annual report 2006 handelsbanken has 615 branches worldwide

Transcription

ALFTA ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA SKY CITY ARLÖV ARVIDSJAUR ARVIKAAVESTA BACKE BANKERYD BERGBY BERGSJÖ BJURHOLM BJURSÅS
BJÄSTA BJÖRBO BJÖRNA BLACKEBERG BODEN BO LLE BYGD BOLLNÄS BORENSBERG BORGHOLM BORLÄNGE BORÅS: HULTA NORRBY STORA TORGET VIARED BREDBYN BROBY BROMMAPLAN BRÄCKE BUREÅ BURTRÄSK BYSKE BÅLSTA BÅSTA DALARÖ DELSBO DJURSHOLM DOMSJÖ DOROTEA ED SBYN EKERÖ EKSJÖ EMMABODA ENKÖPING ESKILSTUNA: FRISTADSTORGET
ÖSTERMALM ESLÖV FAGERSTA FALKENBERG FALKÖPING FALUN FARSTA CENTRUM FELLINGSBRO FILIPSTAD FINNERÖDJA FINSPÅNG FJUGESTA FLEN FRISTAD FRÄNSTA FRÖSUNDA FRÖVI
FURUDAL FÅRÖSUND FÄRGELANDA FÄRJESTADEN FÖLLINGE GAGNEF GAMMELSTAD GISLAVED GLOBEN GNARP GNESTA GRANGÄRDE GRÄNGESBERG GÄLLIVARE GÄLLSTAD GÄLLÖ GÄVLE
CITY GÖTEBORG: ALMEDAL AVENYN BACKA RINGÖN CITY ERIKSBERG FRÖLUNDA FÖRSTA LÅNGGATAN GÅRDA HISINGS KÄRRA HJÄLLBO HÖGSBO KORTEDALA LANDALA LILLA BOMMEN
MAJORNA MARIEHOLM ODINSGATAN SISJÖN TORSLANDA VOLVO PVB ÖRGRYTE ÖVRE HUSARGATAN HAGFORS HALLSBERG HALLSTAVIK HALLUNDA TORG HALMSTAD HAMMARBY
HAMMARSTRAND HAMMERDAL HANINGE CENTRUM HAPARANDA HEBY HEDE HEDEMORA HEDESUNDA HELSINGBORG: NORR STORTORGET SÖDERPORT HEMSE HERRLJUNGA HJO
HOLMSUND HOTING HUDDINGE CENTRUM HUDIKSVALL HULTSFRED HUSKVARNA HUSUM HÄGERSTEN HÄRNÖSAND HÄSSELBY GÅRD HÄSSLEHOLM HÖGANÄS HÖGDALEN HÖGSBY
HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖPING KALIX KALMAR: BERGA K VARNHOLMEN KARLSHAMN KARLSKOGA KARLSKRONA
KARLSTAD: VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPANKNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS KRISTIANSTAD KRISTINEHAMNKROKOM
KUMLA KUNGSBACKA
KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA
LANDVETTER LEKSAND
LERUM LIDEN LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING CITY TORNBY LIT
LJUNGBY LJUNGBYHED LJUSDAL LJUSNE
LOMMA LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER
MALMÖ AMIRALSGATAN CITY DALAPLAN FOSIE FRIDHEM KÖPENHAMNSVÄGEN LIMHAMN LUNDAVÄGEN TRIANGELN VÄRNHEM MALUNG
MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLNDAL MÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA
MÖRSIL NACKA FORUM NACKA NORBERG NORDINGRÅ NORDMALING NORRKÖPING: DROTTNINGGATAN ENEBY CENTRUM HAGEBY CENTRUM NORRTÄLJE NORSJÖ NYBRO NYKÖPING
NYNÄSHAMN NÄSBY PARK NÄSSJÖ NÄSÅKER NÖDINGE OCKELBO OFFERDAL OLOFSTRÖM ORSA OSBY OSKARSHAMN PAJALA PARTILLE PITEÅ PÅLSBODA RAMSELE RIMBO ROBERTSFORS
RONNEBY ROTEBRO RÅNEÅ RÄTTVIK RÖRVIK SALA SALEM SALTSJÖ-BOO SANDVIKEN SIGTUNA SIMRISHAMN SJÖBO SKANÖR SKARA SKELLEFTEÅ SKINNSKATTEBERG SKULTUNA SKURUP
SKUTSKÄR SKÄRHOLMEN SKÄRPLINGE SKÖNDAL SKÖNSBERG SKÖVDE SLITE SOLLEBRUNN SOLLEFTEÅ SOLLENTUNA CENTRUM SOLNA SORSELE SPÅNGA STAFFANSTORP STENUNGSUND
STOCKHOLM: BIRGER JARLSGATAN FLEMINGGATAN FRIDHEMSPLAN FRIHAMNEN GAMLA STAN GUSTAV ADOLFS TORG GÖTGATSBACKEN HORNSBERG HORNSGATAN HUMLEGÅRDEN
HÖGALID KARLAPLAN KARLAVÄGEN KUNGSHOLMSTORG KUNGSTRÄDGÅRDEN MARIEBERG NORRMALMSTORG NORRTULL ODENGATAN ODENPLAN RENSTIERNAS GATA S:T ERIKSPLAN
SERGEL SKANSTULL STRANDVÄGEN STUREPLAN SVEAVÄGEN TESSINPARKEN UPPLANDSGATAN VANADISPLAN VÄRTAVÄGEN VÄSTERMALM ÖSTERMALMSTORG ÖSTRA STATION STORA
TUNA STORUMAN STORVIK STRÄNGNÄS STRÖMSUND STUVSTA SUNDBYBERG SUNDSVALL SUNNE SURTE SVEDALA SVEG SVENLJUNGA SVENSTAVIK SÄFFLE SÄTER SÄVSJÖ SÖDERHAMN
SÖDERKÖPING SÖDERTÄLJE SÖLVESBORG SÖRBERGE SÖSDALA TIBRO TIDAHOLM TIERP TIMRÅ TINGSRYD TOMELILLA TORSBY TORSÅKER TORSÅS TRANEMO TRANÅS TREHÖRNINGSJÖ
TRELLEBORG TROLLHÄTTAN TROSA TRÅNGSUND TULLINGE TYRESÖ TYRINGE TÄBY CENTRUM UDDEVALLA ULLÅNGER ULRICEHAMN ULVSUNDA UMEÅ: CITY TEG VÄSTRA UPPLANDS VÄSBY
UPPSALA: CITY ERIKSBERG INDUSTRIOMRÅDE LUTHAGEN VADSTENA VAGGERYD VALLENTUNA VANSBRO VARA VARBERG VASAGATAN VAXHOLM VEBERÖD VELLINGE VETLANDA VILHELMINA
VIMMERBY VINDELN VIRSERUM VISBY: ADELSGATAN ÖSTER VISLANDA VITTSJÖ VOLLSJÖ VRETEN VÅRGÅRDA VÄLLINGBY VÄNERSBORG VÄNNÄS VÄRMDÖ VÄRNAMO VÄSTANFORS
VÄSTERHANINGE VÄSTERVIK VÄSTERÅS: CITY EMAUSGATAN KÖPINGSVÄGEN STORA GATAN VÄXJÖ YSTAD ÅHUS ÅKERSBERGA ÅLEM ÅMÅL ÅNGE ÅNÄSET ÅRE ÅRJÄNG ÅRSTA ÅSEDA ÅSELE
ÅTVIDABERG ÄLMHULT ÄLVSBYN ÄLVSJÖ ÄLVÄNGEN ÄNGELHOLM ÖREBRO: EKERSGATAN STORTORGET VÅGHUSTORGET ÖRNSKÖLDSVIK ÖSMO ÖSTERBYBRUK ÖSTERSUND ÖSTERVÅLA
ÖSTHAMMAR ÖVERKALIX ÖVERTORNEÅ ALFTA ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA SKY CITY ARLÖV ARVIDSJAUR ARVIKA AVESTA BACKE BANKERYD
BERGBY BERGSJÖ BJURHOLM BJURSÅS BJÄSTA BJÖRBO BJÖRNA BLACKEBERG BODEN BOLLE BYGD BOLLNÄS BORENSBERG BORGHOLM BORLÄNGE BORÅS: HULTA NORRBY STORA
TORGET VIARED BREDBYN BROBY BROMMA PLAN BRÄCKE BUREÅ BURTRÄSK BYSKE BÅLSTA BÅSTA DALARÖ DELSBO DJURSHOLM DOMSJÖ DOROTEA EDSBYN EKERÖ EKSJÖ EMMABODA
ENKÖPING ESKILSTUNA: FRISTADSTORGET ÖSTERMALM ESLÖV FAGERSTA FALKENBERG FALKÖPING FALUN FARSTA CENTRUM FELLINGSBRO FILIPSTAD FINNERÖDJA FINSPÅNG FJUGESTA
FLEN FRISTAD FRÄNSTA FRÖSUNDA FRÖVI FURUDAL FÅRÖSUND FÄRGELANDA FÄRJESTADEN FÖLLINGE GAGNEF GAMMELSTAD GISLAVED GLOBEN GNARP GNESTA GRANGÄRDE
GRÄNGESBERG GÄLLIVARE GÄLLSTAD GÄLLÖ GÄVLE CITY GÖTEBORG: ALMEDAL AVENYN BACKA RINGÖN CITY ERIKSBERG FRÖLUNDA FÖRSTA LÅNGGATAN GÅRDA HISINGS KÄRRA
HJÄLLBO HÖGSBO KORTEDALA LANDALA LILLA BOMMEN MAJORNA MARIEHOLM ODINSGATAN SISJÖN TORSLANDA VOLVO PVB ÖRGRYTE ÖVRE HUSARGATAN HAGFORS HALLSBERG
HALLSTAVIK HALLUNDA TORG HALMSTAD HAMMARBY HAMMARSTRAND HAMMERDAL HANINGE CENTRUM HAPARANDA HEBY HEDE HEDEMORA HEDESUNDA HELSINGBORG: NORR
STORTORGET SÖDERPORT HEMSE HERRLJUNGA HJO HOLMSUND HOTING HUDDINGE CENTRUM HUDIKSVALL HULTSFRED HUSKVARNA HUSUM HÄGERSTEN HÄRNÖSAND HÄSSELBY GÅRD
HÄSSLEHOLM HÖGANÄS HÖGDALEN HÖGSBY HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖPING KALIX KALMAR: BERGA KVARNHOLMEN
KARLSHAMN KARLSKOGA KARLSKRONA KARLSTAD: STORA TORGET VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPAN KNISLINGE KNIVSTA KOLBÄCK
KOPPARBERG KRAMFORS KRISTIANSTAD KRISTINEHAMN KROKOM KUMLA KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT
LANDSBRO LANDSKRONA LANDVETTER LEKSAND LERUM LIDEN LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING: CITY TORNBY LIT LJUNGBY
LJUNGBYHED LJUSDAL LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ: AMIRALSGATAN CITY DALAPLAN FOSIE FRIDHEM
KÖPENHAMNSVÄGEN LIMHAMN LUNDAVÄGEN TRIANGELN VÄRNHEM MALUNG MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA
MÖLNDAL MÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACKA: FORUM NACKA ALFTA ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ
ARLANDA SKY CITY ARLÖV ARVIDSJAUR ARVIKAAVESTA BACKE BANKERYD BERGBY BERGSJÖ BJURHOLM BJURSÅS BJÄSTA BJÖRBO BJÖRNA BLACKEBERG BODEN BOLLE BYGD BOLLNÄS
BORENSBERG BORGHOLM BORLÄNGE BORÅS: HULTA NORRBY STORA TORGET VIARED BREDBYN BROBY BROMMA PLAN BRÄCKE BUREÅ BURTRÄSK BYSKE BÅLSTA BÅSTA DALARÖ DELSBO
DJURSHOLM DOMSJÖ DOROTEA ED SBYN EKERÖ EKSJÖ EMMABODA ENKÖPING ESKILSTUNA: FRISTADSTORGET ÖSTERMALM ESLÖV FAGERSTA FALKENBERG FALKÖPING FALUN FARSTA
CENTRUM FELLINGSBRO FILIPSTAD FINNERÖDJA FINSPÅNG FJUGESTA FLEN FRISTAD FRÄNSTA FRÖSUNDA FRÖVI FURUDAL FÅRÖSUND FÄRGELANDA FÄRJESTADEN FÖLLINGE GAGNEF
GAMMELSTAD GISLAVED GLOBEN GNARP GNESTA GRANGÄRDE GRÄNGESBERG GÄLLIVARE GÄLLSTAD GÄLLÖ GÄVLE CITY GÖTEBORG: ALMEDAL AVENYN BACKA RINGÖN CITY ERIKSBERG
FRÖLUNDA FÖRSTA LÅNGGATAN GÅRDA HISINGS KÄRRA HJÄLLBO HÖGSBO KORTEDALA LANDALA LILLA BOMMEN MAJORNA MARIEHOLM ODINSGATAN SISJÖN TORSLANDA VOLVO PVB
ÖRGRYTE ÖVRE HUSARGATAN HAGFORS HALLSBERG HALLSTAVIK HALLUNDA TORG HALMSTAD HAMMARBY HAMMARSTRAND HAMMERDAL HANINGE CENTRUM HAPARANDA HEBY HEDE
HEDEMORA HEDESUNDA HELSINGBORG: NORR STORTORGET SÖDERPORT HEMSE HERRLJUNGA HJO HOLMSUND HOTING HUDDINGE CENTRUM HUDIKSVALL HULTSFRED HUSKVARNA
HUSUM HÄGERSTEN HÄRNÖSAND HÄSSELBY GÅRD HÄSSLEHOLM HÖGANÄS HÖGDALEN HÖGSBY HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ
JÖNKÖPING KALIX KALMAR: BERGA KVARNHOLMEN KARLSHAMN KARLSKOGA KARLSKRONA KARLSTAD: VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPAN
KNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS KRISTIANSTAD KRISTINEHAMN KROKOM KUMLA KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP
KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA LANDVETTER LEKSAND LERUM LIDEN LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG
LINKÖPING: CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ
AMIRALSGATAN CITY DALAPLAN FOSIE FRIDHEM KÖPENHAMNSVÄGEN LIMHAMN LUNDAVÄGEN TRIANGELN VÄRNHEM MALUNG MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS
MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLNDAL MÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACKA: FORUM NACKA NORBERG
NORDINGRÅ NORDMALING NORRKÖPING: DROTTNINGGATAN ENEBY CENTRUM HAGEBY CENTRUM NORRTÄLJE NORSJÖ NYBRO NYKÖPING NYNÄSHAMN NÄSBY PARK NÄSSJÖ NÄSÅKER
NÖDINGE OCKELBO OFFERDAL OLOFSTRÖM ORSA OSBY OSKARSHAMN PAJALA PARTILLE PITEÅ PÅLSBODA RAMSELE RIMBO ROBERTSFORS RONNEBY ROTEBRO RÅNEÅ RÄTTVIK RÖRVIK
SALA SALEM SALTSJÖ-BOO SANDVIKEN SIGTUNA SIMRISHAMN SJÖBO SKANÖR SKARA SKELLEFTEÅ SKINNSKATTEBERG SKULTUNA SKURUP SKUTSKÄR SKÄRHOLMEN SKÄRPLINGE
SKÖNDAL SKÖNSBERG SKÖVDE SLITE SOLLEBRUNN SOLLEFTEÅ SOLLENTUNA CENTRUM SOLNA SORSELE SPÅNGA STAFFANSTORP STENUNGSUND STOCKHOLM: BIRGER JARLSGATAN
FLEMINGGATAN FRIDHEMSPLAN FRIHAMNEN GAMLA STAN GUSTAV ADOLFS TORG GÖTGATSBACKEN HORNSBERG HORNSGATAN HUMLEGÅRDEN HÖGALID KARLAPLAN KARLAVÄGEN
KUNGSHOLMSTORG KUNGSTRÄDGÅRDEN MARIEBERG NORRMALMSTORG NORRTULL ODENGATAN ODENPLAN RENSTIERNAS GATA S:T ERIKSPLAN SERGEL SKANSTULL STRANDVÄGEN
STUREPLAN SVEAVÄGEN TESSINPARKEN UPPLANDSGATAN VANADISPLAN VÄRTAVÄGEN VÄSTERMALM ÖSTERMALMSTORG ÖSTRA STATION STORA TUNA STORUMAN STORVIK STRÄNGNÄS
STRÖMSUND STUVSTA SUNDBYBERG SUNDSVALL SUNNE SURTE SVEDALA SVEG SVENLJUNGA SVENSTAVIK SÄFFLE SÄTER SÄVSJÖ SÖDERHAMN SÖDERKÖPING SÖDERTÄLJE SÖLVESBORG
SÖRBERGE SÖSDALA TIBRO TIDAHOLM TIERP TIMRÅ TINGSRYD TOMELILLA TORSBY TORSÅKER TORSÅS TRANEMO TRANÅS TREHÖRNINGSJÖ TRELLEBORG TROLLHÄTTAN TROSA
TRÅNGSUND TULLINGE TYRESÖ TYRINGE TÄBY CENTRUM UDDEVALLA ULLÅNGER ULRICEHAMN ULVSUNDA UMEÅ: CITY TEG VÄSTRA UPPLANDS VÄSBY UPPSALA: CITY ERIKSBERG
INDUSTRIOMRÅDE LUTHAGEN VADSTENA VAGGERYD VALLENTUNA VANSBRO VARA VARBERG VASAGATAN VAXHOLM VEBERÖD VELLINGE VETLANDA VILHELMINA VIMMERBY VINDELN
VIRSERUM VISBY: ADELSGATAN ÖSTER VISLANDA VITTSJÖ VOLLSJÖ VRETEN VÅRGÅRDA VÄLLINGBY VÄNERSBORG VÄNNÄS VÄRMDÖ VÄRNAMO VÄSTANFORS VÄSTERHANINGE VÄSTERVIK
VÄSTERÅS: CITY EMAUSGATAN KÖPINGSVÄGEN STORA GATAN VÄXJÖ YSTAD ÅHUS ÅKERSBERGA ÅLEM ÅMÅL ÅNGE ÅNÄSET ÅRE ÅRJÄNG ÅRSTA ÅSEDA ÅSELE ÅTVIDABERG ÄLMHULT
ÄLVSBYN ÄLVSJÖ ÄLVÄNGEN ÄNGELHOLM ÖREBRO: EKERSGATAN STORTORGET VÅGHUSTORGET ÖRNSKÖLDSVIK ÖSMO ÖSTERBYBRUK ÖSTERSUND ÖSTERVÅLA ÖSTHAMMAR ÖVERKALIX
ÖVERTORNEÅ ALFTA ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA SKY CITY ARLÖV ARVIDSJAUR ARVIKA AVESTA BACKE BANKERYD BERGBY BERGSJÖ
BJURHOLM BJURSÅS BJÄSTA BJÖRBO BJÖRNA BLACKEBERG BODEN BO LLE BYGD BOLLNÄS BORENSBERG BORGHOLM BORLÄNGE BORÅS: HULTA NORRBY STORA TORGET VIARED
BREDBYN BROBY BROMMA PLAN BRÄCKE BUREÅ BURTRÄSK BYSKE BÅLSTA BÅSTA DALARÖ DELSBO DJURSHOLM DOMSJÖ DOROTEA ED SBYN EKERÖ EKSJÖ EMMABODA ENKÖPING
ESKILSTUNA: FRISTADSTORGET ÖSTERMALM ESLÖV FAGERSTA FALKENBERG FALKÖPING FALUN FARSTA CENTRUM FELLINGSBRO FILIPSTAD FINNERÖDJA FINSPÅNG FJUGESTA FLEN
FRISTAD FRÄNSTA FRÖSUNDA FRÖVI FURUDAL FÅRÖSUND FÄRGELANDA FÄRJESTADEN FÖLLINGE GAGNEF GAMMELSTAD GISLAVED GLOBEN GNARP GNESTA GRANGÄRDE GRÄNGESBERG
GÄLLIVARE GÄLLSTAD GÄLLÖ GÄVLE CITY GÖTEBORG: ALMEDAL AVENYN BACKA RINGÖN CITY ERIKSBERG FRÖLUNDA FÖRSTA LÅNGGATAN GÅRDA HISINGS KÄRRA HJÄLLBO HÖGSBO
KORTEDALA LANDALA LILLA BOMMEN MAJORNA MARIEHOLM ODINSGATAN SISJÖN TORSLANDA VOLVO PVB ÖRGRYTE ÖVRE HUSARGATAN HAGFORS HALLSBERG HALLSTAVIK HALLUNDA
TORG HALMSTAD HAMMARBY HAMMARSTRAND HAMMERDAL HANINGE CENTRUM HAPARANDA HEBY HEDE HEDEMORA HEDESUNDA HELSINGBORG: NORR STORTORGET SÖDERPORT
HEMSE HERRLJUNGA HJO HOLMSUND HOTING HUDDINGE CENTRUM HUDIKSVALL HULTSFRED HUSKVARNA HUSUM HÄGERSTEN HÄRNÖSAND HÄSSELBY GÅRD HÄSSLEHOLM HÖGANÄS
HÖGDALEN HÖGSBY HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖPING KALIX KALMAR: BERGA KVARNHOLMEN KARLSHAMN KARLSKOGA
KARLSKRONA KARLSTAD: VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPAN KNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS KRISTIANSTAD
KRISTINEHAMN KROKOM KUMLA KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA LANDVETTER
LEKSAND LERUM LIDEN LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING: CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA
LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ: AMIRALSGATAN CITY DALAPLAN FOSIE FRIDHEM KÖPENHAMNSVÄGEN LIMHAMN
LUNDAVÄGEN TRIANGELN VÄRNHEM MALUNG MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLNDAL MÖLNLYCKE
MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACKA: FORUM NACKA ALFTA ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA SKY CITY
ARLÖV ARVIDSJAUR ARVIKAAVESTA BACKE BANKERYD BERGBY BERGSJÖ BJURHOLM BJURSÅS BJÄSTA BJÖRBO BJÖRNA BLACKEBERG BODEN BOLLE BYGD BOLLNÄS BORENSBERG
BORGHOLM BORLÄNGE BORÅS: HULTA NORRBY STORA TORGET VIARED BREDBYN BROBY BROMMA PLAN BRÄCKE BUREÅ BURTRÄSK BYSKE BÅLSTA BÅSTA DALARÖ DELSBO DJURSHOLM
DOMSJÖ DOROTEA ED SBYN EKERÖ EKSJÖ EMMABODA ENKÖPING ESKILSTUNA: FRISTADSTORGET ÖSTERMALM ESLÖV FAGERSTA FALKENBERG FALKÖPING FALUN FARSTACENTRUM
FELLINGSBRO FILIPSTAD FINNERÖDJA FINSPÅNG FJUGESTA FLEN FRISTAD FRÄNSTA FRÖSUNDA FRÖVI FURUDAL FÅRÖSUND FÄRGELANDA FÄRJESTADEN FÖLLINGE GAGNEF
GAMMELSTADGISLAVED GLOBEN GNARPGNESTA GRANGÄRDE GRÄNGESBERG GÄLLIVARE GÄLLSTAD GÄLLÖ GÄVLE CITY GÖTEBORG: ALMEDAL AVENYN BACKA RINGÖN CITY
HANDELSBANKEN HAS
615 BRANCHES WORLDWIDE
ANNUAL REPORT 2006
ERIKSBERG FRÖLUNDA FÖRSTA LÅNGGATAN GÅRDA HISINGS KÄRRA HJÄLLBO HÖGSBO KORTEDALA LANDALA LILLA BOMMEN MAJORNA MARIEHOLM ODINSGATAN SISJÖN
TORSLANDA VOLVO PVB ÖRGRYTE ÖVRE HUSARGATAN HAGFORS HALLSBERG HALLSTAVIK HALLUNDA TORG HALMSTAD HAMMARBY HAMMARSTRAND HAMMERDAL HANINGE
CENTRUM HAPARANDA HEBY HEDE HEDEMORA HEDESUNDA HELSINGBORG: NORR STORTORGET SÖDERPORT HEMSE HERRLJUNGA HJO HOLMSUND HOTING HUDDINGE
CENTRUM HUDIKSVALL HULTSFRED HUSKVARNA HUSUM HÄGERSTEN HÄRNÖSAND HÄSSELBY GÅRD HÄSSLEHOLM HÖGANÄS HÖGDALEN HÖGSBY HÖLLVIKEN HÖÖR INSJÖN
JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖPING KALIX KALMAR: BERGA KVARNHOLMEN KARLSHAMN KARLSKOGA KARLSKRONA KARLSTAD: VÅXNÄS
KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPAN KNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS KRISTIANSTAD KRISTINEHAMN KROKOM KUMLA
KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA LANDVETTER LEKSAND LERUM
LIDEN LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING: CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA
LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ: AMIRALSGATAN CITY DALAPLAN FOSIE FRIDHEM KÖPENHAMNSVÄGEN
LIMHAMN LUNDAVÄGEN TRIANGELN VÄRNHEM MALUNG MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLND
MÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACK A : FORUM NACK A NORBERG NORDINGRÅ NORDMALING NORRKÖPING: DROTTNINGGATAN
Annual general meeting
(Shareholders’ meeting)
Grand Hôtel, Vinterträdgården, Royal entrance,
Stallgatan 4, Stockholm
TIME : Tuesday, 24 April 2007, 10 a.m.
LOCATION :
NOTICE OF ATTENDANCE
Shareholders wishing to attend the AGM must:
• be entered in the register of shareholders kept by VPC AB
(Swedish Central Securities Depository and Clearing) by
Wednesday, 18 April 2007
• give notice of their attendance at the latest by 3 p.m. on
Wednesday, 18 April 2007, to Handelsbanken, Kungsträdgårdsgatan 2, SE-106 70 Stockholm, tel: +46 8 701 19 84, or online
at www.handelsbanken.se/bolagsstamma
To be entitled to take part in the AGM, 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 18 April 2007, when this
entry must have been effected.
DIVIDEND
The board of directors proposes that the record day for the dividend
be Friday, 27 April 2007. If the AGM votes in accordance with this
proposal, the VPC expects to send the dividend to shareholders on
Thursday, 3 May 2007.
Contents
Handelsbanken in brief
2
Highlights of 2006
3
The group chief executive’s comments
4
Goals, methods and outcome
8
Economic outlook
10
The market
11
Our customers
12
Our employees
13
Business concept, working methods and organisation
15
Svenska Handelsbanken AB (publ)
Corporate identity no. 502007-7862
www.handelsbanken.com
Income statement
Administration report
40
Balance sheet
41
Review of operations
16
Statement of changes in equity
42
Key figures and quarterly performance
18
Cash flow statement
43
The Handelsbanken share and shareholders
19
Notes
Segment information – review of business areas
21
Branch office operations
22
Handelsbanken Markets
26
Handelsbanken Asset Management
29
Handelsbanken Pensions & Insurance
31
Financial reports
Risks and risk control
44
1 Net interest income and net gains/losses on
financial items at fair value
54
2 Net fee and commission income
55
3 Risk result – insurance
55
4 Other income
55
5 Staff costs
55
6 Other expenses
58
Accounting policies
34
7 Loan losses/recoveries
58
The Group’s income statement and balance sheet and notes
40
8 Gains/losses on disposal of property, equipment
and intangible assets
59
Five-year review – Group
82
9 Earnings per share
84
Five-year review – Parent company
111
Recommendation for appropriation of profits
112
Audit report
Ethical standards and corporate social responsibility
64
16 Derivative instruments
66
17 Intangible assets
68
18 Property and equipment
69
114
19 Other assets
69
115
20 Prepayments and accrued income
69
117
21 Due to credit institutions
70
22 Liabilities where the customer bears the value change risk
70
23 Issued securities
71
118
122
The board
13 Interest-bearing securities
65
Corporate governance report *
Corporate governance
62
63
66
Corporate social responsibility
Environmental issues
11 Loans to credit institutions
12 Lending and deposits, the public
15 Assets where the customer bears the value change risk
113
Handelsbanken in the community
60
14 Shares and participating interests
Other
Senior management
124
Branches and branch managers
125
Definitions and explanations
59
10 Classification of financial assets and financial liabilities
The parent company’s income statement
and balance sheet and notes
Inside back cover
24 Other trading liabilities
71
25 Insurance obligations
72
26 Taxes
72
27 Provisions
72
28 Other liabilities
72
29 Accruals and deferred income
72
30 Subordinated liabilities
73
31 Specification of changes in equity
73
Other disclosures – Group
74
* The corporate governance report is not part of the statutory annual report.
HANDELSBANKEN ■ ANNUAL REPORT 2006
1
HANDELSBANKEN IN BRIEF
Satisfied customers lead
to higher profitability
HANDELSBANKEN’S GOAL
HANDELSBANKEN’S CORPORATE PHILOSOPHY
• Handelsbanken’s financial goal is to have higher
• A strongly decentralised organisation – the branch
profitability than the average of its competitors.
HANDELSBANKEN’S STRENGTHS
• For the past 35 years, Handelsbanken has had higher
profitability than the average for its competitors.
• Since the survey began 16 years ago, Handelsbanken
has had the highest level of customer satisfaction of the
four largest banks in Sweden.
• For many years, Handelsbanken has been one of the
most cost-effective universal banks in Europe.
• For a long period of time, Handelsbanken has had a
lower loan loss ratio than its competitors.
HANDELSBANKEN’S BRANCHES ON ITS
DOMESTIC MARKETS IN THE NORDIC COUNTRIES
AND GREAT BRITAIN
457 branches in Sweden
42 branches in Norway
36 branches in Finland
37 branches in Denmark
26 branches in Great Britain
Handelsbanken has seven
representative offices:
Beijing
La Nucia
Marbella
Mumbai
2
Nice
St. Petersburg
Taipei
is the Bank.
• Focus on the customer.
• Profitability always has higher priority than volume.
• A long-term perspective.
HANDELSBANKEN TODAY
•
•
•
•
•
Total assets: SEK 1,790bn
Operating profit: SEK 17.2bn
Number of employees: over 10,000
Number of branches: 615
Number of countries with operations: 20
Three branches in Poland.
Two branches in France and Germany.
One branch in each of Austria, China, Estonia, Hong Kong,
Luxembourg, Netherlands, Russia, Singapore, Switzerland
and USA.
HIGHLIGHTS OF 2006
Highest profit ever
SEK 17.2bn
Operating profit increased by 10%
to SEK 17.2bn – the highest ever.
20.9%
Return on equity was 20.9%.
19 new
branches
and two
new
representative
offices
Nineteen new branches were
opened: six in Great Britain, five in
Norway, three in Sweden, two in
Denmark, two in Poland and one
in Estonia. Representative offices
were opened in India and in Spain.
Over
SEK 2bn
For the first time, the branch office
operations outside Sweden had
profits of more than SEK 2bn.
SEK 8.00
The board proposes
increasing the dividend
by 14% to SEK 8.00.
The most
international
Nordic bank
Handelsbanken has operations
in 20 countries.
Satisfied
customers
Handelsbanken had the most
satisfied customers in the Nordic
region, when weighing together
the autumn surveys in Sweden,
Norway, Denmark and Finland.
Source: SKI, EPSI, Dansk KundeIndex.
3
THE GROUP CHIEF EXECUTIVE’S COMMENTS
The branches are the Bank
A brief summary of our figures for 2006:
• Return on shareholders’ equity was 20.9%.
• Never before has the Bank had so many branches – at the end of the
year there were 615 branches, 158 of them outside Sweden.
• Operating profit was SEK 17.2bn.
Our fi nancial statements with all their figures really say three things:
We have achieved our corporate goal, we have grown, and we earn
more money than ever before.
But the annual report doesn’t really explain how we did it, and it
defi nitely doesn’t answer what is probably the most important question – how can we do it again in future years?
I will instead try to respond to these two questions here. We should
also see the answers in light of the fact that we have increased our
profits and our business volumes in a year when running a bank
was unusually free of risks. In times like this, our skill in assessing
business and credit risks would in fact tend to hamper our growth,
rather than favour it – at least in Sweden.
To fi nd the answers I think you need to look further than the
plain, black figures of the annual report. For behind all these summaries lie hundreds of thousands of meetings with customers, advisory sessions, business arrangements and fi rm handshakes. But above
all, we fi nd people there – people who have met, gained confidence
in each other and therefore started doing business together.
OUR BEST ADVICE LEADS TO SATISFIED CUSTOMERS
You can gain people’s confidence in many different ways. Our advice
to customers is always based on their personal conditions, their risk
propensity, their goals – it is not based on the Bank’s goals, margins
or the profit it can make. For this reason, none of our 615 branch
managers receives a bonus, nor does anyone else in the branch operations. The same applies to the senior management of the Bank
including myself. But we do have written instructions stating that
our advice must always be in the customer’s best interests, even if
that advice is not the most profitable for the Bank in the short term.
In the long run, we all benefit from this. This is because we are convinced that running a bank cannot only be a matter of wanting to
earn money. It must also be combined with a desire to serve people.
I am convinced that there is a direct link between our ability to
earn money and the fact that, according to the Swedish Quality Index (SKI) and its counterpart in the other Nordic countries, we have
the most satisfied customers in the Nordic countries. In the Prospera survey we were ranked number one by Swedish mutual fund
savers, and the Swedish business weekly Affärsvärlden acclaimed us
Commercial Bank of the Year. The list could be made longer but I
think I have made my point. Customers like us and what we do. The
explanations for this are many and could be expressed at length, but
they can also be summarised in two words – our branches.
THE BRANCH IS THE BANK
Handelsbanken is its branches and the branches are Handelsbanken.
This is not a marketing strategy, a concept, or some other temporary
idea we are testing at present. It is much, much more.
4
The branches are where our customers are, in their everyday lives.
Thus our branches know their customers well, know their personal
circumstances and limitations, their opportunities and goals. The
branches know better than anyone else at the Bank what their customers need and desire. It is therefore natural that the business decisions are also taken there, close to the customer, close to real life, at
the branches. This gives better service, greater effectiveness and not
least higher quality credit decisions. This is why responsibility for
customers always lies with a branch office.
These strengths are enough for most customers. Even a multinational group belongs to the branch of Handelsbanken situated
closest to the head office of that corporate group – and these large
companies are happy with this.
Our position among small and medium-sized companies is very
strong. I believe this is because these enterprises have a strong, genuine local presence where “being local” is important. At the same
time I would stress that today’s small and medium-sized companies
have become much more international in the last few years. Their
need of advanced fi nancial advice and business support is often on
a par with that of the major industrial groups. But even these small
and medium-sized companies continue to belong to “their” branch
of Handelsbanken.
The way we meet customers has given us a network of contacts
with Swedish business and industry which no other bank can approach. Almost one-third of all corporate lending in Sweden is done
by Handelsbanken. Our clients are among the best in the Swedish
business world, which is one reason why the international rating
agency Moody’s gives the Bank its high Aa1 rating.
WITH OUR EARS TO THE GROUND
Another advantage of the fact that business decisions are taken at
the local level, close to customers, is that this creates a greater awareness of the market which runs right through our organisation. To
put it simply, you could describe this as continuous market research,
where the lead-times between identifying needs and fi nding solutions are extremely short. Each individual branch determines its own
mix of products and services that it offers its local market. This is
logical, as only the branch knows exactly what its customers want,
need or are lacking.
This gives our specialists at our central units a continuous challenge to develop, discontinue or change our various products and
solutions, according to the needs and wishes of the market. The fact
that the specifications are made by experienced bank staff with daily
customer contact means that the feedback during the entire process
is well-informed, detailed and completely ruthless.
We can point to a number of examples where the branches together with central specialists have carved out new products and refined
“ Handelsbanken is its branches and the
branches are Handelsbanken. This is not
a marketing strategy, a concept, or some
other temporary idea we are testing at
present. It is much, much more.”
old products. Examples of the former are equity-linked bonds and
other capital-protected products where the branches together with
Capital Markets have designed various products. Handelsbanken
introduced equity-linked bonds to Sweden, and the Bank dominates
the market in Sweden and in some of its neighbouring countries.
The product has steadily been refi ned, and different variations have
been tested and approved by branch customers. This would not have
been possible without continuous market research in the form of
close collaboration between the branches and Capital Markets. The
importance of this collaboration was emphasised even more when
Capital Markets became a separate business segment on 1 January
this year. This change denotes the Bank’s increased level of ambition
in the area of investment banking.
Another example is mortgages, where the Bank has improved its
product range and the branches have worked hard with existing and
new customers. Mortgage business is vital to the Bank, not only
through its direct contribution to Group earnings, but also via the
extra business that it generates. Buying a house is often a private
customer’s largest transaction, and therefore a mortgage is nearly
always an excellent fi rst stage to gaining all of a customer’s banking
business.
A third example is credit and charge cards, where the Bank’s operations weren’t quite up to the rest of the market. But in 2006, our
Allkort was the credit card with the highest turnover per card in the
whole of Europe. It is an excellent card, giving access to a range of
good services. Handelsbanken Finans, whose responsibility includes
the Bank’s card services, made more improvements. Our customers with Bankomat ATM cards were given the opportunity to swap
these for our new Frikort ATM/debit card, at no extra charge. In
less than three months, 70,000 customers accepted the offer.
Finally, I would like to mention Handelsbanken Asset Management, where fund management performance has improved over the
past few years. This has been reflected in a sharply improved rating
from the independent rating institute Morningstar, and a maintained level for the Bank’s high market share of new savings in mutual funds. Morningstar ranks Handelsbanken’s range of products
highest among all the major Swedish players.
WE GO OUR OWN WAY
Handelsbanken also challenges what is generally accepted. One
example is our work to make Handelsbanken Liv and SPP profitdistributing, in complete contrast to how the rest of the sector functioned – and largely still does. When we demutualised
Handelsbanken Liv in 2002, it was the fi rst time that a mutually
run life insurance company had been reorganised on profit-distributing lines. Profit-distributing life insurance companies are
good for customers, and good for the Bank. Every year since then,
5
“ We have written instructions stating that our
advice must always be that which is best for
the customer, even if that advice is not the most
profitable for the Bank in the short term.”
