions 220 126
155 414
42
Issued securities etc.
440 981
401 489
10
Other liabilities
152 634
146 568
4
Subordinated loans
28 976
19 066
52
Shareholders’ equity
48 112
42 466
13
Total liabilities and
shareholders’ equity
1 174 521
1 020 353
15
21
SEK 212bn (191). Corporate mortgage lending was
SEK 138bn (135). In the Nordic countries outside
Sweden, lending was SEK 97bn (73).
The adjoining table shows the geographical distribution of lending, principally based on where the borrower
is domiciled. Note that lending to the general public in
Sweden decreased somewhat as a proportion of total
lending, to just over 80%. Special attention was paid
during the year to a number of sectors where analysts
and rating agencies foresaw problems, particularly
following the terrorist attacks in the US in September.
The Bank’s exposure to these sectors is shown in the
adjoining table. The principles for granting loans are
identical irrespective of business sector, and the Bank
feels no particular concern regarding these commitments.
The credit portfolio included 6 (5) exposures which
exceeded 10% of the Group’s capital base. The table
shows lending to the general public by categories.
Deposits from the general public rose by 18% to
SEK 226bn (191). The Bank continued to gain market
share in the household deposits market in Sweden. Its
share was 17.5%1) (17.2).
GEOGRAPHICAL DISTRIBUTION OF LENDING
DEPOSITS FROM THE GENERAL PUBLIC, HANDELSBANKEN GROUP
31 December
31 December
1) November 2001
2001
2000
Change
%
from households
74 170
67 179
10
from companies etc.
78 094
76 001
3
152 264
143 180
6
64
GROUP
SEK m
2001
2000
Sweden
646 753
573 767
Norway
43 640
35 226
Finland
32 117
25 837
Denmark
20 772
11 605
Rest of Europe
26 634
21 555
North America
28 339
19 066
Asia
1 813
2 050
Total
800 068
689 106
The distribution shows where lending operations are conducted. This mainly
corresponds to the domicile of the borrowers.
SEK m
Deposits in Swedish kronor
Foreign currency deposits
from households
13 641
8 312
from companies etc
59 845
39 524
51
73 486
47 836
54
225 750
191 016
18
Total deposits
OUTSTANDING LOANS TO CERTAIN SECTORS, HANDELSBANKEN GROUP
31 December
SEK bn
2001
% of lending
Telecom
15.6
2.0
Travel, hotel
2.8
0.3
Shipping
9.5
1.2
HOUSEHOLD DEPOSITS – MARKET SHARE IN SWEDEN, SEK,
UP UNTIL NOVEMBER 2001
%
18
17
16
Airlines, aircraft finance,
airport finance
3.1
0.4
Non-life insurance
0.3
0
15
14
13
LENDING TO THE GENERAL PUBLIC, HANDELSBANKEN GROUP
12
31 December
2001
2000
Change
%
258 579
234 650
10
SEK m
Lending in Swedish kronor
to households
to companies etc.
11
1991
336 849
296 746
14
595 428
531 396
12
45
1993
1995
1997
1999
2001
Foreign currency lending
to households
36 163
25 024
to companies
171 953
135 875
27
208 116
160 899
29
Provision for possible
loan losses
Total lending
22
– 3 476
– 3 189
9
800 068
689 106
16
Annual Report 2001
LOAN LOSSES AND BAD DEBTS
FINANCIAL RISK
Loan losses
The economic outlook deteriorated in Sweden and the
other Nordic countries. The number of bankruptcies
increased in Sweden and corporate profit levels fell. In
1999 and 2000, the Bank’s recoveries were higher than
its loan losses. In 2001, the Bank reported loan losses
of SEK 152m, including changes in value of repossessed
property, compared to the previous year’s recoveries of
SEK 67m. The change in value of repossessed property
was SEK 8m (1).
Amounts recovered from previous losses were
SEK 574m (272) and provisions written back were
SEK 722m (565).
Eight of the loan losses exceeded SEK 40m. The
table below shows loan losses analysed by borrower
category.
The Bank limits and monitors financial risk according
to the principles described in “Risk and risk control”
on page 44.
The interest rate adjustment periods for the Bank’s
assets and liabilities are shown in the table on the next
page. The table shows the interest rate adjustment periods
for the Group’s assets and liabilities on the balance
sheet and off-balance-sheet items for all currencies at
the end of 2001.
A change in interest rates has an impact on the Bank’s
net interest income, partly through the differences in
interest rate adjustment periods between assets and liabilities and partly due to the difference in the volume
of interest-bearing assets/liabilities. The overall impact
of these factors means that at the year-end, net interest
income would have been higher if interest rates were
rising.
Bad debts
Bad debts, after deduction of provision for possible loan
losses, were SEK 1 468m (2 313). They represented
0.18% (0.33) of lending at the year-end.
The reserve for possible loan losses was SEK 3 571m
(3 219), which is 71% (58) of gross bad debts. A full
report is given in note 17, page 63.
LOANS AND LOAN LOSSES BY CATEGORY
31 December
2001
Loans
SEK m
%
2000
Loan losses
SEK m
%1)
Loans
SEK m
%
Loan losses
SEK m
%1)
Industrial, trading and service companies, etc.
264 768
30.4
– 705
0.33
215 671
27.5
– 200
0.11
Households
294 742
33.8
– 113
0.04
259 674
33.1
– 91
0.04
Construction and property companies
173 499
19.9
– 98
0.06
154 284
19.7
– 10
0.01
58 931
6.8
– 23
0.04
52 236
6.7
– 42
0.08
8 128
0.9
0
—
7 241
0.9
0
—
Housing co-operative associations
Local authorities
Lending to the general public
800 068
689 106
Banks
48 498
5.6
12
– 0.02
76 095
9.7
7
– 0.01
Other credit institutions
22 359
2.6
0
—
18 582
2.4
0
—
70 857
94 677
Less amounts recovered but not categorised
Change in value of repossessed property
Total
870 925
100.0
767
—
402
—
8
—
1
—
– 152
0.02 2)
783 783
100.0
67
– 0.01 2)
1) As a percentage of loans per category at beginning of year.
2) As a percentage of lending to the general public and credit institutions excl. banks at beginning of year.
Annual Report 2001
23
INTEREST RATE ADJUSTMENT PERIODS FOR THE GROUP’S ASSETS AND LIABILITIES
SEK m
–3 mths
3–6 mths
6–12 mths
1–5 yrs
5 yrs–
Total
ASSETS
Lending
511 271
46 910
38 050
184 816
36 530
817 576
Banks and other financial institutions
86 240
6 413
12 662
741
246
106 301
Bonds etc.
53 957
18 761
13 860
36 486
7 962
131 026
Total assets
651 468
72 083
64 572
222 042
44 738
1 054 903
LIABILITIES
Deposits
314 239
7 489
2 014
6 109
6 081
335 932
Banks and other financial institutions
219 193
13 871
9 374
1 472
1 482
245 391
Issued securities
161 466
88 689
100 441
117 045
3 614
471 254
Total liabilities
694 898
110 049
111 828
124 625
11 177
1 052 578
4 744
20 389
88 725
– 60 902
– 27 952
25 003
– 38 687
– 17 576
41 469
36 514
5 609
27 329
Off-balance-sheet items
Difference between assets and liabilities
including off-balance-sheet items
The table shows the interest rate adjustment periods for the Group’s interest-related assets and liabilities as at 31 December 2001, reported as at the transaction date.
Non-interest-bearing assets and liabilities have been excluded.
Value-at-Risk
Handelsbanken uses Value-at-Risk (VaR) as a method of
measuring risks. Daily VaR at Handelsbanken Markets
is shown in the table.
The VaR level in the Bank’s equity, fixed-income and
exchange rate positions was on average SEK 37m (39),
in other words with 99% probability, the Bank would
not lose more than SEK 37m in a single day. During the
year, the VaR level was SEK 66m at its highest and
SEK 19m at its lowest.
The VaR level in Handelsbanken Markets’ equity
risk was on average SEK 6m. At its highest, the equity
risk was SEK 16m and at its lowest SEK 1m.
Value-at-Risk for interest and exchange rate risk was
on average SEK 39m. It was SEK 66m at its highest
and SEK 19m at its lowest.
The largest risk in trading operations is interest rate
risk. It is possible to measure market risks with VaR
without taking into account the correlation between
interest rate, exchange rate and equity risk. This type
of measurement revealed that interest rate risks comprise
78%, equity risks 12% and exchange rate risks 10% of
the total risk.
DAILY VALUE-AT-RISK IN 2001 FOR HANDELSBANKEN MARKETS – INTEREST-RATE RISKS, EXCHANGE RATE AND EQUITY PRICE RISKS
Frequency (number of days)
15
10
5
15
24
20
25
30
35
40
45
50
55
60
65
70 SEK m
Annual Report 2001
Interest-rate, exchange rate and equity risks
The measure of interest rate risk used by Handelsbanken
calculates the impact on the market value of all assets
and liabilities both on and off the balance sheet, if all
interest rates rise by one percentage point. At year-end,
the Group’s interest rate risk was SEK 659m (462).
The increase is due to Handelsbanken Markets expanding its operations in derivatives and bond trading.
The equity risk was a maximum of SEK 9m (30),
in the case of a 10% change in all share prices.
The exchange rate risk is measured as the impact on
the Bank’s result if exchange rates change by 5%. This
risk was SEK 1m (7.5).
DERIVATIVE VOLUME
31 December
SEK bn
As stated in the Risk and risk control section, a derivative
is a financial contract whose value is dependent on the
underlying asset. This means that derivatives are in
general monitored according to the same principles as
the underlying asset. Derivative instruments in the
Bank’s books are shown on page 73.
Nominal amount is the most common measure of
volume for the derivatives market. The adjoining table
shows the aggregated nominal amounts in derivative
contracts.
The table shows that outstanding volumes increased
by 37%. Nominal amount is simply a measure of volume
and not of market risk or credit risk. These risks are
much smaller than the nominal volumes.
The counterparty risk in derivatives is based on the
risk classes used for calculating capital adequacy.
Groups A–C (see table) are weighted 0%, 20% and
50%, respectively. The table shows that the largest
exposures were in Group B, which is mainly Swedish
or foreign credit institutions in the EU or OECD. The
recalculated amount of a derivative contract comprises
the sum of the contract’s positive market value on the
balance sheet day and a computed amount for possible
future changes in risk.
2000
Currency forwards
1 497
983
Interest rate and currency swaps
1 772
1 381
Interest rate futures and FRAs
2 304
1 819
Interest rate and currency options
253
115
Equity derivatives
248
135
6 074
4 433
Nominal amount
Converted amount
Total
COUNTERPARTY RISK IN DERIVATIVES
31 December
SEK bn
Derivative instruments
2001
Class A
200
8
Class B
4 593
24
Class C
1 281
11
Total
6 074
43
CAPITAL BASE AND CAPITAL REQUIREMENT
SEK m
2001
2000
Tier 1 capital
37 188
34 596
Tier 2 capital
27 376
16 724
Less shareholdings in insurance
companies and 5–50% in companies
which conduct banking operations
– 4 868
– 675
Total tier 1 and tier 2 capital
59 696
50 645
CAPITAL BASE
Enlarged capital base
921
1 050
60 617
51 695
Credit risks
588 746
518 185
Market risks
22 023
23 371
610 769
541 556
Capital ratio
9.9%
9.5%
Tier 1 capital ratio
6.1%
6.4%
Total capital base
CAPITAL REQUIREMENT
Risk-weighted amount
Total
CAPITAL RATIO
The Group’s capital ratio was 9.9% (9.5) and the
Tier 1 capital ratio was 6.1% (6.4).
Tier 1 capital, which mainly consists of shareholders’
equity, increased by 7% to SEK 37.2bn (34.6). The increase was due to profits generated during the year,
reduced by the proposed dividend, combined with the
effect of the ongoing buy-back programme. Apart from
Tier 1 capital, the total capital base also includes Tier 2
capital and the enlarged capital base. These types of
capital are obtained by funding in the market.
Annual Report 2001
25
NORDIC BANK RATINGS
31 December
MOODY’S
Long
term
STANDARD & POOR’S
Short
term
Financial
strength
Long
term
Short
term
FITCH
Long
term
Short
term
Handelsbanken
Aa2
P-1
B+
A+
A-1
AA–
F1+
FöreningsSparbanken
Aa3
P-1
B
A
A-1
A+
F1
Nordea (Nordea Bank Sweden)
Aa3
P-1
B
A+
A-1
AA–
F1+
SEB
A2
P-1
C+
A–
A-2
A+
F1
Danske Bank
Aa2
P-1
B+
AA–
A-1+
AA–
F1+
Den norske Bank
A1
P-1
B–
A
A-1
Rating
The rating agencies’ rankings mainly affect the costs of
the Bank’s funding in international markets. In 2001,
Handelsbanken’s rating from the three major rating
agencies was unchanged. See the above table.
ACQUISITIONS OF SPP AND MIDTBANK
In March, the Bank concluded the acquisition of SPP
Liv AB, which had been announced in December. In
April, the Bank made a public bid for all the shares in
Midtbank A/S, which was accepted by the shareholders.
Midtbank A/S was consolidated with Handelsbanken
from 15 May. As a result of the acquisition, Handelsbanken gained 24 new branches, mainly in Jutland. It
also made Handelsbanken the fifth largest bank in
Denmark.
IT DEVELOPMENT
The Group’s IT costs were SEK 2.6bn, which is nearly
SEK 0.3bn more than the previous year. The increase
was mainly due to various investments in IT development for business operations in Sweden and abroad.
The Group also continued to expand its Internet operations. The increase also includes the cost of transferring
the system platform for the Finland regional bank to
a new service provider and extra IT costs related to the
acquisition of Midtbank.
As far as possible, Handelsbanken aims to run its IT
operations with its own staff, since this promotes a
sense of community with the business operations and
thereby a greater feeling of joint responsibility for the
Group’s results. It is also more efficient to employ people
on a more permanent or long-term basis as it enables
them to gain in-depth experience of the systems and
operating environments which the Bank uses. This is
a vital component in the Bank’s ability to run a costeffective IT operation. To meet the increased demands
for IT support, there was a major recruitment drive in
the Group’s IT units.
26
The number of Internet customers increased by 36%
to over 535 000. A new architecture and technical
platform was launched for the Bank’s Internet services
in Sweden. The architecture is Java-based and work has
started on rewriting the Swedish Internet services in Java.
This will allow for an increased number of Internet
customers and transactions, while retaining the stability
of the services. The platform is intended for subsequent
use by other parts of the Group.
Handelsbanken is an active participant in a joint
Swedish bank project which is developing a solution for
customers to identify themselves in a secure manner, for
example when filing electronic tax returns or shopping
over the Internet. The service is sold to customers in
competition with other members of the consortium.
Handelsbanken has entered into a framework agreement
with the Swedish Agency for Administrative Development
on behalf of government, county council and municipal
agencies.
As the Bank expands outside Sweden, there is increased
demand for IT support. The Bank has extensive branch
office operations in the Nordic countries outside Sweden,
where service providers are used for most IT development and operations, in close co-operation with the IT
department at the local regional bank. This is the most
efficient way of working in these countries, considering
the stage of development at these regional banks. At the
Bank’s non-Nordic units, development and operations
are performed by the Bank’s own staff. The long-term
aim at these units is to consolidate base systems and
operations. The same base system has been implemented
at the units in Singapore/Hong Kong and in Poland.
In 2002, it will also be implemented at the Frankfurt
branch. All these IT operations will be run from Sweden.
In 2001, the Bank’s IT operations were stable and the
level of accessibility was high. Two benchmark surveys
were performed, one for mainframes and one for minicomputers, and both reported very good results in terms
of quality, cost-effectiveness and system accessibility.
Annual Report 2001
Review of business areas
Business area BRANCH OFFICE OPERATIONS
QUARTERLY PERFORMANCE
SEK m
Net interest income
2001:4
2001:3
2001:2
2001:1
Total
2001
Total
2000
Change
%
3 414
3 112
2 931
2 898
12 355
10 609
16
Commission, net
713
585
738
610
2 646
2 979
– 11
Net result on financial operations
– 10
24
120
140
274
434
– 37
27
67
10
2
106
49
116
4 144
3 788
3 799
3 650
15 381
14 071
9
Other income
Total income
Net internal remuneration included in income
Total expenses
238
203
249
216
906
1 072
– 15
– 1 852
– 1 584
– 1 533
– 1 472
– 6 441
– 5 538
16
2 292
2 204
2 266
2 178
8 940
8 533
5
– 233
– 21
–1
23
– 232
172
Operating profit
2 059
2 183
2 265
2 201
8 708
8 705
19.3
20.5
21.5
21.0
20.6
22.8
5 670
5 927
5 452
5 149
5 549
5 190
Return on equity, %
0
BALANCE SHEET
31 December
SEK m
2001
2000
45 025
36 533
703 169
622 699
Bonds
Nordic area, while Handelsbanken should have the lowest
expenses. This strategy will enable the Bank to grow
throughout the Nordic area.
7 514
8 206
Other assets
37 058
26 987
Total assets
792 766
694 425
fourth largest bank in Finland, fifth in Norway and fifth in
Liabilities to credit institutions
228 377
189 791
Denmark in terms of total assets.
Results
Deposits and funding from
the general public
206 284
182 741
Issued securities
201 828
182 002
Other liabilities
122 842
110 033
33 435
29 858
792 766
694 425
Total liabilities and shareholders’ equity
Handelsbanken is a Nordic universal bank with a strongly
decentralised organisation. The branch is responsible for all
customers within its geographic area – including major
corporations. The branch office co-ordinates all services for
each customer. Where necessary, this is done in close co-
Handelsbanken has 458 branches in Sweden, 27 in Norway,
28 in Finland and 32 in Denmark. Handelsbanken is the
The result of branch office operations was unchanged
at SEK 8 708m (8 705). Net interest income increased
by 16% to SEK 12 355m (10 609), which compensated
for lower net commission income, an increase in loan
losses and higher expenses. Net commission income was
11% lower at SEK 2 646m (2 979). Loan losses were
SEK 404m higher than the previous year, at SEK 232m.
Expenses were up by 16% to SEK 6 441m (5 538).
This was mainly due to the continued expansion in the
Nordic countries outside Sweden and to higher costs for
IT investments.
operation with the Bank’s subsidiaries and with specialists
at regional and central levels.
Handelsbanken conducts complete universal banking operations throughout the Nordic area. The branch office operation
consists of ten regional banks: seven in Sweden and one
each in Norway, Finland and Denmark. The regional banks
are responsible for their own profits and pursue the same
goals – to deliver universal banking services with a higher
service level for customers compared with other banks in the
Annual Report 2001
Branch office operations in Sweden
The Swedish market is dominated by four major banks.
In the press and general debate, there is a tendency to
treat them as one unit, the “big banks”. But in terms of
development and market policy, Handelsbanken is very
different to other banks. Although the major banks as a
group lost market share in the Swedish banking market,
in most customer segments, Handelsbanken succeeded in
growing, while achieving very good profitability (see
table on next page).
27
Handelsbanken also differs from the other major banks
in its charging policy, chiefly because the Bank has
always maintained that it must be easy and cost-free for
customers to access their money, pay bills and use the
Bank’s Internet services. In line with this, Handelsbanken
has decided not to charge for ATM withdrawals, Privatgiro payments, Datasvar telephone banking and Internet
services.
Svenskt Kvalitetsindex (SKI) – the annual survey of
customer satisfaction – showed that Handelsbanken
was still Number One of the banks which have branch
offices all over Sweden. Handelsbanken’s top position
applies to both private and corporate customers. SKI
also carried out a separate survey among private
customers to find out whether there was any difference
in satisfaction between customers who mainly communicated with the Bank via the Internet and those who
preferred other channels for meeting the Bank. This was
indeed the case for three out of four major banks but
for Handelsbanken, customer satisfaction was the same
irrespective of how they chose to communicate with the
Bank. This was very encouraging since Handelsbanken
has always regarded the Internet as just one of many
ways of contact with the Bank and for this reason,
Internet services have been completely integrated with
other branch office services. Customer satisfaction
is a pillar of the Bank’s philosophy and an important
means of achieving the company’s overall goal of higher
profitability than our competitors. The SKI survey was
broken down at regional level and one regional bank
went further and conducted a survey at branch office
level. (See the section “Satisfied customers – survey at
branch level”.)
In view of the result of SKI’s survey, it was no great
surprise – but nevertheless very welcome – that Privata
Affärer, a periodical for private finances, acclaimed
Handelsbanken “Bank of the Year”. It is the first time
a major Swedish bank has received this award. The jury
explained their decision by describing Handelsbanken
as “…a bank which offers good personal service at
branch offices and combines an extensive branch
network with free banking services over the Internet.”
MARKET SHARE IN SWEDEN
2001
%
2000
%
SEK deposits, households 1)
17.5
17.2
Mutual funds, new sales
19.0
11.4
SEK lending, households1)
16.8
16.7
Mortgage loans in SEK, households 1)
31.6
31.4
Profitability lead on other listed banks
+6.5
+4.9
Victor Brott
Satisfied customers – survey at branch level
Having more satisfied customers than other comparable
banks is one of the main reasons behind Handelsbanken’s
lead in profitability and growth. For many years, the Bank
has been at the top of one of Sweden’s most detailed
customer surveys – Svenskt Kvalitetsindex. For the second
year running, the results were also reported at regional
level, thus enabling the Bank to follow up its position in
different parts of the country.
The Stockholm City regional bank performed the Bank’s
first survey at branch office level. At all 48 branches in the
regional bank, 50 corporate customers and 100 private
customers were interviewed by phone. A total of 7 200
customers were interviewed, which is an even larger sample
than that used by SKI. The purpose of this was to provide
each branch with better feedback material so that they
could act to increase customer satisfaction.
A central feature of the branch report was a table
showing how important different factors were for customers,
such as opening hours, quick decisions and regular product information, and the branch’s performance in these
respects. Several branches reviewed their opening times,
staffing levels, phone service and increased the number of
front-office desks in order to cut waiting time for customers,
Many of them increased their supply of foreign currency.
The customers’ opinions led to tangible results: “We
immediately saw that our customers wanted longer opening
times in the afternoons and evenings,” says Håkan Lindholm,
manager of the Upplands Väsby branch. “So we have now
extended our opening hours on Thursdays. If this works out
well, we will continue,” says Håkan.
Another survey will be performed in 2002. All branches
can then see whether their customers have become more
satisfied during the past year.
“It is difficult to make any real improvements if you don’t
make measurements,” says Magnus Uggla, head of the
regional bank. “The survey helps our branches to steer
their operations in the right direction. Our goal is for customers to be more and more satisfied each year.”
1) Market share for 2001 as at 30 November
28
Annual Report 2001
When SPP Liv AB was acquired, a major factor in the
acquisition calculation was the scope for cross-selling of
banking services to SPP customers who did not already
have a relationship with Handelsbanken. Cross-selling
has been particularly successful to companies. Business
volumes of almost SEK 5bn have been generated so far
from SPP customers who were not previously customers
of Handelsbanken. The Bank will continue working
with cross-selling in the same way as it did to customers
of Stadshypotek. Plans have been drawn up and at the
end of the first quarter of 2002, more active customer
marketing will start.
Branch office operations in Norway
The Bank opened branches in Sarpsborg and Ålesund,
bringing the number of branches in Norway to 27. The
Norwegian market was characterised by increased competition and a certain amount of pressure on margins.
The Bank gained market share among both companies
and private individuals. The Bank’s market share in
Norway is estimated at 4–5%.
Profits in Norway fell, which was entirely due to
provisions for loan losses against certain exposures in
the shipping industry, relating to the acquisition of
Bergensbanken. The result before loan losses continued
to develop in a very favourable direction.
Bergensbanken is completely integrated with Handelsbanken, both formally and in terms of working methods.
From a legal point of view, the whole Norwegian operation is run as a branch of Handelsbanken. Bergensbanken ceased to be a brand name at the end of 2001
and all operations are run under the name of Handelsbanken. Banking operations in Norway are run entirely
according to the Handelsbanken model. The branches in
Bergen were allocated a geographic area of operations and
were given complete responsibility for their customers.
KEY FIGURES – NORDIC BRANCH OPERATIONS OUTSIDE SWEDEN
2001
Number of branches
Number of customers, private, 1 000s
2000
87
52
170
102
Number of customers, corporate, 1 000s
29
19
Internet penetration %, private
23
28
1 091
758
141
117
Total assets, SEK bn
Lending to the general public, corporate, SEK bn
74
57
Lending to the general public, private, SEK bn
31
20
Deposits from the general public, SEK bn
39
28
5
4
Mutual fund volumes, SEK bn
Income, SEK m
Expenses, SEK m
Operating profit, SEK m
Annual Report 2001
2 193
1 561
– 1 929
– 769
264
792
Branch office operations in Finland
The Bank had 28 branches in Finland, 8 of which
were new during the year, an increase of 40%. Branches
were opened in Helsinki-Munkkivuori, Joensuu,
Kokkola, Raisio, Rovaniemi, Salo, Seinäjoki and
Hämeenlinna. Handelsbanken had approximately
68 000 customers. Total assets were around SEK 54bn.
Operations expanded very rapidly. The most critical
factor in opening new branches is finding the right
staff. They also need substantial backup from the
regional head office. Thus, rapid organic growth makes
very high demands on resources. Operating profits
were lower in Finland. This was due in part to the
rapid expansion, but also to the process of changing
IT service providers. This led to almost doubled costs
for IT production in Finland.
Branch office operations in Denmark
Operations in Denmark continued
their very rapid expansion and for
the third year running, income grew
by over 60%, excluding the effects
of the acquisition of Midtbank.
At the beginning of April,
Handelsbanken made a public bid
for Midtbank A/S. The bid was wellreceived by Midtbank’s shareholders,
employees and customers. Midtbank
was consolidated with Handelsbanken
from 15 May, and in July, Handelsbanken had acquired 100% of the
shares in Midtbank and the company was delisted from
the Copenhagen Stock Exchange. Like Handelsbanken,
Midtbank has a long history. It was founded 131 years
ago and its operations have been centred on the Jutland
area of Denmark. The bank’s method of operations has
been characterised by close customer relationships,
particularly with private individuals and small/mediumsized companies.
Following the acquisition, Handelsbanken became
the fifth largest bank in Denmark. Two new branches
were opened in Horsens and Esbjerg, bringing the
number up to 32. The Denmark regional bank is now
organised in the same way as Handelsbanken’s other
regional banks. The process of delegating decisionmaking functions to the Midtbank branches is in
progress.
In collaboration with the Århus School of Business, the
Danish Centre for Management carried out a survey of
customer satisfaction among the private customers of
Danish banks. Handelsbanken had the most satisfied
private customers of all the major Danish banks. According to a survey carried out by a business magazine called
Børsens Nyhedsmagasin, 13% of large Danish companies
said they did regular business with Handelsbanken and
6% of companies with sales in excess of DKK 100m
said that Handelsbanken was their main bank.
29
the corporate market where
Stadshypotek confirmed its
position as the predominant
lender.
At year-end, the mortgage
group’s lending was SEK 350bn
(326), an increase of SEK 24bn.
As at 30 November, total lending in the Swedish mortgage
market was SEK 1 116bn
(1 0691)). Stadshypotek’s share
was 31.0% (30.41)). Its share of
the household market was 31.6%
(31.41)) and 30.1% (29.21)) of
the corporate market. Margins
were unchanged but due to its
increased share of household
lending, Stadshypotek’s overall
margin was slightly higher.
In 2000, a new mortgage loan –
PrioritetsLån – was introduced
on the Danish market. The total
mortgage loan portfolio to
private individuals now exceeds
DKK 1bn.
Handelsbanken issued an
equity linked bond for DKK
207m, the largest-ever instrument of this type placed in the
Danish market.