Handelsbanken Liv has given its customers higher yields than the
average for mutually run life insurance companies. On many annual
ranking lists, Handelsbanken has been right at the top. SPP, which
has only been a profit-distributing company for one year, also generated higher than average yields for the mutually run companies. At
the same time as the policyholders received good yields on their savings, SPP delivered a large contribution to the Group’s profits and
the fi nancial risks were reduced.
However, it is not just the form of the companies that is important, but also how they work. A commercially run company aiming
to make a profit must be transparent and simple for the customer to
comprehend. Here, the Bank has helped to set new standards for the
market. A commercially run company must offer its customers freedom of choice such as the option of transferring their insurance to
another company. Handelsbanken Liv and SPP have been pioneers
in this respect, and it should be self-evident that customers are entitled to transfer their insurance funds.
A further example of Handelsbanken going its own way concerns
collaboration with estate agents. Handelsbanken has not acquired
an estate agent or entered into a central agreement with any fi rm of
estate agents. This is because our branches decide how they wish to
market their products and services, and thus centrally issued directives are not appropriate. But what we have done is develop e-bud,
our electronic property bidding service, (www.e-bud.nu) into an efficient and effective means for local collaboration with estate agents
– completely in line with the Bank’s basic philosophy. Today, 10% of
properties sold via estate agents go through e-bud. The Bank collaborates locally with almost 800 estate agents, and during 2006, over
30,000 bidders – customers or potential customers – made roughly
85,000 bids on properties. The success of e-bud is one of many reasons why the Bank’s mortgage operations have performed so well.
Possibly the prime example of us going our own way is our untiring effort to ensure that private customers can open an account,
pay their bills (by Privatgiro or online) have access to their money
(e.g. the Frikort cards) at no extra charge. An added benefit of
the Frikort card is that it can be used for point-of-sale purchases.
Handelsbanken is almost alone in making this effort.
WORLD-CLASS EVERYDAY SERVICE
But products and solutions must be combined with world-class service. The fact that this is one of our main strengths is corroborated by
all customer surveys, and in my view, this is also due to our decentralised way of working. The high degree of independence that the
branches enjoy gives the staff the feeling that the customers of the
branch really are the branch’s own. Customers appreciate being able
to talk directly to the employee who makes the decision, and not
merely to someone who has to ask a central department for approval.
I often hear from our branches that a high service level is not always
the same thing as high level banking transactions. It’s actually the
6
customer who decides what is regarded as advanced service. And not
all customers are the same. Some customers are very familiar with
the banking market, while others need considerably more advice.
This actually has nothing to do with what the customer regards as
advanced service on any given occasion. Sometimes, a simple, common transaction, such as transferring money between two accounts
can, for a customer with high demands, suddenly turn into an insurmountable task. This is where we come into the picture. By solving
the problem in a smooth, unbureaucratic manner, we are a highly
qualified business partner – in the customer’s eyes. And that is the
most important thing.
If we can deal with these seemingly unglamourous tasks then
and there, we will be the best bank in town. And we’ll be the customer’s fi rst choice when they want to do some business which is
really profitable for us – business that often involves expert advisory
services and asset management. With our everyday service we build
up customer relationships, increase customer satisfaction, and create
security for customers in their relationship with the Bank. This is
very difficult for our competitors to copy, since it assumes familiarity
with and experience of the customer, as well as the staff’s ability to
make their own decisions. We create these conditions by consistently
applying our decentralised way of working.
DOMESTIC MARKETS OUTSIDE SWEDEN
Finland, Denmark, Norway and Great Britain
The strength of our business model becomes, perhaps, even clearer
abroad than in Sweden. Outside Sweden we could be regarded as an
anonymous bank, with its head office far away in a foreign country.
But we are not. Decisions are taken close to the customer outside
Sweden too. In fact, our newly opened branches outside Sweden
have nothing else with which to compete, since the Handelsbanken
name is unknown there. The range of products we offer is – at least
initially – limited, we have few reference customers and we have little
experience of the local area. In short, the only factor that can differentiate us from our competitors is our ability to satisfy a customer.
In Norway, our operating profit for 2006 was up 13% to
SEK 965m – our best ever result in that country. Here, too, there
was a strong link to customer satisfaction. In 2006, EPSI, which
conducts annual customer satisfaction surveys in Norway, named
Handelsbanken as “the clear winner in the corporate market”. Just
as in Sweden, customers are drawn towards an efficient bank. In
Norway, our cost/income ratio was 44.9% – an efficiency figure that
is the envy of many of our competitors.
The Finnish regional bank also raised its operating profit to
SEK 447m, compared with SEK 381m in 2005. Among the major
banks in Finland, Handelsbanken had the most satisfied customers
– both private and corporate. Satisfied customers do more business.
In Finland, a great deal of effort has been put into improving our
range of savings products. We have never sold so many capital-
protected products, and new sales of mutual funds increased in
Finland.In Denmark, operating profit climbed 8% to SEK 456m. At
the beginning of the decade, Handelsbanken launched a long-term
mortgage loan called a priority loan, and at year-end 2006, volumes
exceeded DKK 10bn. Also in Denmark, private customer business
was developed, and the Bank had success with sales of capital-protected products.In 2006, our British operations maintained their
rapid growth. The Bank opened six new branches in Great Britain,
and at year-end we had 26 branches there. More branch managers
have been recruited, and these branches will open in the fi rst half of
2007. Business volumes grew very rapidly, with lending increasing
by more than 50% to GBP 2.4bn.
HANDELSBANKEN – THE MOST INTERNATIONAL
NORDIC BANK
Handelsbanken has units – branch offices and/or representative
offices – in 15 countries outside the Nordic region and Great Britain,
making us the most international Nordic bank. These operations are
run by the Handelsbanken International business area, which became an independent unit when Handelsbanken Markets was split into
two separate units. A vital task for Handelsbanken International will
be to increase the number of markets in which the Bank can start
up and grow organically by running profitable universal banking
operations through its own branch network. And the Bank will continue to grow internationally – and even more quickly than before.
In 2006, our operations in the Nordic countries and Great Britain
contributed over SEK 2bn to our operating profits. We are continuing our international drive and will open more branches in Great
Britain, Finland and Norway, probably around ten in each country
during 2007. There will probably be some in Denmark too, but
not as many. In Germany and Poland we will double the number of
branches and start universal banking operations.
In countries where Handelsbanken has not (yet) established a
regional bank, we are still making advances. For example, we have
now established an infrastructure for opening more offices in Russia
through our branches in Moscow and St Petersburg.
We were the fi rst Nordic bank to start up in Russia, we were the
fi rst in China, and we were also fi rst on another rapidly growing
market – India, where we opened a representative office in Mumbai,
the country’s fi nancial capital. There was a record amount of interest, even before the office had opened for business, above all from
clients in our domestic markets which have, or will be starting up,
operations in India.
Our model of running a bank on markets outside Sweden works,
as confi rmed by 300,000 active customers outside Sweden. We are
much better at starting branches abroad now. We see that their earnings grow every year and that the return on equity of the regional
banks outside Sweden is approaching that of the Swedish branches.
Growing organically is cost-effective. The average cost of a new
branch is SEK 5m. This includes paying for the initial investments,
while taking into account the deficit arising before the branch breaks
even. This takes on average between 16 and 18 months.
WE AIM TO BE EVEN BETTER
It must become even simpler to contact the Bank, and it must become even simpler to do business with us. Last year, we began a
major project to expand our online banking services, and now each
branch’s web page is even more focused on business and customer
service. We started up Handelsbanken Direct, a new service for
customers whose fi rst contact with us is via the internet. We must
always – 24 hours a day, seven days a week – be prepared to do business when the customer wants. We will continue to make things
simpler, for ourselves and for our customers. During the year, the
branches submitted 400 suggestions for changes, with the aim of
creating more time to meet customers and do business; 160 of these
suggestions have already been implemented. This is how Handelsbanken fits together: we are all dependent on each other to achieve
our common corporate goal – a higher return on equity than the
weighted average of other banks on our domestic markets. With
pride I can say that once again – for the 35th consecutive year – we
have achieved this corporate goal. I am proud of the extraordinary
expertise, versatility and commitment that I encounter every day in
my contacts with staff. This is the base from which we have achieved
our corporate goal, and I thank you all. And I am convinced that we
will continue to achieve it. How? By continuing to be Handelsbanken – only a little more so, and in even more locations around the
world.
Stockholm, February 2007
Pär Boman
7
GOALS, METHODS AND OUTCOME
Creating sustainable profitability
Handelsbanken’s financial goal is to have higher profitability than other banks.
The Bank will achieve this goal by having more satisfied customers, while having
lower costs than its competitors.
High profitability
GOAL
Handelsbanken’s overall financial goal is to have higher
return on equity than a weighted average of comparable
listed Nordic and British banks.
GOAL ACHIEVEMENT
Handelsbanken’s return on equity after standard tax
was 19.7% for the whole of 2006. Return on equity for a
weighted average of comparable banks was just over 18%.
This means that 2006 was the 35th consecutive year that
Handelsbanken met its overall financial goal.
Return on shareholders’ equity 1973–2006
(ANDELSBANKEN
/THER3WEDISHBANKS
Most satisfied customers
METHOD
Customer satisfaction index, private customers in Sweden
The Bank aims to achieve this goal by having the most
satisfied customers. The quality of the Handelsbanken
Group’s services must therefore meet the expectations of
demanding customers.
)NDEX
OUTCOME
Once again in 2006, Handelsbanken had the most satisfied
customers in Sweden – both private and corporate – when
compared with the four largest Swedish banks. An overall
weighting of the results of surveys in Denmark, Finland and
Norway showed that Handelsbanken had the most satisfied
customers in the Nordic region.
8
(ANDELSBANKEN
3%".ORDEAAND3WEDBANK
GOALS, METHODS AND OUTCOME
Most effective bank
METHOD
Cost-effectiveness
Cost-effectiveness should be higher than in comparable
banks.
#OSTSINCOMEEXCLLOANLOSSES
OUTCOME
Costs as a proportion of income were 42%. Thus, as in previous years, Handelsbanken was the listed Nordic bank with
the highest cost-effectiveness level.
(ANDELSBANKEN
!VERAGEn.ORDICBANKSEXCL(ANDELSBANKEN
Lowest loan losses
METHOD
Profitability is always more important than volumes. This
means that when granting credits, the credit quality must
never be disregarded in order to achieve higher volume.
Loan losses as a percentage of lending
OUTCOME
Handelsbanken had no loan losses – it had net recoveries.
The loan loss ratio was –0.01%. The corresponding figure for
other Swedish banks was –0.05%.
(ANDELSBANKEN
/THER3WEDISHBANKS
9
ECONOMIC OUTLOOK
2006 – another strong year for the
global economy
Handelsbanken’s chief economist Jan Häggström sums up the past year.
How would you sum up the trends in 2006?
“2006 was another strong year for the global economy in many
respects. Company earnings reached record levels, and several stock
exchange indices reached all-time highs. This was against a backdrop
of continued strong growth in the global economy. In 2006, global
GDP growth was at roughly the same level as the year before, i.e.
among the highest of the past 20 years. However, the global pattern
of growth began to change. The US economy showed clear signs
of the cooling effect that recent years’ interest rate hikes have had.
House prices stopped rising, and activity on the housing market was
more subdued in terms of sales and new construction. During the
autumn, industry also began to be affected by the weak housing
construction market.”
stronger GDP growth than Finland and Sweden in 2006. The Nordic countries were buoyed by low interest rates and robust government fi nances. This also provided stimulus for fiscal policy.”
“A normalisation of central banks’ key rates began in the eurozone, as well as in Norway and Sweden. Despite this, lending to
households and companies continued to show double-digit growth.
House prices in the Nordic countries rose sharply, and price increases in the UK picked up again. The historically low interest rates
meant that households experienced few credit problems in 2006,
despite the high debt levels.”
And the trend in Europe?
At the beginning of 2006, you were one of the few analysts who
predicted that the Riksbank’s repo rate would double during
the year, from 1.50% on January 1 to 3.00% at the end of 2006.
This turned out to be the case. What is your forecast for 2007?
“Europe, on the other hand, experienced a surprisingly sharp upswing, driven by rising corporate earnings and investments. The
long-standing decline in the German construction sector was turned
around. At the same time, emerging markets in Asia and Eastern
Europe were the locomotive for many European industrial companies, particularly Nordic players.”
“Many factors suggest that there is a fair way to go before key rates
in Norway and Sweden reach a neutral level, and that 2007 will also
see rapid credit growth and rising house prices. This also means that
the level of household debt in the Nordic countries will rise from
already high levels, except possibly in Denmark, where the peak may
have been reached.”
And what about the trends on the corporate side?
“ In Western Europe, only the
Republic of Ireland showed
stronger GDP growth than Finland
and Sweden.”
How are Sweden and the other Nordic countries being affected by
increasing globalisation?“The structure of industry in the Nordic
region is particularly well suited to fulfi l the increasing demand in
emerging markets, with its focus on infrastructural investments,
transport and raw materials. This is one reason why the Nordic
region as a whole has grown much more rapidly than the OECD
average. In Western Europe, only the Republic of Ireland showed
10
“The combination of companies’ strong return on capital, bond
yields remaining low, and small credit risk premiums created favourable conditions for acquisition calculations. Thus, 2006 became
another record year for corporate acquisitions. A large proportion
of these were carried out in Europe, with the Nordic region receiving its due share. These transactions were a vital driving force for
growth in corporate loans, counteracting the tendency for companies to use their strong cash flows to reduce the debt side of their
balance sheets. The corporate sector enters 2007 with key ratios still
looking good, which indicates that activity levels in mergers and acquisitions will remain high.”
THE MARKET
Handelsbanken – a major player
in the financial markets
Handelsbanken took market share in a growing savings market.
MARKETS
Handelsbanken offers a full range of fi nancial products and services
in Sweden, Denmark, Finland, Norway and since 2002, in Great
Britain. The Bank regards these countries as domestic markets.
Sweden is the largest fi nancial market in the Nordic region, and
Handelsbanken’s position here is strong. Seventy-five percent of
Handelsbanken’s income is generated in Sweden. The other Nordic
countries and Great Britain accounted for 19% of Group income, as
compared with 16% two years ago.
by 14% per year. In 2006, it grew by a further 13% to SEK 1,241bn
(1,102). Competition remained intense. Handelsbanken had a 27%
share of the market in new lending which was the same as its share
of total lending volume (adjusted for securitisation). The Bank had
24% of the total market for household lending, that is mortgage
loans and bank loans.
During the year, lending to non-fi nancial companies in Sweden was 7% higher at the end of the year than the beginning.
Handelsbanken was the largest player on the corporate market, with
a 30% share.
MARKET TRENDS
The fi nancial market can be divided into various segments. The
most important of these are the credit market and the savings market. Handelsbanken has no volume goals, either in absolute figures
or as market share; instead, it always gives priority to profitability
over volumes.
THE SAVINGS MARKET
The Swedish mortgage market continued to grow. Between 2001
and 2005, the household mortgage lending market in Sweden grew
In the past five years, Swedish households’ fi nancial savings (excluding directly-owned shares) have increased by an average of 9% per
year. As at 31 December 2006, they amounted to SEK 4,171bn.
Handelsbanken had an 11% share of the total market, and has an
18% share of new savings since 1 January 2000. Thus, over the
course of this decade, Handelsbanken has increased its share of the
overall market, and in terms of new savings, Handelsbanken has a
larger share than any of its competitors.
The Swedish savings market, 31 December 2006
The Swedish market for loans to the public, 31 December 2006
Lending
Total lending to
households,
SEK 1,635bn
Mutual funds
(incl PPM and
unit-linked insurance)
SEK 1,775bn
Bonds SEK 144bn
Bank deposits
SEK 680bn
Total lending to
non-financial companies,
SEB 1,227bn
Traditional insurance
SEK 1,572bn
OF WHICH:
OF WHICH:
Handelsbanken’s market shares
Bonds 19 %
Bank deposits 16 %
Handelsbanken’s market shares
Mutual funds
(incl PPM and
unit-linked insurance)
12 %
Traditional insurance 7 %
Household lending, 24 %
Corporate lending, 30 %
Source: SEB Sparbarometern
Source: Statistics Sweden, refers to total lending, i.e. mortgages and bank loans
11
OUR CUSTOMERS
Handelsbanken has the highest
customer satisfaction
Handelsbanken is a service company that focuses on its customers – not on individual products.
Handelsbanken’s organisation and methods of work are based on
customers’ needs and on the branches’ responsibility for individual
customers – not on the central units’ responsibility for product areas
or market segments. The local branch is responsible for the profitability of the Group’s overall exchange of business with the customer.
The branch is responsible for providing the customer with expert
and co-ordinated services from all units in the Handelsbanken
Group.
CUSTOMER SATISFACTION
Handelsbanken aims to have the most satisfied customers of the
Nordic banks. The Bank therefore attaches great importance to
customer satisfaction surveys and acts on the results. In Sweden,
independent surveys of customer satisfaction in the banking field
have been performed every year since 1989. They are carried out by
Svenskt Kvalitetsindex (Swedish Quality Index). The survey weighs
together a number of variables such as image, expectations, product and service quality and value for money. Originally, the survey
only covered the large nationwide banks, and compared with these,
Handelsbanken has been in top position every year for private customers and every year but one for corporate customers. This year’s
survey reached the same conclusion.
Corresponding surveys in Denmark, Finland and Norway showed
that Handelsbanken has the highest customer satisfaction levels in
the Nordic region. Among private customers, Handelsbanken had
more satisfied customers than the sector average in all countries,
showing results which are well above those of its main competitors.
RESPONSIBILITY FOR FINANCIAL ADVICE
Many of Handelsbanken’s employees have long experience and excellent knowledge of the investment area. In Sweden, the Bank has 913
investment advisers who are licensed by the Swedish Security Dealers’ Association.
The Swedish legislation on consumer fi nancial advice stipulates
that the Bank must be able to show that its employees who provide
advice on fi nancial instruments have relevant knowledge appropriate
to their work tasks. Handelsbanken offers a licensing course which
complies with these requirements. Over 4,200 employees, more
than 3,200 of them in the branch operations, have completed the
course and are now licensed. Employees are regularly trained and
CUSTOMER COMPLAINTS
Dealing with customer complaints is one way of focusing on routines and services that do not function as they should. The Bank’s
website informs customers how to draw the Bank’s attention to any
problems. Customers should fi rst talk to their local branch, where
the problem will normally be solved directly.
The Bank also has a designated complaints manager to whom
customers can turn if they wish to have their case reconsidered. The
Bank’s management is kept regularly informed about complaints cases.
All branch employees, both in Sweden and abroad, attend annual
training courses on complaints management.
For several years, Handelsbanken has had the lowest proportion of complaints submitted to the National Board for Consumer
Complaints of all the major banks. Once again in 2006, of the four
major Swedish banks, Handelsbanken was the one with the lowest
proportion of complaints in relation to its business volume (household deposits).
Number of active customers
Thousands
Active private customers
Sweden
Other Nordics
and Great
Britain
Total
1 823
253
2 076
149
46
195
Active corporate customers
Definition of an active customer: A customer who makes at least one transaction
a month on their own account, has a balance of at least SEK 1,000 at the end of
the month, has a loan with the Handelsbanken Group or has mutual fund savings of
at least SEK 1,000. Customers who appear in several categories are only counted
once.
Customer satisfaction, Private customers
Customer satisfaction, Corporate customers
Index
80
Index
80
Handelsbanken
SEB, Nordea and Swedbank
75
75
70
70
65
65
60
60
55
55
50
12
authorised in the investment and insurance field, so that they can
meet the requirements of customers and also their own and external
competence demands. In addition, more than 3,300 employees of
the Handelsbanken Group are authorised in accordance with the
Insurance Mediation Act.
Handelsbanken’s financial advisory services are based on the individual customer’s needs. The adviser obtains an overall picture of the
customer’s circumstances and financial situation, and the Bank can
then make an investment proposal which is individually adapted to the
customer’s needs, investment horizon and risk level. As in other areas,
customers themselves are responsible for the actual decision.
91
93
95
97
00
02
04
06
50
-91
Handelsbanken
SEB, Nordea and Swedbank
-93
-95
-97
-00
-02
-04
-06
OUR EMPLOYEES
Committed employees make for
satisfied customers
Handelsbanken aims to recruit the best people, develop them and keep them within the
Group. The Bank has over 10,000 employees active in 20 countries.
RECRUITMENT
INDIVIDUAL SALARY DIALOGUE REVIEWS
Handelsbanken sees each recruitment as a vital investment. The
Bank aims to recruit the best people, develop them and keep them
within the Group. “Best” means people who have the personal qualities for further development at the Bank. They should also have an
education which is broad and appropriate for the Bank’s operations,
usually at university level. To attract potential employees when they
are students, the Bank has regular local contact with students and
universities. The Bank aims to meet its need for employees at various
levels through internal recruitment and promotion. Some 96% of all
managers in Sweden were recruited internally. The corresponding
figure for the whole Group was 91%, including the markets where
the Bank is relatively new. One of the most important tasks for
managers is to stimulate employees to develop their career within
the Bank. Internal mobility is highly valued both within and across
national borders. External employee turnover was 5% (3).
Individual salary reviews are an expression of the Bank’s aim to further decentralise responsibility and powers. All employees in Sweden
have individual salary reviews with their immediate superior with no
central directives concerning defi ned salary levels. The reviews are
based on the individual action plans and follow-up of these plans.
COMPETENCE DEVELOPMENT
Every year, all employees have a planned and structured development review with their immediate superior. Based on the unit’s business/operational plan, they discuss the employee’s skills and competence, how he or she should contribute to the goals of the operation
and any skills development needed. The dialogue results in an action
plan describing how the individual goals are to be achieved. The
dialogue also includes a discussion of the next step in the employee’s development. The action plan is regularly followed up by the
manager and the employee. Handelsbanken defines competence as
the ability to acquire, use, develop and pool knowledge, skills and
experience. All employees are required to take responsibility for their
own competence development and for sharing their competence
with others. The most important means of improving professional
skills is, and always has been, learning from daily work.
Average number of employees
EQUALITY
Handelsbanken’s equal opportunity policy states that equal conditions must apply to men and women regarding career development
within the Handelsbanken Group. One long-term goal is that the
proportion of women and men who are managers will be the same
as the overall gender distribution at the Bank. At the year-end, 36%
(35) of managers at the Handelsbanken Group were women. The
proportion of women among the total number of employees was
54% (52).
To make it easier for both men and women to combine a career
with parenthood, the Bank offers household services to all employees with children under the age of eight. In Sweden, the Bank also
compensates employees on parental leave with 80% of that part of
their salary which is not compensated by national insurance. Employees who take parental leave have the same right to salary development as other employees.
WORKING ENVIRONMENT AND HEALTH PROMOTION
Handelsbanken has various types of programmes for health promotion among its employees. The Bank’s recreation programme is a
vital ingredient in caring for its employees and their health. The purpose of this is to make the employees active, mainly through health
promotion measures. It is considered very important to reach out to
all employees and to increase the feeling of community at the Bank.
The Bank’s overall goal in its working environment efforts is for the
Age and gender distribution 2006
4HOUSANDS
Men
Women
65–
60–64
55–59
50–54
45–49
40–44
35–39
30–34
3WEDEN
$ENMARK
&INLAND
.ORWAY
'REAT"RITAIN
/THERCOUNTRIES
25–29
–24
1,200 1,000
800
600
400
200
0
200
400
600
800
1,000 1,200
13
OUR EMPLOYEES
employees to enjoy good health, to develop on a personal level and
to function in an optimal way. This is a long-term goal based on several factors that will help to keep the employees healthy. Examples of
this are the importance of keeping an appropriate balance between
work and leisure time, having the right skills and competence to
perform tasks and manage various work-related situations, clear and
honest communication and showing individuals trust and respect.
In line with the Bank’s decentralised way of operating, work tasks
which may imply responsibility for the working environment are delegated to managers and supervisors at workplace level. The regional
banks, subsidiaries and central units have working environment
committees, and at central level, there is also a working environment
and safety committee.
OKTOGONEN – THE BANK’S PROFIT-SHARING SYSTEM
In order to achieve its overall goal – higher profitability than comparable banks – Handelsbanken is dependent on high-quality performance from its employees. It is therefore reasonable that the employees
receive part of any extra profits. Every year but one since 1973, the
Bank has allocated part of its profit to a profit-sharing scheme for its
employees. The funds are managed by the Oktogonen Foundation.
A condition for making an allocation is that the Handelsbanken
Group achieves its goal of higher return on shareholders’ equity after standard tax than a weighted average of other listed Nordic and
British banks. One third of the extra profits can then be allocated
to the employees. The amount is limited to 15% of the dividends to
shareholders. All employees receive an equal part of the allocated
amount and the scheme includes all employees in the Nordic countries and since 2004, also employees in Great Britain. Disbursement
can be made when the employee reaches the age of 60.
In spring 2006, the board approved the allocation for the 2005
fi nancial year of SEK 22,000 (35,000) for each full-time employee
in Sweden. Staff who have worked full-time since the profit-sharing
scheme was introduced in 1973, have received over SEK 855,000 in
allocations. Through share price increases, however, mainly in the
Handelsbanken share, the value of the allocations has risen to over
SEK 8m. The corresponding value for a person fi rst employed in
1990, was almost SEK 2.4m at the year-end. One of the fundamental concepts in managing the foundation is that a considerable part
of the funds are invested in shares in Handelsbanken. Oktogonen is
one of the Bank’s largest shareholders. The board of the Oktogonen
Foundation is appointed by the local organisation of the Union of
Finance Sector Employees.
Business plan
process
Business plan
Salary
dialogue
review
Customer
Individual
follow-up
14
Action plan
PLUS
review
The Wheel depicts the interplay between the Bank’s operations
and the employee’s career development as a continual process in
order to achieve Handelsbanken’s overall objectives.
Every year, each unit at the Bank makes a business plan. Based
on this, all employees have a planned development review (PLUS)
with their immediate superior. The discussion results in an individual action plan presenting the employee’s goals and possible
needs for support and skills development. The action plan is then
followed up and forms the basis of the individual salary dialogue
review between employee and manager.
BUSINESS CONCEPT, WORKING METHODS AND ORGANISATION
Overall customer responsibility at one place
in the Handelsbanken Group
Handelsbanken is a universal bank with strongly decentralised business operations.
BUSINESS CONCEPT
Handelsbanken is a universal bank and its business concept is to
offer private and corporate customers in the Nordic countries and
Great Britain a complete range of fi nancial services, based on the
customer’s needs. A basic concept is that for every customer – private
and corporate – there is overall responsibility at one place in the
Handelsbanken Group. The overall customer responsibility is at the
local branch of the Bank in the locations where the customer operates.
WORKING METHODS
The business operations of the Handelsbanken Group are strongly
decentralised. The Bank’s organisation and work methods are based
on the branches’ responsibility for individual customers and not
on the central units’ responsibility for product areas or market segments. The most important means of control are a deep-seated corporate culture, and an effective fi nancial control system.
Central
departments
6 central
business areas
The Bank does not make central marketing plans, nor does it control the branches’ marketing activities at the central level by giving
priority to certain customer categories or product areas. For many
years, Handelsbanken has consistently and successfully applied and
developed this basic concept.
ORGANISATION
Handelsbanken’s organisation aims at promoting the interplay between branches, support functions, specialists and central units with
business responsibility. The Bank’s organisation should be viewed as
a single unit focusing on the individual customer and with the local
branch office at the forefront.
11 regional
head offices
615 branches
“Always responsible
for the customer”
CUSTOMER
15
ADMINISTRATION REPORT ■ REVIEW OF OPERATIONS
Highest profit ever
Operating profit rose by 10% to SEK 17.2bn (15.7). The Bank’s insurance operations boosted
their profits by 356% to SEK 2.6bn (0.6), of which SPP contributed SEK 2.1bn.
Operating profit increased by 10% to SEK 17,164m (15,650).
Return on shareholders’ equity increased to 20.9% (17.9).
Income rose by 12% to SEK 29,559m (26,323). Expenses were
SEK 12,451m (10,938). Starting on 1 January 2006, SPP is
included in the Group’s consolidated accounts, and thus affects
both expenses and income. The cost/income ratio was 42.1%
(41.6). Earnings per share were SEK 20.41 (16.98).
mainly consist of equities and interest-bearing assets. The change
in the deferred capital contribution was SEK 1,045m.
Trading operations performed well, and net fi nancial items at
Capital Markets increased by 43% to SEK 1,378m (964). In particular, currency trading and structured products generated higher
income.
REDUCED RISKS IN SPP
INCREASING BUSINESS VOLUMES BUT SQUEEZED
LENDING MARGINS
Average lending volumes in the Group rose by 13% and deposits by
14%. Branch office operations outside Sweden continued their rapid
growth: lending rose by 25% and deposits by 22%.
The rapid growth in lending volumes could not compensate for
poorer lending margins, particularly as regards mortgage loans to
households. Net interest income was positively affected by higher
deposit margins but in total, net interest income in the Group fell
by SEK 118m to SEK 14,972m (15,090). Net interest income in
the branch office operations outside Sweden increased by 17% to
SEK 2,951m (2,525). Net interest income was lower in the Swedish branch office operations at SEK 10,722m (11,511). Net interest
income includes the impact of previous decisions concerning repurchases of bonds, the funding of Stadshypotek’s mortgage loans and
other aspects of the operations which cannot be directly influenced
by the branches.
RECORD HIGH NET FEE AND COMMISSION INCOME
Net fee and commission income increased by 31% to SEK 9,232m
(7,055). This high rate of increase was mainly due to higher insurance commissions and equity-related commissions. Insurance commissions totalled SEK 2,338m (937). SPP accounted for SEK 1,316m
of this amount. The positive yield split was SEK 1,023m, with SPP’s
share being SEK 752m and Handelsbanken Liv’s SEK 271m (263).
Equity-related commissions – comprising equity commissions, equity-related income in mutual fund and custody operations, corporate
fi nance and structured products – were SEK 4,151m (3,308). This
was 25% higher, where the increase for structured products was 72%
to SEK 279m (162). Total commissions from mutual fund management rose by 26% to SEK 1,548m (1,232).
CONSOLIDATION OF SPP AFFECTED NET FINANCIAL
ITEMS AT FAIR VALUE
Net gains/losses on fi nancial items at fair value were SEK 4,261m
(3,459), with most of the increase due to the effects of SPP. At the
time SPP became a profit-distributing company on 1 January 2006,
certain insurance contracts were underfunded since the market value
of the assets did not cover the insurance liability. This underfunding
was reported in liabilities as a deferred capital contribution. When
calculating the insurance liability, this is discounted by using a longterm market yield as the discount rate and fluctuations in this rate
affect the amount of the liability. The deferred capital contribution
is also affected by changes in the market value of the assets which
16
SPP’s stated goal has been to reduce the effects on the company’s
results of interest rate fluctuations. For this reason, in the second
quarter, SPP started to conduct transactions with the purpose of
hedging against changes in market value with respect to the deferred
capital contribution.
Value-at-Risk (VaR), which is the most common measurement of
aggregated risks, was SEK 1,276m before SPP started to reduce its
risks and at the end of 2006, the amount was SEK 259m.
This means that with a confidence level of 99%, the maximum possible loss in an individual month has been reduced from
SEK 1.3bn to SEK 0.3bn. VaR can be complemented by simulating
the effect of an interest rate shock. In the case of a parallel shift in
all interest rates in all currencies of 100bp, SPP’s earnings would be
affected by SEK 30m. Finally, it is also possible to view the capital
requirement in relation to the Swedish Financial Supervisory Authority’s so-called traffic light model. At the end of the year, only
SEK 1,078m, i.e. less than 10% of the company’s capital base, was
required to obtain a green light in the traffic light model. At the end
of Q1 2006, the corresponding figure was SEK 4,196m.
SPP AND PERFORMANCE-RELATED REMUNERATION
ACCOUNTED FOR MOST OF THE INCREASE IN COSTS
Expenses were SEK 12,451m (10,938), an increase of 14%. The
underlying increase in expenses was just under 2.6%, excluding SPP,
performance-related remuneration and cost increases in operations
outside Sweden. SPP’s expenses, which were not included in the
Bank in the previous year, were SEK 734m, or almost 6.7 percentage points of the cost increase. Performance-related remuneration
rose by SEK 169m to SEK 589m, corresponding to 1.5 percentage
points of the increase. Although the Bank opened more branches
in 2006 than in the previous year, expenses for new branches were
unchanged. The growth in operations outside Sweden meant that
expenses, excluding performance-related remuneration, went up by
SEK 327m, corresponding to 3.0 percentage points of the cost increase. Part of this is due to an increase in the number of employees
outside Sweden by 145. The number of employees increased and
totalled 10,320 (9,922) at the year-end.
NET RECOVERIES ON LOAN LOSSES
Recoveries exceeded loan losses and totalled SEK 55m (261). Gross
losses continued to decline. The loan loss ratio was –0.01 (–0.03).
Net bad debts decreased to SEK 876m (1,256), equivalent to 0.07%
(0.12) of lending.
ADMINISTRATION REPORT ■ REVIEW OF OPERATIONS
CAPITAL RATIO AND RATING
The Bank’s capital ratio was 9.5% (11.6) and the Tier 1 capital ratio
was 6.8%. The reason for the decrease in the capital ratio between
2005 and 2006 is that at the end of 2005, the Bank raised a loan
with the purpose of contributing capital to SPP in connection with
converting it into a profit-distributing company. Thus the capital
ratio was unusually high at the end of 2005.
Handelsbanken’s rating was unchanged with all three rating
agencies which rate the Bank.
Rating as at 31 December 2006
Long-term
Short-term
Moody´s
Aa1
P-1
Standard & Poor´s
AA-
A-1+
Fitch
AA-
F1+
BUYBACK AND CANCELLATION OF SHARES
At the 2006 annual general meeting, a resolution was passed to cancel 20.6 million shares which the Bank had previously repurchased.
In connection with the cancellation, the nominal value of the share
was increased from SEK 4.30 to SEK 4.45. The AGM also resolved
to authorise the Board to repurchase a maximum of 40 million
shares during the period until the 2007 AGM. During the second
and third quarters, the Bank repurchased 14.8 million shares.
The board is requesting the 2007 AGM to cancel the repurchased
shares and any shares repurchased before the 2007 AGM, and also
to authorise the board to repurchase a maximum of 40 million
shares during the period up to the 2008 AGM. The purpose of this
is to adjust the capital structure.
BRANCH OPERATIONS OUTSIDE SWEDEN EARNED
OVER SEK 2BN
Branch office operations outside Sweden boosted their total profits
by SEK 205m to SEK 2,018m, an increase of more than 11%. This
increase took place at the same time as 14 (9) new branches were
opened. Income rose by SEK 571m or more than 14%, while the
increase in expenses was slightly less.
However, the Bank opened more branches than the 14 started in
Denmark, Finland, Norway and Great Britain. Three new branches
were opened in Sweden, two in Poland, and also two representative offices, one in Spain and one in Mumbai, India. Thus the Bank
started up operations in 21 new locations during the year. The rate
of expansion will increase. Some 30–40 branches will be opened
during 2007 with the focus on Great Britain, Finland and Norway.
New markets will be opened up for universal banking operations.
17
ADMINISTRATION REPORT ■ KEY FIGURES AND QUARTERLY PERFORMANCE
Key figures and quarterly performance
Key figures for the Handelsbanken Group
Profit before loan losses, SEK m
Loan losses/recoveries, SEK m
2006
2005
2004
2003
2002
17 108
15 385
13 718
11 843
10 781
55
261
-167
-492
-392
199
-199
10 190
Impairment losses/reversals on financial non-current assets, SEK m
Operating profit, SEK m
17 164
15 650
13 553
11 550
Profit for the year, SEK m
13 128
11 354
9 860
8 116
7 282
1 790 008
1 582 907
1 316 789
1 260 454
1 277 514
52 192
Total assets, SEK m
Shareholders’ equity, SEK m
66 226
65 758
61 372
56 835
Return on equity, %
20.9
17.9
16.6
14.9
14.6
Return on equity after standard tax, %
19.7
17.8
16.4
15.3
14.6
Return on total assets, %
0.99
1.08
1.05
0.90
0.83
Cost/income ratio, %
42.1
41.6
42.8
46.9
50.2
-0.01
-0.03
0.02
0.06
0.05
Bad debt reserve ratio, %
69.5
65.9
53.4
51.4
60.9
Proportion of bad debts, %
0.07
0.12
0.21
0.28
0.23
Capital ratio, %
9.5
11.6
10.0
10.2
9.3
Tier 1 ratio, %
6.8
7.6
7.6
7.3
6.4
10 163
9 395
9 150
9 258
9 752
Loan loss ratio, %
No. of branches in Sweden
457
455
453
453
456
No. of branches in Nordic countries and Great Britain
141
128
120
101
96
17
14
11
11
11
No. of branches in other countries
For definitions, see inside back cover.
2004 has been restated in accordance with IFRS. For 2002 and 2003, the figures are presented according to the previous format.
Quarterly performance for the Handelsbanken Group
SEK m
2006:4
2006:3
2006:2
2006:1
2005:4
Interest income
14 672
12 871
11 743
10 847
13 551
Interest expense
-10 946
-9 175
-7 977
-7 063
-9 758
Net interest income
3 726
3 696
3 766
3 784
3 793
Fee and commission income
3 073
2 417
2 379
2 652
2 284
Fee and commission expense
-324
-345
-310
-310
-305
Net fee and commission income
2 749
2 072
2 069
2 342
1 979
Net gains/losses on financial items at fair value
1 607
-247
1 064
1 837
1 517
Risk result – insurance
187
38
297
49
38
Other dividend income
9
2
149
33
0
11
21
7
66
4
Share of profit of associated companies
Other income
58
51
38
78
81
Total income
8 347
5 633
7 390
8 189
7 412
Staff costs
-1 988
-1 543
-2 142
-2 041
-1 775
Other expenses
-1 131
-929
-1 052
-1 068
-995
-141
-137
-136
-143
-70
-3 260
-2 609
-3 330
-3 252
-2 840
5 087
3 024
4 060
4 937
4 572
-55
-22
53
79
37
0
0
1
0
0
5 032
3 002
4 114
5 016
4 609
Administrative expenses
Depreciation, amortisation and impairments of property, equipment and intangible assets
Total expenses
Profit before loan losses
Loan losses/recoveries
Gains/losses on disposal of property, equipment and intangible assets
Operating profit
Taxes
Profit for the period
-1 358
-887
-904
-887
-1 289
3 674
2 115
3 210
4 129
3 320
3 674
2 115
3 210
4 129
3 320
-
-
-
-
-
5.79
3.31
4.97
6.32
4.98
Attributable to
Ordinary shareholders
Minority interest
Earnings per share *
* No dilution.
18
ADMINISTRATION REPORT ■ SHARE AND SHAREHOLDERS
The Handelsbanken share
Handelsbanken’s higher profitability has benefited shareholders through greater
growth in dividends than the average for other listed Nordic banks. Handelsbanken’s
share was first listed on the Stockholm stock exchange in 1873, and is the share
that has been listed longest on the Swedish stock market.
THE HANDELSBANKEN SHARE
DIVIDEND
Handelsbanken’s share is listed on the Nordic stock exchange in
Stockholm and on the Nordic Large Cap list. One trading unit is
equivalent to 100 shares. The share capital amounts to SEK 2,888m,
divided over 649 million shares. Each share thus represents
SEK 4.45 of the share capital.
There are two classes of shares: class A and class B. Of the total
number of outstanding shares, 98% are class A.
Handelsbanken’s policy is that the dividend should be competitive
in relation to other listed Nordic bank shares. For 2006, the board
recommends a dividend of SEK 8.00 (7.00), an increase of 14%,
corresponding to a payout ratio of 39% (41). The board proposes
that the record day for dividend be 27 April 2007, implying that the
share will be traded ex-dividend from 25 April 2007.
If the annual general meeting resolves in accordance with the
board’s proposal, this will mean that Handelsbanken’s dividend will
have increased by 78% over the past five years. The corresponding
rate of increase for comparable Nordic banks is 68%.
VOTING RIGHTS
Class A shares each carry one vote, while class B shares have onetenth of a vote each. At the annual general meeting, no shareholder
is allowed a greater voting power than 10% of the total number of
votes in the Bank.
OWNERSHIP STRUCTURE
Handelsbanken has approximately 100,000 shareholders. As at 31
December 2006, most of these, or around 60% of the total number
of shareholders, owned fewer than 500 shares. The 10% of shareholders (approx.) whose holdings exceeded 2,500 shares each, together
held just over 90% of the share capital. The two largest owners,
Industrivärden and the Oktogonen Foundation, each owned just
over 10% of the shares.
As at 31 December 2006, roughly 50% of the outstanding shares
were owned by large Swedish institutions. International investors
owned some 28% (25).
SHARE PRICE PERFORMANCE
As at 31 December 2006, Handelsbanken’s market capitalisation
was SEK 131bn (129).
The Swedish stock market grew by 24% during the year. The
OMX Bank Index climbed by 21%. The price of Handelsbanken’s
class A share rose by 5%. The total yield, including dividends paid,
was 9%.
Over the past five years, Handelsbanken’s share price has climbed
by 34%, while the Stockholm stock exchange as a whole has grown
by 57% and the Bank Index has increased by 82%.
The largest Swedish shareholders
as at 31 December 2006
% of
votes
% of
capital
Industrivärden
10.7
10.5
REPURCHASING OF SHARES
Oktogonen Foundation
10.4
10.2
For a company, repurchasing its own shares is a way of transferring
capital to shareholders. It also allows the company to adjust its capital structure continuously throughout the year. The latter factor is
particularly important for a bank whose fi nancial objective is higher
return on shareholders’ equity.
The scope and size of the buyback depends on the Bank’s fi nancial position, its net earnings trend, investments and credit demand.
At the annual general meeting on 25 April 2006, it was resolved
to cancel the 20.6 million shares that the Bank had repurchased
since the 2005 AGM. At the same time, the Bank’s board received
a mandate to repurchase 40 million shares during the period until
the 2007 AGM. The buybacks were begun on 26 April 2006, and
by the end of the year, 14.8 million shares had been repurchased.
Since 2000, the Bank has bought back 80.5 million shares (net),
which has led to capital totalling SEK 13.3bn being transferred to
Handelsbanken’s shareholders.
Alecta
5.3
5.2
AMF and funds
2.6
2.6
Swedbank Robur funds
2.6
2.5
Handelsbanken’s funds incl. XACT
1.9
1.8
SEB funds
1.8
1.8
Livförsäkrings AB Skandia
1.7
1.7
AFA Försäkring
1.6
1.6
Lundbergs etc.
1.6
1.6
1st National Swedish Pension Fund
1.1
1.0
4th National Swedish Pension Fund
1.0
1.0
Nordea funds
1.0
0.9
Folksam/KPA/Förenade Liv
0.9
0.9
2nd National Swedish Pension Fund
0.9
0.9
19
ADMINISTRATION REPORT ■ SHARE AND SHAREHOLDERS
Market capitalisation 1997–2006
Share price performance 1997–2006
SEK bn
140
350
120
300
100
250
80
200
60
150
40
100
20
50
Index
■ SHB A
■ AFGX Bank & Insurance
■ AFGX
0
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
1997
2006
Key figures
Earnings per share, SEK
1998
1999
2000
2001
2002
2003
2004
2005
2006
2006
2005
2004
2003
2002
20.41
16.98
14.55
11.70
10.50
Dividend per share, SEK
8.00*
7.00
6.00
5.25
4.75
Dividend growth, %
14.3*
16.7
14.3
10.5
5.6
Adjusted shareholders’ equity per share, SEK
104.27
100.23
92.30
82.61
75.48
Price of class A share, 31 December, SEK
207.00
197.00
173.00
147.00
116.00
Class A, number of shares
3 180 486
2 573 108
2 550 130
2 663 856
2 488 517
Class B, number of shares
41 024
59 610
154 003
57 964
52 986
240.0/173.0
199.5/156.5
174.5/136.5
148.5/103.5
162.5/97
Average daily turnover on Stockholm stock exchange
Highest/lowest price paid, class A shares, SEK
3.9*
Dividend yield, %
3.6
3.5
3.6
4.1
P/E ratio
10.1
11.6
11.9
12.6
11.0
Stock exchange price/equity, %
199
197
187
178
154
* Dividend as recommended by the board.
In all material respects, the figures have been adjusted to take account of current accounting policies and definitions. For definitions, see inside back cover.
Shares per shareholder
31 December
Shareholdings
No. in thousands
Number of
shareholders
Number of shares
Class A
shares
Class B
shares
% of
share
capital
% of
votes
1.4
1–500
shares
59 058
8 560
1 828
1.6
501–2 500
shares
28 236
29 386
3 379
5.0
4.7
2 501–25 000
shares
9 373
50 979
4 226
8.5
8.0
25 001–250 000
shares
617
44 997
1 034
7.1
7.1
shares
221
488 537
1 283
75.5
76.5
14 517
306
2.3
2.3
97 505
636 976
12 056
100.0
100.0
250 001–
Shares repurchased by Handelsbanken
Total
Shares divided into share classes
31 December
Average
prices/
repurchased
amount
No.
% of
capital
% of
votes
Class A
636 976 319
98.14
99.81
Class B
12 055 943
1.86
0.19
53 648 946
649 032 262
100.00
100.00
2 888 193 566
Share class
Share
capital
2 834 544 620
Repurchased during the year
Class A
14 517 300
2.23
2.28
at 190.63
Class B
305 500
0.05
0.00
at 206.56
64 601 985
1 359 475
14 822 800
2.28
2.28
2 830 475 672
65 961 460
Class A
622 459 019
98.15
99.81
Class B
11 750 443
1.85
0.19
52 289 471
634 209 462
100.00
100.00
2 822 232 106
After repurchases
Total after repurchases
As at 13 June 2006, 12,972,900 Class A shares and 7,636,300 Class B shares were cancelled. The quotient value of the shares was simultaneously increased
from SEK 4.30 to 4.45 through a bonus issue. During the year, 14,517,300 Class A shares and 305,500 class B shares were repurchased.
The average number of outstanding shares in 2006 was 643,284,311.
20
2 769 942 635
ADMINISTRATION REPORT ■ SEGMENT INFORMATION
Segment information
Segment information
SEK m
Net interest income
Branch
operations
Markets
Asset
Management
Pensions &
Insurance
Other
operations
Eliminations
Total
2006
Total
2005
-15
Change %
14 324
572
168
139
-216
14 972
15 090
-1
4 174
1 728
1 193
2 304
-167
9 232
7 055
31
Net gains/losses on financial items
at fair value
1 206
1 422
33
907
693
4 261
3 459
23
571
194
194
Risk result - insurance
571
Other income
391
839
90
153
3 526
-4 476
523
525
0
Total income
20 095
4 561
1 484
4 074
3 836
-4 491
29 559
26 323
12
Of which internal
-8 841
9 634
-240
-262
4 200
4 491
3 890
15
-8 241
-3 244
-677
-1 297
-2 926
4 491
-11 894
-10 425
14
-557
-513
9
4 491
-12 451
-10 938
14
Depreciation, amortisation and
impairments of property, equipment
and intangible assets
-153
-21
-2
-199
-182
Total expenses
-8 394
-3 265
-679
-1 496
-3 108
11 701
1 296
805
2 578
728
17 108
15 385
11
53
2
-
-
55
261
-79
Gains/losses on disposal of
property, equipment and intangible
assets
Operating profit
Return on equity, %
0
0
-
-
1
1
4
-75
11 754
1 298
805
2 578
729
17 164
15 650
10
18.5
14.0
30.4
34.7
20.9
17.9
Assets
1 119 346
702 974
24 133
216 669
297 568
-570 682
1 790 008
1 582 907
Liabilities
1 074 401
696 177
22 227
209 669
291 990
-570 682
1 723 782
1 517 149
Other disclosures
Investments in non-financial assets
152
33
4
30
283
502
4 436
6 155
1 244
339
681
1 744
10 163
9 395
Internal income and expenses are included in the respective item on the income statement. Internal income consists of payment for services rendered according to the cost price
principle. Expenses also include the distribution of costs made internally within the Group for services from business support operations. The Other operations business area
includes Treasury and the central head office departments. It also includes capital gains/losses, divdends and income and expenses that are not attributable to a specific segment.
Return on equity for the segments is computed after standard tax while for the whole Group and Pensions & Insurance, it is computed after full tax.
The shareholders’ equity, on which calculation of return on equity is based, corresponds to the assessment of the Group’s overall actual capital requirement.
21
ADMINISTRATION REPORT ■ BRANCH OFFICE OPERATIONS
Branch office operations comprise a total of 599 branches in eleven regional banks, and
also include Handelsbanken Finans. Seven of the regional banks are in Sweden, with the
remaining four in Great Britain, Denmark, Finland and Norway. At Handelsbanken, the
branches are the base of all operations and co-ordinate services for all customers, including major corporations. The regional banks are responsible for their own profits and all
pursue the same goals – to provide universal banking services with a higher service level
and at lower cost than comparable banks. Handelsbanken Finans offers a full range of finance company services in the four Nordic countries and in Great Britain. Handelsbanken
Finans works through the Bank’s branches and in financing collaborations with retailers
and vendors.
EARNINGS PERFORMANCE
Demand for credit remained strong, while margins on mortgage
loans in particular remained under pressure. Deposit margins improved slightly on practically all markets. Operating profit decreased
by 5% to SEK 11,754m (12,416). Income was generally unchanged,
while expenses increased at the same time as recoveries were slightly
lower than the previous year. A total of 17 new branches were
opened.
BRANCH OFFICE OPERATIONS IN SWEDEN
Earnings performance
Operating profit was SEK 9,764m (10,583), a decrease of 8%. Net
interest income fell in the Swedish branch office operations. Lending
volumes rose by 10%, household lending by 11% and corporate lending by 9%. The increase in lending volumes could not compensate
for the pressure on margins but higher deposit margins boosted net
interest income.
The margin on floating rate household deposits was 38bp higher
during the fourth quarter than in the same quarter one year previously. In terms of lending margins, the margin on mortgage loans
to private individuals was under particular pressure throughout the
year. The average margin was 77 bp, a decrease of 17 bp. Fee and
commission income rose, particularly equity-related commission
income. Expenses increased, while recoveries were SEK 134m
lower and totalled SEK 55m (189).
Quarterly performance
SEK m
2006:4
2006:3
2006:2
2006:1
Total 2006
Total 2005
Net interest income
3 624
3 550
3 609
3 541
14 324
14 655
-2
1 123
917
1 047
1 087
4 174
3 803
10
-4
297
172
412
325
1 206
1 261
Other income
78
89
127
97
391
369
6
Total income
5 122
4 728
5 195
5 050
20 095
20 088
0
Of which internal
-2 589
-2 513
-1 946
-1 793
-8 841
-6 399
38
-2 235
-1 841
-2 158
-2 007
-8 241
-7 797
6
Depreciation, amortisation and impairments
of property, equipment and intangible assets
Total expenses
Gains/losses on disposal of property,
equipment and intangible assets
Operating profit
Return on equity, %
22
Change %
-57
-32
-32
-32
-153
-138
11
-2 292
-1 873
-2 190
-2 039
-8 394
-7 935
6
2 830
2 855
3 005
3 011
11 701
12 153
-4
-55
-22
52
78
53
259
-80
0
0
0
0
0
4
-100
2 775
2 833
3 057
3 089
11 754
12 416
-5
17.8
18.1
18.5
19.6
18.5
16.6
6 193
6 364
6 055
6 007
6 155
6 018
2
Balance sheet
Operating profit
Branch office operations 31 December
SEK m
2006
Loans to credit institutions
2005
Change %
Branch office operations in Sweden
SEK m
2006
2005
Change %
-3
39 998
35 127
14
Income
15 943
16 354
1 042 171
946 997
10
Expenses
-6 234
-5 959
5
Interest-bearing securities
9 985
12 164
-18
55
189
-71
Assets where the customer bears the
value change risk
1 437
0
Other assets
25 755
33 523
-23
Total assets
1 119 346
1 027 811
9
Due to credit institutions
367 602
367 722
0
Deposits and borrowing from the
public
322 321
286 185
13
Issued securities
351 381
288 231
22
Loans to the public
Liabilities where the customer bears
the value change risk
Disposal of property, equipment/intangible assets
0
-1
100
9 764
10 583
-8
2006
2005
Change %
278
246
13
of which households
105
93
13
companies
173
153
13
Operating profit
Business volumes Sweden
Average volumes
SEK bn
Deposits from the public
1 437
0
31 660
29 175
9
44 945
56 498
-20
Loans to the public*
797
727
10
1 119 346
1 027 811
9
of which households
369
333
11
of which mortgage loans
319
285
12
companies
428
394
9
of which mortgage loans
142
142
0
Other liabilities
Shareholders’ equity
Total liabilities and equity
Business development in Sweden
As shown in the table, business volumes increased, to both households and companies. The rate of increase was high throughout
2006, except for lending to companies where the rate of increase
decreased between the last two quarters of the year. The average
volume of deposits from households increased by 13%.
Credit volumes at Handelsbanken Finans, reported under branch
office operations, increased by 14% to SEK 42bn.
Handelsbanken was acclaimed Commercial Bank of the Year by
Affärsvärlden, a Swedish business periodical. This award is based on
a survey among major companies in Sweden.
During the autumn, Swedish Quality Index (SKI) presented its
annual survey of how satisfied bank customers are. This survey has
been carried out since 1989, when only the four major Swedish
banks were included. Among these four, Handelsbanken has always
been in top position, among both private and corporate customers.
This was the case again in this year’s survey.
Three new branches were started during the year, in Frösunda
and Ekerö outside Stockholm and in Viared, outside Borås. Thus
the Bank had 457 branches in Sweden. More branches will be
opened in 2007.
Within the organisation of Handelsbanken Finans,
Handelsbanken Direct was started on 1 October with the aim of
increasing availability for customers, existing and potential, who use
the Bank’s online services. The intention is to develop the online
banking service so that more transactions can be generated via the
service, customers can be given personal service by phone 24 hours
a day, 7 days a week, and the branches’ administration is also made
easier. The range of offerings via the online banking service will
gradually be increased. So far, customers can apply for loans and
card services, or sign up for a selection of the Bank’s savings products.
The volume of purchases made using the Bank’s Allkort credit
card increased, and it had the highest purchase volume per card in
Europe in its class. The total number of Allkort cards was 179,000,
an increase of 20%.
The Frikort ATM and debit card, which replaced the Bankomat
ATM card, has been a success. Since its launch in October, around
70,000 cards have been distributed to customers. It is particularly
gratifying that these customers, who previously used cash dispensers,
have started to use their cards when shopping instead of using it solely
as an ATM card.
In 2006, Handelsbanken was fi rst to launch private label corporate cards.
* excl. loans to the National Debt Office
GREAT BRITAIN
Earnings performance in Great Britain
Operating profits fell to SEK 150m (154). The decrease was mainly
due to a provision for probable loan losses. The operating profit
before loan losses increased by 6%, despite the continuing rapid
expansion in the form of new branches and costs for upgrading IT
systems. The number of employees grew in line with the expansion, and at the end of 2006 there were 267 employees, an increase
of 23%. The increase in income was mainly due to the continued
strong growth in business volumes, in both newly-opened and existing branches. The average volume of lending rose by 51% to GBP
2.4bn, while deposits rose by 25% to GBP 1.3bn.
Operating profit
Branch operations in Great Britain
SEK m
Income
2006
2005
Change %
20
591
493
-421
-332
27
-20
-7
186
Operating profit
150
154
-3
Expenses
Business volumes, Great Britain
Average volumes
GBP m
2006
2005
Change %
1 254
1 004
25
Of which households
102
70
46
companies
1 152
934
23
51
2 403
1 591
Of which households
432
301
44
companies
1 971
1 290
53
Loans to the public
Business development in Great Britain
Six new branches were opened – in Slough, Sheffield, Oxford,
Leicester, Swindon and Wolverhampton. This brought the number
of branches to 26. Managers have been recruited for several new
branches and premises acquired. These branches will start up in the
fi rst half of 2007, and discussions are in progress to open branches
in other locations.
Handelsbanken in Great Britain was assessed for the Best Companies accreditation. This is based on a detailed questionnaire to all
23
employees with a response rate of 88% – which is considered a high
figure. The outcome was the highest possible rating – three stars
– which is only awarded to companies which are assessed as being
”extraordinary”. The results of this survey reflect the fact that Handelsbanken’s business model is popular with its staff. Customers also
showed their appreciation in a survey arranged by the “Forum of
Private Business”, where Handelsbanken was one of the banks customers least wanted to leave.
Business volumes, Denmark
Average volumes
DKK bn
2006
2005
Change %
19.4
16.3
19
Of which households
5.7
5.3
8
companies
13.7
11.0
25
19
26.2
22.0
Of which households
11.6
9.5
22
companies
14.6
12.5
17
Loans to the public
DENMARK
Earnings performance in Denmark
FINLAND
Earnings performance in Finland
Operating profits rose, despite pressure on margins. The operating
profit for the fourth quarter was the highest ever. The increase in
profits was mainly generated through higher business volumes.
The average volume of lending was DKK 26.2bn, with lending
to households representing DKK 11.6bn. The average volume of
lending to households went up by 22%, while the average volume
of total lending increased by 19%. One reason for the growth in
household lending was the strong demand for priority loans, Handelsbanken’s mortgage loan on the Danish market. The average
volume of deposits from households increased by 8% to DKK 5.7bn,
and total deposits rose by 19% to DKK 19.4bn.
The positive trend in the area of securities continued. Turnover
on the Danish stock market was at a record high level with rising
share prices, although the third quarter had temporarily lower activity. Fee and commission income rose by 8% overall. Net gains/losses
on fi nancial items increased, mainly due to a positive trend for foreign exchange trading and the fair value measurement of interest
rate derivatives.
In 2006, two structured products were launched: an equitylinked bond worth DKK 168m and a commodity-indexed bond
with sales of DKK 186m. The volume of priority loans – a product
which Handelsbanken was the fi rst bank to introduce in Denmark in
2000 – exceeded DKK 10bn in December.
The number of currency transactions and leasing transactions
with companies increased substantially, particularly in the second
half of the year. In parallel with the increased level of business activity, there was a significantly heightened interest in Handelsbanken in
the Danish media. Handelsbanken was mentioned in the nationwide
media twice as often in 2006 as in 2005.
In Dansk Kundeindex, which is an independent survey of satisfaction among Danish banking customers, Handelsbanken was once
again very highly rated by both private and corporate customers.
Two new branches were opened in 2006, one in Hillerød, north
of Copenhagen, and one in Køge, south of Copenhagen. This
brought the number of branches in Denmark to 37.
Operating profit increased by 17% to SEK 447m (381). Increased
business volumes – resutling in higher net interest income – and
higher commissions mainly on investment operations, led to an
overall increase in income of 16% to SEK 1,173m. Costs rose by
10%, due mainly to the ongoing change of bank systems, but also to
higher staff costs.
Demand for credit by households remained strong in 2006,
particularly for mortgage loans. The average volume of lending to
households climbed by 19%. In corporate lending, Handelsbanken
reinforced its position as one of the largest corporate fi nanciers in
Finland. One example of this is fi nancing the local trains in the
Helsinki region. A fi nancing agreement for 32 trains worth some
EUR 300m was Handelsbanken’s largest ever leasing transaction in
Finland.
Operating profit
Branch operations in Finland
SEK m
2006
2005
Change %
1 173
1 011
16
-668
-608
10
-58
-22
164
Operating profit
447
381
17
Income
Expenses
Business volumes, Finland
Average volumes
EUR m
Of which households
companies
Loans to the public
2006
2005
Change %
1 967
1 778
11
942
894
5
1 025
884
16
7 286
6 636
10
Of which households
2 323
1 955
19
companies
4 963
4 681
6
Business development in Finland
Operating profit
Branch operations in Denmark
SEK m
Income
Expenses
Disposal of property, equipment/
intangible assets
Operating profit
24
2006
2005
Change %
972
907
7
-546
-492
11
30
4
0
4
-100
456
423
8
EPSI’s survey of satisfaction among Finnish bank customers showed
that Handelsbanken had Finland’s most satisfied customers among
the large banks. The Bank had the best ratings from both private
and corporate customers.
For some time Handelsbanken in Finland has been developing
its product range in the area of savings and investments. The Bank
started to see the result of these investments during the year. Alongside its traditional savings and investment accounts, the Bank offers
several different mutual funds and structured products as investment
options. A commodity index bond issued in April was subscribed
for some EUR 40m. This bond issue was the largest so far issued in
Finland by Handelsbanken. New sales in the Bank’s mutual funds
were EUR 66m (47) and the total volume in mutual funds was
EUR 367m (269) at the end of the year. A Private Banking operation was started in 2006. In addition to structured products, two
new retail bond loans were issued during the year.
On 1 June, the branch in Tallinn, Estonia was opened. In organisational terms, this branch is part of Regional Bank Finland,
bringing the number of branches to 37. Handelsbanken in Finland
decided to expand its operations with a major drive on opening new
branches in 2007. It is planned to open around 10 branches in 2007.
Defi nite decisions were taken to open a branch in Mikkeli and a
third branch in Espoo.
Handelsbanken in Finland ordered a local banking system
from Samlink. Since its collaboration with Samlink is long-term
and strategic, Handelsbanken acquired an 8% stake in Samlink.
Handelsbanken Finans boosted sales in Retail Finance Consumer
by 28%. An important reason for the successes was the transfer to
MasterCard, which led to more active and loyal customers and thus
increased turnover and higher profits.
NORWAY
The average lending volume increased by 33% to NOK 90.0bn
(67.7), as compared to the overall increase among Norwegian banks
which was 15%. The Bank’s lending to households rose by 22%. One
contributory factor to this was the increasing proportion of “boligkrediter” (housing credits), a product well received by the market.
Lending to corporate clients rose by 41%. Average deposits were up
31%, of which household deposits grew by 21% to NOK 7.4bn (6.1).
Handelsbanken Finans also showed strong growth in Norway.
The most important factor for sustainable profitable growth is
satisfied customers. It is therefore pleasing that EPSI, in its yearly
survey of customer satisfaction among Norwegian banking customers, in 2006 acclaimed Handelsbanken as the “outstanding winner
in the corporate market”.
In the private market too, Handelsbanken’s customer satisfaction
ratings were considerably higher than for the other universal banks
on the Norwegian market.
Branches were opened in Kolbotn, Asker, Moss, on Sotra, and in
Molde, bringing the total number of branches in Norway to 42.
Key figures
Operating profit for 2006 was up by 13% to SEK 965m (855), the
highest ever figure. Income increased by 16% to SEK 1,809m. Higher business volumes for both deposits and lending created higher net
interest income, despite increasing pressure on the margin for loans.
Interest margins were adversely affected by Norges Bank raising key
rates on five occasions during the year. These rate increases did not
have a direct impact on lending rates, due to the long periods of
notice that banks are obliged to give private customers under Norwegian law. The full-year effect is estimated at SEK 35m. Fee and
commission income also increased significantly, as Handelsbanken
Norway is doing more and more business with households.
The increase in costs was 13%, due mainly to the establishment of new branches, but also to the rapid rate of expansion.
Handelsbanken Norway invested in a corporate profi le marketing
campaign, including TV advertising, which was one factor in the
increase in costs. The underlying cost trend was moderate, and the
C/I ratio improved to 44.9% (45.9).
Branch office operations outside Sweden
Number of branches
Number of employees
Number of active customers, private, 1000s
Number of active customers, corporate, 1000s
Total assets, SEK bn
2006
2005
142
128
1 568
1 423
255
244
44
42
299
251
Loans to households, SEK bn
87
77
Loans to corporates, SEK bn
154
124
94
83
Deposits from the public, SEK bn
Operating profit
Branch operations in Norway
SEK m
2006
2005
Change %
1 809
1 563
16
-812
-718
13
-32
10
Operating profit
965
855
13
Change %
Income
Expenses
Business volumes, Norway
Average volumes
NOK bn
2006
2005
34.7
26.5
31
Of which households
7.4
6.1
21
companies
27.3
20.4
34
90.0
67.7
33
Of which households
35.0
28.7
22
companies
55.0
39.0
41
Loans to the public
Business development in Norway
The Norwegian economy maintained its positive trend during 2006.
Almost all sectors showed high activity and good profitability, which
helped to boost consumer purchasing power. This provided good
conditions for the Norwegian banking sector.
25
ADMINISTRATION REPORT ■ HANDELSBANKEN MARKETS
Handelsbanken Markets is organised into four business areas: Capital Markets, Markets
International, Financial Institutions and Cash Management and Payments. Capital Markets
is the Bank’s investment bank comprising corporate finance, including debt capital markets,
equities, fixed income, commodities and foreign exchange trading, structured products and
research. It also includes support to the branch office operations for products in these areas. Markets International comprises banking operations outside the Nordic countries and
Great Britain, trade finance, export and project finance. Financial Institutions is responsible for
monitoring countries, banks and other financial institutions. Cash Management and Payments
is the Bank’s central function for development and sales support for payment products. There
are just over 1,300 employees in 16 countries.
Profits increased by 34% to SEK 1,298m (969). Handelsbanken
Capital Markets reported significantly higher earnings, while
Handelsbanken Markets International reported slightly lower earnings, mainly due to the fact that the new units opened in 2005 and
2006 have not yet reached break-even. Total income rose by 29% to
SEK 4,561m (3,536), while expenses were up by 27%.
Changes in organisational structure at year-end 2006
As part of the Bank’s increased focus on both its investment banking
operations and its international expansion, Handelsbanken Markets
was split into two on 1 January 2007. Handelsbanken Capital Markets continues to run the Bank’s investment banking operations, but
as a separate business area. Handelsbanken International consists of
three units: International, Financial Institutions and Cash Management and Payments.
Balance sheet
Handelsbanken Markets 31 December
SEK m
2006
2005
395 713
424 604
-7
52 457
28 689
83
151 993
158 839
-4
Other assets
102 811
93 386
10
Total assets
702 974
705 518
0
301 351
301 870
0
Loans to the public
public
Change %
88 403
78 023
13
Issued securities
166 070
175 869
-6
Other liabilities
140 353
144 490
-3
6 797
5 266
29
702 974
705 518
0
Change %
2006:4
2006:3
2006:2
2006:1
Total 2006
Total 2005
Net interest income
SEK m
150
145
145
132
572
482
19
515
353
440
420
1 728
1 523
13
328
235
427
432
1 422
1 010
41
Other income
231
182
281
145
839
521
61
Total income
1 224
915
1 293
1 129
4 561
3 536
29
Of which internal
2 580
2 653
2 460
1 941
9 634
6 344
52
-891
-679
-938
-736
-3 244
-2 550
27
Total expenses
Operating profit
Return on equity, %
26
-6
-5
-5
-5
-21
-20
5
-897
-684
-943
-741
-3 265
-2 570
27
327
231
350
388
1 296
966
34
0
0
1
1
2
3
-33
0
0
0
0
0
0
0
327
231
351
389
1 298
969
34
13.9
10.0
14.8
17.6
14.0
13.8
1 321
1 332
1 213
1 111
1 244
1 102
13
HANDELSBANKEN CAPITAL MARKETS
Earnings increased by 41% to SEK 965m (686), the highest figure
since Capital Markets was formed in 2003. Virtually all business
units improved their earnings. Income rose by 24%, while expenses
went up by 18%. The increase in costs was mainly a result of higher
staff costs, partly due to higher performance-related remuneration
and partly to the average number of staff rising from 518 to 540.
Operating profit
Handelsbanken Capital Markets
SEK m
Income
Expenses
Operating profit
2006
2005
Change %
3 198
2 572
24
-2 233
-1 886
18
0
0
0
965
686
41
Business development
Capital Markets’ objective is to be the leading Nordic investment
bank. During the year, it advanced its positions and is one of the
top three investment banks in virtually every area of operations, and
market leader in several areas.
This was particularly evident in brokerage income, which increased by 28%. Brokerage operations in the Nordic countries and
in London showed especially strong progress. Handelsbanken is one
of the leading players in Nordic equities, and customers outside the
Nordic region accounted for over 38% of Capital Markets’ brokerage
income.
Business flows at corporate fi nance and debt capital markets remained strong. Handelsbanken was the largest player for IPOs in
Sweden, and also one of the two largest bookrunners for syndicated
loans.
For several years, Handelsbanken Capital Markets has been
the Nordic market leader in structured products. In 2006,
Handelsbanken Capital Markets arranged SEK 18.6bn worth of
capitalprotected products. For equity-linked bonds, the largest product in terms of volume, the Bank’s market share in Sweden was 24%.
On the warrants and certificates market, Handelsbanken Capital
Markets’ sales rose by 209% to SEK 20bn. The Bank’s Nordic market share grew by 10 percentage points to 53%. 2006 saw the launch
of the Maxcertifi kat (discount certificate), an alternative to outright
equity investments.
Earnings from trading in fi xed income and foreign exchange instruments climbed by 26%. Research products were improved: rapid,
close-to-the-market analysis was combined with more long-term research. The Bank’s market position improved, and the international
fi nancial magazine Global Finance acclaimed Handelsbanken as
Scandinavia’s best foreign exchange bank.
Following the takeover of commodity broker, Svenska Metallbörsen’s operations in September, the Bank can now also offer
fi nancial solutions in this product range. The acquisition made
Handelsbanken the leading commodity broker in the Nordic region.
During the fourth quarter, the Bank began working with a leading provider of direct equity trading services, which means that the
Bank’s institutional clients will have access to direct trading in equities on all the leading European stock exchanges. The solution is expected to be ready for launch in Q1 2007. In the second stage of the
launch, North American stock exchanges will also be included.
Organisation
Handelsbanken Capital Markets is Handelsbanken’s investment
bank. Capital Markets was formed on 1 January 2003 and was the
fi rst Nordic investment bank to integrate its operations in the fields
of equities, foreign exchange, fi xed income instruments, corporate
fi nance, debt capital markets and structured products in the same
organisation.
Corporate fi nance and debt capital markets comprise stock market introductions (IPOs), the raising of equity and loan capital on
public markets, corporate mergers and acquisitions, and structured
fi nancing. Operations are primarily oriented towards companies and
their main owners.
Stockbroking operations comprise equities trading and research
on behalf of customers with a focus on the Nordic markets, as well
as the production of independent research reports. Quantitative and
macroeconomic research are also produced. Operations mainly focus
on major Nordic and international investors. Foreign exchange and
fi xed income trading comprise all trading in fi xed income, commodities and foreign exchange products, for both Nordic and international investors.
The structured products unit provides customised fi nancial solutions suited to different customers’ needs and risk level, for example,
equity-linked bonds, multi-asset bonds, credit-linked notes, warrants, equity certificates, baskets of equities or other types of assets
and share redemption programmes. These products demand broad
fi nancial knowledge and a strong capital base.
The fact that Capital Markets is an integral part of Handelsbanken
offers proximity to Nordic customers via the Bank’s branch office
network. Marketing to international customers is done through
Handelsbanken Capital Markets’ units in London, New York and
Singapore. Handelsbanken’s strong balance sheet offers the opportunity to handle both complex transactions and high risk which
is a necessity for its ability to compete effectively with international
investment banks.
HANDELSBANKEN MARKETS INTERNATIONAL AND
FINANCIAL INSTITUTIONS
Earnings for the Handelsbanken Markets International and Financial
Institutions business areas, which make up the business core of the
operation which, on 1 January 2007 became Handelsbanken International, totalled SEK 107m (116), a decrease of 8%. Income increased
by 6% while expenses rose by 9%. The fall in profits was due to increased investments in newly opened units such as in Poland, Russia,
China and India. Income increased in all international units. Corporate business in Germany, the US and Hong Kong and clearing services for foreign banks were particularly successful. The number of
employees was 369 (326), some 70% of these being outside Sweden.
Operating profit
Handelsbanken Markets International and Financial Institutions
SEK m
Income
Expenses
Operating profit
2006
2005
Change %
631
594
6
-526
-481
9
2
3
-33
107
116
-8
Business development
One long-term goal of the international expansion is to increase the
number of markets where the Bank can conduct profitable universal
banking operations via its own branch network.
Handelsbanken was the fi rst Nordic bank to open a representative
office in Mumbai, India. The representative office in St. Petersburg,
Russia is expected to be converted to a branch during the fi rst
quarter of 2007.
Operations in Poland were expanded with two new branches, in
Gdansk and Poznan. Since 2005, the Bank has been able to offer
mortgage loans to local customers in Poland. In summer 2006, the
27
Bank also started to offer leasing services to corporate customers.
The plan is to continue expanding in Poland in the years ahead.
Through the export and project fi nance unit, the Bank arranged
the fi nancing of a road project in Finland. Handelsbanken’s position
as a leading bank for trade fi nance was confi rmed when the Bank for
the second year running was acclaimed “Best Trade Finance Bank
and Provider in Sweden” by the international specialist periodical
Global Finance.
Organisation
Handelsbanken Markets International is responsible for the branch
offices and representative offices outside the Nordic region and
Great Britain, clearing services for foreign banks, trade fi nance, export and project fi nance. Outside Sweden, its purpose is twofold: to
support the Bank’s Nordic and British corporate customers by acting
as a business partner in the international markets where the Bank’s
customer base is strongly established, and to develop and enhance
relationships with international corporate groups. Outside the Nordic region and Great Britain, Markets International has banking operations in New York, Luxembourg, Amsterdam, Paris, St Raphaël,
Vienna, Frankfurt, Hamburg, Warsaw, Poznan, Gdansk, Moscow,
Singapore, Hong Kong and Shanghai and representative offices in
Beijing, Mumbai, Taipei and St. Petersburg.
28
ADMINISTRATION REPORT ■ HANDELSBANKEN ASSET MANAGEMENT
Handelsbanken Asset Management comprises fund management, discretionary management
and Nordic 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 the
four Nordic countries, and in Luxembourg, Switzerland, France, Spain and Singapore.
Operating profit increased by 35% to SEK 805m (598). Income,
which was mainly based on the volume of assets managed, increased
by 23% due to higher share prices and new sales. Expenses increased
by 11%. Since autumn 2004, the Bank has invested in an enhanced
management organisation and an expanded range of products,
which have had an impact on both expenses and income.
The volume of assets managed by Handelsbanken Asset Management grew to SEK 371bn (332). The total volume of assets under
management by the Group was SEK 435bn (388).
HANDELSBANKEN MUTUAL FUNDS
2006 was another good year for savers in mutual funds, with a good
performance on most of the world’s stock markets. Several equity
funds increased by 25-30%. The Nordic small cap funds reported
the best performance among the Bank’s mutual funds with an increase of 36-38%.
At the end of 2006, the Bank’s mutual fund management
company managed 106 (106) mutual funds with a total value of
SEK 220bn (184). Some 49% (49) of the assets under management
were invested in equity funds, 25% (24) in fi xed income funds, 24%
(25) in mixed funds, and just over 2% (2) in hedge funds. The average volume of assets under management in Handelsbanken’s mutual
funds increased by 27% from the previous year and amounted to
SEK 199bn (156). The gross margin, that is the management commission in relation to the assets under management, fell during
the summer months with the decline in stock markets. However, it
improved towards the end of the year due to rising share prices and
the Bank’s launch of new mutual funds with higher management
commissions.