Internet
At Handelsbanken, the Internet
is just one of many ways customers can communicate with
their branch. But in order to
have a dialogue, two-way communication is needed. So, it was
important for the branches to
be able to communicate back
over the Internet. The work of
enabling branches to make their own homepage was
completed. Every single branch in all the Nordic
countries has its own homepage which is unique to
each branch. Over 535 000 customers of the Group
were registered for the Internet, most of them in
Sweden. More than 30% of Swedish private customers
use the Bank’s Internet services. The proportion is
slightly lower in the other Nordic countries. In Sweden,
over 50% of corporate customers are linked to Internet
banking. Towards the end of the year, the rate at which
they signed up declined to some extent.
New credit system
A great deal of effort has been invested in a new loan
and collateral system which will be implemented gradually, starting in 2003 with the collateral system. In order
to make system development work more efficiently, the
Bank is aiming for systems to be built partly using
general components, which can be reused for future IT
projects.
Mortgage lending
Stadshypotek and its subsidiary Handelsbanken Hypotek
are responsible for most of the Group’s mortgage financing, and all customer contacts are through the Bank’s
Swedish branch network.
In 2001, there was high demand for loans, particularly from households. An important reason for this
was an active trend to convert rental apartments into
housing co-operatives, particularly in the large cities.
Stadshypotek’s market shares increased, in both
corporate and household lending. Apart from increased
focus on mortgage loans at branch offices, these successes
are due to the launch of the property bidding service,
e-bud, which helped expand the Bank’s collaboration
with estate agents. Lending volumes also increased on
30
Stadshypotek e-budTM
The electronic bidding service
(called e-bud in Swedish) was launched at the end of
2000 and is a new feature on the Swedish housing market.
It enables buyers and sellers to follow in real-time via
the Internet, bidding on properties which estate agents
put on the market. The service is based on close co-operation with estate agents but does not change their role
regarding contacts and responsibility towards their
customers. Stadshypotek’s role is to provide an independent marketplace.
Over 400 estate agents signed up for this service in
2001. A total of 3 400 properties were available for
bidding and over 13 500 bids were made. The service
attracted more and more attention with over 600 000
visitors to the marketplace.
Stadshypotek e-bud creates added value for all those
involved. For interested parties/buyers, it means that
they can follow the bidding process in real-time and see
for themselves the status of their own bid. For the seller,
the attraction is that more people can participate in the
bidding process, thus leading to a fairer price. For estate
agents, e-bud means increased efficiency since the time
they save can be used for giving advice and marketing.
Many estate agents who frequently use the service,
consider that the customer has a more positive view of
the complex bidding process through using e-bud. There
is increased transparency, faster information about how
the sale is going and a higher level of security. The
customers’ financing requirements are also met at an
earlier stage of the process. The branches have an
important advisory role in connection with mortgage
transactions, mainly for loans, but also insurance solutions and ancillary banking business.
1) As at 31 December 2000
Annual Report 2001
Business area
SEK m
Net interest income
2001:4
2001:3
2001:2
2001:1
Total
2001
Total
2000
Change
%
498
455
404
149
1 506
145
Commission, net
81
48
45
44
218
166
31
–7
168
101
428
690
1 625
– 58
Other income
Total income
Net internal remuneration deducted from income
Total expenses
7
2
–1
7
15
10
50
579
673
549
628
2 429
1 946
25
7
7
20
7
41
39
5
– 238
– 294
– 263
– 276
– 1 071
– 1 010
6
341
379
286
352
1 358
936
45
44
1
–5
48
88
17
– 418
Operating profit
385
380
281
400
1 446
953
52
Return on equity, %
27.2
24.7
17.2
26.1
23.6
18.5
878
759
717
718
768
703
BALANCE SHEET
31 December
SEK m
2001
2000
211 023
198 197
70 328
48 560
Bonds
90 491
59 645
Other assets
212 052
138 516
Total assets
583 894
444 918
186 560
198 076
the general public
Issued securities
Other liabilities
91 345
54 954
209 633
182 374
91 896
5 495
4 460
4 019
583 894
444 918
Increased expenses as a result of investments in banking
in the UK and Mid-Europe and the subsidiary in Poland
were compensated by lower expenses through efficiency
gains in trading operations.
All three business areas at Handelsbanken Markets
increased their results, with Trading reporting the largest
increase.
In October, a joint back-office function was created.
All money and bond market, currency, equity and
Swedish custody operations are now gathered in one
department called Handelsbanken Markets Operations,
which carries out all back-office operations for Handelsbanken Markets, Handelsbanken Securities, the Swedish
branch office operations and to some extent, the Nordic
branch operations.
Handelsbanken Markets’ operations are organised into three
Trading
business areas: Trading, Financial Institutions and Trade
Handelsbanken Trading is responsible for the Bank’s
trading on the foreign exchange, money and fixed income
markets and also for the Bank’s activities in the public
debt capital markets. Operations have become highly
centralised in recent years. Previously, interbank trading
was conducted in twelve locations around the world,
but now only in Stockholm, New York and Singapore.
During the year, interbank trading in Luxembourg was
transferred to Stockholm. Customer sales remain a
natural part of business operations in those places
where the Bank was previously engaged in interbank
trading. Customer sales are carried out as close to the
customer as possible, in total accordance with Handelsbanken’s traditional work methods. There were 170
employees at Handelsbanken Trading.
Profits continued to develop well during the year in
all units and areas of operation, with New York and
Money Markets reporting particularly good results.
Finance, and Banking operations outside the Nordic countries.
The Bank’s economic research unit is also included in Handelsbanken Markets as a resource. Handelsbanken Markets has
just over 850 employees in 17 countries. From an organisational point of view, Handelsbanken Securities is also part
of Handelsbanken Markets. Handelsbanken Securities is
reported as a separate business area in the interim and
annual reports.
Results
Handelsbanken Markets’ operating profit was SEK 1 446m
(953) – a rise of 52%.
Income increased by 25% to SEK 2 429m, mainly due
to a strong growth in trading volumes. Expenses rose
by 6%, which is entirely due to exchange rate fluctuations.
Annual Report 2001
31
FOREIGN EXCHANGE AND
MONEY MARKETS
In foreign exchange and money
market trading, Handelsbanken
maintained its strong position
in Nordic currencies, while
trading in international and
emerging markets represented
an increasing share of this
business area’s result.
Through continued expansion of the product base, there
were increased opportunities to
meet customers’ requirements.
This also made it easier to
manage various types of financial risk in the operation. As a
result, Handelsbanken was able
to offer a number of structured
solutions in the area of foreign
exchange during the year.
Efforts to expand the number of financially strong
counterparties continued successfully. The Baltic focus
resulted in Handelsbanken being acclaimed Best Bank
in the Nordic and Baltic Regions by Euromoney in July
2001. The Bank also received a number of awards for
foreign exchange trading from leading financial periodicals
such as Corporate Finance and FX&MM.
MONEY MARKETS
The result for trading in bonds and interest derivatives
increased.
Handelsbanken reinforced its position as a leading
Nordic bank for public corporate issues and syndicated
loans in the debt capital market. This was confirmed
when the specialist periodical, EuroWeek, put Handelsbanken in first place for Eurobonds in Swedish kronor.
Handelsbanken performed public debt capital transactions for companies such as General Electric Capital
Corporation, Stora Enso and Nordiska Investeringsbanken.
Handelsbanken was a leading bank for syndicated
loans to Nordic companies and arranged loans for companies including Volvo, SCA, Copenhagen Airports and
Stena Line.
Financial institutions and trade finance
Operations continued to develop well and the result
increased by 14%.
Financial Institutions is responsible for business with
foreign banks and foreign governments. The main products offered are clearing services and cash management
solutions for foreign banks. The Bank increased the number
of customers using its Swedish krona clearing services.
This operation reported a significantly higher result.
Trade Finance is responsible for export documentary
credits, short- and long-term export finance, and project
finance. During the fourth quarter, Handelsbanken participated in financing a Mexican telecom operator which
32
purchased Nordic telecommunications equipment and the Bank
also arranged financing for a
water purification project in
China with a Swedish supplier.
Due to higher commission
income, this operation reported
an increased result. Volumes
for both export documentary
credits and export and project
finance increased.
Banking operations outside
the Nordic countries
Banking operations outside the
Nordic regions are organised
into five units: UK, Mid-Europe,
Asia, New York and Warsaw.
In the UK, the Bank has branches
in London, Manchester, Birmingham, Nottingham, Leeds and
Reading; in Mid-Europe, in Frankfurt, Hamburg,
Luxembourg, Vienna, Zurich and Paris; and in Asia,
in Singapore and Hong Kong. A total of 280 people
were employed in these operations.
The year was characterised by geographic and business
expansion in the UK and Mid-Europe. In the UK, where
the Bank has conducted retail banking operations for
almost two years, branches were opened in Leeds and
Reading. Many British companies and individuals became
customers of the six branches in the UK, even though
there was no formal marketing of their services. The
key to this success is a good range of products, a high
service level and local knowledge of the market. Two
new branches will be opened in 2002, one of them in
Newcastle.
During the spring, the corporate-focused banking
operations in continental Europe, apart from Poland,
were concentrated to a new unit called Mid-Europe,
with its head office in Frankfurt. This organisational
change has resulted in a well-integrated and cost-effective
banking operation. As part of this focus, the Bank was
the first Nordic bank to start a branch in Vienna. The
Vienna branch generated several attractive business
opportunities with Austrian customers who have
a Nordic connection. Handelsbanken will be enhancing
its European presence in the first half of 2002 by opening
an office in Amsterdam.
In February 2001, Handelsbanken was the first Nordic
bank to receive permission to start a wholly-owned
subsidiary in Poland. The permission to start actual
operations was received in early October. The unit is
situated in Warsaw and has 26 employees, one-quarter
of whom speak Swedish. The new subsidiary has attracted
a great deal of interest from the media and also from
Nordic-related companies which are its target group.
The number of new customers and completed transactions has so far exceeded even the best expectations.
Annual Report 2001
Business area HANDELSBANKEN SECURITIES
SEK m
Net interest income
2001:4
2001:3
2001:2
2001:1
Total
2001
Total
2000
Change
%
–2
– 29
– 38
– 52
– 121
– 130
7
Commission, net
181
147
241
198
767
980
– 22
106
93
101
199
499
804
– 38
5
40
87
26
158
83
90
290
251
391
371
1 303
1 737
– 25
– 21
Other income
Total income
Total expenses
31
7
14
11
63
80
– 234
– 220
– 244
– 249
– 947
– 982
–4
56
31
147
122
356
755
– 53
– 53
Operating profit
56
31
147
122
356
755
Return on equity, %
22.4
12.4
58.8
48.8
35.6
83.6
392
474
467
454
447
425
BALANCE SHEET
31 December
SEK m
2001
2000
67
113
535
54
Bonds
294
—
Other assets
18 563
14 808
Total assets
19 459
14 975
3 296
2 093
613
305
the general public
Issued securities
Other liabilities
—
—
14 821
11 893
729
684
19 459
14 975
deteriorated market conditions. Expenses, excluding
performance-related staff costs, rose, mainly because
the average number of employees rose by 22 to 447
and because of the negative impact of the falling krona.
Although Handelsbanken Securities was considerably
smaller than its major Nordic competitors in terms of
sales, the business area reported a competitive result.
In terms of value added per employee, Handelsbanken
was one of the top companies. The market position for
Handelsbanken Securities was strengthened in all four
Nordic countries. Overall, Handelsbanken was the third
largest participant on the Nordic stock exchanges.
On 1 January 2002, Handelsbanken Investment
Banking changed its name to Handelsbanken Securities,
which is the conventional name for this kind of business.
Handelsbanken Securities is responsible for corporate finance
Operations
and equity sales and trading. Apart from its activities aimed
Handelsbanken Securities aims to be the first choice
for customers performing equities transactions or
corporate finance business with a Nordic connection.
The Bank’s ambition is to secure a position in equities
and Corporate Finance which corresponds to that which
the Bank has in most other areas. Customers comprise
Nordic private individuals, via the branch offices, and
also Nordic and international institutions and companies,
who are served directly by Handelsbanken Securities
within the framework of a well-defined business
responsibility.
Handelsbanken Securities has good opportunities to
improve its market position. At an early stage, the Bank
focused on structured equity products which demand
broader financial competence and capacity than traditional equities business. For products such as equitylinked bonds, warrants, buy-backs, corporate incentive
programmes, various types of hedge instruments, equity
loans etc, Handelsbanken is probably already the overall
at companies and institutional investors, Securities also
provides support to the branches in the field of equityrelated products for small institutional investors and private
customers. This support comprises research, development
of new products and IT support. Operations are run in seven
countries with a focus on the Nordic markets. International
investors are mainly serviced via the units in Stockholm,
London and New York.
Results
Handelsbanken Securities reported an operating profit
of SEK 356m (755), down by 53%. Corporate Finance
and Sales/Trading both reported a lower result. For
Corporate Finance, the decrease was much less than for
equities trading, which is more dependent on volumes.
The lower result was mainly due to dramatically
Annual Report 2001
33
largest player in the Nordic
countries. These products can be
tailored to meet each customer’s
specific requirements and often
entail structuring risk or added
yield in an optimal manner.
Handelsbanken’s efficient
branch network in the Nordic
countries gives a unique opportunity to offer various equity products to Nordic private customers.
The Bank’s financial capacity and
credibility are also necessary in
order to offer customers competitive solutions in, for example,
equity loans or equity redemption
programmes.
Equity sales and trading
Handelsbanken Securities has
overall product responsibility for
equities sales/trading and equity
research. This includes support to
the branch offices on research products, information
systems and product development. The result generated
by Nordic customers’ equity business is reported under
branch office operations. Handelsbanken Securities is
remunerated for the work done on behalf of the branches.
Handelsbanken reinforced its market position in
traditional equity business – meaning research-driven
advice to institutional customers and private individuals. Gradual expansion of technology and research
products has also made Handelsbanken a major Internet
broker. Almost half of all equity trading in branch office
operations is done via the Internet.
Handelsbanken Securities decided to develop two
main areas: to offer customers an even better research
product and to focus more effectively on the international
customer base outside the Nordic countries. Equities
trading is becoming increasingly global and customers
are seeking a cross-border, sector-based research product.
The fact that the Bank closed its equity operations in
Paris should be seen in the light of this trend.
Corporate Finance
An increasing number of customers and companies are
seeking a main provider of various financial products,
one which can offer a broad range of business credits,
syndicated loans, currency hedging and equity finance etc.
This is a clear trend which favours Handelsbanken.
It is a matter of combining the competence at the individual branch, Handelsbanken Trading and Handelsbanken Securities in an efficient manner. The Bank
aims to offer a joint service in the financial area. But in
other cases it is vital to keep loans and advisory functions clearly separated. The individual customer’s
wishes are the decisive factor.
34
For Corporate Finance, this
trend of customers seeking
a main provider offers considerable potential for working more
closely with other units of the
Bank.
The market for Corporate
Finance services was much
weaker than the previous year.
The market for IPOs was generally weak and transaction volumes
for mergers and acquisitions also
dropped significantly. This trend
was accentuated after the summer and was further reinforced
after the terrorist attacks in the
US. Handelsbanken was affected
by the generally dismal market
situation, but all in all it was
a good year for the Bank with
profitability still at a healthy level.
A fall in profits in Sweden was to
a high degree counteracted by
increases in other Nordic countries, particularly Denmark. In sector terms, the technology sector brought in
by far the largest income, as in the previous year.
Among Corporate Finance’s seven public acquisitions
in the equity market in 2001 were German Eon’s acquisition of Sydkraft, Sveaskog’s acquisition of AssiDomän
and the Ernström Group’s acquisition of Platzer. Two
transactions were related to Danish companies: FSN
Capital’s bid for Jamo and Handelsbanken’s acquisition
of Midtbank.
In Mergers & Acquisitions/Divestitures of unlisted
companies, many of the transactions were cross-border.
Sales mandates included Cloetta Fazer’s sale of the
Consiva Group to Swiss Valora, Swedcarrier’s sale
of Unigrid to Cap Gemini and XponCard’s sale of
Graphium to Finnish Edita. On the buying side,
Corporate Finance assisted Telia in its acquisition of
Danish Powercom, French Vivendi in buying Danish
Marius Pedersen and Finnish YIT in acquiring Calor.
In Norway, a leading buildings material chain was created by the merger of Gann-Graveren, Byggmo and LA
Lund, and in France, Handelsbanken was adviser in the
merger of two IT companies, Himalaya and Euroasset.
On the Stockholm Stock Exchange, three new companies were launched by Handelsbanken: Dimension,
Lagercrantz and Addtech, the latter two being demerged
from Bergman & Beving. In a number of companies
such as Getinge, Switchcore, Proact and Decim, new
issues were carried out for listed companies. Handelsbanken was market leader for incentive programmes
for listed companies.
Annual Report 2001
Business area HANDELSBANKEN ASSET MANAGEMENT
SEK m
2001:4
Net interest income
Commission, net
2001:3
2001:2
Total
2001
2001:1
Total
2000
Change
%
48
53
45
40
186
172
8
225
230
247
198
900
878
3
8
2
8
5
23
32
– 28
Other income
0
14
1
8
23
8
188
281
299
301
251
1 132
1 090
4
– 17
Total income
126
118
145
129
518
621
– 144
– 141
– 151
– 136
– 572
– 444
29
137
158
150
115
560
646
– 13
– 10
—
—
—
– 10
—
Operating profit
127
158
150
115
550
646
Return on equity, %
26.1
33.2
31.8
22.7
28.4
37.7
346
397
383
362
372
327
Total expenses
– 15
BALANCE SHEET
31 December
SEK m
2001
2000
3 847
2 975
2 193
2 080
Bonds
—
—
Other assets
5 400
4 348
Total assets
11 440
9 403
598
253
7 455
7 719
the general public
Issued securities
—
—
Other liabilities
1 821
96
1 566
1 335
11 440
9 403
Handelsbanken Asset Management comprises Fund Management, Discretionary Management and Institutional Custody
Services. Apart from services aimed at companies, institutions and private individuals, Asset Management provides
support to the branch offices regarding investments, portfolio
systems and accounting for foundations. Operations are conducted in four Nordic countries, Luxembourg and the UK.
Results
Operating profit was SEK 550m (646). Lower volumes
of managed assets, the result of a weak stock market,
were compensated by new management assignments so
that income rose by 4%. Expenses rose by 29%. Increased
volumes of managed assets, partly due to the acquisition
of SPP, meant that the organisation had to be expanded,
resulting in increased staff costs. Expenses for systems
development also went up. The volume of assets managed
by Handelsbanken Asset Management was SEK 236bn
(149). The total volume of assets under management by
the Group was SEK 284bn (211).
Annual Report 2001
Mutual fund management
The Bank’s mutual fund management company managed
84 mutual funds with a total value of SEK 99bn (90).
Sixteen of these funds derive from the acquisition of
SPP Fonder, and have been managed by Handelsbanken
Asset Management since April 2001. Since March
2001, SPP Fonder AB has been a separate company
within Handelsbanken’s mutual fund operations.
New savings in the Swedish mutual fund market
were SEK 57bn (100), of which premium pensions
savings represented SEK 12bn. Handelsbanken’s share
of net deposits in the Swedish mutual fund market was
19%. This was the third year running that Handelsbanken’s market share for new mutual fund savings
was higher than its share of the total volume. Excluding
new savings in the premium pension system, Handelsbanken’s market share was 19.3% – the highest of the
players in the Swedish mutual fund market. The net
inflow to Handelsbanken was SEK 10.9bn (11.7), of
which 2.1bn was premium pension savings. The Bank’s
increase was partly due to successful sales of mutual
funds to major customers and also to continued good
performance for sales of unit-linked insurance and
traditional mutual funds. Sales of SPP’s funds also
contributed to the increase. The largest net deposits in
2001 were in fixed-income funds. Generation funds and
the new hedge fund also reported net inflows. For the
Nordic equity funds, however, there was a net outflow
during 2001.
On 1 July, the management fees for Handelsbanken’s
index funds were lowered from 0.90% to 0.65%. The
Bank also removed the withdrawal fee for units held
longer than 30 days.
In March 2001, a new mutual fund, Chalmers Globalfond, was launched in collaboration with the Chalmers
University of Technology in Göteborg. Each year, 2%
of the value of the Globalfond will be distributed in
35
order to further strengthen
Chalmers’ position as a leading
international university of technology. The fund is an actively
managed global equity fund.
In October, Handelsbanken
Hedgefond Aktie Europa was
started, a hedge fund of the
“equity long/short” category,
i.e. an equity fund with flexible
investment rules. The fund aims
to achieve positive performance
even when share prices are
falling. The investment focus is on
European equities. On the three
sales occasions in 2001, SEK
0.6bn was invested in the fund.
During the autumn, customers
who have private pension
savings, alternative ITP or ITPK
supplementary pension schemes
with SPP, were given the opportunity to invest in 15 of Handelsbanken’s funds. These funds
complement SPP’s mutual fund range in areas where
SPP previously lacked investment opportunities.
In 2001, the management performance was good for
fixed-income funds and Swedish equity funds but less
so for international equity funds.
Discretionary management
Despite poorer market conditions, assets under discretionary management increased by SEK 80bn to SEK
131bn at year-end. The unit received new assignments
amounting to SEK 83bn, primarily from Handelsbanken’s
acquisition of SPP, but also from new customer assignments such as Norges Bank. SEK 7bn of the assets
under discretionary management were invested in
Handelsbanken’s mutual funds. Handelsbanken Asset
Management continued to strengthen its position in
Sweden for index management.
A new portfolio management system was introduced
during the year to meet customers’ high demands on
management, administration and systems. The new
agreements which the Bank has entered into with, for
example, Norges Bank, are proof that asset management
can deal with the most demanding customers and this
offers new opportunities throughout the Nordic region.
The performance for customer portfolios varied
somewhat depending on the market but in general, the
portfolios underperformed their benchmark indexes
slightly. However, there was a major recovery in the
last quarter.
36
Investment Management
Investment Management
manages Handelsbanken’s
mutual funds and discretionary
assignments. In order to raise
competence and capacity, the
management organisation was
reinforced and expanded. This
was prompted by increased
volumes, partly due to the
acquisition of SPP and the new
product area of hedge funds.
The key concepts in Handelsbanken’s investment philosophy
are goal focus, clear allocation
of responsibility and knowledge
transfer. At the end of 2001,
over 60 analysts, traders and
portfolio managers worked at
Investment Management.
Licensing of financial advisers
In order to ensure high standards on the Swedish securities
market, the Swedish Securities Dealers Association has
introduced licensing requirements, in force from 2002.
The licensing requirement applies to all staff who
work with securities and whose main duties involve
contact with customers, market places and clearing
organisations. At Handelsbanken, around 1 000 staff
are subject to these requirements. During 2001, a large
number of branch office investment advisers, stockbrokers and asset managers received their licence after
passing the certification exam.
Asset management outside the Nordic countries
Outside the Nordic countries, asset management is
conducted at units in London and Luxembourg. The
units in Marbella, Côte d’Azur and Zurich are representative offices whose main task is to support asset
management in Luxembourg. The subsidiary in
Luxembourg received authorisation to start a branch in
Zurich. Operations are expected to start in spring 2002.
Assets managed were SEK 12bn.
Institutional custody services
In Sweden, market share increased for institutional
custody services, primarily due to new assignments
from major pension managers. In the other Nordic
countries, market share went up for both domestic and
international customers. The unit’s income was based in
part on total value of accounts and in part on the number of transactions. Despite falling market values, the
total value of custody accounts rose and the number of
transactions increased by 48%.
Annual Report 2001
Business area HANDELSBANKEN FINANS
SEK m
Net interest income
2001:4
2001:3
2001:2
2001:1
Total
2001
Total
2000
Change
%
126
132
121
120
499
483
3
Commission, net
69
72
79
65
285
239
19
–1
0
0
0
–1
12
– 108
4
3
5
5
17
19
– 11
198
207
205
190
800
753
6
Other income
Total income
0
2
0
1
3
15
– 80
– 118
– 108
– 116
– 108
– 450
– 408
10
80
99
89
82
350
345
1
–3
–2
–7
7
–5
– 14
– 64
Operating profit
77
97
82
89
345
331
4
Return on equity, %
25.9
33.9
28.6
29.8
29.4
24.8
425
438
441
440
436
423
Total expenses
BALANCE SHEET
31 December
SEK m
2001
2000
3 265
4 257
21 256
15 179
Bonds
—
—
Other assets
6 766
1 200
Total assets
31 287
20 636
13 711
12 273
the general public
Issued securities
Other liabilities
838
345
—
2 196
15 776
4 919
962
903
31 287
20 636
Handelsbanken Finans offers in four Nordic countries a full
range of local finance company services: leasing, conditional
sales, financing in collaboration with vendors of investment
assets, company car financing and associated administration
services, factoring/invoice services, debt collection, consumer
credits and private label plastic cards for retailer partners.
Results
The result was SEK 345m (331), an increase of 4%.
Return on equity was 29.4% (24.8%). Income rose by
6% to SEK 800m (753), mainly due to higher business
volumes. The rise in expenses was due to major IT investments in the Finnish operations and to the expansion
of retail sales finance in the Nordic countries outside
Sweden. Remuneration to the branch office operations
was also higher. Total credit volumes increased by 31%
to SEK 26.5bn, which means that Handelsbanken
Finans has taken market share from its competitors.
Annual Report 2001
Leasing, conditional sales and car administration
Handelsbanken Finans is one of the most prominent
finance companies in the Nordic area in the field of
investment finance. Almost all companies need new
investments in order to increase efficiency, expand or
update their operations. Via Handelsbanken’s branch
office network in the Nordic countries, corporate
customers are offered local specialist skills in all types
of financing. Handelsbanken Finans has a local presence
with representatives at each regional bank to assist the
branches with training and marketing finance company
services. The aim is to create simpler and more secure
solutions so that as many branch office staff as possible
will be able to carry out transactions directly with
customers. For large and very complex transactions,
Handelsbanken Finans offers specialist functions.
Last year, a new model was introduced for the branch
offices’ responsibility and authority concerning finance
company services. It proved to work well. A new transaction management system guides the Bank’s staff
efficiently and securely through new deals. More than
80% of all transactions are arranged in real-time at the
branch together with the customer.
A marketing programme was implemented to support
the branches in their work with customers. Each programme comprised one week of activities together with
the branches and their customers. Around one hundred
such programmes were carried out.
New sales increased by 31% despite the economic
downturn. Handelsbanken Finans’ share of the leasing
market in Sweden increased to over 15%.
In 2001, major leasing transactions were contracted
for a total of SEK 5bn. These included contracts with
Jönköpings Lokaltrafik and Linjebuss for financing
trains and buses. In 2000, the Öresund Bridge Consortium
entered into an agreement for financing trains to traffic
37
the bridge between Sweden and
Denmark. This was one of
Handelsbanken Finans’ largestever transactions and in 2001,
deliveries of trains started and
thus also utilisation of the agreed
credit facility.
Factoring/invoice and
collection services
Factoring/invoice and collection
services enable customers to
release working capital. Using
invoice processing, the customer
assigns management of ledgers to
Handelsbanken Finans. Factoring
implies that the customer borrows
money against invoices as collateral
and also hands over administration of the company’s ledgers to
Handelsbanken Finans. Factoring
without invoice processing is a
service where the company administers its own ledgers but raises
credit with invoices as collateral.
Various debt collection services
also help the customer to administer payment demands and monitor overdue invoices.
High priority was given to
investments in IT solutions to
manage business flows. In line with this, electronic
services, such as file communication, were enhanced.
Factoring/invoice and debt collection services are available via the Internet and over 70% of factoring/invoice
customers use the Internet as the main information
source for payment flows and invoice status. There was
also increased use of the Internet for debt collection services.
A factoring service was established in Norway
through the acquisition of Kronos AS, and extensive
product development was implemented together with
a major customer.
It was decided to sell the debt collection company,
Nordan AS in Denmark. This was in order to streamline
operations and focus resources for further expansion
of the core business. The sale of Nordan AS is expected
to be completed during the first quarter of 2002.