Net new savings in the Group’s funds on the Swedish mutual
fund market were SEK 15.4bn (14.9), equivalent to a market share
of 22% (18). This was the eighth year running in which the Bank’s
market share of new sales was higher than its share of total mutual
funds savings, which at year-end amounted to 14.0% (13.7). Handelsbanken was thus the third largest player on the market.In 2004,
a major restructuring programme was launched to improve fund
management performance. The programme has achieved the desired
Asset Management
SEK m
Net interest income
2006:4
2006:3
2006:2
2006:1
Total 2006
Total 2005
Change %
41
51
43
33
168
113
49
296
282
320
295
1 193
985
21
7
4
15
7
33
42
-21
Other income
29
23
17
21
90
69
30
Total income
373
360
395
356
1 484
1 209
23
Of which internal
-48
-25
-74
-93
-240
-408
-41
-183
-155
-178
-161
-677
-608
11
Total expenses
0
-1
0
-1
-2
-3
-33
-183
-156
-178
-162
-679
-611
11
190
204
217
194
805
598
35
-
-
-
-
-
-
-
-
-
-
-
0
Operating profit
190
204
217
194
805
598
Return on equity, %
28.8
30.8
32.6
29.3
30.4
23.2
357
344
328
325
339
320
35
6
29
ADMINISTRATION REPORT ■ HANDELSBANKEN ASSET MANAGEMENT
effect, not the least of which was an improved rating. Every month,
the independent ratings institute Morningstar rates selected mutual
funds from the fund management companies. In the December
ratings from Morningstar (three-year ratings), Handelsbanken’s mutual funds received an average rating of 3.31, which was the highest
among the major Swedish banks. In addition, Handelsbanken was
best among the major Swedish banks in the equity and fi xed income
funds categories for the same period.
Balance sheet
Asset Management 31 December
SEK m
Loans to the public
2005
Change %
14 752
11 095
33
NORDIC CUSTODY SERVICES
2 437
2 221
10
-
-
Custody holdings in the Bank’s Nordic custody services amounted
to SEK 790bn, an increase of 4%. The number of securities transactions rose by 68%. This reflects increased activity among customers,
as well as the strong performance of the Nordic stock exchanges.
During the year, Handelsbanken’s institutional custody services
entered into a collaboration agreement with one of the largest global
custodian banks in the USA. The aim of the agreement is to offer a
sophisticated range of products in institutional custody services to
Nordic fi nancial institutions.
Global Investor Magazine, which annually ranks institutional
custody services, awarded Handelsbanken’s Nordic custody services
a high rating in all the Nordic countries. Handelsbanken was acclaimed the best custodian bank in Denmark and Norway.
6 944
5 292
31
Total assets
24 133
18 608
30
9 367
6 001
56
11 352
8 493
34
-
-
public
Issued securities
Other liabilities
1 508
2 359
1 906
1 755
9
24 133
18 608
30
-36
Sweden
Customer interest in regular savings in mutual funds increased
sharply during the year, both in terms of number of customers and
volume. The monthly amount saved in mutual funds during the year
increased by approximately 16%. An independent customer survey
reported that Handelsbanken’s mutual fund customers were again
the most satisfied. Handelsbanken received the highest rating of the
major banks for all 12 rating criteria and the highest rating of all
fund management companies on 9 of the 12 criteria.
Two new mutual funds were launched on the Swedish market
– the India Fund and Garantifond Plus (Guarantee Fund Plus).
Garantifond Plus was launched in June as the fi rst mutual fund of its
kind in Sweden. The fund guarantees 80% of the highest price ever
achieved for a fund unit.
Finland and Norway
There was a continued focus on increased sales via the Norwegian
and Finnish regional banks during the year. Two new mutual funds
were launched, the India Fund and Klick Norge 90. Good performance, especially by the equity funds and mixed funds, contributed to
the sales increase.
New sales in the Bank’s mutual funds in Finland were EUR 66m
(47), and at year-end, volumes of Finnish customers’ mutual funds
totalled EUR 367m (269).
Net savings in the Bank’s mutual funds by customers in the Norwegian branch operations increased by NOK 0.8bn (0.2) and the
volume of funds managed rose by 12% to NOK 2.7bn (2.4).
Exchange-traded funds
The assets managed in the XACT funds increased by 16% to SEK
17bn (14). The average volume increased by 105% to SEK 16.8bn.
Three new mutual funds were launched, giving XACT a total of
eight listed mutual funds. Six of these are traded on the Stockholm
stock exchange, with the other two being traded on the Oslo and
Helsinki stock exchanges respectively. XACT Bull increased by 33%,
making it the best performance in the Swedish funds category for
2006, according to Morningstar. XACT Bull is a special fund with
the objective of giving a daily return equivalent to approx. 150% of
the daily change in the OMXS30TM Index.
30
The Bank managed discretionary assets totalling SEK 177bn (169),
of which 34% were exposed to equity markets and the rest to fi xed
income markets. SEK 40bn (34) of the managed assets were invested
in the group’s mutual funds.
In 2006, portfolios under discretionary management generally
achieved good returns, mainly due to strong equity markets, coupled
with structured and customised management solutions. Discretionary management acquired several new institutional customers during
the year, Q4 being the strongest quarter with net sales of approximately SEK 6.6bn.
2006
Other assets
DISCRETIONARY MANAGEMENT
PRIVATE BANKING OUTSIDE THE NORDIC COUNTRIES
AND GREAT BRITAIN
Private Banking outside the Nordic countries and Great Britain is
conducted through Svenska Handelsbanken S.A. in Luxembourg,
with a branch in Zurich, a representative in Singapore, and representative offices in Marbella (Costa del Sol), Nice (Côte d’Azur),
and La Nucia (Costa Blanca), which was opened this year. The
representative offices market private banking services to Nordic
expatriates.
The volume outside the Nordic countries and Great Britain was
SEK 14bn (12), which represents an increase of 17% for the year and
12% in the fourth quarter.
ADMINISTRATION REPORT ■ HANDELSBANKEN PENSIONS & INSURANCE
Handelsbanken Pensions & Insurance
Handelsbanken Pensions & Insurance comprises Handelsbanken Liv and SPP. On
1 January 2006, SPP became a profit-distributing company, as did Handelsbanken Liv
in 2002. Together, these companies are among the market leaders, with a complete
range of life insurance products for occupational and private pensions, as well as asset
protection schemes for companies, organisations and private individuals. The companies sell their services via Handelsbanken’s branch offices, their own sales organisations, independent brokers, workplaces at corporate customers, and direct marketing.
Breakdown of results
Handelsbanken Liv
SPP
Pensions & Insurance
2006
2005
2006
2006
2005
Administration result
102
101
44
146
101
Risk result
218
194
353
571
194
Financial result
213
258
1 578
1 791
258
Other
100
12
130
230
12
SEK m
2005
SPP brand name
-160
Operating profit
633
565
2 105
2 578
565
Total 2005
Change %
SEK m
Net interest income
2006:4
2006:3
2006:2
2006:1
Total 2006
68
25
23
23
139
-2
832
518
340
614
2 304
857
160
-355
-123
1 225
907
65
169
187
38
297
49
571
194
Other income
42
44
37
30
153
109
40
Total income
1 289
270
574
1 941
4 074
1 223
233
-91
-61
-69
-41
-262
-68
285
-303
-276
-335
-383
-1 297
-631
106
Of which internal
Total expenses
194
-48
-48
-49
-54
-199
-27
-351
-324
-384
-437
-1 496
-658
127
938
-54
190
1 504
2 578
565
356
-
-
-
-
-
-
Operating profit
938
-54
190
1 504
2 578
565
Return on equity, %
54.8
-8.0
6.2
86.0
34.7
35.9
680
681
674
687
681
185
356
268
31
Balance sheet
Consolidation of insurance operations
Pensions and Insurance 31 December
Income/expense
Income statement
Reported in the insurance
companies’ sub-results
Fees
Net fee and commission
income
Yield split
Net fee and commission
income
Financial result
Yield on equity
Net gains/losses on
Other
SEK m
Net gains/losses on
Capital contribution to
meet guaranteed interest
Net gains/losses on
Risk result
Financial result
Financial result
Other income
Other income
Staff costs
Staff costs
Other expenses
Other expenses
Amortisation of intangible
assets
Depreciation, amortisation and impairments of
property, equipment and
intangible assets
Other
PERFORMANCE FOR PENSIONS & INSURANCE
Operating profits were SEK 2,578m (565). Since 1 January 2006,
SPP has been included in Handelsbanken’s consolidated accounts.
2006 was another good year for the policyholders at
Handelsbanken. For Handelsbanken Liv, this was the fourth year
running that policyholders’ insurance assets showed higher growth
than the average for life insurance companies offering traditional
savings. In its fi rst year as a demutualised company, SPP also offered
higher return on customer’s assets than the sector average.
These high returns meant that the full yield split was received for
all insurance contracts within Handelsbanken Liv and SPP. Hence
the companies received 10% of the total return in the yield split and
the net income was SEK 745m.
Handelsbanken Liv and SPP had a strong, positive net inflow.
For the year, premium income less insurance claims were SEK 7bn.
Together with a good total return, this means that assets under
management increased by 10% to SEK 171bn, including SEK 59bn
in unit-linked insurance.
Definitions of the result components
The administration result is the difference between the company’s actual
costs and the fees charged on the insurance contracts to cover administration.
The fees are either based on assets managed, the premiums, the number of
contracts or the disbursement.
The risk result is the difference between the fees the company charges to
cover the insurance risks (mortality, longevity, disability and accident) and the
actual cost of these.
The financial result consists of the difference between the return on assets
managed on behalf of the policyholders and that which has been allocated to
the policyholders. When the total return exceeds the guaranteed rate, the company receives 10% of the total return as its share. If the value of a customer’s
insurance contract is less than the guaranteed value, the company provides
capital. A capital contribution of this kind affects the financial result.
Other includes amortisation of intangible assets, interest expense on debentures loans and the change in value of assets not managed on behalf of the
policyholders.
32
Change %
22 276
8 391
166
75 317
15 420
388
Assets where the customer
bears the value change risk
58 468
134 432
-57
Other assets
60 608
18 241
232
Total assets
216 669
176 484
23
24 223
90
Deposits and borrowing from
the public
111 682
30 804
Liabilities where the customer
58 473
135 926
-57
2 871
862
233
Insurance obligations
Risk result
2005
Yield – risk insurance
2006
Other liabilities
263
12 420
7 452
67
7 000
1 350
419
216 669
176 484
23
HANDELSBANKEN LIV
Profits for Handelsbanken Liv improved sharply for the fourth year
running. Operating profit increased by 12% to SEK 633m (565).
SPP Liv Fondförsäkring AB was part of Handelsbanken Liv in
2005, but was sold to SPP on 1 January 2006. If the comparative
period is adjusted for this, the profit figure improves by 20%.
The administration result increased to SEK 102m (101). Excluding SPP Liv Fondförsäkring, the administration result rose by 50%,
which was mainly due to rising income as a result of higher business
volumes.
Since demutualisation on 1 January 2002, the risk result has
gradually improved, and totalled SEK 218m (194).
Total return on policyholders’ funds was 8.24% (11.65). Since the
total return was greater than the guaranteed rate, which is between
3% and 5% depending on when the contract was entered into, the
company receives 10% of the total return for all insurance contracts.
Policyholders saw their capital adjusted upward by 7.42% (10.49).
Handelsbanken Liv’s share of the return was thus SEK 196m (237).
The fi nancial result was SEK 213m (258).
The Other component was SEK 100m (12), of which the return
on assets corresponding to shareholders’ equity was SEK 146m (94).
Interest expenses and depreciation of intangible assets reduced the
result by SEK 46m (82).
Assets managed rose by 16% to SEK 59bn (51), of which SEK
32bn (26) was invested in unit-linked insurance. The increase was
due mainly to a continued positive net inflow, but also to a positive
change in the value of the assets. At the end of the year, 34% of
the assets were placed in equities, of which 12 percentage points in
Swedish equities and 22 percentage points in international equities.
In connection with demutualisation in 2002, Handelsbanken Liv
became one of the fi rst life insurance companies to introduce the
right for customers to transfer their insurance funds. In 2006, SEK
519m was transferred to Handelsbanken Liv, while 126m was transferred from the company. On 1 February 2007, the Swedish government proposed a temporary stop in transfers for pension insurance
contracts entered into on or before 1 February 2007. The total net
inflow was SEK 3.7bn. Premium income, reported in accordance
with IFRS 4, was SEK 774m (680). Insurance claims reported in
accordance with IFRS 4 were SEK 422m (368).
The available solvency margin was SEK 3,239m. This should be
related to the required solvency margin which was SEK 1,674m,
implying a solvency ratio of 1.94 (2.41).
Investment assets, average exposure %
Handelsbanken Liv
Investment assets, average exposure %
Full year
2006
Jan–Jun
2006
Full year
2005
SPP
Full year
2006
Jan–Jun
2006
Full year
2005
Shares
37
38
34
Shares
36
36
18
Fixed income
55
54
58
Fixed income
60
60
79
Property
6
6
6
Property
0
0
0
Other
2
2
2
Other
4
4
3
100
100
100
100
100
100
Full year
2006
Jan–Jun
2006
Full year
2005
Full year
2006
Jan–Jun
2006
Full year
2005
8.24
0.52
11.65
Total return, %
6.76
-0.17
6.60
Assets managed, SEK bn, end of
period
112
104
105
27
23
23
3.10
3.24
1.44
Total
Key figures
Handelsbanken Liv
Total return, %
Assets managed, SEK bn, end of
period
of which unit-linked
Solvency ratio, end of period
Total
Key figures
59
53
51
32
27
26
1.94
2.39
1.43
SPP
of which unit-linked
Solvency ratio, end of period
* Administration result for SPP 2005 is calculated proforma.
SPP
SPP’s profits were SEK 2,105m. The administration result was
SEK 44m. This was a substantial improvement compared to the previous year, primarily due to a 39% reduction in operating expenses
to SEK 636m. Increased business volumes also contributed to an
improvement in this part of the result.
The risk result was SEK 353m.
The fi nancial result was SEK 1,578m. Total return was 6.76%
(6.60). Since the return was higher than the guaranteed rate on
all contracts, SPP received SEK 549m as its share of the return on
these contracts. The guaranteed rate is between 2.50% and 5.20%,
depending on when the contract was entered into. Some 75% of the
assets under management have a guaranteed rate of 3.50% or less.
Policyholders saw their capital adjusted upward by 6.08%.
Prior to the demutualisation, some of SPP’s insurance portfolios
were underfunded. At year-end 2005, the shortfall was estimated at
SEK 3.6bn on the basis of prevailing interest rates. When calculating the insurance liability, a long-term market yield is used as the
discount rate. At year-end 2006, the discount rate was 54bp higher
than at the start of the year. This meant that the value of the insurance liability for previously underfunded contracts was lower than at
year-end 2005, which had a positive impact on the fi nancial result.
Since Q3, the company has hedged a large part of the sensitivity in
the valuation of the underfunded contracts caused by market interest
rates and share price movements. The positive impact on the fi nancial result was SEK 1,045m.
Among other things, the Other component reports the yield
on assets corresponding to the company’s equity. This figure was
SEK 353m. In Q4, the portion of the company’s own funds previously invested in equities was reinvested in fi xed-income securities.
Amortisation of intangible assets and interest expenses had a negative impact of SEK 224m on the Other component.
SPP had a positive net inflow of SEK 3.3bn. Together with a good
total return, this means that assets under management increased by
7% to SEK 112bn (105), of which 27bn (23) were invested in unitlinked insurance. At the end of the year, 32% of the managed assets
were placed in equities, of which 11 percentage points in Swedish
equities and 21 percentage points in international equities. Premium
income, reported in accordance with IFRS 4, was SEK 612m. Insurance claims, reported in accordance with IFRS 4, were SEK 197m.
The available solvency margin was SEK 10.9bn. This should be
related to the required solvency margin, which was SEK 3.5bn,
implying a solvency ratio of 3.10.
Demutualisation of SPP
In connection with the demutualisation of SPP, the surplus was
distributed to the policyholders. Savers who held policies with guaranteed return shared over SEK 2.5bn. SPP introduced the right for
customers to transfer their insurance in connection with the demutualisation. Activity in the fi rst year was extremely low: SEK 3m was
transferred to SPP and SEK 40m was transferred out.
CERTIFICATION ENHANCED SALES CAPACITY
AT BANK BRANCHES
Insurance plays a very important role in the Bank’s investment concept. As a further step in the integration of insurance in the banking
business, the insurance advisers were transferred in organisational
terms to the respective regional banks. During the year, some 3,000
Handelsbanken employees were trained and certified in compliance
with the legal requirements for insurance advisers.
CONTINUED FOCUS ON NORDIC BUSINESS
A large number of companies in the Nordic countries became new
customers, following a successful collaboration with the insurance
company If. Thus, Handelsbanken Liv has become one of the major
insurers of mandatory occupational pensions in Norway. In Denmark, preparations began to be able to offer occupational pension
plans to existing customers of the regional bank during 2007.
33
FINANCIAL REPORTS ■ ACCOUNTING POLICIES
Accounting policies
The accounts have been prepared in accordance with international financial reporting standards, IFRSs, as
adopted by the EU. The accounting also follows the additions and restrictions of the regulations in the Annual
Accounts Act for Credit Institutions and Securities Companies (ÅRKL), and the directives issued by the Swedish Financial Supervisory Authority, (FFFS 2005:33) and where applicable, the Swedish Financial Accounting
Standards Council’s recommendations. Classification and valuation of items in the income statement and balance sheet for the parent company follows ÅRKL, FFFS 2005:33 and where applicable, the Swedish Financial
Accounting Standards Council’s recommendations if complete adjustment to IFRS is not allowed. Differences
in the accounting policies between the Group and the parent company are presented under the appropriate
heading below. The currency used for reporting is Swedish kronor.
34
CHANGED ACCOUNTING POLICIES ETC.
ASSESSMENTS AND ESTIMATES
As from 2006, SPP is a profit-distributing company. Previously it was
run on mutual principles. When SPP was demutualised, the insurance
contracts were amended, and all the surplus funds in SPP as at 31 December 2005 were allocated to the policyholders. The insurance capital is then individual for each policyholder. This results in a change in
accounting policy with the purpose of reflecting SPP’s commitment.
The change implies that the reported obligation per customer will be
at least the amount of the guaranteed assets. The EU occupational
pensions directive is now applied in Swedish legislation. One implication of this is that a market rate of interest must be used to calculate the insurance obligations. For the insurance obligations that
were previously measured using a maximum interest rate established
by the Financial Supervisory Authority, the valuation now applies
a risk-free market interest rate. Through this change of accounting
policy the group’s opening shareholders’ equity has decreased by
SEK 3,265m.
The defi ned-benefit policies for the employees in the insurance
business were previously treated as defined-contribution in the consolidated accounts. It has now been possible to change the accounting policy so that the pension obligations can now be reported as
defi ned-benefit. The opening shareholders’ equity has been adjusted
by SEK 280m.
New policies are applied concerning consolidation of mutual
funds managed by the Group where it has significant holdings.
Mutual funds managed by the Handelsbanken Group are consolidated if:
• A company in the Group owns more than 50% of the total units
in an individual fund.
• The Group’s return from a fund exceeds 5% of the fund’s total
return, regardless of the size of the Group’s fund unit holding.
In the case of consolidation, the part of the fund’s assets corresponding to the ownership share is reported in the balance sheet
as shares and participating interests. The part of the fund’s assets
belonging to other unit holders is reported in the balance sheet as
assets or liabilities where the customer bears the value change risk.
Comparative figures for 2005 have been adjusted but this has not
led to any change in shareholders’ equity.
Due to a reclassification, all interest income and interest expense
relating to fi nancial assets in the trading book are now reported under Net gains/losses on fi nancial items at fair value. This is in order
to arrive at a figure for net interest income which is clear of fi nancial
assets and liabilities in the trading book and to gain an overall view
of activity in the trading book. The adjustment of the comparative
figures has an impact only on the distribution within net interest
income.
When preparing the annual report and consolidated accounts, the
accounting regulations require that the company makes assessments
and estimates. These are based on experience, assumptions and assessments which the management considers to be reasonable. The critical
assessments made by the company management when applying the
accounting policies are stated under the respective section and in the
descriptions pertaining to each note. The final accounting of individual transactions may deviate from the estimated values.
Areas which are particularly complex where assessments and estimates are of crucial importance are:
• Valuation of fi nancial instruments. Holdings of instruments
where prices are lacking from well-functioning liquid markets
means that standard valuation models must be used where assessments and assumptions are applied apart from the market parameters that can be used in the valuation models.
• Insurance obligations. In order to calculate the technical insurance obligations which consist of insurance provisions and provisions for unsettled claims, advanced assessments of a technical
nature are carried out with assumptions regarding for example
mortality, future interest rates, expenses and taxes.
• Pension provisions. A number of actuarial, demographic and
fi nancial assumptions are used to calculate the Group’s various
pension liabilities. The various parameters used for calculation are
stated in the information given in the note on staff costs.
• Loan losses/bad debts. The value of the loan receivables is tested
at regular intervals. Such tests contain a great many various assumption and assessments that are objective in various degrees.
This impairment testing includes, for example, testing the value
of collateral and estimating the cash flows that can be expected
to be received from the customer as well as the estimated times of
receipt of these cash flows.
• Intangible assets. Impairment testing is carried out annually regarding intangible assets with an undefi ned utilisation period by
comparing the calculated recovery value with the value reported.
The recovery value is calculated by estimating future cash flows
and relevant discount interest rates.
CONSOLIDATED ACCOUNTS
The consolidated accounts comprise all companies in which
Handelsbanken directly or indirectly has a controlling influence. Normally Handelsbanken has a controlling influence when its holding is
more than 50% of the voting rights. In exceptional cases, legal obstacles may prevent a controlling influence. In such cases, consolidation
does not take place, even though the participating interest exceeds
50% of the number of votes.
Subsidiaries are consolidated in accordance with the acquisition
accounting method.
Companies in which Handelsbanken directly or indirectly has a
significant influence are reported as associated companies. A significant influence normally exists when the participating interest is at
least 20% and at most 50% of the voting rights. Associated companies are reported in the consolidated accounts in accordance with
the equity method.
Since 2001, SPP Livförsäkrings AB has been 100-percent owned
by Handelsbanken. The balance sheet has been consolidated since 31
December 2005. As of 1 January 2006, the company distributes profits, which means that the earnings risk in SPP’s operations is borne by
Handelsbanken and the income statement is also consolidated.
There may be significant holdings of units in mutual funds managed by the Handelsbanken Group. These mutual funds are consolidated if:
• A company in the Group owns more than 50% of the total units
in an individual fund.
• The Group’s return from a fund exceeds 5% of the fund’s total
return, regardless of the size of the Group’s fund unit holding.
In the case of consolidation, the part of the fund’s assets corresponding to the ownership share is reported in the balance sheet as shares
and participating interests. The part of the fund’s assets belonging to
other unit holders is reported in the balance sheet as assets or liabilities where the customer bears the value change risk.
All foreign operations have activities that could cause their functional currency to deviate from the currency that the Group uses for
reporting. In line with the Group’s decentralised organisation, each
operation is run independently, and transactions between the parent
company and the respective unit represent 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 translating the foreign subsidiaries’ balance sheets
and income statements, 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 income statement has
been translated at the average annual rate. Liabilities in foreign currencies raised for the purpose of hedging exchange rate differences
in the net investment in independent foreign units are recorded at
the closing day rate. The resulting translation differences have been
classed as shareholders’ equity.
VALUATION OF RECEIVABLES AND LIABILITIES IN FOREIGN
CURRENCIES
Receivables and liabilities in foreign currencies have been recorded at
the end-of-day exchange rate. In the parent company, liabilities raised
for the purpose of hedging exchange rate differences in subsidiaries’
shares are recorded at the rate applicable on acquisition.
measurement is considered to provide a fairer picture of the earnings
trend than measurement at amortised cost.
Assets available for sale comprise all instruments which do not
come under any of the other three categories. These assets are measured at fair value in the balance sheet. Unrealised changes in value
are classed as shareholders’ equity. However, changes in value attributable to interest as well as exchange rate fluctuations are recognised
directly in the income statement. Impairment testing is performed in
those cases where indications of an impairment loss are present. The
impairment loss is recorded in the income statement.
Loans to the public and credit institutions
In the balance sheet, depending on the counterparty, receivables are
reported either as Loans to the public or as Loans to credit institutions. This classification is independent of the measurement category.
The items are reported in the balance sheet on the settlement date.
Leasing agreements where the lessee bears the economic risks and
acquires the rewards associated with ownership of the asset are also
reported as receivables.
Loan receivables which represent bad debts are reported on the
balance sheet at their net amount, i.e. after deduction for probable
and actual loan losses.
Undrawn loans (including the risk related to fi xed advance interest rates) are regarded as an off-balance-sheet commitment until the
settlement date. The accounting standards allow measurement at fair
value or at the highest of fair value and carrying amount.
If a loan receivable is redeemed ahead of time, any early redemption charge received is reported immediately under Net gains/losses
on fi nancial items at fair value.
Repo transactions
Repurchase transactions, also called repo transactions, refer to agreements where the parties simultaneously agree on the sale of specific
securities and the repurchase of these securities at a pre-determined
price. The securities provided remain in the balance sheet while those
received are not carried in the balance sheet. The securities provided
are carried as Collateral pledged. Payment received is recognised under Due to credit institutions or as Deposits and borrowing from the
public, depending on the counterparty. Payment made is recognised
under Loans to credit institutions or as Loans to the public, depending on the counterparty.
Securities loans
Securities lent out are recognised in the balance sheet as securities and
as collateral pledged. Borrowed securities are not recognised as assets.
Securities which have been lent out are measured in the same way as
other securities of the same type. In cases where borrowed securities
are sold, an amount corresponding to the fair value of the sold securities is recognised as a liability.
CLASSIFICATION AND MEASUREMENT RULES FOR
FINANCIAL ASSETS
Financial assets are classified for measurement into the following
categories:
1. Loans and other receivables.
2. Assets held to maturity.
3. Assets measured at fair value.
4. Assets available for sale.
Categories 1 and 2 are measured at amortised cost. In simplified
terms, this means that the individual instrument’s effective interest
rate is used as a basis for calculating the carrying amount. Measurement is supplemented by impairment testing when indications of an
impairment loss are present. The impairment loss is recorded in the
income statement. Assets measured at fair value mainly comprise assets held for trading purposes. In addition, individual lending portfolios may be classified as measured at fair value in cases where such
On the balance sheet, interest-bearing securities are carried either as
Instruments eligible as collateral with central banks or as Bonds and
other interest-bearing securities. This classification is independent of
the measurement category. Interest-bearing securities acquired with
the intention of being held until maturity are classified as Assets held
to maturity.
The acquisition value of discount and coupon instruments (held
and issued) refers to the accrued acquisition value. This value is the
discounted present value of future payments where the discount interest rate is 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.
35
Shares and participating interests
PROPERTY AND EQUIPMENT
Shareholdings are reported in the balance sheet as Shares and participating interests. This classification is independent of the measurement
category. In the Group, measurement is always done at fair value in
the balance sheet in those cases that can be reliably measured. Impairment testing is also carried out for shares classified as Available for sale
if there are indications that an impairment loss may need to be recognised. Impairment losses, if any, are recognised immediately in the
income statement. In the parent company, shareholdings in associated
companies and subsidiaries are measured at their acquisition value.
Assets where the customer bears the value change risk
Buildings in the banking business are carried at historical cost after
deductions for depreciation and impairment losses, if any. Depreciation according to plan is based on an estimated useful period for each
sub-component of the buildings. The remaining useful period for
each sub-component is tested annually. In addition, impairment testing is performed if indications of the need for impairment are present.
Any impairment losses are recognised immediately in the income
statement. Buildings owned as investment assets in the insurance business are reported at fair value in the balance sheet, since changes in
the value of the latter are related to the size of the financial undertakings in the insurance contracts.
In the balance sheet, assets where the change in value is completely
linked to a liability are reported as Assets where the customer bears
the value change risk.
CLASSIFICATION AND MEASUREMENT RULES FOR
FINANCIAL LIABILITIES
Measurement at fair value of loan receivables and other unlisted
financial items classified for measurement at fair value
Financial liabilities are normally measured at amortised cost. However, financial liabilities are carried at fair value in cases where they
have a trading book purpose.
Assets are classified for measurement at fair value if such measurement is judged to provide a fairer picture of the earnings trend than
measurement at amortised cost.
When disclosing the change in fair value of the credit risk component in a fi nancial instrument, calculations are made by separating
fair value attributable to changes in interbank interest rates. This
method is applied since this component can be read directly in a
liquid market and therefore gives a reliable objective measurement of
the change in fair value. The method avoids the subjectivity attributable to measuring fair value of the credit risk component separately.
The fair values of the credit risk component cannot be set at a single
value. Measurement of the credit risk component offers a wide variety of possible outcomes. This is because several different models
can be used and because usually there is no liquid market for the
credit risk in these assets.
REINSURANCE ASSETS
Receivables related to reinsurance agreements classified as insurance
contracts are reported in the balance sheet as Reinsurance assets.
INTANGIBLE ASSETS
An intangible asset is an identifiable non-monetary asset without
physical form. An asset is a resource that is expected to provide future
economic benefit over which there is control as a result of past events.
When acquiring companies, an acquisition balance sheet is prepared in which identifiable assets and liabilities are measured at fair
value at the time of acquisition. This measurement is also performed
when acquiring intangible assets that do not yet fulfi l the requirement for classification as an asset. The reason for this is that this
intangible right may nevertheless have a separable fair value. The
part of the acquisition price that cannot be attributed to identifiable assets and liabilities is recognised as goodwill. Acquired brands
are recognised in the balance sheet at cost, after deduction for any
amortisation and impairment losses. Internally accrued values in the
form of goodwill, trademarks, publishing rights, customer databases
and similar are not reported as assets in the balance sheet.
Investments in software developed by the Bank are carried as an
expense on a current basis where the expenditure refers to maintenance of existing business operations or an existing intangible asset.
For development of new intangible assets, or new business operations for existing intangible assets, the costs accrued are capitalised
from the time when it is probable that economic benefit that can be
reliably measured will arise.
An impairment test is performed when there is any indication that
the asset may have decreased in value. In addition, in cases where
the intangible asset has an indefi nite useful life, an annual impairment test is performed at the same point in time each year.
36
Due to credit institutions and deposits and
borrowing from the public
In the balance sheet, liabilities to credit institutions, as well as deposits and borrowing from the public are reported under Due to
credit institutions and Deposits and borrowing from the public,
respectively. This classification is independent of the measurement
category.
The fi nancial component separated from insurance contracts in
traditional legal life insurance agreements is also carried here. In
these contracts, the fi nancial portion of the insurance contracts has
an annual yield split. The yield split means that the policyholders
every year receive an amount which is the highest of the adjusted liability based on the original guaranteed yield and the yield arising as
a result of the yield split model. The calculation is accumulated for
each individual insurance contract. This means that the conditional
bonus is reduced in those cases where the yield in an individual year
is less than the guaranteed interest rate. The portion of the yield
which according to the yield split model belongs to the Bank is
reported as fee and commission income. If the yield is less than the
guaranteed yield per contract, it is reported under Net gains/losses
on fi nancial items at fair value.
The fi nancial component in the liabilities relating to occupational
pension contracts is measured at a market rate of interest.
Issued securities
Various types of securities issued by a stock exchange or other marketplace are reported in the balance sheet under Issued securities. This
classification is independent of the measurement category.
Other trading liabilities
Trading liabilities are measured at fair value. These consist of short
positions in various types of spot instruments. Other types of trading book liabilities are reported divided into categories of financial
liability.
Subordinated liabilities
Subordinated liabilities contain various types of financial liabilities
for which financiers are entitled to payment only after other lenders
have been paid. The item may consist of securities issued on a stock
exchange or of loans raised from individual counterparties. Subordinated liabilities are classed in this category regardless of the measurement category.
INSURANCE OBLIGATIONS
Insurance obligations comprise insurance contracts that have been
classified in their entirety as insurance, as well as the insurance com-
ponent in those insurance contracts that have been divided into a financial and an insurance component. Insurance obligations for which
the insured party bears the entire value change risk are reported in
the balance sheet item Liabilities where the customer bears the value
change risk.
Valuation of technical provisions
Technical provisions consist of life insurance provisions and provisions
for claims outstanding.
The various components in the insurance obligations are measured using market-adapted valuation parameters.
Mortality assumptions
Mortality assumptions vary depending on when various insurance
policies were taken out. The assumptions applied are based on joint
industry statistics. For the main part of the portfolio, the mortality assumptions used were compiled in 1990. These assumptions take into
account the expected future increase in life expectancy.
EMBEDDED DERIVATIVES
If there are liabilities or assets containing financial components that
can clearly be separated, these are separated and then reported separately. Exceptions include items in the trading book of embedded
derivatives carried at fair value, as well as instruments with similar
changes in value in the different components. For example, the components may be separated in issued structured bonds – known as
equity linked bonds and credit-linked notes.
TRADE DATE OR SETTLEMENT DATE ACCOUNTING
Purchases and sales of money market and capital market instruments
on the spot market are subject to trade date accounting. The same applies to derivative instruments. Other financial assets and liabilities are
normally reported on the settlement date. All instruments measured
at fair value, however, are measured starting on the trade date. This
also applies to the currency risk component in the financial assets and
liabilities that are carried at cost or amortised cost.
HEDGE ACCOUNTING
Fee assumptions
The fee assumptions vary depending on when various insurance policies were taken out and are based on the fees applying at the time
the contract was signed. Principally, this means one fee that is proportional to the premium and one fee that is proportional to the life
insurance provisions.
Provision for claims outstanding
Provision for claims outstanding consists of insurance indemnity due
but not paid at the close of the financial year, together with the estimated future operating costs for settling these claims. The provision
also consists of a reserve for claims incurred but not yet reported to
the company at the close of the financial year.
LIABILITIES WHERE THE CUSTOMER BEARS THE VALUE
CHANGE RISK
The item Liabilities where the customer bears the value change risk
comprise various financial liabilities where the liability has a direct link
to the value of a financial asset reported in the balance sheet but for
which the Group bears no risk whatsoever for changes in the fair value
of the asset.
Hedge accounting is divided into two hedge categories depending on
the purpose of the hedge: fair value hedges or cash flow hedges.
In the case of fair value hedges, the item being hedged and the hedging instrument are both recognised at fair value. Changes in value are
recorded directly in the income statement. This accounting policy is
used in cases where the purpose of the hedge is to protect the company against unfavourable changes in market prices.
In the case of cash flow hedges, the derivatives are recognised at fair
value while the hedged item is carried at amortised cost. For the effective portion of hedges, the change in value of the derivative is recognised in equity. An effective hedge means that the cash flows on the
hedged item correspond to the cash flows in the hedging instrument.
The ineffective portion of the derivative’s change in fair value is recognised directly in the income statement. The change in fair value of the
derivative is then transferred from equity at the same rate as the cash
flows of the hedged item are recognised in the income statement.
INCOME
Income is reported in the income statement when it is probable that
future economic benefits will be gained and these benefits can be reliably measured.
PROVISIONS
INTEREST INCOME AND EXPENSE
Provisions consist of expected negative outflows of resources from the
Group charged against earnings. Whether or not the outflow occurs,
however, is dependent on some type of future event that is fully or
partially beyond the control of the Group. Provisions are reported,
when the Group has a legal or informal obligation, as a consequence
of past events when it is probable that an outflow of resources will
be required to settle the obligation. The provision is recorded in the
amount estimated to be most probable taking into account the time
of settlement.
Interest income and interest expense on fi nancial assets and liabilities,
excluding interest for trading purpose are recognised in the income
statement using the effective interest method.
Also reported under net interest income is interest attributable to
derivative instruments used as formal or economic hedges of hedged
items that have interest flows reported in net interest income.
To arrive at a figure for net interest income which is clear of fi nancial assets and liabilities that are in the trading book and to gain an
overall view of activity in the trading book, all interest income and
interest expense relating to fi nancial assets in the trading book is
now reported under Net gains/losses on fi nancial items at fair value.
DERIVATIVE INSTRUMENTS
Derivative instruments consist of financial derivative contracts. All derivative contracts are carried in the balance sheet at fair value. Where
the fair value is positive, it is reported as an asset. When fair value is
negative, it is reported as a liability.
NET ACCOUNTING
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 in the balance
sheet in cases where there is an intention to settle the obligations by
netting or at the same time.
FEE AND COMMISSION INCOME AND EXPENSE
Income and expense for various types of services are reported under fee and commission income and fee and commission expense,
respectively. This means that brokerage income and various types of
management fees are reported as commissions. Other types of income
reported as commissions are payment commissions and card fees, as
well as commissions from insurance operations. Positive results from
the yield split in the profit-distributing part of the insurance business
are also reported as commissions.
37
NET GAINS/LOSSES ON FINANCIAL ITEMS AT FAIR VALUE
Net gains/losses on financial items at fair value includes all items with
an impact on income which arose when measured at fair value and
when realising financial assets and liabilities. Specifically, the following
items are reported here:
• Unrealised changes in fair value of those assets and liabilities classified as Assets at fair value, excluding the component of change
in value reported as interest.
• Unrealised changes in fair value of those assets and liabilities that
are subject to fair value hedges, excluding the component of
change in value reported as interest.
• Capital loss or gain from the sale of fi nancial assets and liabilities.
• Realised and unrealised changes in value as well as interest on assets and liabilities classified as held for trading.
• Unrealised and realised changes in fair value on derivative contracts used as formal or economic hedges of other financial assets
and liabilities in addition to the component of changes in value
reported as interest.
• Dividend income on those fi nancial assets classified as the trading
book.
• Negative yield split. This item contains the effects on operating
profits of the yield on fi nancial assets in the insurance business
being less than the change in guaranteed liability during the year.
• Ineffective component of derivatives used as hedging instruments
in cash flow hedges.
RISK RESULT – INSURANCE
Risk result – insurance comprises the changes that affect the operating
profit in those liabilities classified as insurance obligations.
OTHER DIVIDEND INCOME
Other dividend income consists of dividends on shares other than
those classified as holdings in the trading book. In the parent company’s income statement this item is called Dividends received. In the
parent company, dividends from subsidiaries and associated companies, as well as dividend income from shares in the trading book are
also reported here.
SHARE OF PROFITS OF ASSOCIATED COMPANIES
In the Group, the Bank’s share of the associated companies’ profit
before tax is reported as Share of profits of associated companies. The
share of the associated companies’ taxes is reported with other taxes.
OTHER INCOME
Income from sold services as well as external rental income relating
to leases pertaining to the Bank’s own properties are reported under
Other income.
STAFF COSTS
Staff costs consist of all direct staff costs, including various forms of
social security costs and other payroll overheads.
+ Accrued pension rights during the year. This item refers to the
year’s proportion of the calculated final total pension payment.
The calculation is based on an estimated fi nal salary and is subject
to actuarial assumptions.
+ Interest expense. The present value of the pension liability increases during the year since the time to disbursement becomes
shorter. This increase in liability is reported as an interest expense.
The interest rate applied is the current government bond rate for
maturities corresponding to the remaining period until the pension liability is due to be disbursed.
- Expected rate of return. The expected rate of return is based on
an assessment of the average return which will be earned on the
assets which are kept separate for securing defi ned-benefit pension obligations. The time horizon for the assessment is related to
the entire term of the commitment. The return is reduced by the
taxes and administrative costs for managing the pension obligations.
In addition, individual years may include parts of the actuarial profits
and losses carried in the income statement.
For defi ned-benefit pension plans, the pension payable is based
on the salary and period of employment implying that the employer
bears all the material risks for fulfi lling the pension obligation. For
the majority of defi ned-benefit plans, the assets are kept separate in
pension foundations and a pension fund. The net amount of estimated pension obligations and fair value of the plan assets is reported in the balance sheet. The assumptions applied are shown in the
note on staff costs. The difference between the actual and expected
return on the assets which are kept separate for securing the pension
obligations is called actuarial gains or losses. The part of the actual
return on the assets which is kept separate for guaranteeing pension
obligations and which is higher or lower than the expected rate of
return is called actuarial profit or loss. Actuarial profits and losses
also exist in those cases where the actual pension liability at the end
of the reporting period differs from the pension liability which has
been estimated to exist at the end of the period based on actuarial
assumptions. These profits and losses can occur when actuarial assumptions are changed and as an effect of the assumptions differing
from the actual outcome. Only that part of fair value on the plan
assets which can be expected to accrue to the Group is recognised as
a net asset. The amount is tested annually.
The accounting standard allows that parts of actuarial profits and
losses do not need to be carried in the income statement. Only that
part of the actuarial profits and losses exceeding the higher of 10%
of pension assets/liabilities at the opening of the reporting period is
carried in the income statement. The amount outside this corridor
is carried in the income statement on a straight-line basis during the
average remaining period of employment. For Handelsbanken, this
means capitalisation over a period of 20 years.
Premiums paid for defi ned-contribution pension plans are reported as an operating expense.
OTHER EXPENSES
PENSION COSTS
A pension cost computed on an actuarial basis, relating to pension obligations backed by the Bank’s own pension foundations, is reported
as an operating expense in the parent company. The calculations
comply with the Swedish Act on Safeguarding Pension Obligations.
Premiums paid for pension insurance are also reported under Operating expenses. The actuarial pension premium is reversed as an appropriation under Settlement of pensions, where settlement is made
against disbursed pensions and any compensation from the pension
foundations.
The net amount of three different items related to defined-benefit
pension plans is reported as an operating expense in the Group:
38
Other expenses consists of administrative expenses other than staff
costs and depreciation. Operating expenses pertaining to own properties are also reported here.
DEPRECIATION, AMORTISATION AND IMPAIRMENT OF
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS
Depreciation and amortisation
All assets that have been classified as Property and equipment are
depreciated over an estimated useful life. A linear depreciation plan is
usually applied. The property and equipment that consist of components with different set periods of useful life are divided into different
categories with separate depreciation plans. Normally this only applies
to properties.
Personal computers are usually written off over 3 years and investments in bank vaults and similar investments in premises over 10
years. Other equipment is depreciated over five years.
Intangible assets are divided into two categories. The fi rst category applies to assets for which it is possible to assess a useful period.
These are amortised over this set period of useful life. The other
category involves intangible assets for which it is not possible to
establish a defi nite useful period. These are not amortised. Instead,
they are the object of annual impairment testing. Goodwill is not
subject to amortisation.
Intangible assets for which it is possible to establish an estimated
useful period are amortised, usually for a maximum of five years.
Normally the useful period does not exceed five years. Acquired
brands are normally regarded as having a very long useful life, and
thus the amortisation period may be much longer. The same applies
to acquired customer contracts in the insurance business. The amortisation period is tested on an individual basis at the time of new
acquisition and also on a continuous basis if there are indications
that the useful life period may have changed.
Impairment losses
Impairment losses on property and equipment and intangible assets as
well as shares in subsidiaries, associated companies and any participation in joint ventures are reported when the recovery value is less than
the carrying amount. The recovery value is calculated, at the cashgenerating unit to which the asset refers, as the higher of an asset’s
value in use or net realisable value. The recovery value is determined
when there is an indication that the asset has fallen in value.
LOAN LOSSES
Actual loan losses for the year and impairments in respect of probable
loan losses for loan receivables and other receivables are reported as
Loan losses, after an individual assessment has been made. A loan loss
is reported in cases where the estimated value that can be recovered
is less than the book value. Any part of the receivable for which there
is no realistic possibility of recovery is reported as an actual loss. This
is the case, for example, when a trustee in bankruptcy has estimated
bankruptcy dividends, a scheme of arrangement has been accepted
or the receivable has been reduced in some other way. An amount
forgiven in connection with a reorganisation is always reported as an
actual loss.
For loans which have earlier been reported as actual loan losses in
full, a reappraisal of the size of the loss is made in those cases where
the customer is following a payment plan.
Impairment for probable loan losses is made for bad debts if the
value of the collateral together with other payments from the counterparty do not cover the book value of the receivable. Impairment
losses are recognised down to the amount which is expected to
be realised, taking into account the value of the collateral and the
present value of expected payments from the customer. If the collateral is a listed asset, the valuation of the collateral 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 property mortgages, the underlying
collateral valuation is made in the same way as for repossessed properties.
In cases where the amount expected to be recovered has been calculated by discounting future cash flows, the method of calculation
implies that the recovery value increases as the time for the payment
from the customer approaches. The difference thus arising in the
book value is recorded as interest income.
Apart from the risk assessment for individual loan receivables
made quarterly by all units in the Group that are responsible for
customers and loans, a central assessment of homogeneous groups
of loan receivables is made at the central level. This assessment takes
into account whether there have been loan losses in these groups of
loan receivables that cannot yet be allocated to an individual loan.
If necessary, a group provision is made for these loan receivables. As
soon as the receivable can be individually identified, the provision is
transferred to probable loan losses.
VALUATION OF REPOSSESSED PROPERTY
Property repossessed to protect claims is measured at the time of
repossession at fair value. Repossessed property is reported and
valued thereafter together with other similar properties. In the parent company repossessed property, other than repossessed financial
instruments, is valued according to rules for Valuation of inventory as
stipulated in IAS 2, which means they are valued at the lower of cost
and net realisable value. In the parent company, financial assets repossessed for protection of receivables must always be valued and reported
as if they had been classified as available for sale.
GAINS/LOSSES ON DISPOSAL OF PROPERTY AND
EQUIPMENT AND INTANGIBLE ASSETS
The differences between the remaining carrying amount for property
and equipment and intangible assets and the sale price is reported
under Gains/losses on disposal of property, equipment and intangible
assets.
TAXES
The tax expense for the period consists of Current tax and Deferred
tax. Current tax refers to taxes relating to the period’s taxable result.
The item also includes the Bank’s share of associated companies’ taxes. Deferred tax is tax referring to temporary differences between the
value of an asset or liability in the accounts and its taxable value.
LOAN COSTS
Loan costs are normally carried as expenses on a current basis. Where
the expenditure refers to intangible assets developed by the Bank, the
expenditure is capitalised from the date on which a decision is made to
capitalise development costs.
LEASING
Leases are defined as finance or operating leases. A finance lease implies that the lessor transfers substantially all the risks and rewards
associated with ownership to the lessee. Operating leases are all
non-financial leases. In accordance with the Annual Accounts Act for
Credit Institutions and Securities Companies, all leases in the parent
company have been classified as operating leases. This means that leasing fees paid are reported as costs, regardless of whether the lease is
of the finance or operating type. In the Group, the majority of leases
for which the Group is lessor are finance leases. A finance lease implies
that the leases are reported as loans.
SEGMENT REPORTING
Income and expenses are reported both by business area and by geographical area. Classification into segments is based on differences in
risks and opportunities. The primary basis of classification is business
areas, regardless of geographical location. Income and expenses in
each segment are reported gross before transactions between the various segments have been eliminated. Transactions within the segments
have been eliminated.
39
FINANCIAL REPORTS ■ INCOME STATEMENT – GROUP
Income statement – Group
The accounting and valuation principles applied are shown in the section titled Accounting Policies.
GROUP
SEK m
2006
2005
Interest income
Note 1
50 133
39 134
Interest expense
Note 1
-35 161
-24 044
14 972
15 090
Net interest income
Note 2
10 521
8 182
Note 2
-1 289
-1 127
9 232
7 055
Note 1
4 261
3 459
Note 3
571
194
193
158
Note 14
105
59
Other income
Note 4
225
308
29 559
26 323
Total income
Staff costs
Note 5
-7 714
-6 678
Other expenses
Note 6
-4 180
-3 747
Note 17, 18
Total expenses
-557
-513
-12 451
-10 938
17 108
15 385
261
Note 7
55
Note 8
1
4
17 164
15 650
Operating profit
Taxes
Note 26
Profit for the year
-4 036
-4 296
13 128
11 354
13 128
11 354
-
-
20.41
16.98
Attributable to
Minority interest
Earnings per share *
* No dilution.
40
Note 9
FINANCIAL REPORTS ■ BALANCE SHEET – GROUP
Balance sheet – Group
GROUP
SEK m
2006
2005
ASSETS
Cash and balances with central banks
4 800
7 014
86 565
44 490
Note 11
177 175
136 546
Note 12
1 100 538
983 681
Bonds and other interest-bearing securities
Note 13
180 178
140 220
Note 14
72 917
28 857
Note 15
62 827
134 432
Derivative instruments
Note 16
53 703
68 169
Treasury bills and other eligible bills
Note 13
Loans to the public
Reinsurance assets
108
48
Intangible assets
Note 17
12 524
12 789
Property and equipment
Note 18
3 545
3 318
Current tax assets
747
67
265
197
Deferred tax assets
Note 26
Net pension assets
Note 5
3 914
3 698
Other assets
Note 19
21 012
13 629
Prepayments and accrued income
Note 20
9 190
5 752
Total assets
Note 10
1 790 008
1 582 907
Note 21
320 482
289 053
Deposits and borrowing from the public
Note 12
533 885
407 617
Liabilities where the customer bears the value change risk
Note 22
62 833
135 926
Issued securities
Note 23
595 001
486 344
Note 16
66 182
73 734
Note 24
51 829
48 137
Insurance liabilities
Note 25
2 871
862
488
767
LIABILITIES AND EQUITY
Current tax liabilities
Deferred tax liabilities
Note 26
6 810
5 950
Provisions
Note 27
127
36
Pension obligations
Note 5
422
-
Other liabilities
Note 28
15 537
10 180
Accruals and deferred income
Note 29
15 643
11 748
Note 30
51 672
46 795
Total liabilities
Note 10
1 723 782
1 517 149
Minority interest
Share capital
Other reserves
0
0
2 888
2 879
3 972
3 583
Retained earnings
46 238
47 942
Profit for the year
13 128
11 354
Total equity
66 226
65 758
1 790 008
1 582 907
41
FINANCIAL REPORTS ■ STATEMENT OF CHANGES IN EQUITY – GROUP
Statement of changes in equity – Group
GROUP
SEK m
Shareholders’ equity 31 December 2004
Share
capital
Statutory
reserves
2 878
2 751
Hedge
reserve
Fair
value
reserve
Retained
earnings
Minority
interest
Total
55 743
0
61 372
Impact of transition to IFRS 2005
Net effects of transition to measuring
at fair value according to IAS 39
-149
680
Provision by group for individually assessed receivables
Impact of changed accounting policies in
the insurance operations 2006
2 878
2 751
-149
680
Acquisition SPP
Note 31
118
0
192
192
109
Note 31
380
-
-
109
192
Profit for the year according to 2005 income statement
-200
380
-
11 365
Impact of changed accounting policies in
the insurance operations 2006
Profit for 2005 after adjustment
Total changes before transactions with the owners
-
-
109
60 789
-580
109
Total changes in equity not recognised in
the income statement
192
101
11 365
-11
-11
11 354
11 354
11 154
-
11 455
Dividend
-4 018
-4 018
Repurchase of own shares
-2 468
-2 468
-
Reduction of share capital by means of cancellation
-99
99
Bonus issue
100
-100
2 879
2 751
-40
872
59 296
2 879
2 751
-40
872
55 644
Impact of changed accounting policies
in the insurance operations 2006
Change in available-for-sale instruments,
after tax
Note 31
Total changes in equity not recognised in
the income statement
0
62 106
-3 652
251
138
138
Note 31
-492
-
-
138
251
Profit for the year
65 758
251
Change in cash flow hedges, after tax
Exchange difference
0
-3 652
Opening equity 2006 after adjustment
-492
-492
-
13 128
-
-
138
251
12 636
-103
13 128
-
13 025
Dividend
-4 543
-4 543
-4 362
-4 362
-89
89
-
98
-98
Bonus issue
42
54 629
-580
Exchange difference
-341
-360
118
Change in available-for-sale instruments,
after tax
-872
-360
2 888
2 751
98
1 123
59 366
0
66 226
FINANCIAL REPORTS ■ CASH FLOW STATEMENT – GROUP
Cash flow statement – Group
GROUP
SEK m
2006
2005
17 164
15 650
OPERATING ACTIVITIES
Operating profit
of which paid-in interest
47 690
46 823
of which paid-out interest
-31 639
-30 137
of which paid-in dividends
2 223
252
Adjustment for non-cash items in the operating profit
Loan losses
Unrealised changes in value
Paid income tax
233
238
-2 088
1 364
557
513
-4 248
-6 735
Changes in the assets and liabilities of operating activities
-40 629
-27 470
Loans to the public
-117 091
-121 494
Financial current assets
-123 416
-21 463
45 429
30 057
122 648
65 374
Issued securities
108 657
43 708
6 879
-13 681
3 691
21 940
Derivative instruments, net positions
Short-term positions
Claims and liabilities on investment banking settlements
-7 165
-150
Other
-8 501
-2 675
2 120
-14 824
Cash flow from operating activities
INVESTING ACTIVITIES
Acquisition of subsidiaries
Change in shares
Change in interest-bearing securities
Change in property and equipment
Change in intangible non-current assets
Cash flow from investing activities
-
-
266
342
0
5
-323
-276
-83
-23
-140
48
FINANCING ACTIVITIES
Repayment of subordinated loans
-
-
4 876
21 613
Dividend paid
-4 543
-4 018
-4 362
-2 468
Cash flow from financing activities
-4 029
15 127
Cash flow for the year
-2 049
351
Issued subordinated loans
Liquid funds at beginning of year
7 014
6 396
2 120
-14 824
-140
48
-4 029
15 127
Exchange rate difference on liquid funds
Liquid funds at end of year
-165
267
4 800
7 014
43
FINANCIAL REPORTS ■ NOTES – GROUP
Risks and risk control
HANDELSBANKEN’S UNIQUE WORK METHOD
HANDELSBANKEN’S APPROACH TO CREDIT RISK
At Handelsbanken, business transactions are always based on the
customer’s requirements. The branch has responsibility for the customer and all decisions are made as close to the customer as possible.
The branches aim to achieve sustainable and high profitability by offering high-quality services to satisfied customers. Handelsbanken’s
decentralised method of working is a cornerstone in how it achieves
its corporate goal. At Handelsbanken, credit decisions are made at
the branches, which are also responsible for following up credit risks
and being proactive in its risk management. The fact that all branches are so active in managing credit risk means that Handelsbanken
in historic terms has had low loan losses. New capital requirements
affect how capital adequacy will be calculated and how risks will be
managed. Handelsbanken is currently working on developing new
methods and tools in the area of risk management.
The Bank’s approach to credit risk can be summarised in the
following points:
• The Bank strives to maintain its historically low level of credit
losses in relation to other banks, thus contributing to the Bank’s
profitability target and retaining its sound fi nancial position.
• A new borrower should have a repayment ability which in the
opinion of the Bank is normal or better than normal.
• The Bank’s overall profitability target means that the credit risk
must be in reasonable proportion to the profitability of the exposure.
• The Bank aims for the individual employee’s responsibility for
business 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 assess the risk.
HISTORICALLY LOW LOAN LOSSES
RISK ORGANISATION
An excellent picture of Handelsbanken’s management of credit risks
is obtained by looking at the actual outcome. For a long time – and
particularly during the fi nancial crisis in the early 1990s – the Bank’s
method of managing credit risk has led to significantly lower loan
losses than for its competitors in relation to outstanding loan volumes. In the past five years, Handelsbanken’s average loan loss ratio
has been 0.02%, compared to 0.08% for the other Swedish banks.
This picture is further enhanced when looking at bad debts as
a proportion of lending at Handelsbanken. In the past five years,
Handelsbanken’s average bad debt reserve ratio has been 0.20%,
compared to 0.47% for the other Swedish banks.
The board is responsible for assessing and monitoring the risks arising in the Group’s operations. The board ratifies policy documents
and instructions describing how various risks should be managed
and reported. For credit risks, the board draws up a decision structure for limits but does not set any limit for the total exposure.
The board decides on limits for other fi nancial risks in the banking
operations and the CEO allocates these limits over various business
areas. For the Group’s profit-distributing insurance companies, there
is a risk that the yield agreed with the customer will not be attained
and that the companies must therefore contribute capital. The board
does not set a limit for this risk. The CEO ensures that this risk is
subject to regular follow-up and that any risk exposure exceeding
a certain amount determined by the board is reported to the CEO
and the board.
At the beginning of 2007, the credit risk control and fi nancial
risk control units were merged into an independent risk control unit
for the whole of the Handelsbanken Group, reporting to the head
of Central Control and Accounting. At group level, risk exposure
is checked by this unit which measures and follows up risks and reports to the Bank’s CEO and board. In each business area that has
been allocated a limit, a local risk control unit reports the risk exposure to the central risk control units and to the business area.
Loan losses as a percentage of lending
(ANDELSBANKEN
44
/THER3WEDISHBANKS
DESCRIPTION OF RISK
MAIN RISKS
Credit risk
Depends whether an individual borrower
can fulfil his commitments to the Bank.
WHERE THE RISK MAINLY ARISES
Handelsbanken International
Handelsbanken Liv / SPP
Following a detailed review, the Swedish Financial Supervisory
Authority has assessed that the Bank’s method for internal risk
classification is reliable. Their assessment included a condition concerning the organisational location of the independent risk control
function. This condition has now been met by an organisational
change. This means that the Bank meets the Supervisory Authority’s
strict requirements for applying the internal rating method and that
the method will be used to calculate the capital requirements.
FINANCIAL RISKS
Operational risks – Handelsbanken will use the standard model
Market risk
Impact on the Bank’s profits of
changed market prices
where the capital requirement is based on the Bank’s income in its
various business areas.
Central Treasury
Liquidity risk
That the Bank cannot obtain
funding at normal prices
Whole Group
OTHER RISKS
Capital assessment and risk management – Pillar 2
Operational risk
Manual efforts, errors in procedures and
systems leading to losses
Whole Group
Insurance risk
A life insurance contains uncertainty
depending on the insured party’s
longevity or health
Business risk
The risk related to variations
in income and expenses
Market risks – calculated in accordance with the Financial Supervisory Authority’s standardised directives and where there are relatively few changes.
Whole Group
NEW CAPITAL ADEQUACY RULES
On 1 February 2007, new capital adequacy regulations were implemented – the Basel II rules. The new rules entail major changes in
how the Bank’s capital requirement is to be calculated and how a
satisfactory capital base is ensured. To avoid dramatic changes, there
are transitional rules with gradual adaptation over a period of three
years. The new regulations will be fully implemented from 1 January
2010. The changes apply in particular to banks which apply to use
their own risk calculations – called the Internal Rating Based Approach – when calculating the minimum capital cover requirement.
The work on adapting the Bank to Basel II has been in progress
for several years with the main focus on the regulations regarding
minimum capital. During 2006, the work continued of adapting the
Bank to the regulations. The branches verified the credit information and new procedures. Development of system support for internal risk classification, risk calculation, internal and external reporting
continued and is still in progress for use with capital assessment
and risk management. The Bank’s work to fully implement the new
regulations will continue until the end of 2009.
The regulations cover three main areas, known as pillars. Pillar 1
deals with how the requirements for minimum capital will be fulfi lled and Pillar 2 with the supervision of the authorities and banks’
assessment and management of capital and risks. Finally, Pillar 3
deals with publication of information concerning risk management
and capital adequacy.
Minimum capital requirements – Pillar 1
Credit risks – Handelsbanken applies an internal method for risk
classification and calculation of credit risk. The method is also called
Internal Risk Classification and is based on the internal rating method which the Bank has successfully used for more than 25 years.
The internal rating method is adjusted and developed, but the focal
point of the credit process is the personal contact with the customer.
An important starting point is to retain the strengths in the Bank’s
credit process and credit culture.
Banks must have a process for assessing their total capital requirement in relation to their risk profi le and a strategy for maintaining
the capital level where the board is responsible for establishing
the bank’s risk tolerance. The process is known as internal capital
adequacy assessment (ICAAP). All significant risks must be identified, measured and reported in this process. The assessment must
put special focus on the risks which are not managed under Pillar 1.
Some risks are appropriate for capital cover while other risks such as
liquidity risk, are better managed by other measures. All risks, including those which are not covered by capital, must be included in
the internal capital adequacy assessment. The banks are expected to
keep a larger capital base than the minimum level specified in Pillar
1. In 2006, substantial resources have been devoted to developing
processes and methods for ICAAP.
Handelsbanken has decided to base its ICAAP on an economic
capital model (EC). The EC model provides a measure of the
Group’s overall risks and corresponds to the capital which with very
high probability will cover unexpected losses or decreases in value
from the perspective of the shareholders. The calculation is made
with a time horizon of one year and with a given confidence level.
The confidence level is currently 99.97%. The rating agencies’ statistics show that for AA-banks, the probability is approximately 99.97%
that they will meet their payments in time, with a time horizon of
one year. The confidence level to be applied is determined by the
board which also establishes the Board’s capital policy where the
Bank’s approach to risk is set out.
The capital available to meet risks is called Available Financial
Resources, AFR. AFR consists of the Bank’s equity including other
available fi nancial values.
The head of Central Control and Accounting has the main
responsibility for Handelsbanken’s ICAAP. His task is to weigh
together all the significant risks and other factors for assessing and
deciding the Bank’s and the Handelsbanken Group’s need of riskbearing capital and other fi nancial resources.
Internally, the regional banks and business operations are steered
towards the Bank’s overall profitability goal. To measure and steer
the business operating units towards the Bank’s overall goal, all the
capital requiring return is allocated to these units.
Public disclosure – Pillar 3
Information which must be published mainly covers two areas:
• Detailed mandatory information concerning models and data
according to the minimum requirements in Pillar 1.
• Information about how the Bank works with Internal Capital
Adequacy Assessment and risk control according to Pillar 2.
45
CREDIT RISKS
Credit organisation
The Bank’s focus on understanding and individually assessing each
customer in depth requires a strongly decentralised organisation.
The credit responsibility lies with the branch manager or the employee delegated by the manager at the branch responsible for the
customer.
The day-to-day business relationship with the customer gives the
branch an up-to-date picture of how the customer’s operations are
progressing. The branch can quickly identify potential problems
which may affect the Bank’s credit risk. The fi nancial consequences
of the lending affect the earnings of the branch both positively and
negatively and it is the branch that handles the problems arising if a
customer’s ability to pay is impaired. The Bank’s method of working means that everyone who carries out transactions which entail
risk, learns a well-established way of assessing what is an acceptable
level of risk for the Group. This unambiguous responsibility and
Proportion of limit volumes per risk class
Decision levels for granting credits
The board
Proportion of number of limits
7%
Proportion of limit amounts
74%
Credit committee of the board
Central Credit Department
36%
Regional banks
Credit committee
57%
Branches
Credit committee
foreign branches
Regional banks
Credit committee
Credit committee
21%
5%
Handelsbanken Finans
Handelsbanken Stadshypotek
Credit risk exposure
SEK m
2006
2005
1 100 538
983 681
177 175
136 546
Unutilised part of granted overdraft facilities
130 956
124 200
Credit commitments
166 576
149 664
22 392
9 387
Loans to the public
Commercial paper programmes
Other commitments
61
70
Guarantees, credits
18 395
12 052
Guarantees, other
39 618
33 144
Documentary credits
49 150
50 542
Derivatives
42 132
42 934
86 565
44 490
180 178
140 220
Total
72 372
28 461
2 086 108
1 755 391
Geographical distribution
Off-balance-sheet
commitments
Lending
SEK m
Public
Credit
institutions
Derivatives*
Investments
Guarantees
Other
Total
Sweden
834 978
86 133
32 244
246 797
30 320
219 096
1 449 568
Norway
104 494
117
174
1 505
4 386
22 727
133 403
Finland
63 549
368
23
9 045
10 745
12 564
96 294
Denmark
34 659
8 132
169
2 067
2 387
5 206
52 620
Great Britain
37 022
442
115
2 851
1 793
8 552
50 775
Other countries
Total
25 836
81 983
9 407
76 850
8 382
100 990
303 448
1 100 538
177 175
42 132
339 115
58 013
369 135
2 086 108
* Refers to positive market values after taking into account legally viable netting contracts.
46
Loans to the public, by sector
2006
2005
Loans before
provisions
Provisions
for probable
loan losses
Loans after
provisions
Loans after
provisions
484 034
-341
483 693
432 118
338 087
-22
338 065
302 526
322 413
-481
321 932
298 870
79 179
-62
79 117
77 647
Corporate services
40 362
-71
40 291
37 160
Manufacturing
40 674
-239
40 435
38 513
Retail
37 368
-233
37 135
35 686
Transport and communication
17 333
-22
17 311
18 823
Construction
12 673
-51
12 622
11 888
Municipalities
7 880
0
7 880
8 542
Agriculture, hunting and forestry
6 371
-6
6 365
6 344
Hotel and restaurant
5 220
-21
5 199
5 173
SEK m
Private individuals
Of which mortgage loans
Property management
Of which ownership housing co-operatives
Insurance operations
Other sectors
Total loans to the public, before taking into consideration collective provisions
10 671
0
10 671
4 520
117 532
-189
117 343
86 460
1 102 531
-1 654
1 100 877
984 097
Collective provisions
Total
-339
-416
1 100 538
983 681
2006
2005
Loans to the public, collateral
SEK m
1
607 966
547 384
Agricultural property
14 334
10 059
Other property
88 128
83 593
Governments, municipalities and county councils
95 221
106 207
Floating charges on assets
17 767
21 283
Guarantees
17 912
13 348
Unsecured
138 440
116 454
Residential property
Other collateral
Total
1
120 770
85 353
1 100 538
983 681
Including ownership housing co-operatives.
Bad debts and/or non-performing loans, by sector
Bad debts
SEK m
Gross
Provisions
Net2
Of which
non-performing
Non-performing
loans which
are not bad debts
Private individuals
750
-341
409
377
370
Property management/corporate services
952
-552
400
99
143
Manufacturing
451
-239
212
58
18
Retail
328
-233
95
79
17
32
-22
10
9
4
Construction
59
-51
8
7
84
Other
Total
2
28
-21
7
5
0
272
-198
74
63
34
2 872
-1 657
1 215
697
670
Of which
non-performing
Non-performing
loans which
are not bad debts
Book value after provisions.
Bad debts and/or non-performing loans, geographic distribution
Bad debts
SEK m
Gross
Provisions
Sweden
1 851
-1 071
780
483
453
Norway
136
-60
76
76
199
Finland
156
-31
125
106
0
Denmark
689
-462
227
25
18
Great Britain
Net
3
33
-27
6
6
0
Rest of Europe
7
-6
1
1
0
North America
0
0
0
0
0
Asia
0
0
0
0
0
2 872
-1 657
1 215
697
670
Total
3
Book value after provisions.
47
proximity to the customer means that problems can be identified at
an early stage and the Bank’s loan losses can thus be reduced. Most
branch employees have a personal limit within which they have sole
responsibility for their decisions. The limit determines the total
amount of credit which the employee can grant to a customer. The
size of the limit may vary depending on the customer category and
collateral. If there is a need for larger credits, there are corresponding decision limits at the regional level. The largest credits are decided by the board’s credit committee.
The credit process always starts at the branch, and any decision at
a higher level of the Bank is based on the credit process planning prepared by the branch. No credit process may proceed at the Bank without the recommendation of the branch responsible for the customer,
and thus the branch always has the credit responsibility. This does not
mean, however, that the branches have no support from the regional
and central functions. Regionally, there are credit departments that
assist the branches with matters relating to business economics and
risk assessment.
For commitments over SEK 1 million – for mortgages, over SEK
4 million – the branch draws up a credit limit. This specifies a limit
amount for the customer’s maximum credit commitment to Handelsbanken. The credit limit also contains information concerning
the collateral requirements that apply to the limit amount. A business
evaluation with an analysis of the customer’s operations and an assessment of the customer’s repayment capacity is attached to the credit
limit. The amount and arrangement of the credit limit are determined
by the customer’s need of various types of credit and the Bank’s risk
assessment.
Principles for managing credit risk
The Bank must have a high capacity to grant credit and must always
be able to offer good customers credit on competitive terms. This
implies a commitment in terms of both competence and processing
times. A high level of skills and competence on the part of those
working with credits contributes to retaining the Bank’s low credit
risk level and thus increasing the Bank’s profitability. This is based
on business being done according to the Bank’s strict requirements.
The Bank aims to be selective in choosing customers and the borrowers must be of high quality. The quality requirement must never
be neglected in order to achieve a high loan volume.
Some 96% of the overall limit volume for credit risks was to customers with a repayment capacity assessed as normal (risk category
5 according to the Bank’s rating model) or better than normal. This
approximately corresponds to an investment grade rating from external rating agencies such as Moody’s and Standard & Poor’s.
Skills and working methods are crucial in credit processing and are
also important conditions for rapid organic growth. The Bank would
not have been able to grow so quickly outside Sweden in the past ten
years without such deeply rooted working methods and skills in the
area of credits. An important stage in international expansion is to implement Handelsbanken’s credit culture on new markets.
The Bank regards the Nordic region and Great Britain as domestic markets where it can maintain close contact with customers
through a local presence. In future domestic markets such as Poland
and Germany, the credit risk mandate will gradually become more
similar to that which applies in the Nordic countries and Great Britain. Lending in other countries is mainly aimed at customers with a
valuable relationship with the Bank in one of its domestic markets.
Internal rating and risk assessment
A risk assessment is made on which to base credit/limit decisions.
This results in an assessment of the size of the credit risk in the
Bank’s exposure to the customer. In particular, the customer’s
repayment capacity is analysed. The Bank’s risk assessment for an
48
individual customer is a combination of the customer’s repayment
capacity, the size of the credit/limit and the collateral provided by
the customer. The assessment is performed at least once a year for all
customers with a limit, for both corporate customers and private individuals. The assessment of repayment capacity results in an internal
rating of the customer. The Bank has applied the same rating system
for 25 years.
Each branch makes a quarterly risk report, where it reviews its
credit commitments to identify and report credits where the borrower’s repayment capacity is impaired and the Bank’s collateral is
insufficient. For each such commitment, the probability of loss is
specified as well as the amount at risk. The risk is classified as low
potential, high potential or probable loss. If it is considered probable
that a borrower will not meet his or her obligations to the Bank,
the credit is classified as a bad debt and will be written down to
the value of the payments expected to be received. Low potential
or high potential risk exists if the borrower’s repayment capacity is
impaired, but it is still deemed probable that payments will be made.
Normally, risks are identified and reported and risk-limiting measures are taken before a commitment becomes non-performing. The
risk reports are presented each quarter to the boards of the regional
banks and subsidiaries and to the board of the Bank.
Measurement of credit risks
To quantify its credit risks, the Bank calculates the probability of
default (PD), the exposure at default (EAD), and the proportion of
the loan that the Bank would lose in the case of default (loss given
default – LGD). These factors are mainly calculated on the basis of
previous losses incurred. This information is used for several important purposes, above all the pricing of risk and the calculation of
capital requirements according to the Swedish Financial Supervisory
Authority’s capital adequacy regulations.
Credit risk in the insurance operations
The investment policy for the insurance companies describes how
the credit risk is to be managed. Investments in fi xed income securities that are not issued by governments, municipalities or bankowned mortgage institutions may comprise a maximum of 25% of
the fi xed income investments. Investment in fi xed income securities
with a credit rating from an external rating institution below “A”
requires approval from the board of the insurance companies. The
creditworthiness of issuers and counterparties is determined via both
internal and external credit assessments.
OPERATIONAL RISKS
Operational risk is defi ned as the risk of loss due to deficient or
incorrect procedures and systems, human error on the part of the
Bank’s employees or external events. The Bank’s defi nition of operational risk also includes legal risks. Identification, management
and control of operational risks is a clear and integrated part of
managerial responsibility at all levels at Handelsbanken. The Bank’s
decentralised method of work promotes cost-consciousness that results in vigilance against potential loss risk in the daily procedures.
Operational losses are the subject of careful examination. Major efforts are put into analysing how to avoid recurrences. In 2006, the
Bank’s operational losses were SEK 68m. This refers to the total of
individual losses in excess of SEK 25,000. SEK 31m of these losses
was due to external crime.
Apart from the responsibility for operational risk borne by the
managers responsible for various functions, there are managers with
special responsibility for information security and physical security
who report directly to the group chief executive. As an aid to identification, measurement and handling of operational risk, the Bank has a
separate reporting system for operational incidents and losses. The risk
control function at Central Control and Accounting has the overall
responsibility for the methods used for identifying and quantifying
operational risk and for monitoring and reporting these risks to the
management and the board.
To supplement the day-to-day control of operational risk, all main
departments, regional banks and subsidiaries in the Group carry out
annual self-evaluations of operational risk. This review is for the purposes of identifying operational risk and quantifying the losses that
may arise. Following the review, measures are to be proposed and
taken to reduce the risks. A general review of the Group’s operational risks is performed twice a year by the heads of the regional banks,
main departments and subsidiaries. The outcome of these reviews is
reported to the board.
The head of Central Control and Accounting has overall responsibility for the independent control of market risks in the Group.
This responsibility entails ensuring that documentation for decisions
is produced for risk measurements and limits. The head of Central
Control and Accounting is also responsible for appropriate information and report systems being produced for risk measurements and
limits.
The fi nancial risks and limit utilisation for the trading operation,
the internal bank and the mortgage business are checked on a daily
basis. Market risks are regularly assessed by the risk committee, led
by the head of Central Control and Accounting. The risk committee’s analyses and observations are regularly reported to the group
chief executive and the board of the Bank.
FINANCIAL RISKS
Market risk
Interest rate risk
The Group’s interest rate risks arise mainly at Handelsbanken Capital Markets, Central Treasury, the insurance operation and in the
regular lending operations at subsidaries and the regional banking
operations. Interest rate risk arises in banking operations as a result
of the lending partly having longer maturities than the refunding.
The Bank eliminates most of this risk by entering into interest rate
swap agreements. In the insurance operation, the opposite applies,
i.e. the liabilities have longer maturities than the assets. Furthermore, traditional life insurance products frequently offer a guaranteed yield. As a result of this, rising interest rates have a positive effect
on the insurance operation’s activities. This fundamental difference
between banking operations and insurance means that combined operations reduce the Group’s vulnerability to changes in interest rates.
In general, interest rate risk is taken in markets which are characterised by good liquidity. Interest rate risk is measured at the Group in
several ways. Value at Risk, VaR, is used for Handelsbanken Capital
Markets’ trading portfolios and for the insurance operation. For other
units and for the aggregate interest rate risk in the Group, the interest
rate risk is measured as the effect on fair value of a major instantaneous parallel shift of all interest rates. As at 31 December 2006, the
Bank’s interest rate risk in the case of a parallel shift in the yield curve
of one percentage point was SEK –637m (–877).
Market risk is the risk that price changes in the fi nancial markets
– such as interest rates, currencies, equities, commodities or real
estate – result in profits or losses for the Group. Market risks arise
in Handelsbanken Capital Markets’ trading portfolios, insurance
operations and the internal bank. Market risks also arise in the
other banking operations. Handelsbanken Capital Markets is market
maker for fi xed income products, currencies and equity instruments.
Risks arise either through customer-related business or the Bank’s
own positions. Central Treasury’s trading portfolio, with one or
two exceptions, consists of securities that are eligible as collateral
with the Riksbank and is used for securing payments in the daily
clearing operations. In the insurance operations, management of the
policyholders’ funds and the equity capital is exposed to market risk,
mainly interest rate and equity price risks.
Risk management and analysis
The board establishes the Bank’s fi nancial risk policy, stating how
the Group’s fi nancial risks should be measured and reported. Based
on the fi nancial risk policy, the board determines the total market
risk and liquidity risk limits for the entire Group within each type
of risk. The limits are then allocated to the various business areas by
the group chief executive.
Interest rate adjustment periods for the Group’s assets and liabilities
–3 mths
3–6 mths
6–12 mths
1– 5 yrs
5 yrs–
Total
Lending
783 063
52 601
46 787
208 929
32 943
1 124 323
Banks and other financial institutions
171 470
5 500
1 753
487
35
179 245
Bonds, etc.