As a result of Handelsbanken’s acquisition of
Midtbank, a new finance company called Midtfinans
AS was added to the Group.
Retail financial services
Retail financial services’ task is to provide services to help
boost sales of consumer and capital goods. Handelsbanken Finans has a leading position in Sweden in the
field of Retail financial services. In the last two years,
positions have advanced in Norway and Denmark so
38
that Handelsbanken Finans can
now meet customers’ demands
for a local presence in the whole
Nordic region.
In order to achieve high
profitability in the field of retail
financial services, easy-to-use
IT-based services must be provided, combined with tailored
sales support material and training. New partnerships in the
capital goods sector and development of existing partnerships
led to significantly increased
volumes.
A survey was carried out in
the autumn to determine the
level of customer satisfaction
among the Swedish retail partners of Retail financial services.
The survey was divided into
sales, credit assessment, customer service and sales support.
The overall result gave an index
of 80%, which means that
customers in general were very
satisfied with Retail financial
services.
In 2000, a comprehensive
package of financial services
was launched for the auto trade.
So far, around 80 dealers have chosen to work with
Retail financial services.
Just over two years ago, the Swedish Köpkort was
relaunched and by the end of 2001, there were over
200 000 cardholders. The reason for this rapid expansion is the concept of a plastic card for financing goods
via an account, combined with its validity as a payment
card.
Handelsbanken Finans entered into new agreements
with a number of special interest organisations. An
example of this is the Swedish Automobile Association,
which signed an agreement to offer its members a car
loan and credit card. This type of deal confirms how
important it is to find partners and/or organisations
whose members have a strong interest in the sectors,
towards which Retail financial services traditionally
aims its marketing.
One of the world’s largest IT companies, IBM, chose
Handelsbanken Finans’ Netpay, which is a secure solution
for retail finance over the Internet.
Via the Aktiiviraha credit card in Finland, consumer
finance is offered in close co-operation with retailer
partners in the capital goods sector. A number of new
partners led to growth and good profitability. A new
card system was launched and 150 000 customers have
converted to the new system, which offers increased
functionality.
Annual Report 2001
Business area HANDELSBANKEN PENSION AND INSURANCE
SEK m
2001:4
Net interest income
2001:3
2001:2
2001:1
Total
2001
Total
2000
Change
%
8
4
2
1
15
12
25
Commission, net
44
40
43
44
171
176
–3
– 200
11
– 18
4
– 15
– 18
–6
Other income
3
1
2
2
8
5
60
Total income
66
27
51
32
176
187
–6
– 15
Total expenses
60
64
68
67
259
303
– 31
– 29
– 27
– 23
– 110
– 85
29
35
–2
24
9
66
102
– 35
– 35
Operating profit
Return on equity, %
35
–2
24
9
66
102
33.2
– 1.9
22.7
8.3
15.6
23.2
11
11
11
11
11
11
BALANCE SHEET
31 December
Handelsbanken Liv
SEK m
2001
Bonds
2000
—
—
177
178
—
—
Other assets
21 754
17 556
Total assets
21 931
17 734
1
2
1 148
1 994
the general public
Issued securities
Other liabilities
—
—
20 450
15 396
332
342
21 931
17 734
The Handelsbanken Pension and Insurance business area
comprises Handelsbanken Liv and SPP. Together, these
The result for the profit-distributing, unit-linked operation was SEK 66m (102). The lower result was caused
by higher expenses and reduced yield on the company’s
own investments. Due to the substantial growth in sales
in the late 1990s, administrative and sales resources
were expanded in 2000. The cost of these investments
had full impact during 2001. Since some of the company’s
own investments have been in shares, the stockmarket
slump had a negative impact on profits. During the
year, the portfolio was re-allocated in favour of fixedincome investments. Since the end of 2001, the company’s
own assets are mainly invested in fixed-income securities.
Total premium income for traditional and unit-linked
insurance was SEK 5.9bn (9.0). The decrease was
reported in unit-linked insurance. For traditional insurance, premium income increased slightly to SEK 2.4bn
(2.3). The slump in equity markets led to a fall in the
value of the assets but was compensated by new sales.
companies are a market leader, offering a complete range
HANDELSBANKEN LIV FÖRSÄKRINGS AB RESULTS
of life insurance products for occupational and private
pensions, asset protection schemes and employee pension
SEK m
2001
2000
insurance, which are available to companies, private customers
Result on technical account – life insurance business
and organisations. Both companies sell their services via
Premium income
2 350
Investment income
– 439
34
Insurance claims
– 1 331
– 1 186
force, franchisees, independent brokers, and direct sales and
Change in life insurance provisions
– 1 338
– 1 873
telemarketing. The traditional life insurance operations in
Bonus
– 60
– 103
– 331
– 264
—
33
– 1 149
– 1 099
Handelsbanken’s branch offices. SPP also uses its own sales
Handelsbanken Liv Försäkrings AB and SPP’s operations
were run on mutual principles where the whole surplus on
operations was returned to policy-holders in the form of
bonuses and collective risk capital. These units were not
included in Handelsbanken’s consolidated accounts. From
Operating expenses
Other
Result on technical account –
life insurance business
2 260
Non-technical account
Taxes
Profit for the year
– 152
– 156
– 1 301
– 1 255
1 January 2002, Handelsbanken Liv Försäkrings AB is a
demutualised company which distributes profits.
Annual Report 2001
Handelsbanken Liv Försäkrings AB is a mutual life insurance company and is not
included in the consolidated accounts.
39
Insurance assets managed were
SEK 37bn (37), of which unitlinked insurance represented SEK
17bn (17).
Total yield was – 2.1% (0.2)
and the average bonus rate was
5.8%. At year-end, the solvency
margin was 102% (113). The
expenses ratio was 7% (4).
The slump on global equity
markets had an impact on sales
of endowment insurance. Unitlinked insurance, focused on
investments, fell by 48%. Sales
of traditional endowment insurance and inheritance planning
solutions were not affected, however. Nor were pension savings
negatively affected. Premium
income increased for private
pension insurance, occupational
pensions and employee pensions.
During the autumn, a product
called Studiekapitalspar was launched, which is an
endowment insurance policy where the funds are invested in optional mutual funds. This type of insurance is
intended to build up capital for children’s future studies.
The capital can also be used for other purposes such as
driving lessons, buying a car or somewhere to live.
Studiekapitalspar is exempted from income and capital
gains tax. Disbursements are made every month for
at least five years, or as a one-off amount.
The specialisation of the advisory sales force continued
in 2001, with focus on private customers, particularly
in the larger cities. By working together with the branch
offices, the advisers who were recruited in autumn
2000, contributed to increased sales of pension savings.
Staff at many branches were trained during the year in
asset protection schemes and occupational pensions.
These training courses were held on a regional level and
had a positive impact in the form of increased sales of
occupational pensions and inheritance and gift solutions.
During the year, a number of transactions were performed with occupational pensions and endowment
insurance at large companies, together with SPP. This
collaboration is based on a free service offered by the
Bank to high net worth individuals, which includes
advice on investments, insurance and family law.
As of 1 January 2002, Handelsbanken Liv’s occupational group life insurance was transferred to SPP,
which then became the insurer.
Demutualisation of Handelsbanken Liv
On 1 January 2002, Handelsbanken Liv was converted
from a mutual life insurance company into a profit-distributing company. This was the first demutualisation
40
of a life insurance company
offering traditional savings insurance which has ever been done
in Sweden. It marked the end of
a process which was initiated in
1992 when Handelsbanken
bought RKA. The new Insurance
Operations Act – which was
intended to permit demutualisation of life insurance companies
– was already being investigated
in 1992.
The law was not passed by
the Swedish parliament until
autumn 1999. Handelsbanken
Liv’s work on demutalising the
company started in earnest at
this stage.
In autumn 2000, customers
who were affected by the demutualisation were given the
opportunity of voting. Some 98%
voted in favour of demutualisation, with almost 80% of customers participating in the ballot.
After an extensive investigation, Finansinspektionen
then gave its approval and in April 2001, the government finally gave the go-ahead for demutualisation.
The change means that the policy-holders will share
the total return with the company, with 90% going to
the policy-holders and 10% to the company. The company
simultaneously takes responsibility for the administrative
result and for the risk result.
Demutualisation means greater freedom, security and
fairness for Handelsbanken Liv’s customers. More freedom since Handelsbanken Liv is the first company in
Sweden to allow customers to move insurance with
guaranteed interest and unit-linked insurance to other
companies. Private customers can move to a different
company and all customers can change within the
company between unit-linked insurance and guaranteed
interest insurance.
Security increases since Handelsbanken injects risk
capital and assumes the risk for the guaranteed assets
for which the customers were previously jointly and
severally liable. Shareholders’ equity is initially SEK
1.5bn.
It is fairer for the customers as a result of the change
from a collective to an individual system because the
customer will not sacrifice return in order to build up
the collective risk reserve. All the insurance assets become
strictly individual and only the policy-holder receives
the return.
In connection with demutualisation, the unit-linked
company is being merged with the new company. This
paves the way for attractive opportunities to take out
new insurance with combinations of mutual funds and
guaranteed interest management.
Annual Report 2001
SPP
Business trends
Elisabeth Ohlson
Premium income increased for the eighth year running
to SEK 12.6bn (10.0). Traditional insurance represented
SEK 9.6bn (8.2) and unit-linked insurance SEK 3.0bn
(1.8). Regular premiums were SEK 7.4bn (5.9) and
single premiums were SEK 5.2bn (4.1). SPP retained its
strong position and was one of the biggest insurance
companies in the Swedish occupational pensions market.
SPP is the biggest unit-linked company on the ITPK
market (supplementary retirement pensions).
Total insurance assets managed were SEK 87.2bn
(87.4), of which traditional life insurance represented
SEK 80.7bn (83.5). Total return on investments in the
traditional life insurance operations was – 2.8% (3.3).
The expenses ratio was 9.7% (9.1).
In spite of the weak stockmarket, the collective solvency
margin could be retained at a satisfactory level and was
108% (119) at year-end. The bonus rate was on average
5.8% (10.9) during the year. The bonus rate was
gradually lowered in February, May and November
2001, from 7% down to 3%.
SPP – a wholly-owned subsidiary
in the Handelsbanken Group
On 7 March 2001, SPP became a wholly-owned
subsidiary of Handelsbanken. Handelsbanken and SPP
complement each other with skills and competence,
services and products which the separate companies
could not previously offer customers. The two companies
collaborate on a central and regional level. On 1 February
2002, SPP took over most sales of occupational pensions
from Handelsbanken Liv. Occupational group life
insurance was moved to SPP at the end of the year.
SPP is organised in three business areas: Key Accounts
(large companies and municipalities), Companies and
Individuals. They are supported by specialists at SPP
Consulting, the Development unit and central departments. At large companies, individuals are increasingly
making their pension selections by various types of
Internet/IT solutions. Last year, SPP in collaboration
with a major Swedish company, developed an Internet
portal called Benefit World for large corporate groups
to manage their pensions. This portal is neutral from
a competitive point of view. The concept was wellreceived by the company and the insured parties.
The main focus of operations was unchanged. At the
end of the year, the company had 673 (599) employees
and was represented in 15 locations in Sweden, with its
head office in Stockholm.
SPP owns 50% of Nordben Life and Pension Insurance
Co Ltd, which offers insurance solutions to the staff of
multinational Nordic groups employed abroad. SPP
also owns 50% of Euroben Life and Pension Ltd which
insures the local staff abroad of Nordic companies.
Annual Report 2001
SPP GROUP RESULTS
SEK m
2001
2000
Premium income
12 627
10 011
Investment income
– 2 693
2 785
Insurance claims
– 3 872
– 3 003
– 10 734
– 8 884
– 1 223
– 911
58
–2
– 5 837
–4
Change in life insurance provisions
Operating expenses
Other
Other operations
Taxes
Profit for the year
18
16
– 780
– 509
– 6 599
– 497
The Parent company, SPP Livförsäkring AB, is a mutual life insurance company
and is not included in the consolidated accounts.
41
Business area STADSHYPOTEK BANK
SEK m
Net interest income
Commission, net
2001:2
2001:1
Total
2001
Total
2000
2001:3
28
21
19
19
87
65
34
6
3
11
12
32
59
– 46
0
0
0
0
0
0
0
Other income
2
11
1
0
14
2
Total income
36
35
31
31
133
126
Change
%
2001:4
6
8
9
2
3
22
14
57
– 28
– 27
– 28
– 27
– 110
– 111
–1
8
8
3
4
23
15
53
–1
0
0
0
–1
0
7
8
3
4
22
15
Return on equity, %
44.8
51.2
19.2
15.4
30.6
17.1
108
107
108
111
109
106
Total expenses
Operating profit
47
BALANCE SHEET
31 December
SEK m
Bonds
2001
2000
1 714
1 481
145
88
3 904
4 102
Other assets
61
70
Total assets
5 824
5 741
26
34
5 315
5 242
the general public
Issued securities
Other liabilities
—
—
438
398
45
67
5 824
5 741
Stadshypotek Bank is a leading Internet and telephone bank
in Sweden. It operates under its own brand name and provides
its own range of services. The bank specialises in offering
basic banking and insurance services with a unique profile.
It aims for private customers to see it as their basic bank
for day-to-day finances.
Results
Profits were SEK 22m (15). Increased income from the
VISA payment card and higher net interest income
compensated for significantly lower income from retail
bonds and a 50% drop in commission on equity transactions. Expenses have fallen each year since Handelsbanken acquired the company in 1997.
Business trends
In the face of increasing competition, Stadshypotek
Bank took a dominant position in the market for the
new plastic card concept introduced in 2000, in collaboration with leading sports associations. In 2001,
agreements were made with some of Sweden’s leading
non-profit-making organisations.
42
At the Stockholm Boat Show in early November, Stadshypotek Bank launched a Rescue Card in collaboration
with the Swedish Sea Rescue Society. In tough competition with other banks and finance companies, the bank
also entered into an agreement with Save the Children.
This collaboration is based on a VISA card with a unique
profile, which is expected to be launched in February 2002.
The VISA card has been enhanced so that it is now
possible to link one of the best travel insurance policies
on the market to the card. It is a combined assistance,
travel and accident insurance, which also includes travel
cancellation insurance. Card services continued to go
from strength to strength. The number of accounts increased by 39%, the number of purchases by 85% and
purchase volume by 72%.
Stadshypotek Bank’s Internet service was developed
further to include transfers to optional accounts and
monthly standing transfers. Accounts which the customer
has added via the Internet service, also allow withdrawals to be made via the bank’s Teleservice. The
bank also offered customers the opportunity to transfer
money from their accounts with other banks, on a
monthly basis or via a single transfer. At the year-end,
over 28 000 customers could do their banking business
with Stadshypotek Bank via the Internet, an increase of
49%. The customers who were linked to the service were
active users. Over 61% of all private payments made by
Stadshypotek Bank’s customers went via the Internet.
Stadshypotek Bank was the first niche bank to remove
charges for making bank and postal giro payments via
the Privatgiro system. Payment of bills over the Internet
was already free of charge.
Stadshypotek Bank introduced the opportunity for
private customers to make individual purchases or monthly
savings in equity baskets via the Internet. These baskets
are based on the Stockholm Stock Exchange’s new
industrial sector index and contain a selection of shares
in the largest companies in value terms in each area. It is
also possible to make purchases by phone and the baskets
are “packaged” with the shares in question in advance.
Annual Report 2001
Business area HANDELSBANKEN TREASURY
SEK m
2001:4
Net interest income
2001:3
2001:2
2001:1
Total
2001
Total
2000
Change
%
31
63
63
58
215
243
– 12
Commission, net
– 10
– 12
– 11
–9
– 42
– 12
– 250
– 14
– 28
23
– 14
– 33
– 55
40
Other income
4
3
3
3
13
11
18
Total income
11
26
78
38
153
187
– 18
—
—
—
—
—
—
—
7
–7
–7
–8
– 15
– 14
7
18
19
71
30
138
173
– 20
– 20
Total expenses
Operating profit
18
19
71
30
138
173
Return on equity, %
7.6
8.4
32.8
11.6
14.6
10.2
38
38
38
38
38
39
BALANCE SHEET
31 December
SEK m
Bonds
2001
2000
154 891
148 770
3 065
1
26 478
21 325
Other assets
15 531
8 079
Total assets
199 965
178 175
98 795
46 561
the general public
2 116
2 114
Issued securities
29 853
40 835
Other liabilities
68 377
87 231
824
1 434
199 965
178 175
Handelsbanken Treasury manages the Group’s liquidity in
Swedish kronor (the internal bank), its funding in the capital
market, and funding and clearing at the Riksbank. Treasury
also measures and controls financial risks within the Group.
The activity with a direct impact on the profit and loss
account is liquidity management in Swedish kronor.
Results
Handelsbanken Treasury’s result fell by 20% to SEK
138m. The surplus liquidity generated in the Swedish
regional banking operations was transferred internally
to other units in need of liquidity. Thus, no income
from the surplus liquidity arose at treasury operations.
A large part of Treasury’s earnings arise through
fixed-rate lending which is funded by borrowing with
shorter maturities. In previous years, Treasury could
take advantage of the slope of the yield curve. In 2001,
there was only a small difference between short- and
long-term interest rates. Maturing transactions were
therefore not extended. The decreased result was due to
lower business volumes.
Annual Report 2001
The internal bank and liquidity management
The internal bank’s task is to match various flows
within the Group. Internal units needing to borrow or
invest funds utilise the internal bank, which applies
market rates to the transactions. To earn money on the
Group’s cash flows, the internal bank can take positions
in connection with internal transactions. One example
is fixed-term lending to the Bank’s subsidiaries, which
can be funded with liabilities with shorter maturities.
The regional banking operations had a surplus of
Swedish kronor in 2001, which on average was SEK
20.9bn (20.9). The internal bank is responsible for
ensuring that this surplus is efficiently transferred to
units within the Group which need liquidity, mainly
Stadshypotek. Fluctuations in the Bank’s liquidity are
managed by the internal bank on the overnight market.
In order to be able to carry out clearing, the Bank
must pledge securities with the Riksbank. These comprise Swedish government bonds, bonds and certificates
of deposit from issuers with a high rating (at least A)
from Moody’s and Standard & Poor’s. The securities
are managed in a separate trading portfolio, which
yielded a positive result in 2001. The collateral portfolio
represents Handelsbanken’s liquidity reserve for the
purpose of managing short-term market fluctuations.
Capital market funding
The Handelsbanken Group is an active borrower on
the Swedish and international capital markets. On the
Swedish market, the main funding sources were bonds and
commercial paper issued in the name of Stadshypotek.
Internationally, commercial paper funding in the US
and deposits funding were the main sources. When
necessary, foreign currency loans were converted into
Swedish kronor through currency swaps.
43
Risk and risk control
Credit risk, financial risk and operational risk arise in
the Bank’s operations. Credit risks depend on whether
individual customers can fulfil their commitments to the
Bank, while financial risks arise when there are changes
in interest rates or market prices of currencies and securities which have an impact on the value of the Bank’s
positions. Operational risks refer to errors within the
Bank which may lead to losses. Credit risk mainly arises
in branch office operations and financial risk mainly at
Handelsbanken Markets, while operational risks can
occur anywhere within the Group.
The Bank aims for the individual employee’s responsibility for transactions to be combined with the responsibility for risk. The person who best knows the customer
and the market conditions is also in the best position to
evaluate the risk. In this way, full responsibility is taken
for the business operations and it is done as close to the
customer as possible. However, in order for decentralised
risk-taking to work, centralised management and followup of risks are necessary.
Credit risks and financial risks are always restricted
through credit or limit decisions. Individual employees
have a personal limit, within which they take full
responsibility for their decision. If a larger limit is needed,
a decision is required at a higher level of the Bank. The
Bank’s method means that everyone who does transactions which entail risk, learns the established way of
assessing what is an acceptable level of risk for the
Bank.
Total exposure to credit risks and financial risks is
measured and reported to Finansinspektionen. This
exposure leads to requirements on the size of the Bank’s
equity and gives an overall idea of how large the Bank’s
risks are in relation to the capital base.
Nevertheless, the capital adequacy requirement for
credit risks is an insufficient measure of the actual
exposure. A better picture of Handelsbanken’s credit
risks is obtained by looking at the actual outcome. For
a long time – and particularly during the financial crisis
in the early 1990s – the Bank’s method of analysing
and managing credit risk and bad debts has led to significantly lower loan losses than for its competitors in
relation to outstanding loan volumes.
CREDIT RISK
Credit risk arises in lending and in issuing guarantees,
but also includes risks arising when customers do transactions with the Bank on the foreign exchange and
securities markets. The latter is usually referred to as
counterparty risk.
Credit risk in lending operations
The responsibility for the Handelsbanken Group’s credit
exposure lies with the branch which is responsible for
the customer in question1). The day-to-day business
relationship gives the branch a clear, continuous picture
44
LOAN LOSSES AS A PERCENTAGE OF LENDING
%
6
Other Swedish banks
5
4
3
2
1
0.02
1991
1993
1995
1997
1999
2001
of how the customer’s operations are progressing and
it can quickly identify potential problems which might
change the degree of credit risk in the Bank’s exposure.
For all commitments over SEK 1 million – for mortgages
over SEK 3 million – the branch establishes a limit
document. The Bank has over 25 000 customers with
limits. The limit documentation contains information
about the customer’s current and maximum commitment
with the Handelsbanken Group and also what security
is required for the maximum exposure. A business evaluation of the customer is performed in order to make
the limit decision. This consists of a description of the
customer’s operation, an analysis of accounts and an
evaluation of the company’s future prospects. An
assessment is also made of the degree of credit risk in
the Bank’s exposure where the customer’s repayment
capacity is analysed and graded, using a credit risk index
(internal rating) which the Bank has applied for more
than 20 years. The internal rating of repayment capacity
is done in two stages: first an assessment is made of the
probability of financial strain for the customer and then
the customer’s financial powers of resistance, each on a
scale from one to five. After this, a written assessment
is made of facts and assumptions which must be welldocumented in the business evaluation. Finally, the value
of the collateral is estimated in the event of insolvency2).
The business evaluation concludes with a summary of
the Bank’s financial benefit from the customer and the
1) Certain types of lending are not subject to this principle. These are the Bank’s
exposure to other banks and outright export credits, for which Handelsbanken Markets
assumes the credit responsibility, and some small consumer credits at Handelsbanken
Finans and Stadshypotek Bank.
2) The internal rating is considered to comply closely with the Basel Committee’s
‘Probability of Default’ concept in its proposed new capital adequacy regulations. The
overall risk assessment and estimated value of collateral provides a good foundation
for assessing the ‘Loss Given Default’ in the proposal.
Annual Report 2001
future strategy for working with the customer. This
business evaluation is performed at least once a year for
all customers with a limit. Depending on the size of the
limit and the type of collateral, the credit decision is
made by the branch, the regional head office, the Central
Board of the Bank or its credit committee.
Apart from this, each branch performs a quarterly
review of its credit commitments to identify and report
those which are considered to entail an abnormally
large credit risk. For each commitment of this type, the
possible (lesser) or likely (greater) risk of loan loss is
assessed and whether a provision needs to be made for
a possible loss. Normally, the exposure has been reported
and risk limitation measures have been taken before the
loan becomes non-performing. The risk reports are
compiled by the credit department at the regional bank
in question, Handelsbanken Markets and each subsidiary
and by the Central Credit Department for the whole
Group. These quarterly reports are presented to the
boards of the regional banks and subsidiaries and to
the Central Board of the Bank.
New rules for valuation of bad debts
From 2002, new rules have been introduced for valuation of bad debts. Until now, a bank, when calculating
bad debts, has mainly looked at the principal amount
and made a provision for the part which it assesses
will be lost. The new rules also take into consideration
unpaid (or reduced) interest income and take into
account the time aspect, i.e. that a krona today is worth
more than in five years’ time. An overall assessment of
the consequences of applying these new rules is that
they will not lead to any significant difference in the
value of the Bank’s bad debts.
where for some reason the counterparty does not meet
its commitments. On these occasions, the Bank’s risk is
100% of the value of the transaction. Payment risks
arise in all transactions where the Bank cannot check
that the counterparty has fulfilled its obligations at the
same time as the Bank.
Unlike value change risks, payment risks are not
included in the Bank’s credit limit for the customer.
Payment risks are instead part of a separate limit called
a settlement limit which is intended to cover the payment
risks described above, as well as the very short-term
value change risks which may arise when customers
buy and sell securities (for example, shares) through the
Bank.
Where limits, decisions and follow-up are concerned,
settlement risks follow the same pattern as credit risks.
Normally, the settlement limit for a customer is approved
at the same time as the credit limit.
FINANCIAL RISK
In the Bank’s operations, various types of financial risk
arise. These are classified as follows.
Interest rate risk
Market
risk
Systematic risk
Equity risk
Specific risk
Exchange
rate risk
Financial
risk
Liquidity
risk
Counterparty risk
Market risk
Counterparty risk can be divided into two categories:
risk of change in value and payment risk.
Value change risks arise when the Bank has as its
counterparty customers who have issued some kind of
derivative instrument. There is a risk that issuers will
not meet their obligations. If such a situation arises, the
Bank must acquire a new equivalent contract in the
market to replace the old one. This may entail a cost
for the Bank, depending on price trends in the market
in question. The risk of this cost arising is calculated for
each contract and is regarded as a risk on the counterparty in the contract. In terms of limits, credit decision
and follow-up, the counterparty risk is managed in the
same way as credit risk in lending. This implies that the
value change risk for derivative contracts is part of the
Bank’s credit limit and total exposure for a specific
customer.
Payment risks arise in transactions where the Bank
fulfils its obligations in the form of foreign exchange
conversion, payments or delivery of securities, but
Market risk refers to the impact of changes in interest
rates, foreign exchange rates and share prices, which
result in a profit or loss for the Bank.
The Bank’s market risks mainly arise within Handelsbanken Markets and the aim is to keep most of these
risks there.
Handelsbanken Markets is market maker for fixed
income products, currencies and equity instruments.
Risks arise either through customer-related transactions
or through the Bank taking its own positions and they
are contained in a trading portfolio, which is accounted
for at market value on a daily basis. The variations in
result arising when making a valuation have an impact
on the Bank’s profit and loss account.
The market risks which arise in the trading portfolios
are subject to capital adequacy requirements. This
means that the Bank must provide capital in proportion
to the market risks arising in the trading portfolios.
The market risks which arise outside Handelsbanken
Markets are smaller. In practice, all foreign exchange
Annual Report 2001
45
and equity price risk is concentrated to Handelsbanken
Markets. This is done by the unit in the Group which
does a foreign exchange or equity transaction with a
customer, making a reverse transaction with Handelsbanken Markets as the counterparty. Handelsbanken
Markets then performs a matching transaction.
INTEREST RATE RISK
The change in value of all assets and liabilities, on and
off the balance sheet, when there is a simultaneous
change of one percentage point in all interest rates, is
used as a measure to limit interest rate risks both at
Handelsbanken Markets and at other units of the Bank.
Interest rate risks arise at other parts of the Bank
than Handelsbanken Markets. Interest rate risk arises
mainly because of differences in the interest-rate adjustment periods of assets and liabilities. At the regional
bank operations, there may be a situation where lending
has a longer maturity than refinancing and this is carried
out within the framework of a limit for interest rate risk.
This risk-taking does not lead to any capital adequacy
requirements. Normally, the Bank’s assets have longer
maturities than the liabilities. If interest rates rise, net
interest income falls. This is counteracted by the fact
that the Bank has a larger volume of interest-bearing
assets than liabilities, which is mainly because the
shareholders’ equity is invested in interest-bearing
assets. When the interest rate increases, the equity can
be gradually invested at higher interest rates. Outside
Handelsbanken Markets, interest rate risk is mainly
managed by the Central Treasury Department, which
also functions as the Group’s internal bank and manages
the Group’s liquidity.