105 858
23 673
28 610
61 641
51 020
270 802
1 060 391
81 774
77 150
271 057
83 998
1 574 370
SEK m
Assets
Total assets
Liabilities
Deposits
442 443
5 605
4 104
15 951
92 877
560 980
Banks and other financial institutions
286 902
17 679
7 796
2 262
2 916
317 555
Issued securities
340 154
101 382
152 040
36 581
15 895
646 052
Other liabilities
824
1 183
3 029
39 587
9 576
54 199
Total liabilities
1 070 323
125 849
166 969
94 381
121 264
1 578 786
Off-balance sheet items
42 910
-110 941
8 750
28 399
33 997
3 115
Difference between assets and liabilities
including off-balance-sheet items
32 978
-155 016
-81 069
205 075
-3 269
-1 301
The above table shows the interest rate adjustment periods for the Group’s interest-rate related assets and liabilities as at 31 December 2006, reported by the trade date.
Non-interest bearing assets and liabilities have been excluded.
49
Measured as the impact on net interest income for the period January
to December 2006 in the event of an immediate parallel increase/
decrease in the yield curve of one percentage point, the net interest
income risk in banking operations was SEK –153m (70). This risk
measure is constructed so that it assumes that all interest-bearing
assets and liabilities and off-balance-sheet items in the banking operation as at 31 December 2006 are held to maturity and that no new
positions are taken.
The non-linear interest rate risk is measured and a limit set in terms
of the impact on fair value in the case of substantial changes in underlying market interest rates and volatilities.
Equity price risk
The Group’s equity price risk mainly occurs in the Bank’s strategic
share portfolio and also at Handelsbanken Capital Markets and the
insurance operations. Handelsbanken is a leading market maker for
structured products which give rise to equity price risks in the trading operations. Apart from this, the Bank takes its own positions to
a limited extent. In addition to positions in underlying shares, the
equity price risk in the trading portfolio also contains positions in
options which give rise to non-linear risk. The Bank has elected to
set limits on and measure the risk in this portfolio using pre-defined
stress scenarios. This means that the price risk is measured when there
are significant changes in underlying shares prices and volatitilies. This
method captures the non-linear risk in an appropriate manner. Value
at Risk is used as a complementary risk measure for equity price risk in
trading operations.
The equity price risk is small in the Bank’s other operations.
A limit is set for the risk and it is measured as the value change risk in
the case of 10-percent fluctuations in share prices. For the equity price
risk in insurance operations, see a separate section.
The table below shows the risk in the Bank’s equity positions as at
31 December 2006 for hypothetical changes in underlying prices and
volatilities. No correlation is taken into account between the equity
markets in different countries.
Equity price risk
31 December 2006
SEK m
Change in equity price
Change in volatility
25%
0%
10%
590
596
605
-10%
-590
-567
-550
The Bank’s foreign exchange exposure mainly arises from Handelsbanken Capital Markets’ trading in the international foreign exchange
markets. Most of this trading is intra-day trading. The board has
established limits for Value at Risk and stress risk relating to the exchange rate risk arising in Handelsbanken Capital Markets’ trading
operations.
Foreign exchange exposure also arises in the normal banking operations as part of processing customers’ payment flows. The board has
allocated small position limits for this part of the Bank’s exchange rate
risk. The exchange rate risk was SEK 21m (5), measured as the impact
on the Bank’s earnings if exchange rates change by 5%.
Market risk in the insurance operations
Asset management in the insurance operations manages traditional
insurance portfolios, unit-linked insurance and the company’s own
equity. Insurance obligations with guaranteed interest, known as traditional insurance, are managed in a diversified portfolio consisting
of fixed income securities, equities, real estate and alternative investment assets. Unit-linked policies are mainly invested in mutual funds
managed by Handelsbanken Asset Management. The insurance
Risk management at SPP
The deficits at SPP – the deferred capital contribution (DCC) – are
managed by the company carrying these as a liability. The main factor affecting the size of the fi nancial risk, apart from allocation in
the traditional insurance portfolio, is DCC’s sensitivity to changes in
valuation rates for liabilities, and its sensitivity to changes in returns
in the traditional insurance portfolio.
To reduce the sensitivity of the fi nancial result to these factors,
fi nancial derivatives are traded on the company’s own behalf. The
movements in the market that the company protects itself against are
changes in interest rates and stock market performance. During the
year, the company traded in interest rate swaps, interest rate swaptions, equity futures and share options.
-25%
Exchange rate risk
50
operations’ own equity is chiefly invested in fixed income securities.
In traditional insurance with guaranteed returns, the insurance
companies bear the risk of the policyholder not achieving a guaranteed return on paid-in premiums. If the total yield exceeds the guaranteed rate, the yield is split so that the policyholder receives 90% and
the insurance company 10%. For savings in unit-linked insurance, the
policyholder accepts the entire financial risk. The insurance company
bears no risk; nor does it receive any of the yield.
Asset management operations are exposed to market risks, liquidity
risks, credit risks and operational risks. The insurance operations apply integrated management and risk assessment of assets and liabilities
called Asset and Liability Management (ALM).
In order to control exposure to different market risks, the insurance
companies’ chief financial officer establishes a benchmark portfolio.
The resistance of the balance sheet is calculated continually by measuring the theoretical effect of dramatic fluctuations in market prices
on the company’s available solvency margin.
Changes in prices on the financial markets may lead to the value of
the insurance companies’ commitments to various customers exceeding the value of these customers’ total assets. Deficits arise either from
a decrease in the valuation rate for liabilities, which pushes up the
value of the discounted commitment, or from the return on managed
assets decreasing, which causes the customers’ total assets to shrink.
To measure the effect of price variations on the financial markets, the
insurance companies follow up these risks on a regular basis.
Risk control in insurance operations
The risk control group is responsible for producing methods and
processes for risk measurement, ALM analyses, and reporting. Insurance risks and market risks are regularly reported to the chief executive of the insurance companies and the Handelsbanken Group’s
central risk control unit.
Value at Risk
Value at Risk (VaR )is used to measure the losses that may arise in
risk positions due to movements in the underlying markets over a
specified holding period and for an assumed level of probability. The
VaR method implies that the various risk categories, equity risk,
interest rate risk, exchange rate risk and commodity risk, are handled
in a uniform way and that the risks can be aggregated into a total
market risk.
For Handelsbanken Capital Markets’ trading portfolios, VaR is
calculated for the individual classes of risk and at the portfolio level
with a 99% confidence interval and a one-day holding period. The
calculations are based on historical simulation and measure the impact on the portfolio in question, revalued using the past year’s daily
changes in interest rates and prices. The model used implies that
every hundredth trading day, a loss will occur which exceeds VaR.
Since VaR is based on model assumptions, it is important to continually verify the effectiveness of the model. VaR is a good estimate
of the risk under normal conditions, but it does not capture extreme,
individual market movements. VaR is therefore regularly evaluated
using back-testing. This verifies the number of days when the actual
loss exceeded VaR. Back-testing is performed both on the actual result and the hypothetical result, which measures the result excluding
the impact on commission income and intra-day trading.
The table entitled “VaR for trading portfolio. Capital Markets”
refers to the trend in 2006 and 2005. The minimum and maximum
amounts show the intervals within which VaR fluctuated during the
specified period.
The VaR trend relative to hypothetical results is presented in the
below table. On two occasions, the hypothetical outcome was worse
than the VaR. This is in line with the two to three occasions implied
by a VaR model with a 99% confidence level.
In the insurance operations, VaR is calculated using a 99% confidence interval and a one-month holding period. The calculations are
based on historical simulation and measure the impact of the 250
most recent monthly changes in market prices.
Worst outcome relative VaR,
trading portfolio,
Capital Markets
Worst
outcome
scenario test
SEK m
VaR
Multiplier
Average
104
33
3.5
Maximum
158
59
7.7
Minimum
54
16
1.9
Year-end
104
44
2.4
Value at Risk in the insurance operations 2006
3%+M
Stress tests and scenario analyses
The VaR model does not identify risks associated with extreme
market fluctuations, and thus VaR calculations are regularly supplemented by stress tests. The Bank performs stress tests on the
trading portfolios compared to historical scenarios and, when
necessary, compared to extreme hypothetical events. The historical
scenarios comprise events on the fi nancial markets during the period
1994–2006.
The most unfavourable result in these tests is always compared
with the corresponding VaR estimate for that day. The relation between the worst outcome and VaR can be expressed as a multiplier.
This multiplier provides an indication of the possible risk of loss in
the case of extreme market movements.
The table below shows the result of these stress tests during 2006.
VaR for trading portfolio, Capital Markets
*ANUARY
Total
*UNE
$ECEMBER
Fixed income and currencies
Equities
SEK m
2006
2005
2006
2005
2006
2005
Average
32
20
27
19
15
8
Maximum
61
42
46
41
49
26
Minimum
10
7
9
8
2
1
Year-end
44
22
24
23
29
7
Value-at-Risk in relation to hypothetical outcome 2006 trading portfolio, Capital Markets
SEK m
40
20
0
-20
-40
Hypthetical outcome
VaR
-60
-80
January
June
December
51
Liquidity risk
Maturity analysis for contracted payment commitments – remaining contractual time to maturity
Up to 3 mths
3–12 mths
1–5 yrs
Over 5 yrs
Total
Sight deposits from the public
SEK m
319 750
-
-
-
319 750
Other borrowing from the public and credit institutions
383 204
33 264
17 259
100 890
534 617
Issued securities and subordinated loans
208 605
99 177
268 708
70 183
646 673
81
2 627
37 696
9 372
49 776
297 532
-
-
-
297 532
1 209 172
135 068
323 663
180 445
1 848 348
Unutilised credit commitments – unutilised part of overdraft facilities
Total
Short-term volatile financing by market 2006
Sweden 26 %
USA 30 %
Europe 40 %
Asia 4 %
Refers to the average market distribution during 2006 for issued securities with a
residual maturity of less than one year and financing from credit institutions.
Liquidity risk is the risk that the Bank will not be able to meet its
payment obligations when they fall due, or that the Bank will not be
able to raise new loans at acceptable prices to fund its obligations.
Liquidity risk is measured and limited by carrying out a gap
analysis of cash flows for various maturities and all currencies, and
also gap analysis of groups of currencies. As a general rule, a larger
exposure is permitted in currencies with high liquidity than in currencies where the liquidity is low.
The liquidity deficit consists of the amount by which estimated
out-payments exceed estimated in-payments, and is restricted by
limits.
With the purpose of managing disturbances on the fi nancial markets that may have a temporary or long-term effect on the Bank’s
liquidity, the head of Central Control and Accounting ensures that
a contingency plan for the Bank’s liquidity risk management is established annually. Under this plan, the Bank’s liquidity is regularly
analysed by the liquidity committee, which is led by the head of
Central Treasury. The liquidity analysis includes development of
gap analysis, benchmarks for volatile funding and funding costs.
The Bank also develops scenario tests in which the effect on liquidity is simulated, given factors such as substantially reduced deposit
volumes and high utilisation of committed credit lines. Central
Treasury has overall responsibility for the Bank’s liquidity and funding. It must ensure that the Bank has continuous control of its balance sheet and that the actual funding costs are allocated out in the
organisation.
The daily liquidity management is supplemented by contingency
reserves to meet any disruptions in the market. The Bank therefore
holds assets eligible as collateral that can be turned into liquidity at
short notice through borrowing in central banks or on the capital
market. The extra cost arising for funding this portfolio at a maturity which is sufficiently long to handle a temporary liquidity disruption, is distributed over the units at the Bank which use liquidity.
Liquidity in Swedish kronor must normally be in balance at the end
of each working day.
The Bank aims for well-diversified funding in terms of currencies,
markets and products. Liquidity is also created through the Group
having good access to the international and Swedish capital markets.
52
Short-term funding is obtained by means of active commercial paper
programmes in Sweden, the US and Europe. These programmes
are supplemented by funding in the international interbank market.
Long-term funding is mainly obtained through mortgage bond issues in Swedish kronor and utilisation of other funding programmes
at the Bank. If it is assumed that the concentration in the funding
portfolio or maturity structure entails too high a risk, Central Treasury must make sure that this concentration is reduced or that the
maturity structure of the balance sheet is changed.
In autumn 2006, all outstanding bonds in Stadshypotek with a
nominal value of some SEK 245bn, were converted into covered
bonds. Covered bonds are bonds with priority in the issuing institution’s collateral. These bonds have received an Aaa rating from
Moody’s. New issues under existing bond loans and new bond loans
in Stadshypotek will in future be in the form of covered bonds. This
is part of the Bank’s strategy to achieve liquid, easily available, longterm funding with competitive funding costs.
The table above shows all sight deposits as maturing debt within
one month. Historically, these deposits have been very stable over
time and the Bank expects the majority of the sight deposits to be
available to the Bank for a considerably longer period. The table
shows credit promises and unutilised overdraft facilities for the contracted tenors. The total outstanding amount of these commitments
does not necessarily represent future funding requirements.
Liquidity risk in insurance operations
Liquidity risk is the risk that the company will not be able to meet
its payment obligations when they fall due, or that the company will
not be able to sell securities at acceptable prices. This risk is greatly
limited by most of the assets being invested in listed securities with
good liquidity.
INSURANCE RISKS
The uncertainty in the outcome of an insurance policy which is dependent on the insured party’s life or health is called insurance risk.
In Handelsbanken Liv/SPP, there are the following main groups of
insurance risks:
• death – payment in the event of the death of the
insured person
• life – payment as long as the insured person lives
• disability/accident – payment in the event of
illness/inability to work
A policy often includes combinations of the three insurance risks. In
mutual insurance companies, it is the policyholders collectively that
take the risks, since they have the role of both owner and customer.
In SPP and Handelsbanken Liv, which are demutualised (profitdistributing) insurance companies, the policyholders no longer need
to bear the risks collectively; instead, the insurance companies bear
the risks.
Before risk insurance can be granted, a medical risk assessment is
performed for the insured party. The purpose is to assess whether
and on what terms the insured party can be granted insurance on
the basis of his or her state of health. This is essential in order to
be able to offer long-term insurance at a reasonable premium in a
profitable manner.
Future insurance risks
Mortality in Sweden continues to fall. This is favourable with regards to death benefit insurance, but has little effect on the profit, as
risk pricing is continually adjusted.
On the other hand, falling mortality has consequences for pension
insurance, since it means a rising average longevity. In savings insurance – products that provide fi nancial compensation as long as the
insured person lives, e.g. endowment insurance and pension insurance – risk pricing usually applies to the entire duration of the contract. If actual mortality proves to be 10% lower than the assumptions that are normally used in the sector, thus representing an additional 1 to 1.5 years’ life expectancy, this will result in a total profit
reduction of about SEK 40m per annum over a fifty-year period.
Most of SPP’s risk products, which provide fi nancial compensation in the event of death and disability/accident, are priced annually and the company can unilaterally change the premium from year
to year. Thus, an incorrect mortality assumption can be corrected,
with a rapid effect on the results.
BUSINESS RISK
Business risk is the risk that Group earnings will be lower than
expected over a one-year period. For example, unexpected changes
in earnings may arise if demand alters in a manner which could not
have been anticipated, or if competition has increased to an unexpected extent, resulting in declining volumes and squeezed margins.
The size of the business risk depends on how much the income varies, the Bank’s cost structure, and the ease with which operations
can be adapted to new business conditions in the short term. Only
changes in earnings that cannot directly be linked to other categories of risk are included in estimations of business risk. The business
risk is taken into account in the Bank’s internal capital assessment.
INFORMATION GATHERING
The data/documentation for the reporting of risk is obtained mainly
from IT systems. Information relating to credit risk management is
obtained from a central data warehouse. Not all credit systems have
yet been linked up, but a permanent linking-up of credit ledgers
is being carried out, and is going according to plan. Credit risk is
calculated using special calculation models. The information which
forms the documentation for fi nancial risks is obtained from the
business information and risk systems of the various business areas.
The Group’s risks are aggregated and analysed by the central risk
control function. In 2006, substantial resources were devoted to improving system support and calculation capacity for risk control. In
2007, these improvements will remain in sharp focus.
53
Notes – Group
NOTE 1 NET INTEREST INCOME AND NET GAINS/
LOSSES ON FINANCIAL ITEMS AT FAIR VALUE
Specification of interest
Credit institutions and central banks
General public
2006
2005
6 650
4 838
40 486
35 937
2 878
986
8 902
5 404
557
-279
Derivative instruments recognised as hedges
Other interest income
1 114
619
Total interest income, including trading-related
60 587
47 505
Of which trading-related interest reported in net gains/
losses on financial l items at fair value
10 454
8 371
Interest income according to income statement
50 133
39 134
-11 681
-7 848
General public
Issued securities
-8 495
-5 339
-22 730
-16 955
1 020
877
-2 299
-1 520
Other interest expense
-4 333
-1 989
-48 518
-32 774
Total interest income, including trading-related
Of which trading-related interest reported in net financial items at fair value
-13 357
-8 730
Interest expense according to income statement
-35 161
-24 044
14 972
15 090
Net interest income
Includes interest income on bad debts SEK 61m (72).
Total interest income on assets recognised at amortised cost during 2006 was
SEK 46,341m (39,295).
Total interest expense on liabilities recognised at amortised cost during 2006 was
SEK 39,877m (29,319).
Business volumes were larger than the previous year, see Note 12 Loans and
deposits, the public.
Specification net gains/losses on financial items
at fair value
Available for sale, realised
of which hedging instruments
of which hedged items
Ineffective portion of cash flow hedges
Instruments measured at fair value
of which change due to changed interbank
interest rate
2006
2005
937
992
54
85
-17
-1 035
-125
1 120
108
0
0
-184
-82
-186
-82
Loan receivables, valued at cost
359
604
Financial liabilities, valued at cost
-165
-240
Gains/losses on unbundled insurance contracts
767
-
Trading, incl trading-related interest
2 462
2 202
Total
4 261
3 459
Hedge accounting
The profit/loss item Fair value hedges includes the net result of
unrealised and realised market value changes on fi nancial assets and
liabilities which are part of hedging packages. Interest income and
interest expense for these instruments are recognised under net interest income. The impact on earnings of the ineffective portion of
derivative contracts which are used to hedge cash flows is reported
under Ineffective portion of cash flow hedges. Further information
about hedge accounting is shown in Note 16, Derivative instruments.
Instruments measured at fair value refers to a small number of lending portfolios outside Sweden. The change in fair value for these
lending portfolios largely corresponds to equally-sized opposite
changes in value on other fi nancial instruments which are reported
under Trading within Net gains/losses on fi nancial items at fair
value. Interest income is reported under net interest income.
Loan receivables and financial liabilities
Loan receivables are capital gains/losses arising when loans are
redeemed ahead of time. Financial liabilities contain the capital
gains/losses generated from repurchases of the Bank’s own issued
securities.
Trading
Hedge accounting
Fair value hedges
Net gains/losses on fi nancial items at fair value shows the unrealised
and realised changes in value of items which are wholly or partly
dependent on changes in market value.
Trading contains unrealised and realised changes in market value of
derivative instruments which are not used as hedges, and changes
in market value of other fi nancial assets and liabilities at fair value.
A change has been carried out whereby interest pertaining to activity in the trading book is now included in this item. Previously they
were included in the net interest income. The change means that the
net interest income has been positively affected by SEK 310m compared to the previous year.
Gains/losses on unbundled insurance contracts
The result consists both of gains/losses arising on revaluation of liability to policyholders due to changes in the valuation interest rate
and of the results of hedging transactions carried out to counteract
them. The sub-result also contains any negative yield split.
NOTE 1 CONTINUED
NOTE 5 STAFF COSTS
Valuation techniques
2006
The result includes unrealised results as a consequence of measuring balance sheet items at fair value. The assessment is mainly made
on the basis of market prices. When there are no market prices the
assessment uses models based on official market prices. More advanced calculation models contain parameters that are not listed,
where assumptions and estimates must be made instead. These
more advanced valuation models are seldom needed and when they
are, valuation models that are generally accepted by the market are
always used. Net gains/losses on fi nancial items at fair value include
an item of SEK -535m, where the fair value is partly based on the
Bank’s own assumptions. The instruments included in this item are
mainly equity index options. The positions are essentially matched
by opposite positions in listed fi nancial instruments and instruments
whose fair value has been assessed on the basis of models based on
official market prices.
2005
Salaries and fees
-5 297
-4 611
Social security costs
-1 480
-1 287
Pension costs*
-260
-147
Provision to profit-sharing foundation
-135
-130
Other staff costs
-542
-503
-7 714
-6 678
Total
*Information about defined-benefit pensions is shown in the Net pension assets table.
Insurance premiums paid to group companies are SEK 5m (5).
2006
Gender distribution %
2005
Men
Women
Men
Women
Total number of employees
46
54
48
52
Managers
64
36
65
35
CEOs and EVPs
94
6
90
10
Board
69
31
69
31
Board incl. subsidiaries
87
13
86
14
Sickness absence rate in Sweden 2006
NOTE 2 NET FEE AND COMMISSION INCOME
9
2006
2005
Brokerage
1 718
1 383
Mutual funds and custody
2 106
1 660
Insurance
2 338
937
Payments
Short-term sick leave men
Short-term sick leave women
8
7
5
4
1 983
1 875
Lending and deposits
793
835
3
Guarantees
402
388
2
1 181
1 104
1
10 521
8 182
0
Brokerage, mutual funds and custody
-260
-208
Payments
-888
-839
Other
Total fee and commission income
Other
Total fee and commission expense
-141
-80
-1 289
-1 127
9 232
7 055
Long-term sick leave men
Long-term sick leave women
6
– 29 years
50 years–
Sickness absence in the Swedish operations was 4.0% (4.3). The figure
for men was 2.2% (2.3) and for women 5.4% (5.8). Sickness absence in the
form of long-term sick leave fell to 2.4% (2.5).
Salaries and other remuneration
30–49 years
2006
2005
Sweden
-72
-75
Norway
-6
-5
Finland
-5
-5
Denmark
-3
-5
Board, CEO and EVPs
NOTE 3 RISK RESULT – INSURANCE
2006
Premiums written
Insurance claims paid
Change in provisions for unsettled claims
2005
1 194
593
-684
-433
Great Britain
-4
-5
Luxembourg
-2
-2
USA
Sub-total
-2
-2
-94
-99
-3 179
162
52
Others
Other
-101
-18
Sweden
-3 593
Total
571
194
Norway
-416
-333
Finland
-306
-270
Denmark
-312
-281
Great Britain
-278
-204
Luxembourg
-64
-58
Germany
-28
-28
NOTE 4 OTHER INCOME
2006
Rental income
2005
USA
-121
-97
Singapore
-27
-23
-12
37
38
Hong Kong
-11
Other operating income
188
270
Poland
-17
-14
Total
225
308
Other countries
-30
-13
Sub-total
-5 203
-4 512
Total
-5 297
-4 611
Other income includes income for services sold and external rental income relating to
the Bank’s own properties.
55
Remuneration
NOTE 5 CONTINUED
Average number of
employees
2006
2005
Men
Women
Sweden
7 829
7 228
3 523
4 306
Norway
623
569
324
299
Finland
572
542
229
343
Denmark
475
461
233
242
Great Britain
292
248
213
79
Luxembourg
79
72
46
33
Germany
41
50
21
20
USA
82
81
58
24
23
Singapore
40
39
17
Hong Kong
26
26
18
8
Poland
38
28
17
21
Other countries
Total
66
51
32
34
10 163
9 395
4 731
5 432
PRINCIPLES FOR REMUNERATION TO SENIOR MANAGEMENT
The remuneration for senior management is revised annually in accordance with the decision process described below. The main principle in this process is that remuneration is only given in the form
of fi xed salary and customary benefits. Variable remuneration in the
form of bonuses is not paid.
Decision process for remuneration to senior management
The board of the Bank appoints a special remuneration committee
composed of three board members, one of whom is appointed chairman. The remuneration committee convenes when its chairman calls
a meeting. Its assignment is to:
1) establish the principles and overall policy for the salaries, benefits
and pensions of the executive vice presidents
2) prepare proposals relating to salaries, benefits and pensions for
the group chief executive and the head of the auditing department, to be decided by the board
3) every year, report the results of its work to the board.
TERMS AND REMUNERATION OF SENIOR MANAGEMENT
Terms
The Bank has no agreements on severance pay. The group chief
executive, Pär Boman, has a retirement age of 58. His retirement
pension is 65% of his salary immediately before retirement.
The chairman of the board of the Bank and former 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 immediately before retirement, and from the age of 65 it is 65%. From
the date that Lars O Grönstedt was appointed as chairman of the
board his pension benefits accrue entirely in the Bank’s pension fund
and pension foundation (see below).
The lowest pension age for the Bank’s executive vice presidents
is 60. Between the ages of 60 and 64, their retirement pension is
65% of their salary immediately before retirement. From the age of
65, their retirement pension is 10% of the annual salary up to 7.5
income base amounts. They also receive a pension under the general
national insurance scheme. On the portion of the salary in excess of
7.5 income base amounts, a retirement pension of 65% is paid.
Pensions for the chairman of the board, the group chief executive
and executive vice presidents are accrued successively during the years
until retirement age, and are fully accrued by the time the stipulated
retirement age is reached. The Bank is charged annually for the cost
at the same rate as the pension is accrued. Accrued pension commitments are guaranteed by the Bank’s pension foundation and pension
fund, and are vested. If they leave the Bank before the stipulated retirement age, a paid-up policy is issued for the pension accrued.
56
Lars O Grönstedt retired as group chief executive at the AGM in
April 2006 and was simultaneously appointed chairman of the board
of the Bank. This is a full-time position. The chairman also has overall responsibility for ownership issues relating to shareholdings in the
Bank’s pension foundation, pension fund and staff foundation. In addition to the board fee from the Bank, Lars O Grönstedt is employed
by the pension fund and pension foundation and receives remuneration accordingly.
In 2006, Lars O Grönstedt received remuneration and other benefits from the Bank amounting to SEK 3.7m (7.5), with SEK 0.2m
(0.3) of this amount being other benefits. This remuneration refers
to salary and benefits for the part of the year Lars O Grönstedt was
group chief executive of the Bank and the fee for his services as chairman of the board. Apart from this, remuneration and benefits have
been paid by the Bank’s pension foundation and pension fund of SEK
4.5m, with SEK 0.2 of this amount being other benefits. Hence his
total remuneration from the Bank, the pension fund and the pension
foundation was SEK 8.2m (7.5), with other benefits being SEK 0.4m
(0.3). External fees amounting to SEK 0.3m have been paid to the
pension fund.
The Bank’s former full-time chairman of the board Arne Mårtensson retired in 2006 with a pension in accordance with the terms of his
employment contract. In 2006, Arne Mårtensson received remuneration and other benefits of SEK 10.1m (11.5), with SEK 0.1m (0,5)
being other benefits. Board fees of SEK 0.9m (3.5) for serving on
other boards have been paid to the Bank.
Board members who are not employees of the Bank have not
received any compensation from the company over and above the
normal fees.
Board members who are employees of the Bank receive remuneration and pension benefits by reason of their employment. No further
remuneration or pension benefits are paid for serving on the board.
The group chief executive Pär Boman has received remuneration
and other benefits amounting to SEK 6.0m, with SEK 0.3m of this
amount being other benefits. No external fees have been received. No
variable bonuses are paid.
The 21 (21) executive vice presidents have received remuneration
and other benefits amounting to SEK 51.8m (61.1), with SEK 3.9m
(4.5) of this amount being other benefits. External fees are paid to the
Bank. No variable bonuses are paid.
Like all other employees of the Bank, the chairman of the board,
the group chief executive and other senior managers have been allocated one unit in Handelsbanken’s profit-sharing scheme, Oktogonen.
A unit for an employee in Sweden amounted to SEK 21,932 (35,319).
Pension obligations
Accrued pension rights during the year have increased the pension obligations for the group chief executive by SEK 3.0m (1.6) and for the
chairman of the board by SEK 8.1m (7.2).
Accrued pension rights during the year have increased pension obligations for the 21 (21) executive vice presidents by SEK 22.2m (24.2).
Accrued pension rights during the year relating to defined-benefit
pension plans and premiums relating to defined-contribution pension
plans for the present and previous boards, chief executives and executive vice presidents were SEK 51.2m (45.2) for the Group and SEK
46.0m (42.0) for the parent company.
Pension obligations for the same people are SEK 1,575m (1,417)
in the Group and SEK 1,410m (1,302) in the parent company. The
number of people covered by these obligations is 70 (69), of whom 32
(32) are pensioners. The obligations are covered by the Bank’s pension foundation.
All data concerning pension obligations and accrued pension rights
during the year has been calculated in accordance with IAS 19.
Loans to senior management
2006
2005
20 147
16 036
Plan assets
Loans to the board, chief executives and executive vice presidents at
the Bank or group companies are SEK 125m (122) for the Bank or
other group companies and SEK 37m (57) for the parent company.
Opening balance
Expected return on plan assets
Funds contributed by the employer
PENSION PLAN – OTHER EMPLOYEES
From the age of 65, a retirement pension is paid in accordance with
the pension agreement between the Employer’s Association of the
Swedish Banking Institutions (BAO) and Union of Finance Sector
Employees and between BAO and SACO (the Swedish Confederation of Professional Associations). The amount is 10% of the annual
salary up to 7.5 income base amounts. On the part of the salary
between 7.5 and 20 income base amounts the retirement pension is
65% and in the interval between 20 and 30 income base amounts, it
is 32.5% of the annual salary. On the portion of the salary over 30
income base amounts no retirement pension is paid.
185
-534
-9
Funds paid directly to employees
-303
-215
3 126
3 142
Actuarial gains (+) / losses (-)
Price differences
-35
56
Closing balance
23 842
20 147
Return on plan assets
1 014
952
Actuarial gains (+) / losses (-)
3 126
3 142
Real return
4 140
4 094
-3 310
-3 195
Provision for pension obligations
Pension costs, defined benefit plans
16
-33
241
-304
Funds contributed by the employer
-427
-185
Costs for early retirement pensions
-
-
Redeemed Pension obligations
-
-
Paid benefits
The following provisions for pension obligations
have been made in the balance sheet:
952
427
Funds paid to employer
Opening balance
Net pension assets
1 014
2006
2005
Pension obligations
14 343
13 709
Price differences
-12
19
Fair value of plan assets
23 842
20 147
Closing balance
-3 492
-3 698
Pension obligations minus plan assets
-9 499
-6 438
2 740
884
-45
6
0
0
179
-1 286
3 126
3 142
7
-6
6 007
2 740
Retained income on accruals in previous periods
Retained actuarial gains (+) / losses (-)
Retained income in accordance with transitional rules
Allocated for pensions
-
-
6 007
2 740
-
-
-3 492
-3 698
Net actuarial gains /losses
Opening balance,
actuarial gains (+) / losses (-)
Actuarial
gains (-) / losses (+) to be recognised
Of the amount allocated for pensions, SEK -3 914m (-3 698) is pension assets
and SEK 422m (0) a pension liability.
Actuarial
gains (-) / losses (+), redeemed pension obligations
Total pension costs are distributed as follows:
Actuarial
gains (+) / losses (-), pension obligations
Pensions accrued during the year
-518
-359
Interest on pension liability
-557
-554
1 014
952
Write-off of retained income
Write-off of retained actuarial gains (+) / losses (-)
Pension costs, defined benefit plans
Redemption of pension liability
Pension costs, funded plans
Pension costs, defined-contribution plans
Special employer’s contribution and policyholder tax,
other pension costs
Total pension costs
-
0
45
-6
-16
33
Actuarial
gains (+) / losses (-), plan assets
Price differences
Closing balance,
actuarial gains (+) / losses (-)
-
-
-18
-3
The plan assets mainly comprise shares and interest-bearing securities with the following market values on the balance sheet date:
-34
30
-219
-172
Interest-bearing securities, etc.
Total
-7
-5
-260
-147
The actuarial calculation of pension obligations and pension costs is based on the
following main assumptions:
20 712
16 638
3 130
3 509
23 842
20 147
The plan assets include shares in Svenska Handelsbanken AB (publ) with a market
value of SEK 994m (946) on the balance sheet date 31 December 2006. In Sweden,
Norway, Great Britain and Germany the pension plans are defined benefit, meaning
that the pension is based on a certain percentage of the final salary. There are no
post-retirement health care plans.
Discount rate %
3.9
Expected salary increase %
3.6
3.9
3.6
History
Expected rate of return on plan assets %
7.0
7.0
Pension obligations
14 343
13 709
Pension indexing %
2.1
2.1
23 842
20 147
Pension obligations minus plan assets
-9 499
-6 438
Income base amount %
2.8
2.8
Staff turnover %
2.7
2.8
Expected remaining years of employment
19
19
Pension obligations, plan assets and provisions for pensions and net actuarial gains/
losses for the defined-benefit plans have developed as follows. Funds paid to the
employer refer to funds paid for the employer’s pension costs.
Pension obligations
Opening balance
Pensions accrued during the year
Interest expense
Paid benefits
-1 286
209
-1 089
of which changed actuarial assumptions
-30
-197
3 126
3 142
3 126
3 142
0
0
Outcome
2006
Forecast
2007
-596
-586
Actuarial gains (+)/losses (-) for the period,
plan assets
11 957
518
359
of which experience adjustments
557
554
of which changed actuarial assumptions
-596
-528
-
-
Redemption of pension obligations
-
-
Actuarial gains (-) / losses (+)
179
of which experience adjustments
14 097
Retained income on accruals in previous periods
Actuarial gains (+)/losses (-) for the period,
pension obligations
-
-
-179
1 286
Price differences
-54
81
Closing balance
14 343
13 709
Future cash flows
Expected pension payments
57
NOTE 7 LOAN LOSSES/RECOVERIES
NOTE 6 OTHER EXPENSES
2006
Property and premises
2005
-935
-894
-1 263
-920
Communication
-386
-389
Travel and marketing
-430
-343
Purchased services
-696
-753
External IT costs
Supplies
-211
-186
Other expenses
-259
-262
-4 180
-3 747
Total
Minimum lease fee
Variable fee
Total
-685
-579
-18
-146
-703
-725
Rental costs for premises normally have a variable fee related to the inflation rate and
to property taxes. Only one of the major lease contracts has a variable fee (related to
Stibor). In 2006, the cost of the largest individual lease contract was approx. SEK 61m
(58).
IT development at Handelsbanken is principally intended to meet
the requirements of the business operations. This means that, since
operational stability and delivery speed are the crucial factors, the
Bank only changes to new technologies or environments in exceptional circumstances. At the same time there are constant efforts
to increase the efficiency of existing processes and to enhance the
Bank’s technical environment and IT architecture.
In 2006, IT infrastructure was produced for several units worldwide. There are several different methods. When the Bank starts
new branches in countries with existing branches, the work is based
on the existing infrastructure. When starting up in a new country,
the solution is based on local conditions, combined with using the
Bank’s existing infrastructure as far as possible.
IMPROVED INTERNAL SUPPORT
During the past two years, the number of employees at internal IT
support has decreased by 35%. This decrease was due to the implementation of a standard workstation for the Handelsbanken Group.
There are thus fewer technologies used in the organisation.
Audit
Consulting
2006
2005
2006
2005
KPMG Bohlins AB
-9.9
-8.5
-1.4
-1.9
Ernst & Young AB
-1.2
-0.8
-0.0
-0.2
-2.4
-2.1
-0.7
-1.0
-72.2
-69.5
Auditors elected by the
AGM
Auditor elected by the
Swedish Financial Supervisory Authority
58
Write-back of previous provisions for probable loan
losses which are reported as actual loan losses in the
year’s accounts
2005
-596
-550
499
380
-468
-480
Paid in from actual loan losses in previous years
265
476
Write-back of provisions for probable losses
no longer necessary
302
366
2
192
77
84
The year’s provision for probable loan losses
B. PROVISION BY GROUP FOR INDIVIDUALLY
ASSESSED LOAN RECEIVABLES
Allocation to/dissolution of provision by group
C. COLLECTIVELY ASSESSED HOMOGENEOUS GROUPS OF LOAN
RECEIVABLES WITH LIMITED VALUE AND SIMILAR CREDIT RISK
This year’s write-off for actual loan losses
-44
-43
22
23
Allocation to/dissolution of reserve for loan losses
-2
2
-24
-18
-
-
55
258
Net expense for the year for collectively assessed
homogeneous loan receivables
IT PROCEDURES WHEN STARTING NEW BRANCHES
Internal auditing
This year’s write-off for
actual loan losses
Net expense for the year, individually
valued loan receivables
IT DEVELOPMENT
Research and development
PricewaterhouseCoopers AB
2006
A. SPECIFIC PROVISION FOR INDIVIDUALLY
ASSESSED LOAN RECEIVABLES
Of which lease expenses
Auditing costs
Actual and probable losses minus recoveries are reported as loan
losses.
Recoveries exceeded loan losses and net recoveries totalled
SEK 55m as compared to net recoveries of SEK 261m in the
previous year. The loan loss ratio was thus –0.01% (–0.03).
Net bad debts decreased to SEK 876m (1,256), equivalent to
0.07% of lending.
D. TRANSFER RISK
Allocation to/dissolution of reserve for transfer risks
Net expense for the year for loan losses
(A+B+C+D)
Change in value of repossessed property
Total loan losses/recoveries
-
3
55
261
Both actual and probable loan losses reduce the corresponding receivable amount
on the assets side of the balance sheet. The reserve for probable loan losses has
decreased by SEK 29m for the Group in the form of exchange differences.
NOTE 7 CONTINUED
2006
2005
Impairment losses
Claims on credit institutions
0
0
Claims on the public
-611
-693
Total impairment losses
-611
-693
Write-backs
1
14
378
438
Total write-backs
379
452
2006
2005
2 872
3 689
Bad debts etc
(For definitions, see inside back cover)
Bad debts
Specific provision for
individually assessed loan receivables
-1 550
-1 910
Provision for collectively assessed homogeneous
groups of loan receivables with limited value and
similar credit risk
-107
-107
Group provisions for
individually assessed loan receivables
-339
-416
876
1 256
Net bad debts
Total bad debt reserve ratio, %
69.5
65.9
0.07
0.12
Bad debt reserve ratio excl. group provisions, %
57.7
54.7
Non-performing loans which are not bad debts, SEK m
670
602
Book value of loan receivables restructured
during the year, before restructure, SEK m
46
47
Book value of loan receivables restructured
during the year, after restructure, SEK m
50
55
171
391
Bad debts reclassified as normal
loans during the year, SEK m
NOTE 8 GAINS/LOSSES ON DISPOSAL OF PROPERT Y,
EQUIPMENT AND INTANGIBLE ASSETS
2006
2005
Equipment
1
0
Property
-
4
Total
1
4
The difference between the sale price and the remaining value for property, equipment
and intangible assets is reported here.
NOTE 9 EARNINGS PER SHARE
Profit for the year, SEK m
2006
2005
13 128
11 354
Average number of outstanding shares (millions)
643.3
668.6
Earnings per share, SEK*
20.41
16.98
*No dilution.
Earnings per share is calculated by dividing the net profits attributable to holders of ordinary shares by the weighted average number
of ordinary shares in issue during the period. The denominator
excludes the Bank’s holding of repurchased own shares. There are
no potentially dilutive instruments, and therefore the calculation is
the same for earnings per share before and after dilution.
59
NOTE 10 CL ASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES 2006
Recorded at fair value
in income statement
sub-divided into
Trading
Derivative
instruments
designated as
hedging
Other*
instruments
Investments
held to
to maturity
Loans and
customer
receivables
Financial
assets
available
for sale
Others
financial
liabilities
Nonfinancial
assets/
liabilities
Total
Assets
Cash and balances
with central banks
4 800
86 512
12 844
Loans to the public
Bonds and other
interest-bearing securities
4 632
86 565
164 331
177 175
1 095 906
1 100 538
170 838
9 340
180 178
66 410
6 507
72 917
Assets where the customer bears
4 800
53
61 390
51 916
1 437
62 827
1 787
53 703
Reinsurance assets
Intangible assets
108
108
12 524
12 524
3 545
3 545
Current tax assets
747
747
Deferred tax assets
265
265
Net pension assets
3 914
3 914
Other assets
Prepayments
and accrued income
Total assets
21 012
3 471
391 991
66 022
1 787
21 012
5 660
59
1 293 146
15 959
9 190
21 103
1 790 008
Liabilities
the public
13 275
307 207
320 482
111 756
422 129
533 885
61 396
Issued securities
40 681
61 677
51 829
1 437
554 320
4 505
66 182
51 829
2 871
2 871
488
488
6 810
6 810
Provisions
127
127
Pension obligations
422
Other liabilities
Prepayments and
accrued income
181
15 356
2 944
Total liabilities
* Classified to be measured at fair value.
60
62 833
595 001
282 343
61 396
4 505
422
15 537
12 699
15 643
51 672
51 672
1 363 383
12 155
1 723 782
NOTE 10 CONTINUED CL ASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES 2005
Recorded at fair value
in income statement
sub-divided into
Trading
Other*
Derivative
instruments
designated
as hedging
instruments
Investments
held to
to maturity
Loans and
customer
receivables
Financial
assets
available
for sale
Others
financial
liabilities
Nonfinancial
assets/
liabilities
Total
Assets
Cash and balances
with central banks
Loans to the public
Bonds and other
7 014
44 325
283
15
4 574
125 387
502
44 490
136 263
136 546
979 092
983 681
38
23 562
7 014
165
14 293
140 220
5 295
28 857
134 432
63 522
134 432
4 647
68 169
Reinsurance assets
Intangible assets
48
48
12 789
12 789
3 318
3 318
Current tax assets
67
67
Deferred tax assets
197
197
Net pension assets
Other assets
Prepayments
and accrued income
Total assets
3 698
446
2
1 282
258 822
139 006
4 647
13 181
11
4 459
515
1 140 047
3 698
13 629
5 752
19 753
20 117
1 582 907
Liabilities
the public
420
288 633
289 053
24 255
383 362
407 617
Issued securities
52 462
83 464
146 200
66 110
48 137
340 144
135 926
486 344
7 624
73 734
48 137
862
862
767
767
5 950
5 950
Provisions
36
Other liabilities
591
Prepayments and
accrued income
187
9 589
Total liabilities
285 900
52 462
7 624
36
10 180
11 561
11 748
46 795
46 795
1 080 084
91 079
1 517 149
*Classified to be measured at fair value.
61
NOTE 11 LOANS TO CREDIT INSTITUTIONS
2006
2005
Banks
44 781
23 861
Other credit institutions
26 179
7 130
Sub-total
70 960
30 991
Banks
31 652
24 793
74 565
80 762
106 217
105 555
Loans in Swedish kronor
Loans in foreign currency
Sub-total
Probable loan losses
-2
0
Total
177 175
136 546
Of which reverse repos
120 491
100 461
Over
5 yrs
Total
Payable
on
demand
Within
3 mths
2006
95 108
69 269
7 109
3 109
2 580
177 175
2005
77 425
49 234
5 260
2 217
2 410
136 546
2006
2005
62 433
45 922
Remaining maturities
Average volumes
Loans to credit institutions in Swedish kronor
>1 yr
to 5 yrs
insurance operations
7 146
620
Loans to credit institutions in foreign currency
149 741
130 460
insurance operations
Total
Of which reverse repos, insurance operations
62
>3 mths
to 1 yr
451
57
219 771
177 059
46 975
32 882
7 109
387
NOTE 12 LOANS AND DEPOSITS, THE PUBLIC
2006
2005
Households
391 483
351 035
Companies etc
395 141
369 363
Sub-total
786 624
720 398
Households
92 551
81 539
Companies etc
223 356
184 176
Sub-total
315 907
265 715
-1 993
-2 432
1 100 538
983 681
21 947
7 930
Of which subordinated
91
101
Over
5 years
Total
Total
Payable on
demand
Within
3 months
>3 months
to 1 year
>1 year
to 5 years
2006
98 029
308 489
153 510
339 922
200 588
1 100 538
2005
41 581
266 466
142 831
320 885
211 918
983 681
2006
2005
Loans to the public in Swedish kronor
752 671
689 540
Loans to the public in foreign currency
295 599
241 090
1 048 270
930 630
18 022
7 417
2006
2005
533 885
407 617
2006
2005
Average volumes – loans to the public
Total
Deposits in Swedish kronor
Households
106 002
91 769
Companies etc
108 391
107 888
Total
214 393
199 657
23 800
23 930
Deposits in foreign currency
Households
Companies etc
103 922
96 826
Total
127 722
120 756
Total deposits from the public
342 115
320 413
Payable on
demand
Within
3 months
>3 months
to 1 year
>1 year
to 5 years
Over
5 years
Total
2006
319 750
13 442
1 379
703
6 841
342 115
2005
294 331
21 032
3 379
501
1 170
320 413
2006
2005
Deposits from the public in Swedish kronor
203 245
184 719
Deposits from the public in foreign currency
126 861
111 660
Total
330 106
296 379
Average volumes of deposits from the public
63
NOTE 12 CONTINUED
Borrowing from the public
2006
2005
Swedish kronor
151 674
46 780
Foreign currency
40 096
40 424
191 770
87 204
5 777
2 853
Over
5 years
Total
Total
Of which repos
Payable on
demand
Within
3 months
>3 months
to 1 year
>1 year
to 5 years
2006
2 460
70 709
9 401
15 965
93 235
191 770
2005
2 913
54 984
5 552
4 874
18 881
87 204
Average volume of borrowing from the public
Borrowing from the public in Swedish kronor
Borrowing from the public in Swedish kronor, insurance operations
Borrowing from the public in foreign currency
Total
Of which repos
2006
2005
38 852
29 560
107 693
22 352
48 996
41 335
195 541
93 247
7 558
3 931
LENDING AND DEPOSIT VOLUMES
Loans to the public increased by 12% to SEK 1,101bn (984).
Stadshypotek increased by 8% to SEK 480bn (445). Stadshypotek’s
lending represented 44% of the Group’s loans to the public. Loans
to the public in Sweden, excluding the National Debt Office rose by
10% to SEK 831bn (755), where household lending rose by 11% to
SEK 391bn (352).
The average volume of loans to the public excluding loans to
the National Debt Office increased by 13% to SEK 1,045bn (927).
Household lending rose by 13% to SEK 457bn (405), while corporate lending was up 13% to SEK 588bn (522). Average lending in
Sweden increased by 10 % to SEK 797bn (727) while branch office
operations outside Sweden increased by 24% to SEK 224bn(180).
Deposits from the public, including the insurance operations went
up by 31% to SEK 534bn (408). Household deposits went up by
14% to SEK 159bn (139) and deposits from companies increased by
39% to SEK 375bn (269). The consolidation of SPP partly explains
the increase in deposit volumes.
The average volume of deposits in Sweden, excluding insurance operations, increased by 13% to SEK 278bn (246), of which
SEK 104bn (93) was from households. Outside Sweden, the average volume of deposits rose by 15% to SEK 140bn (122), of which
SEK 29bn (27) was from households.
NOTE 13 INTEREST-BEARING SECURITIES
2006
Nominal
value
2005
Fair
value
Nominal
value
Fair
value
Interest-bearing
securities
Government instruments
79 415
84 145
32 663
Credit institutions
48 948
49 316
38 181
38 673
Mortgage institutions
47 507
47 817
27 497
28 249
Remaining
maturities
84 492
85 465
76 957
83 277
Total
260 362
266 743
175 298
184 713
-
-3
Total book value
266 743
184 710
Bonds and other
180 178
140 220
81 819
Total interest-bearing
securities
Of which unlisted securities
64
86 565
42 253
>3 mths
to 1 yr
>1 yr
to 5 yrs
Over
5 yrs
Total
2006
253
18 808
65 833
119 694
62 155
266 743
2005
2 878
14 040
43 595
97 711
26 486
184 710
Average volumes
Interest-bearing securities, insurance operations
Total
Treasury bills and other
eligible bills
Within
3 mths
34 514
Other
Adjustment to book value for
investments held to maturity
Payable
on
demand
44 490
266 743
184 710
1 061
7 926
499
146
2006
2005
194 516
160 508
70 905
15 190
265 421
175 698
NOTE 14 SHARES AND PARTICIPATING INTERESTS
2006
2005
65 169
22 744
Held for trading
Listed
Non-listed
Total
1 241
818
66 410
23 562
5 160
4 537
Holdings classified as available for sale
Listed
Non-listed
Total
Holdings in associated companies, non-listed
802
362
5 962
4 899
545
396
72 917
28 857
Carrying amount at beginning of year
396
354
Participating interests added via consolidation of SPP
108
-
Share of profit for the year
105
59
Taxes
-29
-20
Total shares and participating interests
Participating interests in associated companies
Shareholders’ contribution
Dividend
8
6
-32
-11
Exchange difference
-11
8
Carrying amount at close of year*
545
396
* Of which goodwill
125
87
Book value
Corporate identity
number
Registered
office
No. of
shares
Participating
interest %
Bankomatcentralen AB
556197-2265
Stockholm
1 100
21.9
0
0
BGC Holding AB
556607-0933
Stockholm
25 382
25.4
58
41
Centralen för Elektroniska Korttransaktioner CEK AB
556362-0383
Stockholm
370
37.0
16
16
BDB Bankernas Depå AB
556695-3567
Stockholm
8 000
20.0
2
-
Finansiell ID-teknik BID AB
556630-4928
Stockholm
12 735
28.3
3
2
Associated companies
Nordben Life and Pension Insurance Co Ltd.
2006
2005
14 861
Guernsey
3 000 000
50.0
127
-
Privatgirot AB
556302-4552
Stockholm
290
29.0
6
5
Upplysningscentralen UC AB
556137-5113
Stockholm
2 429
24.3
12
7
VPC AB
556112-8074
Stockholm
-
-
-
325
VPC Holding AB
556709-1763
Stockholm
443 700
24.8
321
-
545
396
Income
Profit/loss
Total
Financial information on associated companies referring to 100% of the companies
BGC Holding AB
Centralen för Elektroniska Korttransaktioner
CEK AB
2006
Assets
Liabilities
2005
Income
Profit/loss
Assets
Liabilities
0
0
0
0
0
0
0
0
383
155
854
169
750
582
850
21
6
62
18
133
2
66
23
120
9
1
57
-12
-
-
-
-
40
29
46
-14
43
43
25
-26
7 801
7 547
338
16
-
-
-
-
48
27
113
-6
49
33
138
1
110
59
30
0
163
138
224
0
-
-
-
-
1 464
266
687
161
1 595
302
712
50
-
-
-
-
Nordben Life and Pension Insurance Co Ltd.
Privatgirot AB
VPC AB
VPC Holding AB
VALUATION METHODS FOR UNLISTED SHARES
Unlisted shares are valued on the basis of valuation models at fair
value. The choice of model is applied consistently for each share. The
choice of model is governed by what is considered appropriate for
the individual share. Several of the unlisted shares are shares where
the Bank in its capacity as shareholder cannot control the price at
which the share will be sold, since this is regulated by the company
agreement. These shares are valued at the pre-determined values. For
example, there are cases where the shareholders’ meeting resolves
the value at which transfers will be made.
65
NOTE 15 ASSETS WHERE THE CUSTOMER BEARS
THE VALUE CHANGE RISK
2006
2005
-
83 664
58 468
48 594
Insurance assets in SPP Liv
Unit- linked insurance assets
Other fund assets
1 437
-
Share of consolidated funds not owned
2 922
2 174
62 827
134 432
Total
NOTE 16 DERIVATIVE INSTRUMENTS
Nominal amount/maturity
Up to 1 year
Positive market values
> 1 year to
5 years
Over
5 years
Total
2006
Negative market values
Total
2005
2006
2005
2006
2005
2 632
Derivatives held for trading
Interest rate-related contracts
Options
FRA/futures
Swaps
Other instruments
177 251
76 343
4 820
258 414
264 052
3 118
2 931
2 803
3 087 592
985 100
8 856
4 081 548
3 986 026
1 138
820
1 091
806
910 816
1 040 615
460 553
2 411 984
2 279 990
18 422
33 211
20 439
34 415
10 510
208
-
10 718
14 840
4
6
0
6
Currency-related contracts
Options
33 203
2 183
-
35 386
50 775
88
439
98
365
Futures
1 129 468
13 057
405
1 142 930
1 351 482
13 313
17 255
18 159
12 590
152 025
162 158
23 293
337 476
269 470
4 526
2 652
5 115
3 689
Options
79 394
45 100
6 088
130 582
118 946
8 247
5 314
9 953
8 537
Futures
31 992
2 152
-
34 144
23 168
838
150
1 187
682
718
1 405
418
2 541
3 038
320
133
1 204
1 385
Swaps
Equity-related contracts
Swaps
Other instruments
Other derivative contracts
Sub-total
32
-
-
32
449
328
13
16
24
365
29 346
749
30 460
15 440
1 574
598
1 612
979
5 613 366
2 357 667
505 182
8 476 215
8 377 676
51 916
63 522
61 677
66 110
Derivatives for fair value hedges
Options
-
-
-
-
4 290
-
13
-
-
3 500
6 300
-
9 800
8 100
6
4
2
5
Swaps
22 821
101 676
54 670
179 167
249 528
794
3 300
3 251
6 171
Other instruments
29 206
-
-
29 206
3 953
4
2
4
2
FRA/futures
Options
45
-
-
45
-
0
-
-
-
Futures
71 092
15 344
-
86 436
89 197
658
1 161
1 183
1 222
-
Other instruments
Sub-total
345
48
-
393
-
0
-
-
182
-
-
182
-
-
-
0
-
127 191
123 368
54 670
305 229
355 068
1 462
4 480
4 440
7 400
Derivatives for cash flow hedges
FRA/futures
Swaps
Sub-total
Total
Of which cleared
-
-
-
-
83
-
0
-
-
4 671
15 018
3 223
22 912
14 231
325
167
65
224
4 671
15 018
3 223
22 912
14 314
325
167
65
224
5 745 228
2 496 053
563 075
8 804 356
8 747 058
53 703
68 169
66 182
73 734
2 878 349
2 992 847
2 973
5 412
1 776
5 693
Currency breakdown of market values
SEK
174 936
11 032
250 432
96 620
USD
-117 607
223 279
-221 426
122 327
EUR
Others
66
24 954
-62 449
5 556
-89 125
-28 580
-103 693
31 620
-56 088
NOTE 16 CONTINUED
HEDGE ACCOUNTING
Fair value hedges
Handelsbanken mainly uses fair value hedges to protect itself against
changes in fair value for lending and deposits at fi xed interest rates
and to hedge foreign exchange exposure when borrowing in foreign
currencies. The main hedge instruments used are interest rate swaps
and currency forwards. In a very few cases, changes in fair value of
credit risk exposures are subject to hedge accounting. In these cases,
credit derivatives are used as the hedge.
As at 31 December 2006, derivatives have been used as fair value
hedges for a nominal amount of SEK 305bn (355). The fair value of
these derivatives was SEK 1bn (4) in positive market values and SEK
4bn (7) in negative market values. The value change for the year
for these derivatives is SEK –1,035m (–125) and this is reported in
the income statement under Net gains/losses on fi nancial items at
fair value. The change in fair value for the hedged items relating to
hedged risk is SEK 1,120m (108), which is also reported under Net
gains/losses on fi nancial items at fair value. Thus, the Group’s fair
value hedges had a positive impact of SEK 85m (–17) on the year’s
profits.
Cash flow hedges
Handelsbanken also hedges the uncertainty of future cash flows.
Uncertainty in future cash flows arises when funding is at variable
interest rates. These interest rates are fi xed for between one and six
months. The maturity horizon of the loan is much longer, however:
up to 15 years. To hedge the future interest payments for a required
maturity, interest rate swaps are used. For future cash flows which
are to be reinvested or refi nanced, interest rate swaps are used with
value dates in the future so as to guarantee a known reinvestment
or refi nancing interest rate. The future cash flows to be hedged have
a high probability of occurring since they are contracted.
As at 31 December 2006, derivatives which have been used as
cash flow hedges have a nominal amount of SEK 23bn (14). The fair
value of these derivatives was SEK 325m (167) in positive market
values and SEK 65m (224) in negative market values. For the effective portion of hedges, the change in value of the derivative is recognised in equity. The change in value is transferred to the income
statement at the same pace as the hedged item’s cash flows affect
the profit/loss. At the end of the year, the hedge provision was
SEK –136m (57). There were almost no ineffective hedges.
67
NOTE 17 INTANGIBLE ASSETS
Goodwill
Trademarks
and other
rights
Customer
contracts
Internally
developed
software
Total
2006
Total
2005
12 498
3 003
954
57
16 512
12 223
12
-
-
71
83
4 120
-160
-
-
-
-160
169
Cost of acquisition at close of year
12 350
3 003
954
128
16 435
16 512
Accumulated amortisation and impairments at beginning of year
-2 956
-725
-35
-7
-3 723
-2 932
-
-
-
-
-
-580
-150
-39
-5
-194
-178
Cost of acquisition at beginning of year
Cost of acquisition of additional intangible assets
Foreign exchange effect
Accumulated amortisation of additional intangible assets
Amortisation for the year according to plan
Impairments for the year
-
-
-
-25
-25
-
31
-
-
-
31
-33
-2 925
-875
-74
-37
-3 911
-3 723
9 425
2 128
880
91
12 524
12 789
Accumulated amortisation and impairments at end of year
Closing residual value
Information on goodwill referring to associated companies can be found in Note 14 Shares and participating interests.
Assumptions
Amortisation is based on the expected useful life. At present, this
means that principally the following amortisation rates are applied.
Goodwill
Not amortised
Trademarks
20 years
Customer contracts
On a straight-line basis over the life
of the relevant contract
Internally developed software
5 years
Other intangible assets
Individual testing
ESTIMATES USED TO CALCULATE THE RECOVERABLE
AMOUNT OF CASH-GENERATING ENTITIES WITH
GOODWILL OR OF INTANGIBLE ASSETS WITH AN
INDEFINITE USEFUL LIFE
Goodwill and other intangible assets with an indefi nite useful life is
allocated over the following segments/cash-generating units.
SEK 5,796m
Markets
SEK 12m
Asset Management
SEK 12m
SEK 3,607m
An impairment test that the recoverable amount exceeds the book
value is performed by comparing the values in the balance sheet with
the estimated recoverable amount. If the recoverable amount exceeds the value in the balance sheet, no impairment loss needs to be
recognised. The recoverable amount for entities to which goodwill
and other intangible assets have been allocated has been determined
by calculating the value in use per entity. This means that future
cash flows including an estimated closing value are estimated. The
calculations are before taxes.
– The assessment is that the difference between the recoverable
amount and the book value is satisfactory.
– An impairment loss has been recognised for capitalised software
since it is not estimated to have any value.
68
– The cash flow period used to calculate the recoverable amount is
normally 20 years for cash-generating entities relating to banking operations and 40 years for insurance operations. The type of
contract and nature of the operations dictates the choice of cash
flow period.
– Detailed forecasts are made for the fi rst five years. In the subsequent years, gradually declining changes in the future cash flows
are assumed. Normally, the rate of increase of future cash flows is
assumed to be no larger than the corresponding historical rise in
GDP in the country in question. These forecasts are based partly
on historical trends and partly on knowledge of future events
which can affect the historical trend. The outcome in individual
years is compared to the forecast values. These comparisons are
used to decide whether an adaptation should be made of the forecasting method and the forecast values in the future.
– The discount rate used is the weighted return requirement for
the respective type of operations. Since capital is allocated on the
basis of a risk assessment, normally the same discount rate can
be used for all types of goodwill items and other intangible items
arising when business operations are acquired. However, the discount rate is always tested on a case-by-case basis. The discount
rate applied is 4.2%.
Intangible assets with an indefinite useful life
The individual assets which are not subject to annual amortisation
are those where the economic life and the useful life cannot be regarded as defi nable. Examples of such items are brand names and in
certain cases customer relations in cases where these are attributable
to sectors which cannot be regarded as associated operations with a
limited life. In cases where the Bank only has the exclusive rights to
a brand name or other intangible asset for a limited period of time,
the cost of acquisition of the brand name is amortised over this period at the rate it is used.
NOTE 18 PROPERT Y AND EQUIPMENT
Operating
properties at
fair value
Opening cost of acquisition
Other property and equipment
Investment
1–4 years
5-9 years 10-19 years
20+ years
No
property depreciation depreciation depreciation depreciation depreciation
Total
2006
Total
2005
4 815
1 380
-
742
911
124
1 212
593
4 962
Opening cost of acquisition, SPP
145
-
10
6
32
-
0
193
New acquisitions during the year
-
-
143
169
11
-
0
323
276
170
-
-
-
-
-
-
170
70
-
96
40
-297
Changes as a consequence of
revaluations during the year
Capitalised new construction and
rebuilding costs during the year
30
-
-
-
-
66
Cost of acquisition of property and
equipment sold during the year
-
-
-194
-176
-24
-31
0
-425
-
-
-13
-26
-3
-
0
-42
58
Total cost of acquisition
1 725
-
688
884
140
1 247
593
5 277
4 962
Accumulated depreciation
at beginning of year
-
-
-570
-655
-58
-554
-1 837
-1 764
Accumulated depreciation
at beginning of year, SPP
-
-
-10
-4
-24
-
-38
Accumulated depreciation on
equipment sold during the year
-
-
188
168
20
32
408
Year’s impairment losses
recognised in the income statement
-
-
-
-
-
-10
-10
-5
Year’s depreciation
-
-
-135
-135
-15
-36
-321
-316
281
-
-
11
17
-1
-
27
-33
Total accumulated depreciation
-
-
-516
-609
-78
-568
-1 771
-1 837
7
7
20
-
-
139
Book value of leasing assets taken over
Book value of other
repossessed property
-
-
-
-
-
32
34
32
-
-
-
-
7
39
193
32
172
275
62
679
600
3 545
3 318
Book value of property
repossessed for protection of claims
32
Total collateral taken over
Residual value according to plan
1 725
Of which land
762
Tax assessment value, Swedish properties
927
583
2 172
Apart from owned equipment, the Bank also has at its disposal
equipment under operating leases. The residual value of leased
equipment in the Bank was SEK 38m (54).
Property held for use in the business at fair value was valued
individually taking cash flows into account. The valuation was
performed in December 2006 by an external valuer. The carrying
1 345
1 253
3 099
3 004
amount of the premises would have been SEK 1,555m, if they had
not been carried at fair value.
The year’s depreciation for other repossessed property is
SEK 7m (14).
Property repossessed to protect claims is sold as soon as reasonable market conditions exist.
NOTE 19 OTHER ASSETS
Claims on investment banking settlements
Other
Total
2006
2005
17 610
8 645
3 403
4 985
-1
-1
21 012
13 629
NOTE 20 PREPAYMENTS AND ACCRUED INCOME
2006
2005
Accrued interest income
7 727
5 065
Other accrued income
1 248
542
215
145
9 190
5 752
4
3
Prepayments
Total
69
NOTE 21 DUE TO CREDIT INSTITUTIONS
2006
2005
Banks
52 133
48 532
15 635
3 027
Sub-total
67 768
51 559
239 122
214 654
Due in Swedish kronor
Due in foreign currency
Banks
13 592
22 840
Sub-total
252 714
237 494
Total
320 482
289 053
35 743
10 783
Over
5 years
Total
Of which repos
Payable on
demand
Within
3 months
>1 year
to 5 years
2006
71 141
225 451
22 485
591
814
320 482
2005
47 046
217 876
22 064
1 047
1 020
289 053
2006
2005
Average volumes
Due to credit institutions in Swedish kronor
55 996
58 792
Due to credit institutions in foreign currency
312 130
257 471
Total
368 126
316 263
29 468
17 396
Of which repos
NOTE 22 LIABILITIES WHERE THE CUSTOMER BEARS
THE VALUE CHANGE RISK
2006
2005
Insurance liabilities in SPP Liv
-
83 464
Unit-linked insurance liabilities
58 474
48 634
Other fund liabilities
1 437
-
Share of consolidated funds not owned
2 922
2 174
Other
Total
70
>3 months
to 1 year
-
1 654
62 833
135 926
NOTE 23 ISSUED SECURITIES
2006
2005
Nominal
amount
Book
value
Book
value
26 579
28 037
26 428
19 298
19 250
26 428
7 281
8 787
-
219 379
218 616
207 217
Certificates
Certificates in Swedish kronor
Of which
at amortised cost
for trading
Certificates in foreign currency
Of which
at amortised cost
174 538
173 775
188 263
for fair value hedges
12 955
12 947
18 954
for trading
31 886
31 894
-
245 958
246 653
233 645
265 631
276 769
222 301
195 306
202 325
177 911
70 325
74 444
44 390
73 412
71 579
30 398
at amortised cost
53 096
51 699
29 182
20 316
19 880
1 216
Sub-total
339 043
348 348
252 699
Total
585 001
595 001
486 344
Sub-total
Bonds
Bonds in Swedish kronor
Of which
at amortised cost
Bonds in foreign currency
Of which
Payable on
demand
Within
3 months
>3 months
to 1 year
>1 year
to 5 years
>5 years
Total
2006
1 657
204 474
96 236
241 846
50 788
595 001
2005
-
175 658
135 614
159 886
15 186
486 344
Remaining maturities carrying amount
2006
2005
Swedish kronor
Average volume of issued securities
301 113
245 392
Foreign currency
285 467
273 391
2006
2005
1 403
1 491
Turnover of own issued securities
Issued
Repurchased
Repaid
292
275
1 001
1 171
2006
2005
NOTE 24 OTHER TRADING LIABILITIES
Short positions at fair value
Equities
2 053
3 868
49 776
44 269
48 318
41 755
Of which
Other issuers
Own issued
Total
1 458
2 514
51 829
48 137
Payable on
demand
Within
3 months
>3 months
to 1 year
>1 year
to 5 years
>5 years
Total
2006
3
78
2 627
37 695
9 373
49 776
2005
-
2 035
5 735
29 333
7 166
44 269
2006
2005
Swedish kronor
41 014
22 674
Foreign currency
2 860
6 057
Remaining maturities short positions interest-bearing securities
Average volumes of other trading liabilities
71
NOTE 25 INSURANCE OBLIGATIONS
Liability for sickness annuities
Liability for other unsettled claims
Liability for prepaid premiums
Total
NOTE 27 PROVISIONS
2006
2005
2006
2005
2 158
437
Opening balance
410
318
Additional provisions when consolidating SPP
36
10
303
107
Provisions during the year
5
2 871
862
Utilisation
-
-
Other changes
-81
-10
Closing balance
127
36
2006
2005
5 505
3 705
167
36
NOTE 26 TA XES
Deferred tax assets
2006
2005
17
-
NOTE 28 OTHER LIABILITIES
Loans to the public
6
8
-
57
105
147
49
54
Intangible assets
Pension obligations
118
-
18
46
Offsetting against deferred tax liability
-48
-115
Total
265
197
2006
2005
Other
Liabilities on investment banking settlements
Other
10 032
6 475
Total
15 537
10 180
NOTE 29 PREPAYMENTS AND ACCRUED INCOME
Accrued interest expense
Loans to the public *
4 627
3 912
252
219
38
42
Intangible assets
611
643
150
159
1 118
1 055
Pension assets
Other
62
35
-48
-115
Total
6 810
5 950
Net deferred tax liabilities
6 545
5 753
Recognised
directly
in equity
Closing
balance
Offsetting against deferred tax assets
* Of which leasing SEK 4 603m (3 858).
Year’s change in
deferred taxes
Recognised
Opening in the income
balance
statement
Loans to the public
3 912
699
-1
4 610
Shares and participating
interests
211
2
33
246
-15
-
53
38
Intangible assets
496
5
5
506
Pension assets/obligations
Other
Total
105
-4
0
101
1 055
33
-88
1 000
-11
-10
65
44
5 753
725
67
6 545
2006
2005
-3 776
-3 636
465
55
Tax expenses recognised in the income statement
Current tax
Tax expense for the year
Adjustment of tax attributable to previous years
Deferred tax
Changes in temporary differences
-725
-715
-4 036
-4 296
28.0
28.0
Different tax base in insurance operations
-3.8
-0.7
Taxes for previous years, and other
-0.7
0.0
23.5
27.4
Total
Nominal tax rate in Sweden, %
Deviations
Effective tax rate, %
72
Other accrued expense
Deferred income
Total
2006
2005
13 509
9 636
2 084
2 026
50
86
15 643
11 748
NOTE 30 SUBORDINATED LIABILITIES
NOTE 31 SPECIFICATION OF CHANGES IN EQUIT Y
2006
2005
Subordinated loans in
Swedish kronor
349
349
foreign currency
51 323
46 446
Total
51 672
46 795
-23
Change in exchange differences in branches
176
Change in exchange differences in subsidiaries
417
Change in exchange differences in associated
companies
8
-213
Exchange difference 31 December 2005
Swedish kronor
349
380
foreign currency
49 080
31 286
Specification, subordinated loans
Currency
Original
nominal
amount
in each
currency
Change in exchange differences in branches
-271
Change in exchange differences in subsidiaries
-339
Change in exchange differences in associated
companies
-11
129
Interest
rate %
-127
Outstanding
amount
Specification of instruments available
for sale (amount after tax)
Other Swedish 7
349
Total
349
IN FOREIGN CURRENCY
EUR
365
Change in exchange difference on
financing of net assets in subsidiaries
IN SWEDISH KRONOR
2005/20151
Exchange differences 31 December 2004
Change in exchange difference on
financing of net assets in subsidiaries
Average volumes
Issue/conv./final
paymt year
Change in exchange differences
500
variable
4 517
2006
2005
Unrealised market value at
beginning of year
872
680
Unrealised market value of
holdings sold during the year
-336
-303
2005/2017 2
EUR
700
variable
6 317
Unrealised market value change during
the year for remaining and new holdings
587
495
2005/perpetual 3
GBP
500
5.000
6 506
Unrealised market value at end of year
1 123
872
2005/perpetual 4
EUR
500
4.194
4 261
2006/2016 5
EUR
600
4.000
5 372
2006/2016 6
USD
800
variable
5 477
Revaluations in insurance operations
recognised directly in equity
2006
2005
Other foreign 7
18 873
Total
51 323
Changes in value of properties
recognised directly in equity
170
70
51 672
Insurance liabilities recognised
directly in equity
-170
-70
-
-
Total
1
2
3
4
5
6
7
Fixed-term subordinated loan with 3-month variable coupon linked to Euribor.
Premature redemption may occur in the case of changed tax regulations or on the
interest due dates from 2010. Premature redemption requires the approval of the
Swedish Financial Supervisory Authority.
interest due dates from October 2012. Premature redemption requires the approval
of the Swedish Financial Supervisory Authority.
Perpetual subordinated loan at fixed rate. Premature redemption may occur in the
case of changed tax regulations or on the interest due dates from 2010. Premature
redemption requires the approval of the Swedish Financial Supervisory Authority. In
connection with the right of redemption, the interest rate becomes variable linked to
Libor.
Euribor.
Fixed-term subordinated loan at fixed rate. Premature redemption may occur in the
Euribor.
Fixed-term subordinated loan with 3-month variable coupon linked to Libor. Premature redemption may occur in the case of changed tax regulations or on the interest
due dates from 2011. Premature redemption requires the approval of the Swedish
Financial Supervisory Authority.
Other subordinated loans which are not specified here are issued in the form of
fixed-term or perpetual subordinated loans.
Total
73
Other disclosures – Group
CAPITAL ADEQUACY
Capital base and capital requirement
SEK m
2006
2005
Tier 1 capital 1)
59 272
58 424
Net tier 2 capital
23 976
30 890
Total capital base
83 248
89 314
Credit risks
827 649
723 658
Market risks
48 529
45 581
876 178
769 239
Capital ratio, %
9.5
11.6
Tier 1 ratio, %
6.8
7.6
Capital base
2006
2005
61 467
59 035
5 358
5 681
0
0
CAPITAL BASE
RISK-WEIGHTED AMOUNT
Total
TIER 1 CAPITAL
Equity1
Tier 1 capital contribution
Minority interest
Deducted items
Goodwill and other intangible assets
-5 917
-5 992
Revaluation
-152
-159
Deferred tax asset
-264
-197
Unrealised accumulated profit
-1 123
Adjustments in accordance with stability filter
Cash flow hedges
-97
56
59 272
58 424
Perpetual subordinated loans
20 838
13 421
Fixed-term subordinated loans after reduction
25 072
26 548
Total tier 1 capital
TIER 2 CAPITAL
Adjustment unrealised accumulated profit
Revaluation adjustment
152
159
47 190
40 128
Total
106 462
98 552
Less shareholdings in insurance companies and 5–50% in companies conducting banking business
-22 148
-9 238
Less adjustment, unrealised pension obligations
-1 066
Total tier 1 and tier 2 capital
83 248
Enlarged capital base
Total capital base
1
74
1 128
Tier 1 capital has been affected by the board’s proposed appropriations.
89 314
-
-
83 248
89 314
CAPITAL COVER CONTINUED
Risk-weighted amount for credit risks
Balance sheet items
2006
2005
Risk-weighted
Investments
amount
Weighting
Investments
Risk-weighted
amount
Risk weight 0% (group A)
0%
367 231
Risk weight 20% (group B)
20%
42 693
8 539
43 466
8 693
Risk weight 50% (group C)
50%
545 623
272 811
502 984
251 491
Risk weight 100% (group D)
100%
471 262
471 262
392 683
392 683
1 426 809
752 612
1 205 387
652 867
Total
266 254
2006
Off-balance-sheet items 2
Weighting
Nominal
amount
2005
Converted Risk-weighted
amount
amount
Nominal
amount
Converted Risk-weighted
amount
amount
0%
21 925
12 264
16 614
10 075
20%
174 099
14 269
2 854
42 061
12 670
2 534
50%
430 084
3 362
1 681
88 346
2 487
1 244
100%
136 290
70 502
70 502
125 777
67 013
67 013
762 398
100 397
75 037
272 798
92 245
70 791
1 527 206
827 649
1 297 632
723 658
Total
Total credit risks
2
The nominal amounts for off-balance sheets items are recalculated using a factor which varies according to the credit risk in the commitments. The recalculated amounts are
subsequently allocated according to the same principles (group A-D) which apply for the balance sheet items.
Risk-weighted amount for market risks
2006
Specific
risk
2005
General Risk-weighted
risk
amount
Specific
risk
risk
amount
Interest rate risks
24 620
10 466
35 086
20 584
10 844
31 428
Equity price risks
815
764
1 579
791
612
1 403
Settlement risks
Counterparty risks and other risks
15
12
10 316
11 770
Exchange rate risks
1 533
968
Total market risks
48 529
45 581
876 178
769 239
Total risk-weighted amount for credit and market risks
CAPITAL POLICY
The Bank aims to maintain a satisfactory capital level corresponding
to the risk implied by the Group’s operations and which exceeds the
legal minimum requirement. A satisfactory capital level is needed to
manage situations of fi nancial strain and also other events such as
acquisitions and strong growth in volumes. In 2006, the Board
established a new capital policy, which provides guidelines for
Handelsbanken’s internal capital assessment.
INTERNAL CAPITAL ASSESSMENT
Handelsbanken must have available fi nancial resources corresponding to all the risks which lead to unexpected losses or reductions in
value. Capital planning must be undertaken to ensure that capital
is available when needed. The internal capital adequacy assessment
also includes the groupwide risk control so that there is an overall
assessment of the Group’s risks. Handelsbanken has decided to use
an economic capital model (EC). The EC model provides a measure
of the Group’s overall risks and corresponds to the capital which
with very high probability will cover unexpected losses or decreases
in value from the perspective of the shareholders. The assessment
is carried out regularly and also monitors compliance with external
statutory capital requirements.