In the trading portfolios, the impact of changes in
market value is reported in the trading result. In those
parts of the Group where items are not reported at
market value, changed interest rates only have an
impact on net interest income and are therefore a net
interest income risk. Thus, the impact on the result of
a rise in all interest rates by one percentage point comes
from two sources: from net interest income and from
the impact on the trading portfolios.
For interest rate risks, Value-at-Risk is used as a
complement.
EXCHANGE RATE RISK
Exchange rate risk is the risk of changes in value of
currency-related assets and liabilities when the underlying exchange rates change. The Bank’s exchange rate
risks are controlled by limits which restrict the various
units’ exchange rate risk exposure. For all units, apart
from Handelsbanken Markets, the exchange rate risks
are restricted by limits for each unit’s position in individual currencies (net position) and groups of currencies
(aggregated net position). For Handelsbanken Markets,
there are also VaR limits.
46
EQUITY PRICE RISK
Equities trading is controlled by measuring and restricting systematic and specific risk. Systematic risk is defined
as that part of a share’s change in value that can be
explained by general changes in the market. Systematic
risk is measured as the largest negative change which
can occur in the case of a simultaneous change in index
and volatility. The calculation covers all option risks
and both probable and improbable events. Specific risk
is defined as that part of the change in value of a share
which is not affected by the general market but only by
the specific share.
For equity risks, Value-at-Risk is used as a complement.
Liquidity risk
Liquidity risk arises when the Bank’s lending and funding
do not coincide in time. The Bank’s lending has a longer
maturity than the funding. In this case, the lending must
be refinanced once or several times during its life. Normally, this is not a problem. If, however, the financial
markets are turbulent, the funding may be expensive.
For this reason, the Bank tries to limit its need for refinancing in the financial markets, and to spread it as
evenly as possible over time.
Liquidity risk is measured by means of a cash flow
forecast in various currencies over all maturities. The
liquidity deficit, i.e. the difference between in-payments
and out-payments, is limited in an interval of 1 to 14
days.
In order to limit the Group’s exposure to liquidity
risk, the Bank has set a target so that medium and longterm foreign currency funding must be at least a certain
percentage of medium- and long-term foreign currency
lending. The Bank also has a foreign currency liquidity
reserve, which can be used to bridge temporary turbulence in the foreign exchange markets.
Another way that the Bank reduces liquidity risk is
to spread its funding over as many markets as possible.
Value-at-Risk (VaR)
VaR is a method of measuring the potential losses
which can arise in risk positions due to movements in
the underlying markets over a specified holding period
and for an assumed level of probability. The different
risk categories, i.e. equity risk, interest rate risk and
foreign exchange risk, are handled in a homogenous
way, which means that the risks can be aggregated into
a total market risk. This is not possible using traditional
risk measurements.
At Handelsbanken, VaR is calculated using daily
changes in interest rates and prices for the latest year; a
99% confidence interval and 1-day and 10-day holding
periods respectively. Since the VaR model is a probability-based model for risk measurement, it is important to
verify whether it is correct or not. This is known as
back-testing and is regularly carried out at Handels-
Annual Report 2001
means of a limit of maximum losses allowed when there
are extreme fluctuations in volatility and prices or rates.
These are called risk matrices and they provide a framework of limits for trading.
Other derivative instruments are measured using the
same methods as for the underlying instruments. These
two methods are aggregated with the Bank’s other
financial risks and are included in the Bank’s financial
reporting.
HOW VALUE-AT-RISK WORKS
Frequency
1% risk of
a major loss
Organisation of the Group’s financial risk control
Loss
0
Profit
EXPECTED OUTCOME
VaR is the value on the horizontal axis where the probability of a major
loss is only a certain percentage, e.g. 1%, while the probability of
a smaller loss than this value is 99%.
banken. The VaR model calculates the worst outcome
in statistical terms which can occur on one day out of a
hundred. But there may also be exceptional turbulence
on the markets, as occurred for example on the equity
market in 1987 and the money market in Sweden in
1992. The VaR model does not capture these risks, and
VaR calculations are therefore regularly complemented
with calculations of possible losses in the case of market
turbulence. These are known as stress tests.
Derivative instruments and options risks
Derivatives, such as options and futures, are financial
contracts whose value is dependent on an underlying
asset. Examples of underlying assets are equities, equity
indexes, bonds and currencies.
Since derivatives are dependent on how an underlying
asset performs, they can be used to reduce the risk in
the underlying asset. This is done by entering into a
derivative contract which has the opposite effect to the
asset held by the Bank, for example, interest rate swaps
where the Bank wants to reduce the impact on its result
of changes in interest rates.
Derivative contracts are used in this way by Central
Treasury, the regional banks and by subsidiaries, where
they are usually subject to hedge accounting. Derivative
contracts are a natural part of the Bank’s trading portfolios, both in customer transactions and in order to
change and limit financial risks.
Options are derivative instruments which differ
slightly from other instruments with respect to risk.
The value of an option depends not only on the level of
interest rates and prices (the underlying asset) but also
on changes and expected changes in the pace of interest
rate and price fluctuations (volatility). Interest and
exchange rate options are controlled and restricted by
Annual Report 2001
The Board of Directors establishes the total market risk
and liquidity risk limits for the entire Group within
each type of risk. These are allocated to the various
business areas by the Chief Executive. The overall
responsibility for financial risks and further allocation
of limits lies with the head of Central Treasury. Within
the allocated limits, the Group units are themselves
responsible for follow-up and control of the financial
risks. Each unit with a limit is subject to independent
risk control to ensure that the follow-up is appropriate
for its purpose.
The internal bank’s maximum risk exposure and
types of transactions are restricted by rules established
by the Chief Executive of the Bank.
The financial risks and limit utilisation for the trading
operation, the internal bank and the mortgage business
are checked on a daily basis. In practice, the risk in the
trading portfolio fluctuates more frequently and more
widely than in the mortgage companies and the internal
bank. However, there is also potential for considerable
fluctuations in interest rate risks in the latter two portfolios. For this reason, they are also followed carefully.
The Central Board receives a monthly report of the
Group’s exposure to financial risks.
At Central Treasury, there is a unit which works
exclusively on independent risk control. This unit has
the overall responsibility for measurement methods,
instructions and control of financial risks, regardless of
whether the risk is trading-related or arises in business
with customers in the regional bank operations or the
subsidiaries. Apart from continuous analysis of the
Group’s exposure to market fluctuations, regular reviews
are performed of the local risk control. These reviews
include the unit’s positions, measurement methods,
limit structure, administrative controls and risk reports.
In addition, the Central Auditing Department carries
out independent examinations.
47
OPERATIONAL RISK
The accepted definition of operational risk is the risk of
direct loss due to inappropriate or inadequate internal
routines, human error and erroneous systems or due to
external events. In its general guidelines for steering,
internal information and internal control, Finansinspektionen specifies IT risks, other technical, administrative
and legal risks as operational risks, to which banks
should pay special attention. An assessment of these
four types of risk is made twice yearly to the Central
Board of the Bank.
In the Handelsbanken Group, the responsibility for
steering and internal control with the purpose of minimising operational risks is an integral part of managerial
responsibility at all levels. When the Bank issues
instructions, special attention is always paid to how
internal control is organised. It is the duty of managers
who are responsible for the various functions at the
central head office to deal adequately with the issue of
risks in the Bank’s internal set of instructions, paying
attention to appropriate distribution of work and
responsibilities, the control structure of routines and the
information and reporting systems. The set of instructions therefore contains adequate instructions on how
the organisation should manage and report operational
risks. A separate section on security contains instructions regarding physical security, information security
and special instructions for staff working in the IT area.
Finally, one of the main tasks of the Bank’s auditing
organisation is to evaluate and ensure that the internal
control is appropriately designed. For many years,
Handelsbanken has had low costs for operational risk
losses.
Increasing dependence on IT support in the Bank’s
work implies a risk for disruptions and other errors.
The most tangible threats are errors in program code
or equipment and problems relating to provision of
electric power, cooling and similar factors. Other
threats may be overloading, manual errors, unforeseen
effects of changes, violation attempts and risk of errors
when launching new systems. The overall view of the
Bank’s IT security is that it is high in relation to the
threat level.
risks instead of the current more standardised methods.
However, there are major requirements for extensive
statistical verification of these internal systems.
The Basel committee’s proposal does not involve any
dramatic changes as regards capital adequacy for market
risk but the proposal to introduce capital adequacy
requirements for operational risks is completely new.
Preparations for the new capital adequacy regulations are in progress at the Central Credit Department.
Probably the most important task is to be able to verify
the Bank’s long-established internal system for grading
of credit risks to show that these correspond with the
criteria laid down by the Basel committee. The Basel
committee’s proposal for new regulations makes it more
advantageous to use the internal system, called the
internal rating method, compared to standardised methods. Another important area is to define and measure
the operational risks. As mentioned above, the Bank
reports the operational risks to the Central Board every
six months. The Bank is taking measures to comply
with the future rules on operational risks.
The proposal aims to have lower capital adequacy
requirements for banks with small loan losses and risks.
For many years, the outcome of these risks has been
lower for Handelsbanken than for its competitors. This
would indicate that in the future the capital adequacy
requirement for Handelsbanken will be lower than for
other banks.
The Basel committee’s proposals for new capital
adequacy regulations
The Basel committee, which mainly consists of representatives from the central banks of OECD countries,
has presented a proposal for principles for new capital
adequacy regulations. The proposal, which will come
into effect in 2005 at the earliest, requires preparations
at the Bank.
As regards capital adequacy for credit risks, the
committee’s proposal means that it will be possible for
banks to use their internal systems for grading credit
48
Annual Report 2001
Directors’ report
Directors’ report
A well-integrated universal bank
Handelsbanken is a universal bank, covering all types
of banking services for both corporate and private
customers.
At Handelsbanken, customer responsibility rests with
the local branch. This is where the services for each
customer are co-ordinated, in collaboration with regional
and central specialists when necessary.
Handelsbanken’s objectives, policy and organisation
are described in more detail on page 12 onwards.
total of 5.4 million shares and 5.6 million shares were
sold in connection with the acquisition of Midtbank.
At year-end, the Bank owned 21.4 million of its own
shares. The Board is requesting that the Annual General
Meeting authorise the Board to repurchase a maximum
of 20 million shares up until the 2003 Annual General
Meeting. The Board also states that the maximum
amount for the repurchase of shares will be SEK 2bn.
It is also proposed that the Annual General Meeting
authorise the Board to use repurchased shares to
finance any future acquisitions.
Total assets and shareholders’ equity
The Handelsbanken Group’s total assets were SEK
1 175bn (1 020) and shareholders’ equity was
SEK 48 112m (42 466).
Balance sheets for 1997–2001 are shown on pages
76–77 and key figures for the same years on page 9.
Capital ratio
At the end of 2001, the Handelsbanken Group’s capital
ratio was 9.9% (9.5). The Tier 1 capital ratio was
6.1% (6.4).
Acquisitions
In April, Handelsbanken acquired a Danish bank,
Midtbank A/S, for SEK 2.5bn.
During the year, the Bank acquired two properties
next to the head office in Stockholm. The total acquisition price was SEK 452m. At the time of acquisition, the
Bank was already a major tenant in these properties.
The Board’s activities during the year
See page 86 for a description of the Central Board’s
activities during the year.
Result
The Group’s operating profit was SEK 11 208m
(11 683). Income rose by 5% to SEK 21 487m (20 458).
Expenses increased by 12%. The cost/income ratio
(C/I ratio) before loan losses was 47.5% (43.8)
Profit and loss accounts for 1997–2001 are shown
on pages 76–77.
Profitability
Return on equity after full tax was 18.4% (22.3).
Handelsbanken’s profitability, expressed as operating
profit after standard tax and adjusted for items affecting comparability, was 17.8% (19.9). Handelsbanken’s
return on equity has been higher than the average for
the other Swedish banks since 1972.
Competent staff
Handelsbanken’s decentralised organisation and the
increasing complexity of banking make high demands
on the skills of our staff. Handelsbanken therefore consistently channels a great deal of resources and efforts
into the training and development of managers and
employees at all levels.
More information about our employees can be found
on page 17.
Appropriations and tax
Compensation from the Bank’s pension foundation was
SEK 400m (974). The Group’s tax expense for 2001
was SEK 3 202m (3 353).
Dividend
The Board recommends a dividend of SEK 4.50 (4.00)
on the class A and B shares. The dividend will require
SEK 3 120.2m.
Buy-back of own shares
The Annual General Meeting authorised the Board of
the Bank to resolve on repurchase of a maximum of 20
million class A or B shares and to sell shares which had
already been repurchased for the purpose of financing
possible acquisitions. In 2001, the Bank repurchased a
Annual Report 2001
49
Accounting principles
The accounting follows the regulations
of the Annual Accounts Act for Credit
Institutions and Securities Companies
(ÅRKL), the Swedish Financial Accounting Standards Council’s recommendations
and the directives issued by Finansinspektionen – the Swedish Financial
Supervisory Authority (FFFS 2000:18).
Changed accounting principles
The Accounting Standards’ recommendation RR 9 on Income taxes came into
force on 1 January 2001. This recommendation implies that both deferred tax
claims and deferred tax liabilities shall
be reported in the accounts. The recommendation implies a change of principle
and the accounts for the previous year
have therefore been restated.
In addition, the composition and
headings in the profit and loss account
have been changed to comply with a
new accounting regulation issued by the
Finansinspektionen. The result of insurance operations before appropriations
and taxes is now reported as a total
directly above the operating profit.
Certain other minor reclassifications
have been made. The comparative figures
have been restated accordingly.
Consolidated accounts
The consolidated accounts have been
prepared in accordance with the acquisition accounting method. The consolidated accounts comprise all companies in
which Handelsbanken directly or indirectly
holds more than 50% of the voting
power. Associated companies are reported
in the consolidated accounts in accordance with the equity method. Companies
taken over to protect claims are not
included in the consolidated accounts.
Handelsbanken Liv Försäkrings AB
and SPP Livförsäkring AB, which are
mutual life insurance companies, are not
consolidated, since the whole surplus of
the life insurance operation accrues to the
policy-holders in the form of bonuses.
Holdings of intra-Group bonds classified as financial fixed assets are eliminated
on consolidation. The difference thus
arising between the book value of the
intra-Group bonds and that of the corresponding liabilities is credited/charged to
net interest income.
All foreign operations have been classified as independent. This classification
is based on the fact that each operation
is run independently in accordance with
the Group’s decentralised organisation
50
and that transactions between the parent
company and the respective unit are only
part of their operations. The foreign units
also conduct their own funding and the
parent company is only affected indirectly
by each operation’s cash flows. Salary
payments and purchases are normally
made in local currency.
When converting the foreign subsidiaries’ balance sheets and profit and loss
accounts, the current method has been
used. Assets, liabilities and minority
interests in equity have been converted
at the closing day rate. Shareholders’
equity is translated at the rate applicable
at the time of investment or earning.
The profit and loss account has been
translated at the average annual rate.
Liabilities in foreign currencies which
refer to financing of shares in subsidiaries
are recorded at the rate on the balance
sheet date. The resulting translation
differences have been classed as shareholders’ equity.
Valuation of assets and liabilities
in foreign currencies
Assets and liabilities in foreign currencies
have been recorded at the average of the
end-of-day buying and selling price.
Foreign banknotes have been recorded at
the buying rates applicable to the general
public on the balance sheet date.
In the parent company, liabilities
which refer to financing of shares in
subsidiaries are recorded at the rate
applicable on acquisition. Holdings of
subordinated loans issued by subsidiaries
are also recorded in the parent company
at the rate applicable on acquisition
(hedge accounting).
Forward contracts in foreign currencies
are recorded at present value.
Unrealised gains or losses which have
arisen as a result of the aforementioned
valuation methods, are credited or charged
to the operating result.
Financial instruments
On the balance sheet, interest-bearing
securities are reported either as Instruments eligible as collateral with central
banks or as Bonds, depending on the
category of issuer. Both the trading book
and securities, which are held long-term
but not with the purpose of being held
until maturity, are classified as Financial
current assets. Securities in the trading
book are valued at market value, while
other financial current assets are valued
at the lower of cost or market. Realised
and unrealised gains/losses are reported
under Net result on financial operations.
Interest-bearing securities which have
been acquired with the intention of
being held to maturity are classified as
Financial fixed assets and reported at
acquisition value. For securities where
the value has fallen and this decline in
value is considered to be permanent, a
write-off is made. Realised price gains are
reported under Other operating income
while realised price losses are reported
under Other operating expenses.
The acquisition value of discount and
coupon instruments (held and issued)
means the accrued acquisition value.
This value is the discounted present
value of future payments where the discount interest rate represents the effective
interest rate at the time of acquisition.
This implies that acquired premiums and
discounts on coupon instruments are
allocated over the bond’s remaining period
to maturity or, for loans with interest
rate adjustments, until the next time the
interest rate is adjusted.
Purchases and sales of money market
and capital market instruments on the
spot market are subject to trade date
accounting. Forward transactions are
registered on the transaction date, but
until the date of settlement they are
regarded as off-balance-sheet commitments. On the date of settlement, they
are reported on the balance sheet.
Equities which are held on a permanent basis are classified as Financial
fixed assets and are reported at acquisition value. For equities where the value
has fallen and this decline in value is
considered to be permanent, a write-off
is made.
Other equities are classified as Financial current assets and are recorded at
the lower of cost or market unless they
are in the trading book. Equities in the
trading book are recorded at market
value.
Short positions in both interestbearing securities and equities are reported
as a liability at their market value.
Derivative instruments are valued at
market value. An exception is made for
derivative transactions which are hedging balance-sheet items that have not
been given a market value. If the hedge
is considered to represent an effective
protection against unfavourable changes
in value, i.e. the changes in value of the
hedged instrument are balanced by
corresponding changes in value of the
hedging instrument, the derivative
Annual Report 2001
transaction is reported using the accounting principles which apply to the hedged
transaction. In cases where unrealised
losses arise in the case of hedge reporting according to the acquisition method,
these are reported on the balance sheets
and profit and loss accounts. Derivative
transactions with a positive market value
at the balance sheet date are reported
under Other assets, and transactions with
a negative market value are reported
under Other liabilities. Receivables and
payables with the same counterparty
which can be set off, i.e. where a
contractual relationship exists implying
that there are legal grounds for applying
set off, are reported net on the balance
sheet in those cases where there is an
intention to settle the obligations by
netting or simultaneously.
Index-linked bonds are reported on
the balance sheet divided into debt
instruments and derivative instruments.
No division is made for the Bank’s own
holdings in the trading book.
Lending and deposits
Lending to the general public and credit
institutions is classified as financial fixed
assets and is reported on the balance
sheet on the settlement date at acquisition value. Leasing agreements in which
the lessee substantially bears the economic
risks and acquires the rewards associated
with the ownership of the asset are also
reported as lending. Loans which represent bad debts are reported on the
balance sheet at their net amount, i.e.
after deduction of the provision for possible and actual loan losses. Undrawn
loans (including the risk related to fixed
advance interest rates) are regarded as
an off-balance-sheet commitment until
the settlement date. If a loan is redeemed
ahead of time, the early redemption
charge received is allocated over the
remaining period of the loan.
Lending and deposits are reported
on the balance sheet at their acquisition
value.
Valuation of repossessed property
Repossessed property is a current asset
and is valued at the lower of cost or
market. By market value is meant the
market value after deduction of costs of
sale. This value is based upon an individual valuation by a firm of valuers with
the required skills in the field. When
repossessed, the properties are written
down to market value. If this value is
Annual Report 2001
less than that of the Bank’s original
collateral, the difference is reported as
an actual loan loss. Changes in value
after the property has been repossessed
are reported under Changes in value of
repossessed property.
Pension costs
A pension cost computed on an actuarial
basis, relating to pension commitments
which are backed by Handelsbanken’s
pension foundation, is reported as an
operating expense. Premiums paid for
pension insurance are also reported
under Operating expenses.
The actuarial pension premium is
restored as an appropriation under
Settlement of pensions, where settlement
is made against disbursed pensions and
any compensation from the pension
foundation.
Development costs
Investments in software developed by
the Bank and also software acquired
externally are reported as expenses as
they arise.
Depreciation
EQUIPMENT
Personal computers are depreciated over
3 years and investments in bank vaults
and similar investments on premises are
depreciated over 10 years.
PROPERTY CONTAINING BANK PREMISES
Property containing the Bank’s premises
is depreciated at the highest percentage
rate allowed for taxation purposes.
REPOSSESSED PROPERTY
Repossessed properties for protection of
claims are reported at the lower of cost
or market at the balance-sheet date.
Consequently, there is no depreciation
of these properties.
GOODWILL
Goodwill from acquisitions with longterm strategic significance is amortised
over 20 years. Other goodwill is amortised
over 10 years.
Loan losses
Actual loan losses for the year and writeoffs in respect of possible losses for loan
receivables are reported as loan losses.
Also reported as loan losses are writeoffs of interest shown as income in
previous annual accounts.
Provisions for country risks are made in
amounts which are considered necessary
on the basis of an individual assessment.
In the accounts, the reserve is allocated
to the asset items in the balance sheet to
which the reserve refers.
Reported as actual loan losses are losses
where the amounts have been finally
determined or are very likely as a result
of an official receiver providing an estimation of bankruptcy dividends, the
acceptance of composition recommendations or the reduction of claims in some
other way. For loans which have earlier
been reported as actual loan losses in
full, a re-appraisal of the size of the loss
is made in those cases where the customer is following a payment plan.
Write-offs of possible loan losses are
made in respect of bad debts if the borrower’s ability to repay is not considered
likely to improve sufficiently within two
years and the value of the collateral does
not cover the loan amount.
Write-offs are made down to the
amount which is expected to be realised,
taking into account the value of the collateral. If the collateral is a listed asset,
the valuation is based on the list price;
otherwise the valuation is based on the
yield value or the market value estimated
in some other manner.
If the collateral consists of a mortgage
on a property, the valuation of the underlying security is made in the same way
as for repossessed properties (see above).
Unpaid interest on non-performing
loans where the value of the collateral
does not cover the principal amount and
the accrued interest by a satisfactory
margin is not taken up as income.
Interest on these claims which was
reported as income but not paid during
the accounting year has been reversed.
Interest payments received thereafter in
respect of this type of credit are reported
in the year of receipt.
Taxes
The tax expense for the period consists
of Current tax and Deferred tax. Current tax refers to reported taxes for the
period’s taxable result. Deferred tax
claims and liabilities are taxes based on
taxable temporary differences between
the value of an asset or liability in the
accounts and its taxable value.
51
Profit and loss accounts and Balance sheets
Profit and loss accounts
GROUP
SEK m
2001
PARENT COMPANY
2000
2001
2000
Interest income
Note 1
57 667
66 308
41 674
47 935
Interest expense
Note 1
– 43 141
– 55 024
– 33 118
– 42 118
5 817
Net interest income
14 526
11 284
8 556
Dividends received
Note 2
309
504
322
584
Commission income
Note 3
5 894
6 048
5 047
5 275
Commission expense
Note 4
– 1 038
– 770
– 973
– 746
Note 5
1 577
3 049
1 499
2 987
Other operating income
Note 6
219
343
117
341
21 487
20 458
14 568
14 258
Total income
General administrative expenses
Staff costs
Note 7
– 5 909
– 5 300
– 5 270
– 4 814
Other administrative expenses
Note 8
– 3 346
– 2 928
– 2 614
– 2 332
Depreciation and write-down in value
of tangible and intangible fixed assets
Note 9
Total expenses before loan losses
– 805
– 753
– 500
– 402
– 10 060
– 8 981
– 8 384
– 7 548
11 427
11 477
6 184
6 710
Loan losses, net
Note 10
– 160
66
– 780
– 129
Note 11
8
1
—
1
82
32
11 357
11 576
5 404
6 582
Participations in result of associated companies
Result of banking operations
Result of insurance operations
– 149
107
11 208
11 683
5 404
6 582
Note 13
306
797
4 802
4 274
11 514
12 480
10 206
10 856
Note 14
– 3 202
– 3 353
– 2 873
– 2 860
7 333
7 996
Note 12
Operating profit
Appropriations
Profit before taxes
Taxes
Minority interests
– 22
– 22
Profit for the year
8 290
9 105
Net earnings per share, SEK
11.99
12.89
52
Annual Report 2001
Profit and loss accounts and Balance sheets
Balance sheets
31 December
GROUP
SEK m
2001
PARENT COMPANY
2000
2001
2000
10 614
5 258
10 371
5 109
23 796
12 662
23 796
11 710
ASSETS
Cash and balance with central banks
Instruments eligible as collateral with central banks
Note 15
Note 16
70 857
94 677
230 841
240 637
Note 17
800 068
689 106
414 485
327 240
Bonds and other interest-bearing securities
Note 15
104 551
75 600
100 092
76 511
Shares and participations
Note 18
13 769
13 883
13 166
13 733
Shares and participations in associated companies
Note 19
300
271
245
246
Shares and participations in Group companies
Note 20
4 419
247
36 964
29 821
Assets in insurance operations
Note 21
20 429
17 762
Note 22
6 587
4 970
475
—
Intangible fixed assets
Goodwill
Tangible assets
Equipment
Note 23
767
744
639
615
Buildings and land
Note 24
1 699
1 014
1 356
921
Other assets
Note 25
109 623
95 073
109 495
96 371
Prepayments and accrued income
Note 26
7 042
9 086
6 324
7 900
1 174 521
1 020 353
948 249
810 814
Note 27
220 126
155 414
254 200
195 337
Deposits
Note 28
225 750
191 016
210 799
178 916
Funding
Note 29
57 942
64 334
54 226
61 332
230 681
197 164
Total assets
LIABILITIES, PROVISIONS AND SHAREHOLDERS’ EQUITY
Deposits and funding from the general public
Issued securities etc
Issued debt instruments
Note 30
440 981
401 489
Liabilities in insurance operations
Note 31
17 535
17 276
Other liabilities
Note 32
119 532
109 391
117 668
107 036
Accruals and deferred income
Note 33
10 017
14 720
7 319
11 274
Provision for deferred taxes
Note 34
5 289
4 920
196
305
Subordinated liabilities
Note 35
28 976
19 066
28 566
18 089
1 126 148
977 626
903 655
769 453
261
261
10 296
9 248
Total liabilities and provisions
Minority interest in shareholders’ equity
Untaxed reserves
Note 36
Share capital
Note 37
2 859
2 859
2 859
2 859
Statutory reserve
Note 37
2 748
2 748
2 682
2 682
Reserve for unrealised profits
Note 37
205
425
195
421
Other restricted reserves
Note 37
14 369
10 541
—
—
Profit brought forward
Note 37
19 641
16 788
21 229
18 155
Profit for the year
Note 37
8 290
9 105
7 333
7 996
48 112
42 466
34 298
32 113
1 174 521
1 020 353
948 249
810 814
48 883
Other reserves
Total shareholders’ equity
Total liabilities, provisions and shareholders’ equity
Collateral pledged for own debt
Note 38
63 137
43 611
64 388
Other collateral pledged
Note 39
33 420
28 357
17 317
11 353
Contingent liabilities
Note 40
79 644
67 162
113 956
120 156
Pension commitments
Note 41
—
—
—
—
Other commitments
Note 42
6 426 421
4 770 643
6 545 270
4 460 217
Annual Report 2001
53
Cash flow statement
Cash flow statement
GROUP
SEK m
PARENT COMPANY
2001
2000
2001
2000
11 208
11 683
5 404
6 582
Loan losses
734
206
986
265
Unrealised changes in value
410
– 2 256
425
– 2 313
Depreciation and write-downs
805
753
500
402
– 3 853
– 1 716
– 4 101
– 2 547
OPERATING ACTIVITIES
Operating profit
Adjustment for items in the operating result
which do not affect the cash flow:
Paid income tax
Changes in the assets and liabilities of operating activities:
Financial current assets
24 783
4 182
9 796
– 50 912
– 103 624
– 63 106
– 88 231
– 55 395
– 36 275
2 800
– 36 102
2 379
62 467
– 31 088
58 863
20 451
20 539
33 867
24 776
26 077
Issued securities
39 492
41 949
33 517
37 701
Other
– 7 005
8 004
– 4 821
9 296
9 681
5 278
1 012
– 8 014
Cash flow on operating activities
INVESTING ACTIVITIES
Acquisition of subsidiaries
– 2 355
—
—
—
Change in shares
– 5 215
– 1 397
– 8 158
– 1 397
Change in interest-bearing securities
– 3 093
1 344
1 590
6 997
Change in tangible fixed assets
– 1 139
– 329
– 843
– 338
– 124
– 590
—
– 506
– 8 001
5 262
Change in intangible fixed assets
Cash flow on investing activities
– 11 802
FINANCING ACTIVITIES
Subordinated loans
Dividend paid
Group contribution
9 910
– 784
10 477
2 600
– 2 751
– 2 144
– 2 751
– 2 144
—
—
4 218
4 536
– 46
– 2 950
– 46
– 2 950
Cash flow on financing activities
7 113
– 5 878
11 898
2 042
Cash flow for the year
4 992
– 1 106
4 909
– 710
Repurchase of own shares
Liquid funds at beginning of year
5 258
6 285
5 109
5 735
Cash flow on operating activities
9 681
5 278
1 012
– 8 014
Cash flow on investing activities
– 11 802
– 506
– 8 001
5 262
Cash flow on financing activities
7 113
– 5 878
11 898
2 042
364
79
353
84
10 614
5 258
10 371
5 109
Exchange rate difference on liquid funds
Liquid funds at end of year
Acquisition of subsidiaries
SPP Fonder and Midtbank were acquired during the year. According to the acquisition analyses,
the value of the acquired assets and liabilities was as follows:
8 073
964
986
Goodwill
1 798
Other assets
1 382
– 7 802
– 2 103
Other liabilities
– 773
Purchase price paid
2 525
Liquid funds in the acquired company
– 170
Impact on Group’s liquid funds
2 355
54
Annual Report 2001
Notes
Notes to the profit and loss accounts
Amounts in SEK million unless otherwise stated
Note
1
Interest
GROUP
PARENT COMPANY
2001
2000
2001
2000
INTEREST INCOME
Interest income in Swedish kronor
Credit institutions
General public
Interest-bearing securities, fixed assets
Interest-bearing securities, current assets
Other interest income
Total interest income in Swedish kronor
1 924
32 600
523
1 868
50
36 965
1 906
31 258
715
1 499
5 985
41 363
8 350
11 712
522
1 705
36
22 325
6 209
9 917
707
1 361
5 968
24 162
Interest income in foreign currency
Credit institutions
General public
Interest-bearing securities, fixed assets
Interest-bearing securities, current assets
Other interest income
Total interest income in foreign currency
Total interest income
4 327
11 809
118
2 896
1 552
20 702
57 667
5 960
9 609
63
2 798
6 515
24 945
66 308
4 926
10 027
118
2 855
1 423
19 349
41 674
6 566
7 998
63
2 746
6 400
23 773
47 935
INTEREST EXPENSE
Interest expense in Swedish kronor
Credit institutions
General public
Issued securities
Subordinated loans
Other interest expense
Total interest expense in Swedish kronor
– 6 949
– 4 315
– 8 822
– 92
– 434
– 20 612
–2
–3
– 11
–
–8
– 26
385
664
598
312
545
504
– 6 641
– 3 944
– 847
– 89
– 254
– 11 775
– 1 878
– 3 321
– 827
– 213
– 8 157
– 14 396
Interest expense in foreign currency
Credit institutions
General public
Issued securities
Subordinated loans
Other interest expense
Total interest expense in foreign currency
Total interest expense
Net interest income
–3
–4
– 12
–1
–
– 22
– 43
14
–8
–3
– 12
–
–2
– 28
– 55
11
869
822
305
926
598
520
024
284
–3
–6
– 10
–1
–
– 21
– 33
8
– 10
–3
– 10
–
–2
– 27
– 42
5
317
690
698
324
500
529
141
526
456
121
015
288
463
343
118
556
162
437
719
890
514
722
118
817
From 2001, interest on swap agreements which is subject to hedge accounting, is reported net.
AVERAGE VOLUMES
Assets
Lending credit institutions in Swedish kronor
Lending general public in Swedish kronor
Interest-bearing securities, fixed assets in Swedish kronor
Interest-bearing securities, current assets in Swedish kronor
Average volume in Swedish kronor
40
555
5
41
643
494
779
291
905
469
48
508
2
33
592
733
102
427
364
626
181
205
9
37
434
905
789
004
952
650
146
174
13
29
364
Lending credit institutions in foreign currency
Lending general public in foreign currency
Interest-bearing securities, fixed assets in foreign currency
Interest-bearing securities, current assets in foreign currency
Average volume in foreign currency
85
203
1
57
348
422
796
594
780
592
106 279
149 791
708
46 939
303 717
96
178
1
56
333
906
610
594
588
698
116 197
127 557
708
46 057
290 519
Liabilities
Deposits and funding credit institutions in Swedish kronor
Deposits and funding general public in Swedish kronor
Issued securities in Swedish kronor
Average volume in Swedish kronor
55
174
167
398
878
754
927
559
58
165
203
427
470
723
791
984
48
167
18
235
611
645
814
070
48
158
19
226
537
680
180
397
Deposits and funding credit institutions in foreign currency
Deposits and funding general public in foreign currency
Issued securities in foreign currency
Average volume in foreign currency
194
103
264
563
700
988
461
149
148
74
197
421
940
553
700
193
239
92
204
536
283
252
971
506
160
76
171
408
991
136
203
330
Average lending rate general public
Average deposit and funding rate general public
Interest income received from Group companies
Interest expense paid to Group companies
Insurance premiums paid to Group companies
Annual Report 2001
265
856
753
875
749
5.85%
3.23%
6.21%
3.12%
5.66%
3.87%
7 342
2 559
5.92%
2.88%
8 803
5 219
107
104
107
104
55
Notes
Note
2
Dividends received
GROUP
PARENT COMPANY
2001
2000
2001
2000
309
500
294
498
—
4
28
4
—
82
504
322
584
2000
2001
2000
1 311
1 014
1 253
960
Lending
790
544
554
355
Deposits
76
79
74
78
301
253
277
242
Securities
2 189
2 988
1 624
2 328
Other commission
1 227
1 170
1 265
1 312
5 894
6 048
5 047
5 275
264
403
Dividends on shares and participations
Dividends from associated companies
Dividends from Group companies
309
Note
3
Commission income
GROUP
2001
Payments
Guarantees
PARENT COMPANY
Commission income received from Group companies
Note
4
Commission expense
GROUP
2001
PARENT COMPANY
2000
2001
2000
Payments
– 780
– 511
– 746
– 483
Securities
– 164
– 162
– 132
– 117
– 94
– 97
– 95
– 146
– 1 038
– 770
– 973
– 746
– 10
– 48
Other commission
Commission expense paid to Group companies
Note
5
GROUP
2000
2001
2000
947
1 371
976
1 343
– 233
– 2 175
– 265
– 2 182
714
– 804
711
– 839
Realised profit
Note
6
PARENT COMPANY
2001
– 325
– 271
– 325
– 259
– 85
2 572
– 100
2 572
Unrealised changes in value
– 410
2 301
– 425
2 313
Currency changes
1 273
1 552
1 213
1 513
1 577
3 049
1 499
2 987
2001
2000
2001
Realised share price gains, not trading book
63
94
63
86
Rental income
57
29
33
26
GROUP
56
PARENT COMPANY
2000
99
220
21
229
219
343
117
341
Annual Report 2001
Notes
Note
7
Staff costs
GROUP
PARENT COMPANY
2001
2000
2001
2000
Salaries and fees
– 3 878
– 3 514
– 3 413
– 3 159
Social security costs
– 1 057
– 999
– 968
– 922
– 470
– 327
– 423
– 309
Pension costs1)
Appropriation to profit-sharing foundation
– 155
– 166
– 140
– 150
Other staff costs
– 349
– 294
– 326
– 274
– 5 909
– 5 300
– 5 270
– 4 814
1) SEK 311m (234) of pension costs are calculated costs and SEK 159m (94) are pension premiums.
The calculated pension cost, which is charged to the operating result, is based on the number of employees in active service.
Pension premiums paid to Group companies
–3
–4
–3
–4
Sweden
– 72
– 59
– 64
– 49
Norway
–6
–6
–2
–2
Finland
–5
–4
–3
–2
Denmark
–4
–3
–3
–2
—
–4
Salaries and other remuneration
Board, CEO and EVPs
France
Luxembourg
–2
–2
USA
–6
–3
– 95
– 81
– 72
– 55
Sweden
– 2 691
– 2 570
– 2 499
– 2 358
Norway
– 227
– 169
– 212
– 162
Finland
– 230
– 206
– 196
– 175
Denmark
– 249
– 123
– 123
– 110
UK
– 123
– 133
– 123
– 133
Other
Luxembourg
– 50
– 48
– 17
– 19
Germany
– 23
– 19
– 23
– 19
USA
– 109
– 104
– 93
– 76
Singapore
– 26
– 25
– 26
– 25
Hong Kong
– 12
–9
– 12
–9
Other countries
– 43
– 27
– 17
– 18
– 3 783
– 3 433
– 3 341
– 3 104
– 3 878
– 3 514
– 3 413
– 3 159
Total
Number of employees
Average during year
2001
2000
Women
Men
Sweden
7 276
7 004
4 002
3 274
Norway
525
504
267
258
Finland
532
465
324
208
Denmark
445
150
214
231
UK
143
145
43
100
Luxembourg
78
83
30
48
Germany
41
39
19
22
USA
86
82
29
57
Singapore
37
37
20
17
Hong Kong
23
24
7
16
Poland
25
—
12
13
Other countries
28
41
12
16
9 239
8 574
4 979
4 260
Information concerning companies which are not consolidated
Handelsbanken Liv Försäkrings AB and SPP AB
The average number of employees was 918 (232).
SEK 4.5m (2.5) was paid in salary and other remuneration to the CEO and board.
Annual Report 2001
57
Notes
Loans to Senior Management
Note
8
GROUP
PARENT COMPANY
2001
2000
2001
2000
CEO and EVPs
97
88
76
64
Board members
11
29
2
8
108
117
78
72
Terms and remuneration of the Bank's senior management
and Chairman of the Board
index-linked base amounts. They also receive a pension under the
general national insurance scheme. A retirement pension of 65% is paid
on the portion of the salary in excess of 7.5 index-linked base amounts.
CONDITIONS
REMUNERATION
The Bank has no agreements on severance pay. The Group Chief
Executive, Lars O Grönstedt, has a retirement age of 60. His retirement
pension between the ages of 60 and 64 is 75% of his salary, and from
the age of 65 the pension is 65%.
For the Chairman of the Board of the Bank and ex-CEO, Arne
Mårtensson, an agreement exists which was entered into when he
became CEO in 1991. This agreement is the same as that which
applied to the two previous CEOs, Jan Wallander and Tom Hedelius.
This implies that if the CEO is not re-appointed, up to and including
the fifth annual general meeting thereafter, he is to be offered other
work and to be paid as if he had been CEO. If the CEO takes up
employment outside the Bank, no compensation will be paid to him.
Arne Mårtensson has a retirement age of 55, which has been considered desirable both for the Bank and him, in view of the fact that he
was appointed CEO at a relatively young age. Until then he is compensated in accordance with the above-mentioned agreement on condition
that he does not serve on any other boards than those desired by the
Bank and that all fees are paid to the Bank. Between the ages of 55 and
64, his retirement pension is 75% of his salary, and from the age of 65,
it is 65%.
The pension for both the CEO and Chairman of the Board is earned
gradually during the years up to age of retirement and is fully earned by
the age of 60 and 55, respectively. The Bank is charged annually for the
cost at the same rate as the pension is earned. An earned pension commitment is guaranteed by the Bank's pension foundation. If they leave
the Bank before the stipulated retirement age, a paid-up policy is issued
for the pension earned.
The Bank's Executive Vice Presidents retire at the age of 60. Between
the ages of 60 and 64, the retirement pension is 65% of their salary.
From the age of 65, their pension is 10% of the annual salary up to 7.5
In 2001, the Chairman of the Board, Arne Mårtensson, received remuneration and benefits from the Bank amounting to SEK 18 718 216. This
amount includes a non-pensionable bonus of SEK 10m which was paid
in recognition of Arne Mårtensson’s 10 years of service as group chief
executive when he left this position. Fees from serving on other boards
have been paid to the Bank. No regular bonus is paid.
The present Group Chief Executive, Lars O Grönstedt, has received
remuneration and benefits amounting to SEK 4 786 602. Fees from
serving on other boards have been paid to the Bank. No regular bonus
is paid.
PENSION COMMITMENTS
Increased pension commitments and paid pension insurance premiums
for the present and previous boards, CEOs and EVPs amount to SEK
170m (85) for the Group and SEK 159m (69) for the parent company.
Pension commitments for the same people are SEK 685m (585) for the
Group and SEK 652m (528) for the parent company. Apart from normal
salary changes, the increase is due to changed interest rate assumptions for insurance reasons and also changed conditions. The number of
people in the Group covered by these commitments is 64 (68), of whom
28 (27) are pensioners. The commitments are covered by the Bank's
pension foundation.
OPTIONS PROGRAMME
In 1999, branch managers and other senior managers were invited to
acquire synthetic options with Handelsbanken class A shares as the
underlying securities. The options programme runs for five years, from
November 1999 until November 2004. By means of hedging transactions, the Bank has limited its maximum cost. The cost in 2001 is SEK
25m.
GROUP
PARENT COMPANY
2001
2000
2001
2000
Property and premises
– 867
– 706
– 783
– 643
External IT costs
– 856
– 690
– 585
– 466
Communication
– 405
– 394
– 342
– 335
Travel and marketing
– 377
– 324
– 285
– 241
Purchased services
– 499
– 433
– 324
– 314
Supplies
– 181
– 178
– 155
– 156
Other expenses
– 161
– 203
– 140
– 177
– 3 346
– 2 928
– 2 614
– 2 332
– 36
– 47
Leasing costs paid to Group companies
Fees paid to auditors
GROUP
Audits
2001
KPMG Bohlins AB
Ernst & Young AB
Deloitte & Touche AB
PARENT COMPANY
2000
Consulting
2001
2000
Audits
2001
2000
Consulting
2001
2000
– 4.4
– 3.5
– 4.1
– 0.1
– 2.5
– 2.3
– 3.4
– 0.5
– 0.5
– 9.8
—
– 0.5
– 0.5
– 9.8
—
– 1.1
– 0.8
—
—
– 0.5
– 0.4
—
—
– 59.9
– 56.3
– 53.5
– 49.6
External auditing
Internal auditing
– 0.1
Consulting mainly refers to fees for tax consultation, negotiated and performed independent of the audit.
Note
9
Depreciation and write-down in value of tangible and intangible fixed assets
GROUP
Equipment
2000
2001
2000
– 392
– 395
– 346
– 357
Property
– 39
– 33
– 38
– 33
Goodwill
– 369
– 318
– 115
– 10
Other depreciation/write-downs
58
PARENT COMPANY
2001
–5
–7
–1
–2
– 805
– 753
– 500
– 402
Annual Report 2001
Notes
Note
10
Loan losses
GROUP
PARENT COMPANY
2001
2000
2001
2000
– 665
– 449
– 468
– 368
A. INDIVIDUALLY VALUED CLAIMS
The year’s write-down for actual loan losses
Write-back of previous provisions for possible loan losses
which have been reported as actual losses in this year’s accounts
The year’s write-down relating to possible loan losses
445
347
308
288
– 1 200
– 630
– 1 113
– 571
Recovered from actual losses in previous years
545
258
204
134
Write-back of provisions for possible losses which are no longer necessary
722
553
288
386
– 153
79
– 781
– 131
– 36
– 39
–1
–1
29
14
1
2
0
12
1
1
–7
– 13
1
2
Net expense for the year for individually valued claims
B. CLAIMS VALUED AS A GROUP
The year’s write-down for actual loan losses
Recovered from actual losses in previous years
Allocation to/dissolution of reserve for loan losses
Net expense for the year for claims valued as a group
C. PROVISION TO GENERAL RESERVE FOR COUNTRY RISK
Total loan losses (A+B+C)
—
—
—
—
– 160
66
– 780
– 129
Both actual and possible loan losses reduce the corresponding claim amount on the assets side of the Balance Sheet. The reserve for possible loan losses decreased
by SEK 57m for the Group and increased by SEK 35m for the Parent Company in the form of foreign currency translation differences.
Write-downs:
Claims on credit institutions
–2
–4
–2
–4
Claims on the general public
– 1 454
– 767
– 1 272
– 648
Total write-downs
– 1 456
– 771
– 1 274
– 652
Write-backs:
Claims on credit institutions
Note
11
6
6
6
6
Claims on the general public
716
559
283
381
Total write-backs
722
565
289
387
2001
2000
2001
2000
—
1
—
1
Other repossessed property
8
0
—
0
Realised change in value
8
1
—
1
2001
2000
2001
3 537
6 751
GROUP
Repossessed buildings
Note
12
PARENT COMPANY
GROUP
(In accordance with the Annual Accounts Act for Insurance companies)
PARENT COMPANY
2000
Technical account – insurance operations
Premium income
Investment income transferred from financial operations
Investment income
Other technical income
–5
–2
344
196
50
0
Change in value of investments for which
policyholders bear the investment risk
– 2 490
– 2 039
Insurance claims paid
– 1 321
– 1 110
288
– 3 479
– 82
– 57
Change in insurance provisions
Operating expenses
Other technical expenses
Result on technical account – insurance operations
Annual Report 2001
– 125
—
196
260
59
Notes
GROUP
PARENT COMPANY
2001
2000
31
50
9
8
2001
2000
Investment income (incl. unrealised changes in value)
Unrealised gains on investments
Investment charges
– 151
2
– 18
– 53
Yield tax
– 216
– 160
Profit before company taxes
– 149
107
Unrealised losses on investments
Taxes
Profit for the year
Note
13
53
–1
– 96
106
Appropriations etc
GROUP
2001
PARENT COMPANY
2000
2001
2000
Settlement of pensions
Calculated pension premiums in the bank
Pensions paid by the bank
Compensation from pension foundation
311
234
311
234
– 405
– 411
– 405
– 411
400
974
400
974
306
797
306
797
– 1 050
– 2 087
Change in tax equalisation reserve K
456
Change in tax allocation reserve
Change in other untaxed reserves
27
– 46
5 519
5 154
797
4 802
4 274
2001
2000
2001
2000
– 2 598
– 3 008
– 3 004
– 2 880
– 50
– 241
47
– 65
Group contribution
306
Note
14
Taxes
GROUP
PARENT COMPANY
Current tax
Tax expense for the period
Adjustment of tax relating to previous years
Deferred tax
Changes in temporary differences
Other tax
Nominal tax rate in Sweden
– 502
– 59
109
105
– 52
– 45
– 25
– 20
– 3 202
– 3 353
– 2 873
– 2 860
28.0%
28.0%
28.0%
28.0%
0.0%
– 0.5%
0.0%
– 1.2%
—
– 0.3%
—
—
0.9%
0.7%
– 1.1%
– 0.9%
0.2%
– 0.5%
27.8%
27.0%
28.2%
26.3%
Deviations
Non-taxable income/non-deductible expenses
Utilised deficit deduction in associated Group companies
Amortisation of goodwill
Effects of foreign taxation and other
The Group’s effective tax rate
A number of legal disputes concerning tax cases are currently being processed in Swedish tax courts.
The tax liabilities include a provision of SEK 275m (271) for claims from the tax authorities which, if admitted, will lead to tax payments
for the same amount. The Bank considers it less than likely that the amount will need to be paid. The Bank has also appealed against other
taxation decisions. The Bank has not reported a claim corresponding to its claim on the authorities.
60
Annual Report 2001
Notes
Notes to the balance sheets
Amounts in SEK million unless otherwise stated
Note
15
GROUP
PARENT COMPANY
2001
2000
2001
2000
23 552
12 336
23 552
11 384
244
326
244
326
23 796
12 662
23 796
11 710
2 508
INSTRUMENTS ELIGIBLE AS COLLATERAL WITH CENTRAL BANKS
Government instruments eligible as collateral
Other securities eligible as collateral
Remaining maturity: maximum one year
18 170
3 460
18 170
Remaining maturity: over one year but maximum five years
5 009
5 545
5 009
5 545
Remaining maturity: over five years but maximum ten years
597
2 373
597
2 373
Remaining maturity: over ten years
Total
Average remaining maturity
20
1 284
20
1 284
23 796
12 662
23 796
11 710
1.2
3.4
1.2
3.7
BONDS AND OTHER INTEREST-BEARING SECURITIES
Issued by public bodies
—
—
—
—
Issued by other borrowers
104 551
75 600
100 092
76 511
104 551
75 600
100 092
76 511
27 268
Of which unlisted securities
39 920
31 350
36 015
Of which subordinated (debenture loans)
—
—
—
—
Of which claims on Group companies
—
—
334
5 017
51 819
36 277
47 921
36 858
42 086
23 678
41 977
24 009
9 810
15 426
9 759
15 427
836
219
435
217
104 551
75 600
100 092
76 511
2.2
2.4
2.1
2.4
Total
CURRENT ASSETS
Current assets acquisition price
Swedish government
16 262
8 155
16 262
8 155
Swedish mortgage institutions
25 144
23 527
22 736
21 711
non-financial companies
5 551
5 801
5 551
5 801
other financial companies
18 820
8 231
16 441
5 945
Other Swedish issuers:
Foreign governments
7 356
3 995
7 356
3 043
Other foreign issuers
46 945
33 157
46 945
33 153
120 078
82 866
115 291
77 808
—
—
—
—
Total
Current assets fair value
Swedish government
16 206
8 230
16 206
8 230
25 091
23 577
22 684
21 761
5 438
5 768
5 438
5 768
18 980
8 245
16 593
5 959
Foreign governments
7 347
4 106
7 347
3 154
47 140
33 210
47 140
33 207
120 202
83 136
115 408
78 079
—
—
—
—
124
270
117
271
Total
Difference between acquisition price and fair value
Annual Report 2001
61
Notes
GROUP
2001
PARENT COMPANY
2000
2001
2000
Current assets book value
Swedish government
16 206
8 230
16 206
8 230
25 091
23 577
22 684
21 761
5 438
5 764
5 438
5 764
18 907
8 245
16 521
5 959
Foreign governments
7 346
4 106
7 346
3 154
47 140
33 214
47 140
33 210
120 128
83 136
115 335
78 078
—
—
—
—
1 711
200
2 045
5 217
5 255
4 450
5 255
4 450
100
100
100
100
1 153
376
1 153
376
Total
8 219
5 126
8 553
10 143
—
—
—
—
1 711
200
2 054
5 261
5 362
4 547
5 362
4 547
90
90
90
90
1 169
378
1 169
378
Total
8 332
5 215
8 675
10 276
Total
FIXED ASSETS
Fixed assets acquisition price
Fixed assets fair value
Note
16
—
—
—
—
Book value higher than nominal value
1 259
861
1 180
966
Book value lower than nominal value
1 200
282
1 186
267
2001
2000
2001
2000
Banks, in Swedish kronor
12 663
27 120
11 916
26 838
Banks, in foreign currencies
35 861
49 001
36 731
53 760
3 781
4 607
153 685
139 013
GROUP
PARENT COMPANY
FIXED ASSETS
Other credit institutions, in Swedish kronor
Other credit institutions, in foreign currencies
Possible loan losses
Of which subordinated
18 578
13 975
28 535
21 052
70 883
94 703
230 867
240 663
– 26
– 26
– 26
– 26
70 857
94 677
230 841
240 637
92
—
Of which claims on associated companies
135
43
162 137
148 037
121
1 689
0
—
Payable upon demand
20 629
22 915
47 980
36 765
Remaining maturity: maximum three months
27 970
42 268
73 805
95 278
Remaining maturity: over three months but maximum one year
16 083
25 798
82 276
81 117
3 917
2 089
23 791
25 127
Information concerning maturities:
Remaining maturity: over five years
Total
62
2 258
1 607
2 989
2 350
70 857
94 677
230 841
240 637
0.7
0.4
0.8
0.6
Annual Report 2001
Notes
Note
17
GROUP
PARENT COMPANY
2001
2000
2001
2000
Households
258 579
234 650
42 464
40 097
Companies etc
336 849
296 746
186 551
150 330
595 428
531 396
229 015
190 427
FIXED ASSETS
Lending, Swedish kronor
Total
Lending foreign currency
Households
Companies etc
Total
Total lending to the general public
Of which subordinated
36 163
25 024
28 464
17 619
171 953
135 875
159 502
120 883
208 116
160 899
187 966
138 502
– 3 476
– 3 189
– 2 496
– 1 689
800 068
689 106
414 485
327 240
221
2
Of which claims on associated companies
25
1
221
2
3 065
900
25
1
Gross investments referring to financial leasing agreements concluded since 1 January 1997 have been calculated to be SEK 18 587m (12 686).
Unearned financial income according to the same calculation is SEK 1 520m (2 088).
Payable upon demand
43 091
112 368
42 399
22 968
247 222
126 823
96 936
84 112
153 436
132 332
109 674
83 892
237 707
211 004
79 948
67 905
118 612
106 579
85 528
68 363
Total
800 068
689 106
414 485
327 240
2.8
2.3
3.6
2.6
Bad debts etc
(For definitions see fold-out inside back cover)
Bad debts
Reserve for possible loan losses
Bad debts, net
Reduced rate loans without a provision for possible loan losses
5 039
5 532
3 824
3 121
– 3 571
– 3 219
– 2 588
– 1 715
1 468
2 313
1 236
1 406
58
55
51
47
1 526
2 368
1 287
1 453
Bad debt reserve ratio
70.9%
58.2%
67.7%
55.0%
Proportion of bad debts
0.18%
0.33%
0.21%
0.29%
5 097
5 587
3 875
3 168
Income on problem loans during the year
203
254
42
35
Annual interest rate on problem loans
9.19
10.73
2.67
2.38
5.86
6.16
5.75
5.89
2 084
1 321
606
307
Total problem loans
Problem loans before write-down for possible loan losses
Annual interest rate on loans which are not problem loans
Non-performing loans for which interest is accrued
COLLATERAL TAKEN OVER
Book value
Buildings and land
16
0
0
0
Shares and other participations
71
55
49
34
Other
Total collateral taken over
Annual Report 2001
83
93
0
—
170
148
49
34
63
Notes
Note
18
GROUP
Trading book
PARENT COMPANY
2001
2000
2001
2000
10 785
11 306
10 071
11 044
For protection of claims
71
55
49
34
Other shares
26
648
159
782
10 882
12 009
10 279
11 860
Current assets
Shares in credit institutions
Other shares and participations
Fixed assets
Of which unlisted
1
1
1
1
2 886
1 873
2 886
1 872
2 887
1 874
2 887
1 873
13 769
13 883
13 166
13 733
130
133
242
245
Fv Fastighetsvärden AB, a wholly-owned subsidiary of the Bank, is included in the parent company. The shares in the company are regarded as investment shares
and as such are current assets. In the Group, this holding has been eliminated by SEK 133m.
CURRENT ASSETS
Acquisition value
Trading book
10 853
11 196
10 015
71
55
50
34
Other shares
26
652
159
785
10 950
11 903
10 224
11 736
11 044
Total
10 917
Fair value
Trading book
10 785
11 306
10 071
78
55
56
34
Other shares
26
1 140
159
1 273
10 889
12 501
10 286
12 351
Total
FIXED ASSETS
Acquisition value
3
3
3
3
2 886
1 940
2 886
1 940
Total
2 889
1 943
2 889
1 943
Fair value
Note
19
1
1
1
1
3 235
2 204
3 235
2 202
Total
3 236
2 205
3 236
2 203
2000
2001
Shares and participations in associated companies
GROUP
2001
PARENT COMPANY
2000
FIXED ASSETS
Credit institutions
Other associated companies
41
39
30
30
259
232
215
216
300
271
245
246
All shares in associated companies are unlisted.
Shares and participations, associated companies 31 December 2001
No. of
shares
Book value
Group
Book value
Parent company
Parent company’s
proportion of equity %
25 000
41
30
50.0
41
30
443 700
200
200
24.7
—
59
15
—
Subtotal
259
215
Total
300
245
CREDIT INSTITUTIONS
Svensk Bostadsfinansiering AB BOFAB (Stockholm)
Total
OTHER ASSOCIATED COMPANIES
VPC AB (Stockholm)
Various companies
The associated company’s name, registered number, registered office, equity, profit/loss, proportion of equity, number of participations and their value
according to the balance sheet have not been included since this information is not considered to be of major importance in providing a fair view.
64
Annual Report 2001
Notes
Note
20
Shares and participations in Group companies
GROUP
PARENT COMPANY
2001
2000
2001
2000
27 376
27 376
4 852
1 834
FIXED ASSETS
Shares in Swedish credit institutions
Shares in foreign credit institutions
Shares in other Swedish companies1)
4 419
247
Shares in other foreign companies
4 419
247
4 603
460
133
151
36 964
29 821
All shares in Group companies are unlisted.
1) Handelsbanken Liv Försäkrings AB and SPP Livförsäkring are not included in the Consolidated Accounts.
Shares and participations, Group companies 31 December 2001
No. of
shares
Book value
Group
Book value
Parent company
Parent company’s
proportion of equity %
100
SWEDISH CREDIT INSTITUTIONS
Handelsbanken Finans AB (Stockholm)
Stadshypotek AB (Stockholm)
Stadshypotek Bank AB (Stockholm)
1 550 000
145
162 000 000
26 870
100
3 000 000
361
100
Subtotal
27 376
FOREIGN CREDIT INSTITUTIONS
Midtbank A/S (Herning)
2 460 000
2 525
100
50 000
494
100
Handelsbanken Norge Holding AS (Oslo)
1 550 000
1 682
100
Svenska Handelsbanken S.A. (Luxembourg)
1 000 000
147
100
4
—
Bank Svenska Handelsbanken (Polska) S.A. (Warsaw)
Various companies
—
Subtotal
4 852
OTHER SWEDISH COMPANIES
Handelsbanken Liv Försäkrings AB (Stockholm)
Handelsbanken Liv Fondförsäkrings AB (Stockholm)
SPP Livförsäkring AB (Stockholm)
1 500
247
100 000
2 000
Various companies
4 172
—
Subtotal
4 419
300
100
139
100
4 139
100
25
—
4 603
OTHER FOREIGN COMPANIES
Svenska Re S.A. (Luxembourg)
19 999
35
99.99
Svenska Finans International BV (Rotterdam)
10 200
84
100
—
14
—
Various companies
Subtotal
133
Total
4 419
36 964
Particulars of subsidiaries’ registered numbers can be found on the inside back cover.
The subsidiary’s name, registered number, registered office, equity, profit/loss, proportion of equity, number of participations and their value
according to the balance sheet have not been included since this information is not considered to be of major importance in providing a fair view.
Note
21
GROUP
Investment assets
Investment assets for which the life insurance
policy-holder bears the investment risk
Other claims and assets
Annual Report 2001
PARENT COMPANY
2001
2000
667
715
16 733
16 951
3 029
96
20 429
17 762
2001
2000
65
Notes
Note
22
Goodwill
GROUP
PARENT COMPANY
2001
2000
2001
2000
Acquisition value at beginning of year
6 333
Acquisition value of past goodwill
– 274
6 235
274
274
– 11
– 274
Acquisition value of future goodwill
—
1 798
109
592
Total acquisition value at year-end
—
7 857
6 333
592
274
– 259
FIXED ASSETS
Accumulated amortisation at beginning of year
– 1 367
– 1 055
– 269
Accumulated amortisation of past goodwill
269
6
269
—
Amortisation for the year according to plan
– 369
– 318
– 115
– 10
– 1 467
– 1 367
– 115
– 269
Accumulated write-downs at beginning of year
—
–5
—
—
Accumulated amortisation of past goodwill
—
5
—
—
Accumulated amortisation at year-end
Write-downs for the year
—
—
—
—
Accumulated write-downs at year-end
—
—
—
—
Foreign currency effect
Book value 31 December
197
4
–2
–5
6 587
4 970
475
—
Goodwill arising from the acquisitions of Stadshypotek AB in 1997, Bergensbanken ASA in 1999 and Midtbank A/S in 2001, is amortised over 20 years.
Other goodwill is amortised over 10 years.
The acquisition value for 2000 of future goodwill in the Group is SEK 109m. SEK 46m of this amount refers to adjustment of the acquistion balance with respect
to Bergensbanken ASA.
Note
23
Equipment
GROUP
PARENT COMPANY
2001
2000
2001
2000
Residual value according to plan on 1 January
744
785
615
633
New acquisitions, net during the year
333
261
370
339
– 392
– 395
– 346
– 357
FIXED ASSETS
The year’s depreciation according to plan
Book value of leasing assets taken over
Residual value according to plan
82
93
—
—
767
744
639
615
Apart from owned equipment, the Bank also has equipment which is subject to leasing contracts. The book residual value of leased equipment in the Group
was SEK 122m (99). For the parent company, the equivalent value was SEK 183m (198).
Note
24
Buildings and land
GROUP
PARENT COMPANY
2001
2000
2001
2000
1 683
1 014
1 356
921
FIXED ASSETS
Containing bank premises
CURRENT ASSETS
For protection of claims etc
16
0
0
0
1 699
1 014
1 356
921
1 038
1 034
930
928
678
2
467
—
6
2
6
2
Total acquisition value
1 722
1 038
1 403
930
Accumulated depreciation at beginning of year
– 326
– 298
– 311
– 293
–9
– 10
– 26
– 18
– 23
– 18
– 361
– 326
– 334
– 311
Containing bank premises
Acquisition value at beginning of year
New acquisitions during the year
Capitalised new and rebuilding costs
Accumulated depreciation of acquired properties
Depreciation during the year
Total accumulated depreciation
Acquisition value, revaluations
452
436
436
436
– 136
– 119
– 134
– 119
Depreciation for the year
– 15
– 15
– 15
– 15
Total revaluation
301
302
287
302
Accumulated depreciation on revaluation
Foreign currency effect
66
—
21
0
Residual value according to plan
1 683
1 014
1 356
921
Tax assessment value of property in Sweden
2 010
1 576
2 010
1 576
Annual Report 2001
Notes
Note
25
Other assets
GROUP
2000
2001
86
173
40
29
Claims on investment banking settlements
16 719
12 645
13 530
11 673
Derivative contracts with a positive value
84 498
77 704
83 360
76 028
–4
–4
—
—
8 324
4 555
12 565
8 641
109 623
95 073
109 495
96 371
2001
2000
2001
2000
6 504
8 232
5 850
7 328
512
790
451
505
26
64
23
67
7 042
9 086
6 324
7 900
2001
2000
2001
2000
56 340
31 258
52 700
29 781
111 283
Pre-paid tax
Other
Note
26
PARENT COMPANY
2001
Prepayments and accrued income
GROUP
Accrued interest income
Other accrued income
Prepayments
Note
27
2000
PARENT COMPANY
GROUP
Banks, in Swedish kronor
Banks, in foreign currencies
PARENT COMPANY
146 872
110 224
151 987
Other credit institutions, in Swedish kronor
9 043
10 460
7 794
5 113
Other credit institutions, in foreign currencies
7 871
3 472
41 719
49 160
220 126
155 414
254 200
195 337
45 176
51 737
528
405
384
0
Of which liabilities to Group companies
Of which liabilities to associated companies
Payable upon demand
54 306
30 268
172 119
140 253
24 670
23 070
16 223
26 973
2 120
4 341
665
87
1 662
1 660
137
59
220 126
155 414
254 200
195 337
0.2
0.2
0.2
0.1
2001
2000
2001
2000
Households
74 170
67 179
69 490
62 572
Companies etc
78 094
76 001
76 855
74 795
152 264
143 180
146 345
137 367
28
26 846
106 344
Total
Note
52 010
141 264
Deposits from the general public
GROUP
PARENT COMPANY
Deposits, Swedish kronor
Total
Deposits, foreign currencies
Households
13 641
8 312
8 598
5 529
Companies etc
59 845
39 524
55 856
36 020
Total
Total deposits
73 486
47 836
64 454
41 549
225 750
191 016
210 799
178 916
460
392
23
127
23
127
192 770
159 802
181 312
152 183
29 870
30 078
28 256
25 772
1 280
1 001
1 023
923
627
107
200
10
1 203
28
8
28
225 750
191 016
210 799
178 916
0.1
0.1
0.1
0.2
Payable upon demand
Total
Annual Report 2001
67
Notes
Note
29
Funding from the general public
GROUP
PARENT COMPANY
2001
2000
2001
2000
in Swedish kronor
25 487
30 030
23 780
28 926
32 455
34 304
30 446
32 406
57 942
64 334
54 226
61 332
134
328
Funding from the general public
Payable upon demand
4 729
6 444
43 530
48 641
5 423
5 005
5 681
5 107
458
550
496
539
364
285
364
285
57 942
64 334
54 226
61 332
0.2
0.1
0.2
0.1
2000
2001
30
6 432
51 386
Total
Note
4 706
47 409
Issued securities
GROUP
2001
PARENT COMPANY
2000
Certificates
in Swedish kronor
Total certificates
32 785
49 420
14 151
8 965
275 331
201 796
200 700
156 244
308 116
251 216
214 851
165 209
122 745
122 390
7 859
7 715
10 120
27 883
7 971
24 240
132 865
150 273
15 830
31 955
440 981
401 489
230 681
197 164
Bond loans
in Swedish kronor
Total bond loans
338 007
297 605
222 836
185 225
92 687
92 858
7 275
11 196
10 287
11 026
570
743
—
—
—
—
440 981
401 489
230 681
197 164
0.9
1.0
0.5
0.4
2001
2000
2001
96
94
16 733
16 951
Total
Note
31
GROUP
Technical provisions
Technical provisions for life insurance where
the policy-holder bears the investment risk
Other provisions and liabilities
Note
32
PARENT COMPANY
706
231
17 535
17 276
Other liabilities
GROUP
Tax liabilities
PARENT COMPANY
2001
2000
2001
2000
255
1 588
13
1 176
Liabilities on investment banking settlements
14 548
10 510
13 122
9 714
Derivative contracts with a negative value
77 911
77 223
75 852
75 530
Short-term positions
16 889
17 930
16 889
17 930
9 929
2 140
11 792
2 686
119 532
109 391
117 668
107 036
Other
68
2000
Annual Report 2001
Notes
Note
33
GROUP
2000
2001
2000
Accrued interest expense
8 128
12 491
5 954
9 749
Other accrued expenses
1 503
1 626
1 318
1 473
386
603
47
52
10 017
14 720
7 319
11 274
2000
2001
2000
Deferred income
Note
34
PARENT COMPANY
2001
Provision for deferred taxes
GROUP
2001
PARENT COMPANY
DEFERRED TAX CLAIM
Machines and equipment
45
38
45
38
Other fixed assets
24
69
—
—
115
50
—
—
184
157
45
38
—
—
176
Other current assets
DEFERRED TAX LIABILITY
1 702
1 084
Tax allocation reserve
3 385
3 389
290
232
164
96
372
77
167
5 473
5 077
241
343
5 289
4 920
196
305
Other fixed assets
Net deferred tax liability
Changes in deferred tax
Opening
balance
Impact
of changed
principles
Reported via
profit and
loss account
Reported directly
against shareholders’ equity
Acquisitions/
divestments
0
63
Closing
balance
GROUP
1 046
—
548
3 389
—
–4
1 657
3 385
Other fixed assets
163
—
192
1
– 90
266
322
– 57
– 234
– 47
–3
– 19
4 920
– 57
502
– 46
– 30
5 289
PARENT COMPANY
Note
35
– 38
—
–7
—
—
– 45
Other fixed assets
176
—
– 12
—
—
164
167
—
– 90
0
—
77
305
—
– 109
0
—
196
GROUP
Subordinated loans in Swedish kronor
PARENT COMPANY
2001
2000
2001
2000
1 600
3 901
1 600
3 401
Subordinated loans in foreign currencies
27 376
15 165
26 966
14 688
Total subordinated loans
28 976
19 066
28 566
18 089
—
—
—
—
—
—
Annual Report 2001
69
Notes
Specification, subordinated loans, Parent company 31 December 2001
Year of issue/conv./
maturity
Original nominal
amount in each
currency (million)
Interest
rate
%
Outstanding
amount
SEK m
IN SWEDISH KRONOR
Other Swedish 5)
1 600
Total
1 600
IN FOREIGN CURRENCY
1997/perpetual 1)
USD
350
variable
1997/perpetual 2)
USD
360
7.125
3 807
2000/2010 3)
EUR
300
variable
2 792
2001/2011 4)
EUR
750
5.500
6 979
2001/2011 4)
EUR
415
5.125
3 718
Other foreign
3 702
5)
5 968
Subtotal
26 966
Total
28 566
1) Perpetual subordinated loan with 3-month variable coupon linked to Libor. Premature redemption may occur in the case of changed tax regulations or from
3 March 2002. The interest rate is adjusted if the right to redeem the loan in advance is used. Premature redemption requires the approval of the Swedish Financial
Supervisory Authority.
2) Perpetual subordinated loan at fixed interest rate paid semi-annually. Premature redemption may occur in the case of changed tax regulations or on the interest due
dates starting on 7 March 2007, provided that the Swedish Financial Supervisory Authority gives its approval. In connection with the right of redemption, the interest
rate becomes variable, linked to Libor.
3) Fixed-term subordinated loan with 3-month variable coupon, linked to Euribor. Premature redemption may occur in the case of changed tax regulations.
Premature redemption requires the approval of the Swedish Financial Supervisory Authority.
4) Fixed-term subordinated loan at fixed interest rate. Premature redemption may occur in the case of changed tax regulations or on the interest due dates starting in
2006. Premature redemption before 2006 requires the approval of the Swedish Financial Supervisory Authority. In connection with the right of redemption without the
approval of this Authority, the interest rate becomes variable, linked to Euribor.
5) Other subordinated loans which are not specified here are issued in the form of fixed-term or perpetual subordinated loans.
Note
36
Untaxed reserves
GROUP
PARENT COMPANY
2001
2000
2001
Accumulated depreciation on property in excess of plan
Other untaxed reserves
Note
2000
10
10
10 155
9 105
131
133
10 296
9 248
37 Shareholders’ equity
GROUP
PARENT COMPANY
2001
2000
2001
2000
Share capital
2 859
2 859
2 859
2 859
Statutory reserve
2 748
2 748
2 682
2 682
205
425
195
421
14 369
10 541
—
—
19 641
16 788
21 229
18 155
8 290
9 105
7 333
7 996
48 112
42 466
34 298
32 113
RESTRICTED SHAREHOLDERS’ EQUITY
Reserve for unrealised profits
Other restricted reserves
UNRESTRICTED SHAREHOLDERS’ EQUITY
Profit brought forward
Profit for the year
Reserve for unrealised profits by balance sheet item:
10
4
—
—
195
421
195
421
205
425
195
421
GROUP
Share
capital
Restricted
reserves
Unrestricted
reserves
Shareholders’ equity carried forward
2 859
13 714
26 058
Changed accounting principles for income taxes
Equity carried forward after adjustment
2 859
13 714
Cash dividend
Transfer between restricted and unrestricted equity
Change of foreign currency component
Change in price difference on financing of subsidiaries’ shares
2 859
Total
42 631
– 165
– 165
25 893
42 466
– 2 751
– 2 751
– 46
– 46
3 415
– 3 415
0
297
293
590
– 104
– 333
Profit for the year
Shareholders’ equity at year-end 2001
Profit for
the year
17 322
19 641
– 437
8 290
8 290
8 290
48 112
The accumulated amount of the Group’s unrealised foreign exchange differences is SEK 808m (218).
The accumulated exchange rate difference on matching hedging instruments is SEK – 529m (– 92).
70
Annual Report 2001
Notes
PARENT COMPANY
Share
capital
Restricted
reserves
Unrestricted
reserves
Shareholders’ equity carried forward
2 859
3 103
26 316
Changed accounting principles for income taxes
Equity carried forward after adjustment
2 859
3 103
Cash dividend
Group contribution paid
Transfer between restricted and unrestricted equity
– 226
Change of foreign currency component
Profit for
the year
32 278
– 165
– 165
26 151
32 113
– 2 751
– 2 751
– 46
– 46
– 2 386
– 2 386
226
0
35
35
Profit for the year
Shareholders’ equity at year-end 2001
2 859
2 877
Total
21 229
7 333
7 333
7 333
34 298
The share capital comprises:
Class A shares
2 600
Class B shares
259
649 949 619 shares at SEK 4.00
64 797 321 shares at SEK 4.00
2 859
Note
38
714 746 940
Collateral pledged for own debt
GROUP
2001
Shares
—
3
Government instruments and bonds
20 053
14 205
20 053
13 366
Repos
42 278
27 924
43 530
34 035
1
—
—
—
805
1 479
805
1 479
63 137
43 611
64 388
48 883
Other collateral pledged
GROUP
2000
2001
560
114
560
114
Government instruments and bonds
11 790
9 176
11 629
9 156
Assets registered for insurance-holders
15 938
16 980
5 128
2 083
5 128
2 083
4
4
—
—
33 420
28 357
17 317
11 353
Securities loans
Other
40
PARENT COMPANY
2001
Cash funds
Note
PARENT COMPANY
2001
2000
2001
2000
Guarantees, loans
10 525
9 684
47 733
63 308
Guarantees, other
29 533
22 062
29 043
21 468
—
0
—
0
36 912
31 295
36 912
31 272
1 129
Special guarantees
Irrevocable letters of credit
Own acceptances
Other
41
2000
GROUP
Note
2000
3
Securities loans
39
2001
—
Property mortgages
Note
PARENT COMPANY
2000
315
1 129
249
2 359
2 992
19
2 979
79 644
67 162
113 956
120 156
2000
2001
Pension commitments
GROUP
2001
PARENT COMPANY
2000
Market value of assets in the Bank’s pension foundation
13 416
16 597
13 416
16 597
Pension liability
– 9 237
– 8 797
– 9 237
– 8 797
4 179
7 800
4 179
7 800
Surplus
The pension commitments in the Bank’s pension fund (Pensionskassan SHB, försäkringsförening) are SEK 2 068m (1 618) and the market value of the assets is
SEK 6 776m (8 467). The surplus in the fund is thus SEK 4 708m (6 849).
Annual Report 2001
71
Notes
Note
42
Other commitments
GROUP
Certificate programmes
2000
2001
2000
4 185
6 319
4 185
6 319
552
1 899
548
313
4 737
8 218
4 733
6 632
Other commitments
Commitments regarding future payments
PARENT COMPANY
2001
Interest rate swaps
1 608 533
1 250 728
1 783 453
1 247 480
FRA/Futures
2 303 946
1 818 581
2 301 676
1 592 586
Interest rate options
145 831
50 721
141 705
44 619
Interest-rate related instruments
4 058 310
3 120 030
4 226 834
2 884 685
Forward currency contracts
1 496 695
983 302
1 506 736
976 349
163 924
129 790
163 526
128 735
Currency swaps
Currency options
Currency-related instruments
107 643
64 697
107 643
64 697
1 768 262
1 177 789
1 777 905
1 169 781
Equity futures
1 565
1 305
1 565
1 305
Equity swaps
3 831
3 980
3 831
3 980
Equity options
241 787
129 618
241 787
129 601
Equity-related instruments
247 183
134 903
247 183
134 886
Credits granted but not yet drawn
164 075
168 355
104 761
102 885
Unutilised part of overdraft facilities granted
183 854
161 348
183 854
161 348
Other commitments
347 929
329 703
288 615
264 233
Total commitments
6 426 421
4 770 643
6 545 270
4 460 217
Agreed future leasing fees distributed by the year they fall due for payment
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Total
344
232
166
85
45
13
11
10
6
6
2
2
922
OTHER INFORMATION
Geographical distribution of income
Nordic
countries
Rest of
Europe
Rest of
world
49 362
2 421
5 884
309
0
—
Commission income
5 463
236
195
1 232
169
176
206
8
5
56 572
2 834
6 260
Nordic
countries
Rest of
Europe
Rest of
world
33 547
2 243
5 884
322
0
—
Commission income
4 738
175
134
1 161
162
176
110
2
5
39 878
2 582
6 199
GROUP
Interest income
Dividends received
Total
PARENT COMPANY
Interest income
Dividends received
Total
The distribution of income is based on in which country the Group’s various units are located.
72
Annual Report 2001
Notes
Assets and liabilities in foreign currency
USD
GROUP
EUR
DKK
NOK
GBP
CHF
JPY
Other currencies
Assets
37 069
6 699
6 183
316
230
574
2 688
655
57 133
66 219
20 415
42 610
4 042
3 141
11 479
1 917
Bonds and other interest-bearing
securities
40 372
14 795
6 230
158
6
6
6
385
87 828
25 486
16 064
4 367
7 035
2 978
5 165
5 820
1 791
1 052
Liabilities
the general public
Issued securities
29 548
30 364
12 805
20 867
252 715
25 477
678
1 833
12 119
14 814
171
272
248 203
8 587
– 3 445
– 15 705
4 508
567
159
– 335
40
– 40
Other assets and liabilities,
including derivative positions
Net position in foreign currency
8 006
1 508
4 424
324
387
3 378
4 261
78
– 44
– 434
Information concerning fair value, Group
Book
value
2001
Adjustment
to fair value
2001
ASSETS
Lending to credit institutions, fixed assets
70 857
195
Lending to the general public, fixed assets
800 068
364
8 219
113
120 128
74
fixed assets
current assets
Other assets
16 643
2 212
158 606
5 207
1 174 521
8 165
220 126
431
283 692
96
Issued securities
440 981
3 214
Other liabilities
152 373
2 215
fixed assets
current assets
Total assets
LIABILITIES
Total liabilities
28 976
859
1 126 148
6 815
1 350
Total surplus value
In accordance with Finansinspektionen's (the Swedish Financial Supervisory
Authority) directives (2000:18), a comparison is to be made between fair value
and book value for both assets and liabilities in the balance sheet and also financial
items which are not reported in the balance sheet. Values which are based on
customer relations are not to be taken into account, although they may be of importance in valuing, for example, deposit accounts and mortgage and customer credits.
The directives allow scope for choice of method and various assumptions. Thus, the
methods applied and the assumptions made may vary among the credit institutions.
Information concerning fair value is not a corporate valuation and therefore cannot
constitute the basis of a comparison between credit institutions.
For means of payment, current claims and liabilities and also for claims and
liabilities with a variable interest rate, the fair value is considered to be the same as
the book value. Claims and liabilities with final maturity or date for next interest-rate
fixing within 30 days are considered to be short-term.
Current assets and liabilities which are traded on liquid markets have been valued
at the average price on the balance sheet day. Market-listed off-balance-sheet items
are valued in the same way.
Items which are not traded on liquid markets, irrespective of whether these are
current assets, fixed assets, issued liabilities or off-balance-sheet financial items
are valued at the current market rate for the corresponding maturity adjusted to
take into account the credit and liquidity risk. The credit and liquidity risk premium by which the market rate has been adjusted when making the valuation is
assumed to be the same as the average margin for new lending at the time of
the measurement.
Properties are valued on the basis of an external valuation.
With the method applied, the interest risk in the balance sheet gives rise to
surplus values if short-term rates are falling and losses if interest rates are rising.
A surplus value also occurs when margins decrease and a loss when margins
increase.
In those cases where fair value on assets is less than the book value and for
liabilities, the book value is less than fair value, this is due to these items being
a) subject to hedge accounting and b) that they are to be regarded as fixed
assets where the fall in value has been considered temporary.
Derivative instruments
GROUP
REPORTED AT MARKET VALUE
Nominal
value
Book value
Positive
Negative
REPORTED AS HEDGES
Nominal
value
Market value
Positive
Book value
Negative
Positive
Negative
Interest rate-related instruments
Options
138 719
116
143
7 113
46
0
82
1
FRA/Futures
2 291 693
3 319
3 392
12 253
52
47
—
—
Swaps
1 360 748
24 158
26 442
247 784
9 565
5 926
5 037
3 813
Total
3 791 160
27 593
29 977
267 150
9 663
5 973
5 119
3 814
573 936
233
216
6 904
7
2
—
—
Of which cleared
Annual Report 2001
73
Notes
GROUP
REPORTED AT MARKET VALUE
Nominal
value
REPORTED AS HEDGES
Book value
Positive
Nominal
value
Negative
Market value
Book value
Positive
Negative
Positive
Negative
—
Currency-related instruments
Options
107 643
572
683
—
—
—
—
Futures
1 481 496
23 785
19 361
15 199
389
8
– 77
6
163 532
14 566
10 852
391
91
—
3
—
1 752 671
38 923
30 896
15 590
480
8
– 74
6
—
—
—
—
—
—
—
—
Options
240 582
7 523
8 047
1 205
60
81
63
27
Futures
1 565
79
25
—
—
—
—
—
Swaps
3 334
—
– 22
496
102
—
–3
—
Total
245 481
7 602
8 050
1 701
162
81
60
27
Of which cleared
112 754
5 841
5 277
—
—
—
—
—
Swaps
Total
Of which cleared
Equity-related instruments
Capital base 31 December 2001
Capital requirement 31 December 2001
GROUP
PARENT COMPANY
43 726
31 178
7 311
GROUP
PARENT COMPANY
Credit risks
588 746
361 888
Market risks
22 023
22 022
610 769
383 910
Capital ratio
9.9%
15.9%
Tier 1 capital ratio
6.1%
9.8%
RISK-WEIGHTED AMOUNT
TIER 1 CAPITAL
Shareholders’ equity1)
of which 72%
Minority interest
Total
261
Less goodwill
– 6 586
– 474
– 213
– 213
37 188
37 802
27 163
26 786
Less adjustment write-up
Total tier 1 capital
TIER 2 CAPITAL
Subordinated loans
after reduction, maximum
Adjustment write-up
213
213
Total tier 2 capital
27 376
26 999
Total
64 564
64 801
Less shareholdings in insurance
companies and 5–50% in companies
which conduct banking operations
– 4 868
– 4 857
Total tier 1 and tier 2 capital
59 696
59 944
Enlarged capital base
Total capital base
921
922
60 617
60 866
1) The Group’s equity includes 72% of untaxed reserves.
Capital requirement 31 December 2001
FOR CREDIT RISKS
GROUP
Weighting
factor
Investments
PARENT COMPANY
Risk-weighted
amount
Investments
Risk-weighted
amount
Balance sheet items
Group
A
0
229 600
B
20
59 990
11 998
57 460
C
50
370 322
185 161
85 490
42 745
D
100
338 449
338 449
255 502
255 502
998 361
535 608
786 444
309 739
Total A–D
387 992
11 492
Off-balance-sheet items
GROUP
Weighting
factor
Group
Converted
amount
PARENT COMPANY
Risk-weighted
amount
Nominal
amount
Converted
amount
Risk-weighted
amount
A
0
25 378
10 788
170 510
49 927
B
20
209 132
9 141
1 828
191 427
8 342
C
50
222 797
5 365
2 683
218 719
3 584
1 792
D
100
102 370
48 627
48 627
102 129
48 689
48 689
73 921
53 138
682 785
110 542
52 149
1 072 282
588 746
896 986
361 888
Total A–D
Total credit risks
74
Nominal
amount
559 677
1 668
Annual Report 2001
Notes
FOR MARKET RISKS
GROUP
Interest rate risks
Equity risks
PARENT COMPANY
Specific
risk
General
risk
Risk-weighted
amount
Specific
risk
General
risk
Risk-weighted
amount
5 497
7 573
13 070
5 497
7 573
13 070
113
76
189
113
75
188
Settlement risks
Counterparty and other risks
Exchange rate risks
Total market risks
9
9
8 755
8 755
—
—
22 023
22 022
The Board’s recommendation for appropriations and distribution of profits has had an impact on tier 1 capital.
Handelsbanken Liv Försäkrings AB
SPP Group
PROFIT AND LOSS ACCOUNT
PROFIT AND LOSS ACCOUNT
2001
2000
Technical account –
2001
2000
Premium income
12 627
10 011
Investment income
– 2 693
2 785
– 3 872
– 3 003
– 10 734
– 8 884
– 1 223
– 911
58
–2
– 5 837
–4
Technical account –
Premium income
2 350
2 260
Investment income
– 439
34
Insurance provisions
– 1 331
– 1 186
Insurance provisions
Changes in technical provisions
– 1 338
– 1 873
Changes in technical provisions
– 60
– 103
Operating expenses
– 331
– 264
Other
—
33
– 1 149
– 1 099
– 152
– 156
– 1 301
– 1 255
2001
2000
Bonus
Operating expenses
Other
Balance on technical account –
Tax
Surplus for the year
Balance on technical account –
Other operations
BALANCE SHEET
Tax
18
16
– 780
– 509
– 6 599
– 497
2001
2000
83 535
86 254
BALANCE SHEET
Assets
Assets
Buildings and land
559
535
8 818
8 767
Other assets
5 656
3 873
Bonds and other securities
9 483
9 390
Total assets
89 191
90 127
Other investment assets
Claims
Other assets
Prepayments
and accrued income
Total assets
Investment assets
2
10
175
166
Liabilities and equity
1 088
1 854
Equity and bonuses
13 045
24 036
Technical provisions for life insurance
74 221
63 300
269
255
20 394
20 977
Other financial liabilities
1 925
2 791
Total liabilities and equity
89 191
90 127
Liabilities, provisions and equity
Equity
150
150
5 763
7 392
– 1 301
– 1 255
Technical provisions
for life insurance
15 451
13 966
Bonuses
Provisions for taxes
Liabilities
Total liabilities, provisions
and equity
54
79
215
573
62
72
20 394
20 977
Comments:
The accounts have been prepared in accordance with the Accounting Act
for Insurance Companies and also with the instructions issued by the
Swedish Financial Supervisory Authority.
The profit and loss account and balance sheet for Handelsbanken Liv Försäkrings AB are based on preliminary information and may differ from
the final figures published in Handelsbanken Liv’s annual report.
Handelsbanken Liv Försäkrings AB is run on mutual principles. According
to the Insurance Companies Business Act, dividends may not be paid
to the shareholders of a traditional life insurance company. The entire
surplus shall accrue to the policy-holders.
Annual Report 2001
75
Five-year review
Five-year review
GROUP
2001
2000
1999
1998
1997
57 667
66 308
58 048
61 940
57 209
– 43 141
– 55 024
– 46 540
– 50 510
– 46 040
309
504
245
139
150
5 894
6 048
4 693
4 077
4 024
– 1 038
– 770
– 715
– 669
– 687
1 577
3 049
969
1 242
593
219
343
354
616
563
21 487
20 458
17 054
16 835
15 812
Staff costs
– 5 909
– 5 300
– 4 888
– 4 579
– 4 150
– 3 346
– 2 928
– 3 030
– 3 543
– 2 926
PROFIT AND LOSS ACCOUNT (SEK m)
Interest income
Interest expense
Dividends received
Commission income
Commission expense
Total income
Depreciation and write-downs in value of
tangible and intangible fixed assets
Total expenses
Participations in result of associated companies
Result of banking operations
– 805
– 753
– 750
– 684
– 616
– 10 060
– 8 981
– 8 668
– 8 806
7 692
11 427
11 477
8 386
8 029
8 120
– 152
67
219
– 319
– 302
82
32
2
2
3
11 357
11 576
8 607
7 712
7 821
7 821
– 149
107
11 208
11 683
8 607
7 712
306
797
603
505
532
Profit before taxes
11 514
12 480
9 210
8 217
8 353
Taxes
– 3 202
– 3 353
– 2 525
– 2 168
– 2 326
– 22
– 22
– 22
– 22
– 19
8 290
9 105
6 663
6 027
6 008
2001
2000
1999
1998
1997
Operating profit
Pension settlement
Minority interest
Profit for the year
BALANCE SHEET (SEK m)
Cash
10 614
5 258
6 285
4 054
3 025
128 347
88 262
93 291
107 709
65 858
70 857
94 677
98 859
139 823
134 472
800 068
689 106
626 206
587 405
586 824
18 488
14 401
9 863
3 326
2 226
20 429
17 762
13 731
6 644
3 182
Tangible assets
2 466
1 758
1 859
1 778
9 329
Other assets
123 252
109 129
86 162
82 106
57 532
Total assets
1 174 521
1 020 353
936 256
932 845
862 448
220 126
155 414
186 503
261 146
241 436
283 692
255 350
221 483
206 524
204 747
440 981
401 489
359 540
299 378
284 051
17 535
17 276
13 649
6 541
3 135
134 838
129 031
96 400
101 429
73 227
Other liabilities
Total liabilities
Minority interest in shareholders’ equity
28 976
19 066
19 850
23 135
23 231
1 126 148
977 626
897 425
898 153
829 827
261
261
261
261
268
48 112
42 466
38 570
34 431
32 353
1 174 521
1 020 353
936 256
932 845
862 448
MEMORANDUM ITEMS
Pledged collateral
96 557
71 968
85 007
93 782
59 437
79 644
67 162
61 927
76 731
81 921
Pension commitments
Other commitments
—
—
—
—
—
6 426 421
4 770 643
5 713 401
6 304 560
5 452 935
The profit and loss accounts and balance sheets have been adjusted to take into account the accounting principles now applied.
76
Annual Report 2001
Five-year review
PARENT COMPANY
2001
2000
1999
1998
1997
41 674
47 935
38 924
38 273
28 976
– 33 118
– 42 118
– 32 678
– 32 514
– 22 941
322
584
1 490
2 552
1 729
Commission income
5 047
5 275
4 078
3 656
3 736
Commission expense
– 973
– 746
– 736
– 614
– 608
1 499
2 987
859
1 211
570
117
341
278
648
2 037
14 568
14 258
12 215
13 212
13 499
Staff costs
– 5 270
– 4 814
– 4 443
– 4 108
– 3 520
– 2 614
– 2 332
– 2 488
– 2 991
– 2 347
PROFIT AND LOSS ACCOUNT (SEK m)
Interest income
Interest expense
Dividends received
Total income
Depreciation and write-downs in value of
tangible and intangible fixed assets
Total expenses
– 500
– 402
– 437
– 370
– 321
– 8 384
– 7 548
– 7 368
– 7 469
– 6 188
6 184
6 710
4 847
5 743
7 311
– 780
– 128
– 181
– 131
123
Operating profit
5 404
6 582
4 666
5 612
7 434
Appropriations
4 802
4 274
4 177
188
– 129
Profit before taxes
10 206
10 856
8 843
5 800
7 305
Taxes
– 1 050
– 2 873
– 2 860
– 2 101
– 771
Profit for the year
7 333
7 996
6 742
5 029
6 255
Dividend for the year
3 120 *
2 751
2 144
1 922
3 515
2000
1999
1998
1997
*) Recommended by the Board
BALANCE SHEET (SEK m)
Cash
2001
10 371
5 109
5 735
4 050
3 023
123 888
88 221
98 384
115 556
90 166
230 841
240 637
189 725
215 541
175 771
414 485
327 240
272 110
242 056
223 426
50 375
43 800
39 301
31 505
30 385
1 995
1 536
1 589
1 612
1 788
Other assets
116 294
104 271
79 322
73 767
47 829
Total assets
948 249
810 814
686 166
684 087
572 388
254 200
195 337
174 886
215 730
172 855
265 025
240 248
214 171
212 187
222 161
230 681
197 164
159 463
119 501
72 311
Other liabilities
125 183
118 615
84 281
88 342
58 441
28 566
18 089
15 489
15 742
15 609
903 655
769 453
648 290
651 502
541 377
Tangible assets
Total liabilities
Untaxed reserves
10 296
9 248
7 570
6 282
5 959
34 298
32 113
30 306
26 303
25 052
948 249
810 814
686 166
684 087
572 388
MEMORANDUM ITEMS
Pledged collateral
Pension commitments
Other commitments
Annual Report 2001
81 705
60 236
84 188
93 758
59 193
113 956
120 156
72 739
79 081
83 648
—
—
—
—
—
6 545 270
4 460 217
5 695 990
6 290 006
5 408 299
77
Recommendation for distribution of profits
Recommendation for distribution of profits
The Handelsbanken Group’s unrestricted equity is SEK 27 931m. SEK 12m is
required for transfer to restricted reserves. In accordance with the balance sheet
for Handelsbanken, profits totalling SEK 28 562m are at the disposal of the
Annual General Meeting.
The Board of Directors recommends that the profits be distributed as follows:
SEK m
Dividend to shareholders SEK 4.50 per share (SEK 4.00 for 2000)
3 120.2
Balance carried forward
25 441.5
Total allocated
28 561.7
Stockholm, 12 February 2002
ARNE MÅRTENSSON
BO RYDIN
HANS LARSSON
PIRKKO ALITALO
TOMMY BYLUND
PER-OLOF ERIKSSON
OLLE PERSSON
LOTTY BERGSTRÖM
GÖRAN ENNERFELT
ANDERS NYRÉN
BENGT SAMUELSSON
LARS O GRÖNSTEDT
President and Group Chief Executive
78
Annual Report 2001
Audit report
Audit report
To the General Meeting of the shareholders of Svenska Handelsbanken AB (publ)
We have audited the annual accounts, the consolidated accounts, the accounting records and
the administration of the Board of Directors and the President of Svenska Handelsbanken
AB (publ) for the year 2001. These accounts and the administration of the company are the
responsibility of the Board of Directors and the President. Our responsibility is to express an
opinion on the annual accounts, the consolidated accounts and the administration based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards in
Sweden. Those standards require that we plan and perform the audit to obtain reasonable
assurance that the annual accounts and the consolidated accounts are free of material
misstatement. During the year, the auditing department of Svenska Handelsbanken has
continuously examined the internal controls and accounts. We have received the reports
that have been prepared. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and their application by the Board of Directors and the President,
as well as evaluating the overall presentation of information in the financial statements.
As a basis for our opinion concerning discharge from liability, we examined significant
decisions, actions taken and circumstances of the company in order to be able to determine
the liability, if any, to the company of any Board Member or the President. We also examined
whether any Board Member or the President has, in any other way, acted in contravention
of the Companies Act, the Annual Accounts Act for Credit Institutions and Securities
Companies or the Articles of Association. We believe that our audit provides a reasonable
basis for our opinion set out below.
The annual accounts and the consolidated accounts have been prepared in accordance with
the Annual Accounts Act for Credit Institutions and Securities Companies, and thereby give
a true and fair view of the company’s and the Group’s financial position and results of
operations in accordance with generally accepted accounting principles in Sweden.
We recommend to the General Meeting of Shareholders that the profit and loss accounts
and balance sheets of the parent company and the Group be adopted, that the profit of the
parent company be dealt with in accordance with the proposal in the directors’ report and
that the members of the Board of Directors and the President be discharged from liability for
the financial year.
Stockholm, 6 March 2002
KPMG Bohlins AB
Ernst & Young AB
THOMAS THIEL
STEFAN HOLMSTRÖM
ÅKE HEDÉN
Authorised Public Accountant
ULF DAVÉUS
Appointed by the Swedish
Financial Supervisory
Authority
Annual Report 2001
79
Branches in the Nordic countries
In SWEDEN, a branch was opened in Salem. Operations at
three branches were transferred to nearby branches. At
the end of the year there were 458 branches in Sweden.
In DENMARK, branches were opened in Horsens and
Esbjerg. Following the acquisition of Midtbank, there
are now 32 branches in Denmark.
In FINLAND, branches were opened in Helsinki –
Munkkivuori, Joensuu, Kokkola, Raisio, Rovaniemi,
Salo, Seinäjoki and Hämeenlinna, bringing the number
of branches there to 28.
In NORWAY, the Bank opened branches in Sarpsborg
and Ålesund. There are now 27 branches in Norway.
NORTHERN NORRLAND
Arvidsjaur
Backe
Bjurholm
Bjästa
Björna
Boden
Bredbyn
Bureå
Burträsk
Byske
Domsjö
Dorotea
Gammelstad
Gällivare
Haparanda
Holmsund
Hoting
Husum
Härnösand
Jokkmokk
Junsele
Kalix
Kiruna
Kramfors
Lugnvik
Luleå
- Storgatan
- Örnäset
Lycksele
Lövånger
Malå
Nordingrå
Nordmaling
Norsjö
Näsåker
Pajala
Piteå
Ramsele
Robertsfors
Råneå
Skellefteå
Sollefteå
Sorsele
Storuman
Trehörningsjö
Ullånger
Umeå
- Storgatan
- Teg
- Västerslätt
Vilhelmina
Vindeln
Vännäs
Ånäset
Åsele
Älvsbyn
Örnsköldsvik
Överkalix
Övertorneå
SOUTHERN NORRLAND
WESTERN SWEDEN
Alingsås
Ambjörnarp
Arvika
Blidsberg
Bollebygd
Borås
- Hulta
- Norrby
- Stora torget
Falkenberg
Falköping
Filipstad
Fristad
Färgelanda
Gällstad
Göteborg
- Almedal
- Avenyn
- Backa Ringön
- Brunnsgatan
- City
- Eriksberg
- Frölunda Torg
- Första Långgatan
- Gårda
- Hisings Kärra
- Hjällbo
- Högsbo
- Kortedala
- Landala
- Lilla Bommen
- Majorna
- Marieholm
- Odinsgatan
- Sisjön
- Volvo PVB
- Örgryte
Hagfors
Herrljunga
Hjo
Karlskoga
Karlstad
- Stora torget
- Våxnäs
Kristinehamn
Kungsbacka
Kungälv
Landvetter
Lerum
Lidköping
Lilla Edet
Mariestad
Mellerud
Mölndal
Nödinge
Partille
Skara
Skövde
Sollebrunn
Stenungsund
Sunne
Surte
Svenljunga
Säffle
Tibro
Tidaholm
Torsby
Trollhättan
Uddevalla
Ulricehamn
Vara
Varberg
Vårgårda
Vänersborg
Åmål
Årjäng
Älvängen
80
Hökarängen
Jakobsberg
Järna
Kolbäck
Kumla
Kungsängen
Kungsör
Kärrtorp
Köping
Lindesberg
Marievik
Nacka Forum
Norrtälje
Nynäshamn
Pålsboda
Rimbo
Salem
Saltsjö-Boo
Skultuna
Skärholmen
Sköndal
Spånga
Stockholm
- Arbetargatan
- Fleminggatan
- Fridhemsplan
- Globen
- Götgatsbacken
- Hornsberg
- Hornsgatan
- Högalid
- Kungsholmstorg
- Marieberg
- Renstiernas
gata
- Skanstull
Stuvsta
Södertälje
Trosa
Trångsund
Tullinge
Tyresö
Ulvsunda
Uppsala
- City
- Eriksberg
- Industriområdet
- Luthagen
Föllinge
Gagnef
Gnarp
Grangärde
Grängesberg
Gällö
Gävle City
Hammarstrand
Hammerdal
Heby
Hede
Hedemora
Hedesunda
Hudiksvall
Insjön
Järpen
Järvsö
Kilafors
Kopparberg
Krokom
Kvissleby
Leksand
Liden
Lima
Lit
Ljusdal
Ljusne
Ludvika
Malung
Matfors
Mockfjärd
Mora
Mörsil
Norberg
Ockelbo
Offerdal
Orsa
Rättvik
Sala
Sandviken
Skinnskatteberg
Skutskär
Skärplinge
Skönsberg
Stora Tuna
Storvik
Strömsund
Sundsvall
Sveg
Svenstavik
Säter
Söderhamn
Sörberge
Tierp
Timrå
Torsåker
Vansbro
Västanfors
Ånge
Åre
Östersund
Östervåla
EASTERN SWEDEN
CENTRAL SWEDEN
Alviks Torg
Arboga
Axelsberg
Blackeberg
Brommaplan
Bålsta
Dalarö
Enköping
Farsta
Fellingsbro
Finnerödja
Fjugesta
Frövi
Hallsberg
Hallstavik
Hallunda
Hammarby
Haninge Centrum
Huddinge Centrum
Hässelby Gård
Högdalen
Alfta
Arbrå
Avesta
Bergby
Bergsjö
Bispgården
Bjursås
Bjuråker
Björbo
Bollnäs
Borlänge
Bräcke
Delsbo
Edsbyn
Fagersta
Falun
Fränsta
Furudal
Vällingby
Värmdö
Västerhaninge
Västertorp
Västerås
- Emausgatan
- Köpingsvägen
- Stora gatan
- Vasagatan
Årsta
Älvsjö
Örebro
- Drottninggatan
- Ekersgatan
- Våghustorget
Ösmo
Österbybruk
Östhammar
Alvesta
Anderstorp
Bankeryd
Borensberg
Borgholm
Eksjö
Emmaboda
Eskilstuna
- Fristadstorget
- Östermalm
Finspång
Flen
Fårösund
Färjestaden
Gislaved
Hemse
Hultsfred
Huskvarna
Högsby
Jönköping
Kalmar
- Berga
- Kvarnholmen
Katrineholm
Klintehamn
Lammhult
Landsbro
Linköping
- City
- Tornby
Mjölby
Motala
Mönsterås
Mörbylånga
Mörlunda
Norrköping
- Drottninggatan
- Eneby Centrum
- Hageby
Nybro
Nyköping
Nässjö
Oskarshamn
Rörvik
Slite
Strängnäs
Sävsjö
Söderköping
Tingsryd
Torsås
Tranås
Vaggeryd
Vetlanda
Vimmerby
Virserum
Visby
- Adelsgatan
- Öster
Vislanda
Värnamo
Västervik
Växjö
Ålem
Åseda
Åtvidaberg
SOUTHERN SWEDEN
Arlöv
Broby
Båstad
Eslöv
Halmstad
Helsingborg
- Norr
- Stortorget
- Söderport
Hässleholm
Höganäs
Höllviken
Höör
Karlshamn
Karlskrona
Kivik
Klippan
Knislinge
Kristianstad
Kävlinge
Laholm
Landskrona
Liatorp
Limhamn
Ljungby
Ljungbyhed
Lomma
Lund
Malmö
- Amiralsgatan
- City
- Dalaplan
- Fosie
- Fridhemstorget
- Köpenhamnsvägen
- Lundavägen
- Triangeln
- Värnhem
Markaryd
Olofström
Osby
Ronneby
Simrishamn
Sjöbo
Staffanstorp
Svedala
Sölvesborg
Sösdala
Tomelilla
Trelleborg
Tyringe
Veberöd
Vellinge
Vittsjö
Vollsjö
Ystad
Åhus
Älmhult
Ängelholm
Annual Report 2001
NORWAY
Bergen
- Fana
- Flesland
- Fyllingsdalen
- Minde
- Sentrum
- Strandgaten
- Vest
- Åsane
Fredrikstad
Haugesund
Kristiansand
Lysaker
Oslo
- Fyrstikktorget
- Kirkegaten
- Olav V´s gate
- Skøyen
Sandnes
Sarpsborg
Ski
Skårer
Stavanger
- Sentrum
- Løkkeveien
Tromsø
Trondheim
- Sentrum
- Heimdal
Tønsberg
Ålesund
DENMARK
FINLAND
Espoo
Helsinki
- Bulevardi
- Esplanadi
- Itäkeskus
- Kamppi
- Munkkivuori
- Pasila
Hyvinkää
Hämeenlinna
Joensuu
Jyväskylä
Kokkola
Kouvola
Kuopio
Lahti
Lappeenranta
Oulu
Pietarsaari
Pori
Raisio
Rovaniemi
Salo
Seinäjoki
Tampere
Tornio
Turku
Vaasa
Vantaa
Aulum
Bording
Brande
Brøndby, Park Allé
Esbjerg
Give
Hammerum
Herning
- Bredgade
- Fredhøj
- Østergade
Holstebro
Horsens
Ikast
Kgs. Lyngby
Karup
Kibæk
Kolding
Copenhagen
- City
- Nytorv
Lemvig
Odense
Sdr Felding
Sdr Omme
Silkeborg
Struer
Sunds
Vejle
Viborg
Videbæk
Vildbjerg
Ålborg
Århus
NORTHERN NORRLAND
The map shows branches at
31 March 2001
FINLAND
SOUTHERN
NORRLAND
NORWAY
CENTRAL SWEDEN
WESTERN
SWEDEN
STOCKHOLM
CITY
STOCKHOLM CITY
EASTERN
SWEDEN
DENMARK
SOUTHERN
SWEDEN
Danderyd
- Djursholm
- Mörby Centrum
Lidingö
- Baggeby
- Centrum
- Larsberg
- Näset
Sigtuna
- Arlanda
- Märsta
- Stora Gatan
Sollentuna
- Centrum
- Rotebro
Solna
- Centrum
- Vreten
Stockholm
- Birger Jarlsgatan
- Frihamnen
- Gamla Stan
- Gustav Adolfs Torg
- Humlegården
- Hötorgscity
- Karlaplan
- Karlavägen
- Kista
- Kungsgatan
- Kungsträdgården
- Norrmalmstorg
- Norrtull
- Odengatan
- Odenplan
- S:t Eriksplan
- Sergels Torg
- Strandvägen
- Stureplan
- Sveavägen
- Tessinparken
- Upplandsgatan
- Vanadisplan
- Vasagatan
- Värtavägen
- Östermalmstorg
- Östra Station
Sundbyberg
- Hallonbergen
- Sturegatan
Täby
- Centrum
- Näsby Park
Upplands Väsby
Vallentuna
Vaxholm
Åkersberga
81
Regional head offices in the Nordic countries
The Nordic branch network is organised into ten
regional banks – seven in Sweden and one each in
Norway, Finland and Denmark. Branch managers
report directly to the Head of the Regional Bank.
At the regional head offices there are various
specialists to support the work of the branch offices,
for example: Regional Area Managers, specialists for
credits, international business, payments, finance
company, asset management, insurance and legal
matters. There are also internal functions for finance
and control, administration, human resources and
auditing.
NORWAY
BOARD:
DAG MEJDELL, Oslo, Chairman
JON FREDRIK BAKSAAS, Sandvika
HANS CHRISTOFFERSON, Åkersberga
KARIN JOYS VABØ, Nesttun
CLAUS KJØRVEN, Oslo (E)
BJÖRN-ÅKE WILSENIUS, Head of Regional Bank
WESTERN SWEDEN
BOARD:
FINN JOHNSSON, Göteborg, Chairman
STIG-ARNE BLOM, Hökerum
THOMAS DAFGÅRD, Källby
LARS IDERMARK, Kullavik
SVANTE CARLSSON, Göteborg
SÖREN MANNHEIMER, Göteborg
EVA PERSSON, Västra Frölunda
LARS-PETER FORSBERG, Tollered (E)
M. JOHAN WIDERBERG, Head of Regional Bank
DENMARK
BOARD:
HANS CHRISTOFFERSON, Åkersberga, Chairman
HANS-OLOF HARRISON, Linköping
STEEN HOVE, Herning
JENS IVERSEN, Brande
PIA LARSEN, Smørum
JÖRGEN LYHNE, Herning
THOMMY MOSSINGER, Malmö
ESKILD THYGESEN, Ikast
TOVE G. GRANDELAG, Herning (E)
JENS CHR. JÖRGENSEN, Fredericia (E)
HANNE MADSBJERG, Brande (E)
PÄR BOMAN, Head of Regional Bank
SOUTHERN SWEDEN
BOARD:
JAN EKBERG, Åhus, Chairman
PER ANDERSSON, Lund
ROLAND BENGTSSON, Viken
KURT J JOHANSSON, Sölvesborg
Victor Brott
SVEN LANDELIUS, Lund
82
MIKAEL ROOS, Malmö
ANN-CHRESTIN SAEDÉN, Ystad (E)
THOMMY MOSSINGER, Head of Regional Bank
Annual Report 2001
NORTHERN NORRLAND
BOARD:
SOUTHERN NORRLAND
BJÖRN KUMLIN, Skellefteå, Chairman
BOARD:
BJÖRN FRANKLIN, Lycksele
ULF BERGKVIST, Insjön, Chairman
BENGT-OVE HÖGSTRÖM, Härnösand
OVE ANONSEN, Gävle
MARGARETA JONSSON, Älvsbyn
PETER LARSON, Sandviken
ERIK ORRING, Umeå
ÅKE RYDÉN, Sveg
MARIANNE ERIKSSON, Örnsköldsvik (E)
ANDERS WIKLANDER, Sundsvall
STEFAN NILSSON, Head of Regional Bank
GÖTHE ÖSTLUND, Mora
MARIA LEIWERT, Årsunda (E)
HÅKAN SANDBERG, Head of Regional Bank
FINLAND
BOARD:
STIG-ERIK BERGSTRÖM, Espoo, Chairman
KAJ JANSSON, Söderkulla
SEIJA TURUNEN, Helsinki
HANS CHRISTOFFERSON, Åkersberga
PETRI HATAKKA, Head of Regional Bank
CENTRAL SWEDEN
BOARD:
PER SORTE, Saltsjöbaden, Chairman
PER JOHAN BEHRN, Örebro
ESKIL FLORVALL, Saltsjöbaden
ESBJÖRN OLSSON, Stockholm
GUSTAV OHLSSON, Västerås
Umeå
OLOF G WIKSTRÖM, Järfälla
JURGEN KLEFELT, Stockholm (E)
MICHAEL ZELL, Head of Regional Bank
STOCKHOLM CITY
BOARD:
JAN BLOMBERG, Stockholm, Chairman
Gävle
Oslo
CARL-OLOF BY, Saltsjöbaden
Helsinki
Stockholm
Linköping
Göteb
teborg
EVA FÄRNSTRAND, Bromma
GÖRAN LARSSON, Stockholm
GÖRAN NORD, Bromma
LENNART SVENSSON, Stockholm
CHARLOTTE SKOG, Stockholm (E)
MAGNUS UGGLA, Head of Regional Bank
EASTERN SWEDEN
BOARD:
Co
Copenhagen
Cope
hagen
Malmö
ANDERS HULTMAN, Växjö, Chairman
LENNART BOHLIN, Linköping
JAN CEDWALL, Nyköping
JAN-ERIC NILSSON, Visby
KENNETH STÅHL, Jönköping
KENNETH SYNNERSTEN, Västerås
LARS HULTMAN, Tranås (E)
HANS-OLOF HARRISON, Head of Regional Bank
(E) = Employee representative
Annual Report 2001
83
Units outside the Nordic countries
Units outside
the Nordic countries
Operations outside the Nordic countries are part of
Handelsbanken Markets’ organisation. There are units
in other European countries, Asia and the US.
These units focus their operations on Nordic companies
with operations abroad and non-Nordic companies
with operations in the Nordic region. They also offer
investment banking and trading. Concerning operations
in the UK, see Banking operations outside the Nordic
countries on page 32. Handelsbanken in Luxembourg
and London also offer asset management services to
Nordic citizens living abroad. These operations are
organised under Handelsbanken Asset Management.
UNITS OUTSIDE THE NORDIC COUNTRIES:
Hong Kong
Luxembourg
Poland
Russia
Singapore
Spain
Switzerland
Taiwan
UK (6)
USA
Victor Brott
Austria
China
Estonia
France (2)
Germany (2)
Tallinn
Leeds
New York
Moscow
Manchester
Hamburg
Nottingham
London
Birmingham
Luxembourg Warsaw
Reading
Frankfurt
Vienna
Paris
Zurich
Cô
´Azur
Azu
Beijing
Marbella
Taipei
Hong Kong
Singapore
84
Annual Report 2001
Central Head Office
The Central Head Office departments provide support to
the branches with development work, day-to-day services
and specialist skills. Our Swedish subsidiaries, which are
integrated in the Bank’s business operations, are also
shown here.
ADMINISTRATION DEPARTMENT
CREDIT DEPARTMENT
Head: JANITA THÖRNER-LEHRMARK
Head: BJÖRN BÖRJESSON
Responsible for managing the Bank’s premises,
investments in premises, equipment and
machines, physical security as well as insurance
and environmental matters.
This responsibility includes general purchasing and building matters and also the Head
Office’s telephone switchboard, distribution
and mail services.
Overall responsibility for the Group’s lending
policies, credit procedures and risk assessment
of the lending portfolio.
Prepares credits to be presented to the
Central Board.
HANDELSBANKEN ASSET MANAGEMENT
Overall responsibility for the Group’s human
resources strategy, personnel and management
recruitment, management and skills development, personnel administration, and negotiations
on salaries and employment conditions. Also
responsible for working environment, corporate
health care and pension matters.
Head: BJÖRN C ANDERSSON
Responsible for asset management, mutual
fund management and also institutional custody
services and capital investment services.
HUMAN RESOURCES
Head: ANNA RAMBERG
AUDITING DEPARTMENT
IT OPERATIONS
Head: TORD JONEROT
Overall responsibility for internal auditing.
Co-ordinates auditing issues within the Group.
Responsible for evaluating and reviewing
internal control. Audits accounts and annual
reports.
Head: ANDERS H JOHANSSON
Responsible for operation of the Group’s IT
systems, workstations and communications.
Development and maintenance of technical
infrastructure and also operational responsibility
for IT security at the Handelsbanken Group.
BUSINESS DEVELOPMENT
LEGAL DEPARTMENT
Head: BJÖRN G OLOFSSON
Responsible for overall development issues
within the Group. Responsible for developing
payment and cash management services,
deposits and lending services, electronic
services, branch office systems, development
and maintenance of the Group’s IT systems
and information security.
Responsible for investments in IT systems.
CONTROL AND ACCOUNTING DEPARTMENT
Head: LENNART FRANCKE
Responsible for Group accounts, annual
accounts, Group financial control, financial
and administrative control systems, internal
cash management and tax analysis.
Head: ULF KÖPING-HÖGGÅRD
Overall responsibility for legal matters in the
Group. Provides legal support to all units within
the Group.
Head: GÖRAN BJÖRLING
Operations comprise corporate finance, debt
capital markets, money market, foreign
exchange and equity trading, correspondent
banking, trade finance, economic research and
back-office operations for securities and foreign
exchange trading at the Bank and custody
account administration.
Handelsbanken Markets also includes the
Group’s units outside the Nordic countries.
TREASURY
Overall responsibility for the Group’s marketing
policy, internal/external information, advertising,
investor relations, complaints and contact with
the media. Publishes the Group’s house journal.
Annual Report 2001
HANDELSBANKEN FINANS
Head: ULF RIESE
Offers leasing, conditional sales, finance
collaboration with suppliers of investment
assets, company car finance and administration, factoring (with and without financing),
debt collection and sales finance in collaboration with vendors.
Conducts operations in Sweden, Norway,
Finland and Denmark.
HANDELSBANKEN FONDER
Head: JOACHIM SPETZ
Manages and administers the Bank's mutual
funds and administers funds for corporate
customers.
Conducts operations in Sweden, Norway
and Finland.
HANDELSBANKEN LIV
Head: BARBRO JOHANSSON
Offers a wide range of life insurance products, such as pension insurance, group
life insurance, unit-linked insurance, health
and accident insurance and international
endowment insurance.
Conducts operations in Sweden, Norway,
Finland and Denmark.
SPP
CORPORATE COMMUNICATIONS
Head: LARS LINDMARK
SUBSIDIARIES
Head: PEHR WISSÉN
Responsible for Group funding in Swedish and
international capital markets. Responsible for
the Group’s liquidity management. Overall
responsibility for the Group’s exposure to
interest rate, exchange rate, liquidity and equity
risks. Operates the internal bank and central
bank clearing.
Head: ANDERS ÖSTRYD
One of Sweden's leading life and pension
insurance groups. The main operations are
occupational pension insurance, occupational
group life insurance, supplementary private
insurance and ancillary administrative services.
STADSHYPOTEK GROUP
Head: CLAES NORLÉN
STADSHYPOTEK and its subsidiary HANDELSBANKEN HYPOTEK provide first-mortgage loans
for single-family houses, second homes,
shares in housing co-operatives, multi-family
dwellings and office and commercial buildings.
STADSHYPOTEK BANK
Head: YONNIE BERGQVIST
A telephone and Internet bank which offers
a selection of standardised and packaged
banking and insurance services for private
customers.
85
Board of directors
Board of directors
CHAIRMAN AND GROUP CHIEF EXECUTIVE
BOARD MEMBERS
In connection with the Annual General Meeting on
24 April 2001, Tom Hedelius, Chairman of the Board of
the Bank, resigned from his post. At the initial board meeting
on that day, the Board appointed Arne Mårtensson, Group
Chief Executive of the Bank since 1991, as new Chairman
and Lars O Grönstedt, Executive Vice-President since 1997,
as new Group Chief Executive after Arne Mårtensson.
Tom Hedelius was appointed Honorary Chairman.
BOARD OF DIRECTORS
At the Annual General Meeting on 24 April 2001, the
Board of the Bank was re-elected apart from Tom Hedelius
and Clas Reuterskiöld, who had both declined re-election.
New members elected to the Board were Anders Nyrén
and Lars O Grönstedt.
In January 2001, Roland Fahlin left the Board, due to
a new commitment in an operation which competes with
the Bank.
ARNE MÅRTENSSON, Chairman
BO RYDIN, Vice Chairman
THE BOARD’S ACTIVITIES
The Board held eleven meetings during 2001. At their
meetings, the Board has discussed the economic situation
and the Bank’s strategy. It has also followed up limits for
interest rate risks etc. The Board has also received regular
information on operational risks. It has made decisions
concerning major credit issues, major investments and
strategic issues. The Board has issued working instructions
for itself, instructions for the Group Chief Executive, and
credit instructions. The Board has also appointed members
of the credit committee and the compensation committee.
PIRKKO ALITALO
LOTTY BERGSTRÖM
COMMITTEES
Credit committee. This committee makes decisions on behalf of the
Central Board of Directors on the majority of the credit matters which
the Board has to determine and prepares matters which, because
of their special importance, must be presented to the whole Board.
Ten meetings of the Credit Committee were held in 2001.
MEMBERS: Arne Mårtensson, Chairman, Bo Rydin and Hans Larsson,
Vice Chairmen, Tommy Bylund, Göran Ennerfelt, Lars O Grönstedt,
Olle Persson, Bengt Samuelsson and Björn Börjesson.
DEPUTY MEMBERS: Lotty Bergström and Anders Nyrén
Compensation committee. This committee reviews the Chairman’s
remuneration and benefits in accordance with his contract; it adjusts
the salary and benefits of the Group Chief Executive in accordance
with his contract; it also establishes the principles and overall policy
for the salaries, benefits and pensions of the Executive Vice Presidents.
MEMBERS: Hans Larsson, Chairman, and Pirkko Alitalo.
PER-OLOF ERIKSSON
86
ANDERS NYRÉN
Annual Report 2001
Board of directors
ARNE MÅRTENSSON, Chairman
of the Board
* 1951, Djursholm
Member since 1990
Director of Holmen AB, Sandvik AB,
Skanska AB, V&S Vin & Sprit AB,
Swedish ICC, Industry and Commerce
Stock Exchange Committee, Business
Council of World Economic Forum,
Chairman of the Stockholm School
of Economics' Advisory Board
Shareholding: 0,
synthetic options: 80 000
BO RYDIN, Vice Chairman
HANS LARSSON, Vice Chairman
LARS O GRÖNSTEDT
* 1932, Stockholm
Member since 1973
Chairman of Svenska Cellulosa AB
SCA, AB Industrivärden, Skanska AB,
Graninge AB
Shareholding: 40 000
HANS LARSSON, Vice Chairman
* 1942, Stockholm
Member since 1990
Chairman of Nobia AB, Sydsvenska
Kemi AB, Biolight International AB;
Director of Bilia AB, Holmen AB,
Carema AB, Pergo AB
LARS O GRÖNSTEDT, President
and Group Chief Executive
* 1954, Stockholm
Member since 2001
Shareholding: 600,
PIRKKO ALITALO
TOMMY BYLUND
GÖRAN ENNERFELT
* 1949, Helsinki
Member since 2000
Vice Chairman of the Foundation
for Finnish Medical Science; Director
of Lagercrantz Group AB
Shareholding: 1 500
LOTTY BERGSTRÖM
* 1949, Ekerö
Member since 1996
Shareholding: 0
TOMMY BYLUND
* 1959, Ljusdal
Member since 2000
Chairman of the Oktogonen foundation
Shareholding: 944,
GÖRAN ENNERFELDT
OLLE PERSSON
BENGT SAMUELSSON
* 1940, President and Group CEO
of Axel Johnson Group, Upplands
Väsby
Member since 1985
Director of Saba Trading AB, Spirent plc
PER-OLOF ERIKSSON
* 1938, Sandviken
Member since 1986
Chairman of Svenska Kraftnät, Sapa
AB; Director of Assa Abloy AB,
AB Custos, Preem Petroleum AB,
Sandvik AB, Skanska AB, SSAB
Svenskt Stål AB, AB Volvo
ANDERS NYRÉN
* 1954, President and CEO of
AB Industrivärden, Bromma
Member since 2001
Director of the Ernström Group,
Svenska Cellulosa AB SCA,
Shareholding: 1 000
OLLE PERSSON
* 1935, Östersund
Member since 1989
Chairman of Byggelit AB, Z-Invest
BENGT SAMUELSSON
* 1934, Professor, Djursholm
Member since 1989
Chairman of the Nobel Foundation;
Director of Pharmacia Corp., USA,
Nicox S.A., France, BioStratum Inc.,
USA, Pyrosequencing AB
Shareholding: 3 000
ELECTION COMMITTEE
Since 1988, the Central Board of
Directors of Handelsbanken has
appointed an election committee
which nominates members of the
Board and auditors before the Annual
General Meeting. This procedure was
changed in connection with the 2001
Meeting. Following a proposal from
the Board, Handelsbanken’s Annual
General Meeting resolved that the
Chairman of the Board would appoint
four representatives for the shareholders of the Bank, who, with the
Chairman, would form a committee to
prepare the next election of Board
members. Board members are not
eligible to serve on the committee. In
connection with the publication of the
interim report for the third quarter, the
names of the representatives appointed by the Chairman of the Board,
Arne Mårtensson, were announced:
Stellan Borgh, Oktogonen Foundation,
Christer Elmehagen, AMF Pension,
Björn Franzon, Fourth AP fund and
Tom Hedelius, Industrivärden.
For members of the Board who were previously Deputies,
the year stated for election to the Board is the year the
person was elected Deputy.
Annual Report 2001
87
Senior Management, Auditors
Senior Management
President
and Group Chief Executive
LARS O GRÖNSTEDT, * 1954
Employed: 1983
Shareholding: 600, options 80 000
Executive Vice Presidents
at the Regional Banks
Chief Executives
of Subsidiaries
STEFAN NILSSON, * 1957
Head of Northern Norrland Regional Bank
Employed: 1980
YONNIE BERGQVIST, * 1961
Head of Stadshypotek Bank
Employed: 1979
HÅKAN SANDBERG, * 1948
Head of Southern Norrland Regional Bank
Employed: 1969
BARBRO JOHANSSON, * 1944
Head of Handelsbanken Liv
Employed: 1961
BJÖRN C ANDERSSON, * 1946
Head of Handelsbanken Asset Management
Employed: 1985
Shareholding: 12 500, options 40 000
MAGNUS UGGLA, * 1952
Head of Stockholm City Regional Bank
Employed: 1983
GÖRAN BJÖRLING, * 1942
Head of Handelsbanken Markets
Employed: 1977
MICHAEL ZELL, * 1950
Head of Central Sweden Regional Bank
Employed: 1978
CLAES NORLÉN, * 1955
Head of Stadshypotek Bank/
Handelsbanken Hypotek
Employed: 1978
BJÖRN BÖRJESSON, * 1951
Head of Central Credit Department
Employed: 1981
HANS-OLOF HARRISON, * 1943
Head of Eastern Sweden Regional Bank
Employed: 1964
LENNART FRANCKE, * 1950
Head of Central Control and Accounting
Department
Employed: 1972
M JOHAN WIDERBERG, * 1949
Head of Western Sweden Regional Bank
Employed: 1972
Executive Vice Presidents
at the Central Head Office
ANDERS JOHANSSON, * 1955
Head of Central IT Operations
Employed: 1999
BJÖRN G OLOFSSON, * 1950
Head of Central Business Development
Department
Employed: 1986
ANNA RAMBERG, * 1952
Head of Human Resources
Employed: 1971
PEHR WISSÉN, * 1951
Head of Central Treasury Department
Employed: 1983
THOMMY MOSSINGER, * 1951
Head of Southern Sweden Regional Bank
Employed: 1982
PÄR BOMAN, * 1961
Head of Denmark Regional Bank
Employed: 1991
PETRI HATAKKA, * 1962
Head of Finland Regional Bank
Employed: 1990
BJÖRN-ÅKE WILSENIUS, * 1944
Head of Norway Regional Bank
Employed: 1961
All options are synthetic.
Auditors
Appointed by the Annual General Meeting
KPMG Bohlins AB
Ernst & Young AB
THOMAS THIEL, Chairman, Auditor in charge
Authorised Public Accountant, Stockholm
ÅKE HEDÉN, Auditor in charge
Authorised Public Accountant, Enköping
ULF RIESE, * 1959
Head of Handelsbanken Finans
Employed: 1983
ANDERS ÖSTRYD, * 1953
Head of SPP
Employed: 2001
Others
JAN HÄGGSTRÖM, * 1949
Head of Handelsbanken Markets Research
Employed: 1988
LARS LINDMARK, * 1945
Head of Corporate Communications
Employed: 1992
BENGT RAGNÅ, * 1950
Head of Investor Relations
Employed: 1982
Changes
Michael Zell, previously Chief Executive of
Stadshypotek and Handelsbanken Hypotek,
was appointed Executive Vice President and
head of the Central Sweden Regional Bank.
Petri Hatakka, previously head of trading
at Handelsbanken Markets, was appointed
Executive Vice President and head of the
Finland Regional Bank.
Claes Norlén, previously regional area manager
at the Central Sweden Regional Bank, was
appointed Chief Executive of Stadshypotek
and Handelsbanken Hypotek.
Appointed by Finansinspektionen
ULF DAVÉUS
Authorised Public Accountant,
Deloitte & Touche AB, Åkersberga
STEFAN HOLMSTRÖM
Authorised Public Accountant, Täby
88
Annual Report 2001
Addresses
Addresses
Central
Head Office
Subsidiaries
Kungsträdgårdsgatan 2
Postal address:
SE-106 70 Stockholm
Telephone +46 8 701 10 00
Handelsbanken
Securities
Northern Norrland
Beijing
New York
Mäster Samuelsgatan 42
Postal address:
SE-106 35 Stockholm
Telephone +46 8 701 46 00
Storgatan 48
Box 1002
SE-901 20 Umeå
Telephone +46 90 15 45 00
CITIC Building No. 22D
19 Jianguomenwai Dajie
Beijing, CN-100004 China
Telephone +86 10 65004691
www.handelsbanken.com
153 East 53rd Street, 37th floor
New York, NY 10022-4678, USA
Telephone +1 212 3265100
Southern Norrland
Côte d’Azur
Handelsbanken Fonder
Nygatan 20
Box 196
SE-801 03 Gävle
Telephone +46 26 17 20 60
62 Place Pierre Coulet
B.P. 317
FR-83700 St Raphaël Cedex
France
Telephone +33 494 953911
29-31, rue Saint-Augustin
FR-75002 Paris, France
Telephone +33 1 42665898
Stockholm City
Frankfurt am Main
Postal address:
SE-106 70 Stockholm
Telephone +46 8 701 10 00
Mittlerer Hasenpfad 25
Postfach 700955
DE-60559 Frankfurt am Main
Germany
Telephone +49 69 605060
Blasieholmstorg 12
Postal address:
SE-106 70 Stockholm
Telephone +46 8 701 10 00
Handelsbanken
Asset Management
Handelsbanken Liv
Blasieholmstorg 12
Postal address:
SE-106 70 Stockholm
Telephone +46 8 701 10 00
Torsgatan 12
Box 1325
SE-111 83 Stockholm
Telephone +46 8 613 20 00
Handelsbanken Markets
SPP
Blasieholmstorg 11 and 12
Postal address:
SE-106 70 Stockholm
Telephone +46 8 701 10 00
Hälsingegatan 38
Postal address:
SE-105 39 Stockholm
Telephone +46 8 556 850 00
www.spp.se
Tegeluddsvägen 10
Postal address:
SE-115 82 Stockholm
Telephone +46 8 701 10 00
Units outside the Nordic countries
Blasieholmstorg 12
Postal address:
SE-106 70 Stockholm
Telephone +46 8 701 10 00
www.handelsbankensecurities.
com
Information Systems
Department
Regional Banks’
Head Offices
Stadshypotek/
Postal address:
SE-103 70 Stockholm
Telephone +46 8 701 10 00
Registered no.
Stadshypotek 556459-6715
556000-7618
www.stadshypotek.se
Stadshypotek Bank
Arenavägen 33
Box 10085
SE-121 27 Stockholm
Telephone +46 8 725 53 00
www.stadshypotekbank.se
Central Sweden
Postal address:
SE-106 70 Stockholm
Telephone +46 8 701 10 00
Eastern Sweden
Nygatan 20
SE-581 04 Linköping
Telephone +46 13 28 91 00
Western Sweden
Östra Hamngatan 23
SE-405 40 Göteborg
Telephone +46 31 774 80 00
Southern Sweden
Södergatan 10
Postal address:
SE-205 40 Malmö
Telephone +46 40 24 50 00
Denmark
Amaliegade 3
Postboks 1032
DK-1007 Copenhagen K
Denmark
Telephone +45 33 418200
www.handelsbanken.dk
Finland
Södra kajen 8
P.O. Box 315
FI-00131 Helsinki, Finland
Telephone +358 10 44411
www.handelsbanken.fi
Hong Kong
B
B
2008 Hutchison House
10 Harcourt Road, Central
Hong Kong
Telephone +852 28682131
London
B
Trinity Tower
9 Thomas More Street
London E1W 1GE, U.K.
Telephone +44 20 75788000
Luxembourg
S
B
146, Boulevard de la Pétrusse
B.P. 678
LU-2016 Luxembourg
Telephone +352 4998111
Marbella
Centro Plaza 2
Nueva Andalucia
ES-29660 Marbella
(Málaga), Spain
Telephone +34 95 2817550
Moscow
Paris
B
B
Singapore
B
65 Chulia Street, Units 21-00
OCBC Centre, Singapore 049513
Telephone +65 653 23 800
Taipei
Room 0813, International
Trade Building
333, Keelung Road
Section 1, Taipei, Taiwan
Telephone +886 22 7577112
Tallinn
15, Pärnu mnt.
P.O. Box 1021
EE-19090 Tallinn, Estonia
Telephone +372 6 651748
Warsaw
S
Wisniowy Business Park
ul. Ilzecka 26
PL-02-135 Warsaw, Poland
Telephone +48 22 8787387
Vienna
B
Parkring 10
AT-1010 Vienna, Austria
Telephone +43 1 516333820
Zurich
Gotthardstrasse 21
Postfach 2889
CH-8022 Zurich, Switzerland
Telephone +41 1 2871020
Khlebny per., 19A
2nd floor
RU-121069 Moscow
Russia
Telephone +7 502 2213560
Norway
Rådhusgaten 27
Postboks 1342 Vika
NO-0113 Oslo, Norway
Telephone +47 22 940700
www.handelsbanken.no
B
Annual Report 2001
= Branch
= Representative office
S
= Subsidiary
General definitions
Explanation of concepts concerning risk
ADJUSTED SHAREHOLDERS’ EQUITY PER SHARE Shareholders’ equity as
BACK-TESTING In the evaluation of statistical models, back-testing is
reported in the balance sheet adjusted for the capital part of the
difference between the book value and market value of interest-bearing
securities which are classified as financial fixed assets divided by
the number of shares after full conversion of convertible subordinated
notes. An adjustment has been made where preference and index
share capital is calculated at current redemption value.
one method of monitoring whether the statistical calculations of the
model agree with the actual outcome.
BAD DEBTS A non-performing loan, or a loan where other circumstances
lead to doubt concerning its value and where the value of the collateral does not cover the principal amount and the accrued interest
by a satisfactory margin. Net bad debts are bad debts minus the
reserve for possible loan losses.
BAD DEBT RESERVE RATIO Reserve for possible credit losses as a
percentage of gross bad debts.
CAPITAL BASE The capital base is the sum of tier 1 (primary) and tier 2
(supplementary) capital. Tier 1 capital comprises shareholders’ equity
less goodwill plus 72% of untaxed reserves in the parent company.
Tier 2 capital includes subordinated loans with some reduction when
the residual maturity is under five years. This part of the supplementary
capital may not exceed 50% of tier 1 capital. With specific permission
from the Government or, following authorisation by the Government,
from the Swedish Financial Supervisory Authority, other instruments
may also be included in tier 1 or tier 2 capital. However, tier 2 capital
must never exceed tier 1 capital. The capital base is obtained by
reducing the total of tier 1 and tier 2 capital by the book value of
holdings in insurance and financial operations not included in the
Consolidated Accounts. To cover the capital requirement on the
market risks, subordinated loans with an original maturity of at least
two years can be included in the capital base.
CAPITAL RATIO Capital ratio or the total capital ratio is the capital base
in relation to risk-weighted volume. The Act on Capital Adequacy
and Large Exposures of Credit Institutions and Securities Companies
stipulates that it should be at least 8%.
C/I RATIO Total expenses in relation to total income. The C/I ratio is
computed before and after loan losses including changes in value
of repossessed property.
DERIVATIVE INSTRUMENTS An instrument whose value is linked to the
value of an underlying commodity. Options, swaps and forward
contracts are examples of derivatives. An option is a derivative
instrument which gives the holder the right to buy or sell a share at
a certain price (the exercise price) within a certain period of time
(the maturity). It can be used to increase or decrease the risk level of
a portfolio. A forward contract is an agreement to buy an underlying
commodity at a predetermined price with delivery and payment at
a predetermined future date. Unlike options, forward contracts are
binding on both parties.
EQUITY RISKS The Bank’s exposure to equity risk is divided into systematic and specific risk. The systematic risk originates in the price
movements of the entire stock market. The specific risk originates in
the price variation of each individual share compared to the index.
EXCHANGE RATE RISKS Exchange rate risks arise when there is a diffe-
rence between the present value of assets and liabilities in foreign
currencies – including the effects of derivative positions. When this
is the case, the Group’s profit is affected by fluctuations in exchange
rates.
FINANCIAL RISKS Financial risks are divided into market and liquidity
risks. Market risks comprise interest rate risks, exchange rate risks
and share price risks. They constitute the changes in value which
arise as a result of a change in price, exchange rate or volatility.
Liquidity risk is the risk that the bank’s expenses will increase as a
result of the funding requirement on a particular day being too large
in relation to available funding.
HEDGE ACCOUNTING Hedge accounting refers to a situation where an
asset or liability is effectively protected against unfavourable changes
in value on the money, foreign exchange and equity markets and
different accounting principles apply for the hedged and the protecting transactions. In hedge accounting, only one of the accounting
principles is used, whereby the transactions have a common valuation
principle. The aim is to value and report the hedged and protecting
positions at market value.
LOAN LOSS RATIO Loan losses and changes in value of repossessed
INTEREST RATE RISKS Interest rate risks arise because the maturity
periods of the Group’s assets and liabilities or off-balance-sheet
items do not coincide. A change in the yield curve may lead to
deterioration in net interest income and/or fall in value when the
maturities for assets and liabilities are different.
property as a percentage of the opening balance for the period for
lending to the general public, lending to credit institutions (excluding
banks), repossessed property and credit guarantees.
INTEREST RATE SWAPS Interest rate swaps are derivative instruments,
which normally consist of an agreement to swap interest payments
from a floating to a fixed interest rate or vice-versa.
NET EARNINGS PER SHARE The result for the period after appropriations
and tax divided by the average number of shares. An adjustment
has been made to take into account preference shares, index shares
and full conversion of convertible subordinated notes.
LIQUIDITY RISKS Liquidity risks arise when assets and liabilities have
differing maturities. When assets mature later than liabilities, the
assets must be refinanced once or several times during their lifetime.
The risk is that the funding cost may increase, if on a particular day
the refinancing requirement in an individual currency is large.
NON-PERFORMING LOANS Loans where interest, repayments or overdrafts have been due for payment for more than 60 days.
RISK MATRIX A risk matrix shows how much the market value of a
DIRECT YIELD Dividend per share divided by the share price at
year-end.
P/E RATIO The share price at year-end divided by net earnings per
position in an option changes when the price of the underlying asset
and the volatility change by certain predetermined values.
share.
SPOT CONTRACT Spot contracts are contracts concerning physical
PROBLEM LOANS The total of bad debts (net) and reduced rate loans.
PROFITABILITY See Return on equity.
PROPORTION OF BAD DEBTS Bad debts (net) in relation to total lending
to the general public and credit institutions (excluding banks).
REDUCED RATE LOANS Loans for which the interest rate has been
reduced relative to market rates.
RETURN ON EQUITY The result for the period after appropriations and
tax in relation to average shareholders’ equity adjusted for rights
issues and dividend.
RETURN ON TOTAL ASSETS Operating profit before tax in relation to
average total assets.
RISK-WEIGHTED VOLUME The risk-weighted volume is determined by
the assets and off-balance-sheet items being placed in varying risk
classes, in accordance with the Act on Capital Adequacy and Large
Exposures of Credit Institutions and Securities Companies. The
volumes are weighted taking into account the assessed risk such
that they are included in the risk-weighted volume by 0%, 20%, 50%
or 100%.
TIER 1 CAPITAL RATIO Primary capital in relation to risk-weighted volume.
(See Capital base and Risk-weighted volume.)
instruments or commodities which, unlike derivative instruments,
require immediate delivery. Spot contracts may refer to the purchase
and sale of shares, currencies, etc.
TRADING BOOK The trading book is a concept defined in the Act on
the Capital Adequacy and Large Exposure of Credit Institutions and
Securities Companies (1994:2004). The trading book includes positions in financial instruments which have been taken for the purpose
of short-term profit in the money, foreign exchange and equity markets.
The trading book is subject to capital adequacy requirements for
market risks.
VAR Value-at-Risk is a probability-based method of measuring market
risks. VaR indicates the maximum loss which can be expected to
occur at a specific confidence interval and for a certain holding period.
For example, if a 99-percent confidence interval is used, the probability of a larger loss than the VaR amount is only 1%.
VOLATILITY Volatility expresses the expected change in the price of
the underlying asset for an option. Volatility is one of the variables in
theoretical option valuation models. In statistical terms, volatility is
measured by the standard deviation of the change in market price.
YIELD CURVE The yield curve is a graph showing the yield which the
fixed income market agrees on depending on the maturity per credit
risk. Credit risk is split into the following types of risk: government,
bank, mortgage institutions and corporate.
Production: Ulla Jansson Information AB
Cover: Painting by Magnus Dahlbäck
Definitions
Photographs: Bengt Wanselius, unless otherwise stated
Repro: Typografen Text&Bild
Explanation of concepts
Printing: Ljung, ISO 14001 environmental certificate

Svenska Handelsbanken

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