DESCRIPTION OF THE CAPITAL BASE FOR
THE FINANCIAL CORPORATE GROUP
The Bank’s capital base consists of tier 1 capital, tier 2 capital and
the enlarged capital base (to cover market risks). Tier 1 capital
consists of the equity belonging to the companies which are part
of the fi nancial corporate group and issued tier 1 loans. Accumulated shareholders’ equity deriving mainly from the Group’s insurance companies is excluded when calculating the capital base for
the fi nancial corporate group. Tier 1 capital loans (certain types
of subordinated loans) can be included up to 15% of the total tier
1 capital excluding tier 1 capital loans, net after reduction items.
Handelsbanken has included 9% so far. The items which must be excluded from the tier 1 capital are the impact of cash flow hedges,
75
deferred tax assets and goodwill and other intangible assets. Tier
2 capital mainly consists of perpetual and fi xed-term subordinated
loans. Tier 2 capital must never exceed tier 1 capital. The extended
capital base also comprises subordinated loans and may only be used
to cover parts of the capital requirement for market risks.
LEGAL CAPITAL REQUIREMENT
In 2006, the Bank complied with requirements of the Act on the
capital adequacy and large exposures of credit institutions and
securities companies (1994:2004). This Act states that at any time
the Bank must have a capital base corresponding to 8% of its riskweighted assets. Risk-weighted assets are assets on the balance sheet,
but also off-balance sheet items, sorted into different groups and
allocated a capital requirement in the form of risk weights on the
basis of risk classes defi ned in the Act.
Handelsbanken has met the requirements of the Act (2006:531)
on special supervision of fi nancial conglomerates, which came into
force on 1 July 2006. Institutions and insurance companies which
are part of a fi nancial conglomerate must have a capital base which
is adequate in relation to the capital requirement for the fi nancial
conglomerate.
On 1 February 2007, new capital adequacy regulations were introduced in accordance with the Act on capital adequacy and large
exposures (2006:1371). The Bank is expected to reserve a larger
capital base than the minimum requirements to cover the risks
arising in the operations in the form of credit risks, market risks and
operational risks. For further information see the note on risks and
risk control.
COLLATERAL PLEDGED FOR OWN DEBT
SEK m
Book value pledged assets
2006
2005
407 390
78 433
Of the book value of pledged assets, interest-bearing securities represent 11% (61), repos 11% (32) and mortgage loans 69% (0).
In addition there are cash funds, shares and securities loans representing 9% (7).
Collateral pledges in the form of mortgage loans comprise the assets separated in favour of holders of covered bonds issued by the company. The collateral in Stadshypotek comprises loans to the public against mortgages in real property which are single-family dwellings, second
homes, multi-family dwellings and ownership housing co-operatives with a loan to value ratio within 75% of the market value and additional
collateral in the form of cash funds on a blocked account. A separate specification is kept of the assets and the covered bonds, and also derivatives relating to these.
OTHER COLLATERAL PLEDGED
SEK m
Market value – collateral obtained
Market value – sold or pledged collateral
2006
2005
180 126
164 932
-
-
180 126
164 932
2006
2005
Guarantees, loans
18 395
12 052
Guarantees, other
39 618
33 144
Irrevocable letters of credit
46 211
46 678
Total
Policyholders’ registered assets represent 91% (96) of the market value of collateral obtained.
In addition there are cash funds, interest-bearing securities, securities and other loans of 9% (4).
COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
SEK m
Own acceptances
Other
Total
213
201
2 790
3 716
107 227
95 791
Commitments and contingent liabilities and assets total SEK 107,227m (95,791). This amount includes SEK 61m (49) relating to a number
of civil actions which the Group is bringing in general courts of law. The largest individual amount in dispute is SEK 30m (24). The Bank’s
assessment is that the actions will essentially be settled in its favour. None of the disputed amounts, nor any insurance compensation, has
been recognised in income.
The data for contingent liabilities is reported in nominal amounts and an assessed expected value is included in the “Other” amount
for the civil actions that the Group is bringing.
The Group is currently pursuing a tax dispute. The total claim is approx. SEK 20m, excluding interest, which in the case of a positive
judgement would increase the Group’s income by the same amount.
76
OTHER COMMITMENTS
SEK m
Other commitments
2006
2005
22 392
9 387
61
70
22 453
9 457
Credit promises
166 576
149 664
130 956
124 200
Total other commitments
297 532
273 864
Total
319 985
283 321
2006
2005
Total commitments regarding future payments
Contracted irrevocable future operating lease charges distributed by the year they fall due for payment
2007
645
364
2008
487
264
2009
424
184
2010
249
125
2011
187
84
2012
106
67
2013
70
33
2014
46
26
2015
38
21
2016
28
13
2017
20
12
2018 and later
41
24
2 341
1 217
Other
Total
2006
14 972
Total
SEGMENT REPORTING 2006
SEK m
Net interest income
Branch
offices
Markets
Asset
Management
Pensions &
Insurance
14 324
572
168
139
-231
4 174
1 728
1 193
2 304
-167
9 232
1 206
1 422
33
907
693
4 261
Other income
391
839
90
153
-950
523
Total income
20 095
4 561
1 484
4 074
-655
29 559
Of which internal
-8 841
9 634
-240
-262
4 200
4 491
-8 241
-3 244
-677
-1 297
1 565
-11 894
Depreciation, amortisation and impairments of property, equipment and intangible
assets
571
571
-153
-21
-2
-199
-182
-557
Total expenses
-8 394
-3 265
-679
-1 496
1 383
-12 451
11 701
1 296
805
2 578
728
17 108
-
55
Operating profit
Return on equity, %
53
2
-
0
0
-
-
1
1
11 754
1 298
805
2 578
729
17 164
18.5
14.0
30.4
34.7
Assets
1 119 346
702 974
24 133
216 669
-273 114
1 790 008
20.9
Liabilities
1 074 401
696 177
22 227
209 669
-278 692
1 723 782
Other disclosures
152
33
4
30
283
502
6 155
1 244
339
681
1 744
10 163
77
SEGMENT INFORMATION 2005
Branch
offices
SEK m
Net interest income
Markets
Asset
Management
Pensions &
Insurance
Other
Total
2005
15 090
14 655
482
113
-2
-158
3 803
1 523
985
857
-113
7 055
1 261
1 010
42
65
1 081
3 459
Other income
369
521
69
109
-543
525
Total income
20 088
3 536
1 209
1 223
267
26 323
Of which internal
-6 399
6 344
-408
-68
4 421
3 890
-7 797
-2 550
-608
-631
1 161
-10 425
194
Depreciation, amortisation and impairments of property,
194
-138
-20
-3
-27
-325
-513
Total expenses
-7 935
-2 570
-611
-658
836
-10 938
12 153
966
598
565
1 103
15 385
-1
261
259
3
-
4
0
0
-
0
4
12 416
969
598
565
1 102
15 650
Operating profit
Return on equity, %
Assets
Liabilities
16.6
13.8
23.2
35.9
1 027 811
705 518
18 608
176 484
-345 514
1 582 907
17.9
971 313
700 252
16 853
175 134
-346 403
1 517 149
Other disclosures
Internal income and expenses are included in the respective item
on the income statement. Internal income consists of payment for
services rendered according to the cost price principle. Expenses also
include the distribution of costs made internally within the Group
for services from business support operations.
The Other operations business area includes Treasury and the
central head office departments. It also includes capital gains/losses,
dividends, and income and expenses that are not attributable to a
specific segment.
96
14
6
4 103
217
4 436
6 018
1 102
320
185
1 770
9 395
Return on equity for the segments is computed after standard tax
while for the whole Group and for Pensions & Insurance, it is computed after full tax.
The shareholders’ equity, on which calculation of return on equity
is based, corresponds to the assessment of the Group’s overall actual
capital requirement.
GEOGRAPHICAL SEGMENT INFORMATION
Sweden
Other Nordic countries
Rest of world
Eliminations
Group
SEK m
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
Income
22 031
20 579
4 747
3 779
2 912
2 042
-131
-77
29 559
26 323
1 466 953
1 223 920
246 230
221 206
461 163
421 439
-384 338
-283 658
1 790 008
1 582 907
399
4 388
60
29
43
19
502
4 436
Assets
Other disclosures
78
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
SEK m
USD
EUR
DKK
NOK
GBP
JPY
HKD
SGD
Other
currencies
Assets
83 531
9 387
6 068
1 497
610
438
134
36
4 488
Loans to the public
22 506
106 208
33 717
102 718
34 779
920
2 052
288
7 324
Bonds and other
70 231
30 772
2 203
4 945
631
0
77
23
5 784
124 528
80 655
7 883
7 877
11 437
1 013
9 535
37
9 335
Liabilities
public
Issued securities
Other assets and liabilities
including positions in derivatives
Net foreign currency positions
37 548
49 202
19 075
43 936
14 664
126
173
244
3 773
177 677
91 593
483
3 347
15 183
1 114
0
0
1 094
9 676
22 727
0
0
18 041
892
0
0
0
172 899
97 199
-14 419
-53 799
23 164
1 514
7 437
23
-2 934
-262
-611
128
201
-141
-273
-8
89
460
Book
value
2006
Adjustment
to fair
value 2006
Book
value
2005
Adjustment
to fair
value 2005
177 175
-34
136 546
-57
1 100 538
-14
983 681
5 775
FAIR VALUE DISCLOSURES
SEK m
Assets
Loans to the public
266 743
-
184 710
3
Other assets
245 552
2 500
277 970
2 185
Total assets
1 790 008
2 452
1 582 907
7 906
331
Liabilities
320 482
76
289 053
533 885
-14
407 617
-6
Issued securities
595 001
-2 169
486 344
2 626
Other liabilities
222 742
-
287 340
-
51 672
111
46 795
556
1 723 782
-1 996
1 517 149
3 507
Total liabilities
Total surplus/deficit
In accordance with IFRS, a comparison is to be made between fair
value and book value for both assets and liabilities in the balance
sheet and also fi nancial 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 consumer 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 receivables and liabilities and also
for receivables and liabilities with a variable interest rate, the fair
value is considered to be the same as the book value. Receivables
and liabilities with fi nal maturity or date for next interest rate fi xing
within 30 days are considered to be short-term.
Assets and liabilities which are traded on liquid markets have been
valued at the average price on the balance sheet day. Market-listed
4 448
4 399
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, non-current assets, issued liabilities
or off-balance-sheet fi nancial 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 deficits
if interest rates are rising. A surplus value also occurs when margins
decrease, and a deficit when margins increase.
In cases where the fair value of assets is less than the book value
and for liabilities, the book value is less than the fair value, this is
because these items are subject to hedge accounting.
79
RELATED PARTY DISCLOSURES
SEK m
Lending
Others
Total
Other assets
Total assets
Interest expense
-
23
-11
12
-
520
Total
6
514
520
23
-11
12
6
514
520
29
503
532
155
85
240
85
105
190
240
190
430
-
7
7
Others
674
102
776
Total
674
109
783
-
1
-1
Others
-
-
-
Total
1
-1
247
156
91
Others
759
207
966
Total
915
298
1 213
2006
2005
1
1
Others
-
65
Total
1
66
-6
-3
Others
-11
-144
Total
-17
-147
185
201
Others
Total
12
-
514
SEK m
Interest income
-11
-
-
Total
Total liabilities
23
6
Others
Other liabilities
Closing balance
Others
Total
Other financial liabilities
Increase/Decrease
Others
Deposits and borrowing
Opening balance
Others
Total
6
167
191
368
-209
-237
-
-
-209
-237
Net result on financial items
at fair value
Other income
Other expenses
Total
80
-
-
Others
-53
-14
Total
-53
-14
-
-
Others
2
154
Total
2
154
-
-53
Others
-198
-69
Total
-198
-122
-29
-91
Others
-254
159
Total
-283
68
RELATED PART Y DISCLOSURES CONTINUED
The associated companies are listed in Note 14. These companies perform various types of services linked to the fi nancial markets.
“Other” includes the various pension organisations: Svenska Handelsbankens Pensionsstiftelse, Svenska Handelsbankens Personalstiftelse
and Pensionskassan SHB, försäkringsförening which use the Bank for customary banking and accounting services.
Shareholders’ contribution to associated companies, see Note 14.
For 2005, ”Other” in the income statement includes SPP Livförsäkring AB (SPP). Svenska Handelsbanken AB mainly performs IT-related
services and asset management. Handelsbanken Liv Försäkrings AB and SPP also have close cooperation.
Related-party transactions with CEO, EVPs and board of directors
SEK m
2006
2005
Lending
85
98
2
2
2006
2005
16
10
0
0
Interest income
Deposits
Interest expense
For other transactions, see Note 5, Terms and remuneration for senior management.
Credit is granted after customary credit review. The interest rate is determined on normal commercial terms. However for employees of the
Bank (not members of the board), the interest rate on credit up to SEK 1.5m is two percentage points lower than the equivalent interest rate
for external customers. This benefit is taxable for the employee and constitutes a basis for social security charges payable by the Bank. Credit
to close family members is granted on normal commercial terms and is not included in this report. In exceptional cases, if credit to a close
family member is granted at the subsidised interest rate described above, this is reported as a taxable benefit for the employee. For deposits,
the interest rate for employees is the same as for external customers.
LEASES
Disclosures on gross investment and present value of future minimum leasing payments
SEK m
2006
2005
Gross investment
36 066
32 831
Present value of future minimum lease payments at balance sheet date
32 641
30 883
Later than
5 years
Total
Distribution of gross investment and minimum lease payments by maturity
Within
1 year
Between 1
and 5 years
Distribution of gross investment
5 066
10 852
20 148
36 066
Distribution of present value minimum leasing payments
5 014
10 287
17 340
32 641
2006
2005
3 424
2 615
Unearned finance income
SEK m
Unearned finance income
NON-GUARANTEED RESIDUAL VALUES ACCRUING TO THE LESSOR
All leases have guaranteed residual values.
PROVISION FOR BAD DEBTS REFERRING TO MINIMUM LEASE PAYMENTS
The book value of the provision for bad debts with respect to minimum lease payments is SEK 5.5m (4.7).
VARIABLE PART OF LEASE PAYMENTS INCLUDED IN EARNINGS FOR THE PERIOD
Amounted to SEK 142m (38) for 2006 due to higher interest rates in 2006 than 2005.
MAJOR LEASE CONTRACTS
The largest individual lease exposure is worth SEK 8.3bn (7.4).
81
FINANCIAL REPORTS ■ FIVE-YEAR REVIEW – GROUP
Five-year review for the Group
As a consequence of the transition to IFRS the formats for the income statements and balance sheets for 2004 –2006 have changed.
The accounting policies are described on page 34. The income statements and balance sheets for 2002 –2003 are reported in the format and according to the principles
in force at the close of the respective years, as no retroactive restatements can be made for these years without considerable difficulty.
Income statement
SEK m
2006
2005
2004
14 972
15 090
14 808
9 232
7 055
6 000
at fair value
Net interest income
Net interest income
Dividends received
2003
2002
18 345
17 006
491
392
4 707
4 587
-1 827
-938
4 261
3 459
2 390
571
194
44
193
158
218
105
59
104
Other income
225
308
399
243
320
Total income
29 559
26 323
23 963
Total operating income
21 959
21 367
Staff costs
-7 714
-6 678
-6 380
Staff costs
-6 216
-6 203
Other expenses
-4 180
-3 747
-3 364
Other expenses
-2 855
-3 267
-557
-513
-501
-12 451
-10 938
-10 245
17 108
15 385
13 718
55
261
-167
Depreciation and impairments of property,
Total expenses
Gains/losses on disposal of
property, equipment and intangible assets
General administrative expenses
1
4
2
Depreciation and impairments of property,
-807
-866
Total expenses before loan losses
-9 878
-10 336
12 081
11 031
-492
-392
199
-199
Loan losses incl. change in value
of repossessed property
Impairment loss/reversals of financial
fixed assets
Result of banking operations
Result of insurance operations
Operating profit
17 164
15 650
13 553
Operating profit
Appropriations
Taxes
-4 036
-4 296
-3 693
13 128
11 354
9 860
13 128
11 354
9 860
-
-
-
20.41
16.98
14.55
20
11 817
10 460
-267
-270
11 550
10 190
-89
-80
Profit before taxes
11 461
10 110
Taxes
-3 345
-2 817
Minority interest
Profit for the year
29
Profit for the year
-
-11
8 116
7 282
11.70
10.50
Attributable to
Minority interest
Earnings per share, SEK *
* No dilution.
82
FINANCIAL REPORTS ■ FIVE YEAR REVIEW – GROUP
Balance sheet
SEK m
2006
2005
2004
2003
2002
839 340
Assets
Loans to the public
1 100 538
983 681
861 252
823 142
177 175
136 546
109 076
115 273
79 517
266 743
184 710
169 854
127 309
137 327
Other assets
245 552
277 970
176 607
194 730
221 330
Total assets
1 790 008
1 582 907
1 316 789
1 260 454
1 277 514
533 885
407 617
342 243
303 326
292 838
320 482
289 053
258 995
202 689
235 113
Issued securities
595 001
486 344
441 614
458 701
464 402
51 672
46 795
25 182
26 732
26 801
222 742
287 340
187 383
212 171
206 168
Liabilities and equity
Other liabilities
66 226
65 758
61 372
56 835
52 192
1 790 008
1 582 907
1 316 789
1 260 454
1 277 514
Memorandum items
111 535
125 570
Contingent liabilities
Collateral pledged
71 311
78 958
Pension obligations
-
-
Other commitments
5 954 068
6 594 156
83
FINANCIAL REPORTS ■ INCOME STATEMENT – PARENT COMPANY
Income statement – Parent company
SEK m
2006
2005
Interest income
Note P1
34 644
24 156
Interest expense
Note P1
-25 510
-15 557
9 134
8 599
Net interest income
Dividends received
Note P2
3 362
815
Note P3
7 107
6 430
Note P3
-1 276
-1 184
Note P4
Note P5
5 831
5 246
2 220
2 582
812
608
21 359
17 850
Staff costs
Note P6
-7 186
-6 629
Other administrative expenses
Note P7
-3 695
-3 192
Note P16, P17
Loan losses, net
Note P8
Operating profit
Appropriations
Note P9
Profit before taxes
Taxes
Profit for the year
84
Note P24
-634
-310
-11 515
-10 131
9 844
7 719
-200
-160
9 644
7 559
4 365
4 712
14 009
12 271
-3 302
-3 404
10 707
8 867
FINANCIAL REPORTS ■ BALANCE SHEET – PARENT COMPANY
Balance sheet – Parent company
SEK m
2006
2005
ASSETS
Cash and balances with central banks
4 676
6 919
Note P13
37 484
37 031
Note P11
338 037
312 391
Loans to the public
Note P12
571 960
495 442
Note P13
153 935
149 057
Note P14
72 466
55 145
1 437
-
Note P15
57 271
72 863
Intangible assets
Note P16
1 597
1 918
Note P17
1 741
1 716
689
-
Current tax assets
Deferred tax assets
Note P24
-
-
Other assets
Note P18
20 842
12 683
Note P19
6 057
3 891
Total assets
Note P10
1 268 192
1 149 056
Note P20
353 112
311 876
Note P21
412 664
376 947
LIABILITIES AND EQUITY
Liabilities where the customer bears the value change risk
1 437
-
Issued securities
Note P22
254 484
217 774
Note P15
67 719
76 724
Note P23
51 829
50 716
-
491
248
Note P24
382
Provisions
Note P25
-
-
Other liabilities
Note P26
13 282
9 122
Note P27
9 419
7 286
Note P28
51 672
46 795
Total liabilities
Note P10
1 216 000
1 097 979
Untaxed reserves
Note P29
1 183
1 397
Share capital
2 888
2 879
Statutory reserve
2 682
2 682
Retained earnings
34 732
35 252
Profit for the year
10 707
8 867
Total equity
51 009
49 680
1 268 192
1 149 056
79 319
MEMORANDUM ITEMS
Collateral pledged for own debt
Note P31
121 978
Other collateral pledged
Note P32
5 397
5 986
Contingent liabilities and commitments
Note P33
136 268
126 703
Pension obligations
Note P34
-
-
Other commitments
Note P35
309 852
271 389
85
FINANCIAL REPORTS ■ STATEMENT OF CHANGES IN EQUITY – PARENT COMPANY
Statement of changes in equity
– Parent company
Restricted equity
SEK m
Share capital
Statutory
reserve
2 878
2 682
2 878
2 682
Hedge
reserve
Fair value
reserve
Retained
earnings
Total
42 589
48 149
Impact of transition to IFRS 2005
Net effect of changeover to measuring at
fair value according to IAS 39
Change in available-for-sale instruments, after tax
680
-347
112
680
42 242
48 261
Note P30
163
Exchange difference
-221
-221
75
Note P30
176
176
176
414
8 867
8 867
9 043
9 281
Dividend
-4 018
-4 018
Group contributions provided
-1 376
-1 376
-2 468
-2 468
-
Total changes in equity not recognised
in the income statement
-
-
75
163
-
-
75
163
Profit for the year
-99
99
Bonus issue
100
-100
-
43 422
49 680
Change in available-for-sale instruments, after tax
2 879
2 682
Exchange difference
Total changes in equity not reported
in the income statement
-146
Note P30
843
259
222
Note P30
-
-
222
259
-
-
222
259
Dividend
Group contributions provided
Bonus issue
259
222
Profit for the year
86
163
75
-261
-261
-261
220
10 707
10 707
10 446
10 927
-4 543
-4 543
-693
-693
-4 362
-4 362
-89
89
-
98
-98
-
44 261
51 009
2 888
2 682
76
1 102
FINANCIAL REPORTS ■ CASH FLOW STATEMENT – PARENT COMPANY
Cash flow statement – Parent company
SEK m
2006
2005
OPERATING ACTIVITIES
Operating profit
9 644
7 559
33 404
34 668
of which paid-out interest
-23 729
-23 500
of which paid-in dividends
2 223
252
of which paid-in interest
Adjustment for non-cash items in the operating profit
Loan losses
Unrealised changes in value
578
306
-2 271
1 360
634
310
-4 465
-6 783
-25 646
-32 107
Loans to the public
-77 096
-85 711
Financial current assets
-7 469
-36 758
41 236
41 507
35 717
61 944
Issued securities
36 710
18 757
6 551
-12 882
1 113
24 519
Paid income tax
Changes in the assets and liabilities of operating activities
Derivative instruments, net positions
Claims and liabilities on investment banking settlements
Other
-9 270
1 610
5 511
-2 949
11 477
-19 318
-12 180
-136
INVESTING ACTIVITIES
Change in shares
Change in interest-bearing securities
Change in property and equipment
Change in intangible non-current assets
0
54
-293
-258
-84
-23
-12 557
-363
FINANCING ACTIVITIES
Repayment of subordinated loans
Issued subordinated loans
Dividends paid
Group contribution paid
-
-
4 876
21 612
-4 543
-4 018
3 027
4 867
-4 362
-2 468
-1 002
19 993
Cash flow for the year
-2 082
312
Liquid funds at beginning of year
6 919
6 302
11 477
-19 318
-12 557
-363
-1 002
19 993
Exchange rate difference on liquid funds
Liquid funds at end of year
-161
305
4 676
6 919
87
FINANCIAL REPORTS ■ NOTES – PARENT COMPANY
Notes – Parent company
NOTE P1 NET INTEREST INCOME
NOTE P3 NET FEE AND COMMISSION INCOME
2006
2005
11 033
8 414
General public
21 275
17 535
Insurance
-
8
2 610
986
Payments
1 948
1 843
8 902
5 406
409
-280
Interest income
Other interest income
Brokerage
869
454
Total interest income
45 098
32 515
Of which interest income reported in net gains/losses on
10 454
8 359
Interest income according to income statement
34 644
24 156
Mutual funds and custody
2006
2005
1 575
1 269
936
935
Lending and deposits
586
667
Guarantees
397
386
Other
1 665
1 322
Total fee and commission income
7 107
6 430
Brokerage, mutual funds and custody
-343
-302
Payments
-862
-814
Other
Total fee and commission expense
-71
-68
-1 276
-1 184
5 831
5 246
Interest expense
General public
Issued securities
-14 172
-8 902
-8 417
-5 184
-10 646
-7 496
989
804
-2 299
-1 520
Other interest expense
-4 322
-1 989
Total interest expense
-38 867
-24 287
NOTE P4 NET GAINS/LOSSES ON FINANCIAL ITEMS
Available for sale, realised
-13 357
-8 730
Interest expense according to income statement
-25 510
-15 557
9 134
8 599
Includes interest income on bad debts SEK 50m (55). Total interest income on assets
recognised at amortised cost during 2006 was SEK 31,908m (23,849). Total interest
expense on liabilities recognised at amortised cost during 2006 was SEK 33,509m
(20,382).
Fair value hedges
NOTE P2 DIVIDENDS RECEIVED
Dividend from associated companies
922
1 019
93
65
of which hedging instruments
115
62
of which hedged items
-22
3
Ineffective portion of cash flow hedges
0
0
Written back from equity on cash flow hedges
0
-
Ineffective portion of net investment hedges
-
-
-184
-82
of which change due to changed interbank interest
rate
Dividend on shares and participating interests
2005
Hedge accounting
Of which interest expense reported in net gains/losses
on financial items at fair value
Net interest income
2006
2006
2005
1 332
720
32
11
Dividend from group companies
1 998
84
Total
3 362
815
-186
-82
Loan receivables, valued at cost
78
-
Financial liabilities, valued at cost
98
-
Trading
1 213
1 580
Total
2 220
2 582
Valuation techniques
The result includes unrealised results as a consequence of measuring balance sheet
items at fair value. The assessment is mainly made on the basis of market prices. When
there are no market prices the assessment uses models based on official market prices. More advanced calculation models contain parameters that are not listed, where
assumptions and estimates must be made instead. These more advanced valuation
models are seldom needed and when they are, valuation models that are generally accepted by the market are always used. Net gains/losses on financial items at fair value
include an item of SEK -535m, where the fair value is partly based on the Bank’s own
assumptions. The instruments included in this item are mainly equity index options. The
positions are essentially matched by opposite positions in listed financial instruments
and instruments whose fair value has been assessed on the basis of models based on
official market prices.
NOTE P5 OTHER INCOME
2006
Rental income
88
2005
37
38
775
570
Total
812
608
NOTE P6 STAFF COSTS
NOTE P7 OTHER ADMINISTRATIVE EXPENSES
2006
2005
2006
2005
Salaries and fees
-4 586
-4 205
Property and premises
Social security costs
-1 262
-1 172
External IT costs
Pension costs *
-718
-649
Communication
-331
-345
Provision to profit-sharing foundation
-117
-115
Travel and marketing
-309
-272
-503
-488
Purchased services
-671
-524
-7 186
-6 629
Supplies
-188
-173
Other staff costs
Total
* SEK 468m (442) of the pension costs are costs calculated on an actuarial basis and
SEK 302m (207) are pension premiums.
The calculated pension cost which is charged to the operating profit is based on the
number of employees in active service.
See the specification of the Group’s pension expenses in Note P34.
Insurance premiums paid to group companies are SEK 5m (5).
Other expenses
Total
2006
2005
-58
-67
Board, CEO and EVPs
Sweden
Norway
-3
-3
Finland
-3
-4
Denmark
-3
-3
Great Britain
-4
-5
-71
-82
Sub-total
-810
-873
-141
-195
-3 695
-3 192
-697
-575
Of which lease expenses
Minimum lease fee
Variable fee
Salaries and other remuneration
-827
-1 228
Total
-18
-146
-715
-721
Rental costs for premises normally have a variable fee related to the inflation rate and
to property taxes. Only one of the major lease contracts has a variable fee (related to
Stibor).
In 2006, the cost of the largest individual lease contract was approx. SEK 61m (58).
Audit costs
Audit
Consulting
2006
2005
2006
2005
KPMG Bohlins AB
-7.0
-5.6
-0.2
-1.7
Ernst & Young AB
-1.1
-0.8
0.0
-0.2
-1.3
-1.4
-0.7
-0.9
-64.9
-66.0
Auditors elected by the AGM
Others
Sweden
-3 099
-2 935
Norway
-377
-300
Finland
-265
-234
Denmark
-299
-270
Auditors elected by the Swedish Financial Supervisory Authority
Great Britain
-278
-204
PricewaterhouseCoopers AB
Luxembourg
-13
-14
Germany
-28
-28
USA
-88
-80
Singapore
-27
-23
Hong Kong
-11
-12
Poland
-17
-14
Other countries
-13
-9
Sub-total
-4 515
-4 123
Total
-4 586
-4 205
Gender distribution %
2006
Internal audit
2005
Men
Women
Men
Women
Board of directors
69
31
69
31
CEO/EVPs
90
10
90
10
Sickness absence rate in the Swedish operations %
2006
Age
2005
Men
Women
Total
Men
Women
Total
–29
1.6
2.8
2.3
2.3
2.5
2.4
30–49
1.9
4.6
3.3
1.8
5.1
3.6
50–
3.0
7.3
5.4
3.4
7.6
5.8
Total
2.2
5.3
3.9
2.3
5.8
4.2
Of which on long-term sick leave, percentage
points of total sickness absence
–29
0.6
0.7
0.6
1.0
0.4
0.6
30–49
0.8
2.8
1.9
0.5
3.2
2.0
50–
1.7
5.2
3.7
2.0
5.4
4.0
Total
1.0
3.4
2.3
1.0
3.8
2.5
See Group Note 5.
Principles for remuneration to senior management.
Decision process for remuneration to senior management.
Terms and remuneration for senior management.
Pension obligations.
Loans to senior management.
89
NOTE P8 LOAN LOSSES
2006
2005
-554
-574
A. SPECIFIC PROVISION FOR INDIVIDUALLY ASSESSED LOAN RECEIVABLES
The year’s write-off for actual loan losses
Write-back of previous provisions for possible loan losses which are reported as actual loan losses in the year’s accounts
490
406
-448
-466
377
144
Write-back of provisions for probable loan losses which are no longer necessary
273
324
Net expense for the year for individually assessed loan receivables
138
-166
-339
-
The year’s write-off for actual loan losses
0
0
1
2
Allocation to/dissolution of reserve for loan losses
0
0
Net expense for the year for collectively assessed homogenous groups of loan receivables
1
2
The year’s provision for probable loan losses
B. PROVISION BY GROUP FOR INDIVIDUALLY ASSESSED LOAN RECEIVABLES
Allocation to/dissolution of provision by group
C. COLLECTIVELY ASSESSED HOMOGENEOUS GROUPS OF LOAN RECEIVABLES
WITH LIMITED VALUE AND SIMILAR CREDIT RISK
D. TRANSFER RISK
Allocation to/dissolution of reserve for transfer risks
Net expense for the year for loan losses (A+B+C+D)
Change in value of repossessed property
Total loan losses
-
-
-200
-164
-
4
-200
-160
2006
2005
Both actual and probable loan losses reduce the corresponding receivable amount on the assets side of the balance sheet. The reserve for probable loan losses has decreased by SEK 27m for the parent company in the form of exchange differences.
Recovered from actual loan losses in previous years includes calculations relating to recoveries in the portfolio of overdue loans which is subject
to monitoring. Previously these were only booked in the consolidated accounts but they can now be reported for a legal entity. For 2006, this has
resulted in an income item of SEK 217m.
Allocation to/dissolution of group provisions were previously only booked in the consolidated accounts but can now be reported for a legal
entity.
Impairment losses
0
0
-851
-634
Total impairment losses
-851
-634
Write-backs
1
14
272
310
Total write-backs
273
324
NOTE P9 APPROPRIATIONS
2006
2005
Settlement of pensions
Calculated pension premiums in the Bank
Pensions paid by the Bank
Compensation from pension foundation
442
-438
520
-
Total
454
4
Change in amortisation of goodwill in excess of plan
152
-208
Change in other untaxed reserves
90
468
-534
-
23
Group contribution
3 759
4 893
Total
4 365
4 712
NOTE P10 CL ASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES 2006
At fair value in the income
statement divided into:
Trading
Other *
Derivatives
designated
as hedge
instruments
Investments
held to
maturity
Loans and
customer
receivables
Financial
assets
available
for sale
Other
financial
liabilities
Nonfinancial
assets/
liabilities
Total
Assets
Cash and balances with central
banks
Treasury bills and other eligible
bills
4 676
37 439
45
Loans to the public
4 676
4 632
37 484
338 037
338 037
567 328
571 960
Bonds and other interest-bearing
securities
144 595
9 340
153 935
18 746
53 720
72 466
1 437
55 910
1 437
1 361
57 271
Intangible assets
1 597
1 597
1 741
1 741
689
689
Current tax assets
Deferred tax assets
Other assets
Prepayments and accrued
income
Total assets
20 842
2 090
258 780
4 632
1 361
20 842
3 908
59
936 228
63 164
6 057
4 027
1 268 192
Liabilities
850
352 262
353 112
the public
108
412 556
412 664
40 681
213 803
Liabilities where the customer
Issued securities
1 437
65 227
51 829
1 437
254 484
2 492
67 719
51 829
382
382
Provisions
Other liabilities
181
13 101
3 196
6 223
9 419
51 672
51 672
Total liabilities
162 072
2 492
1 049 617
13 282
1 819
1 216 000
91
NOTE P10 CONTINUED CL ASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES 2005
At fair value in the income
statement divided into
Trading
Other *
Derivatives
identified
as hedge
instruments
Investments
held to
maturity
Loans and
customer
receivables
Financial
assets
available
for sale
Other
financial
liabilities
Non
financial
assets/
liabilities
Total
Assets
Cash and balances with central
banks
Treasury bills and other eligible
bills
6 919
36 866
55
Loans to the public
15
Bonds and other interest-bearing
securities
134 224
14 495
71 373
6 919
165
4 574
502
37 031
312 336
312 391
490 853
495 442
38
14 293
149 057
40 650
55 145
1 490
72 863
Intangible assets
1 918
1 918
1 716
1 716
Current tax assets
Deferred tax assets
Other assets
Total assets
446
2
12 235
1 058
11
2 822
515
825 203
258 532
4 574
1 490
12 683
3 891
55 108
3 634
1 149 056
Liabilities
public
Issued securities
420
311 456
311 876
746
376 201
376 947
146 200
71 574
217 774
73 995
50 716
2 729
76 724
50 716
491
491
248
248
Provisions
Other liabilities
591
8 531
187
7 099
7 286
46 795
46 795
Total liabilities
92
272 855
2 729
821 656
9 122
739
1 097 979
NOTE P11 LOANS TO CREDIT INSTITUTIONS
2006
2005
Banks
32 291
23 690
178 385
170 858
Sub-total
210 676
194 548
Banks
31 157
24 941
96 206
92 902
127 363
117 843
Sub-total
-2
0
Total
338 037
312 391
108 067
100 461
Over
5 years
Total
Payable
on demand
Within
3 months
>3 months
to 1 year
>1 year to
5 years
2006
101 729
146 740
42 957
36 738
9 873
338 037
2005
78 510
135 232
61 657
27 636
9 356
312 391
2006
2005
214 911
195 967
164 299
146 631
Total
379 210
342 598
46 975
32 882
Average volumes
93
NOTE P12 LOANS TO THE PUBLIC
2006
2005
Households
46 525
42 166
Companies etc
226 764
202 948
Sub-total
273 289
245 114
Households
87 900
77 869
Companies etc
212 613
174 307
Sub-total
300 513
252 176
Total
21 947
7 930
Over
5 years
Total
Within
3 months
>3 months
to 1 year
2006
84 317
87 438
96 087
146 245
157 873
571 960
2005
30 603
71 665
86 888
128 673
177 613
495 442
2006
2005
Loans to the public in Swedish kronor
258 960
234 094
Loans to the public in foreign currency
281 253
228 096
Total
540 213
462 190
18 022
7 417
2006
2005
Bad debts etc. For definitions see inside back cover
Bad debts
Specific provisions for individually assessed loan receivables
Provision for collectively assessed homogeneous groups of loan receivables with limited value and similar credit risk
Provisions by group for individually assessed loan receivables
2 483
3 158
-1 505
-1 848
0
0
-339
0
Net bad debts
639
1 310
Total bad debt reserve ratio, %
74.3
58.5
0.08
0.17
Non-performing loans which are not bad debts, SEK m
440
277
Book value of loan receivables restructured during the year, before restructure, SEK m
17
34
Book value of loan receivables restructured during the year, after restructure, SEK m
18
39
Bad debts reclassified as normal loans during the year, SEK m
40
83
Group provisions were previously only booked in the consolidated accounts, but are now booked on the legal entities.
94
-1 848
495 442
Payable on
demand
Average volumes
>1 year to
5 years
-1 842
571 960
NOTE P13 INTEREST-BEARING SECURITIES
2006
2005
Nominal value
Fair value
Nominal value
Fair value
Government instruments
34 611
35 265
25 797
27 080
Credit institutions
48 787
49 136
38 061
38 547
Mortgage institutions
29 583
29 838
39 260
41 082
Other
76 891
77 180
73 395
79 382
Total
189 872
191 419
176 513
186 091
Adjustment to book value for investments held to maturity
Total book value
-
-3
191 419
186 088
153 935
Government instruments eligible as collateral with central banks
Other instruments eligible as collateral with central banks
Total interest-bearing securities
149 057
34 611
35 265
25 797
2 221
2 219
9 570
9 951
36 832
191 419
35 367
186 088
Of which unlisted securities
27 080
569
7 926
7
146
IFRS 7 is applied from 1 January 2005 onwards.
Payable on
demand
Within
3 months
2006
253
16 779
58 007
2005
2 878
14 445
37 014
Average volumes
>3 months
to 1 year
>1 year to
5 years
Over
5 years
Total
93 410
22 970
191 419
106 729
25 022
186 088
2006
2005
194 517
160 523
2006
2005
18 253
14 485
NOTE P14 SHARES AND PARTICIPATING INTERESTS
Held for trading
Listed
Non-listed
Sub-total
28
10
18 281
14 495
5 161
4 537
Holdings classified as Available for sale
Listed
Non-listed
Sub-total
Holdings in associated companies, non-listed
801
354
5 962
4 891
245
237
Holdings in group companies, non-listed
47 978
35 522
Total
72 466
55 145
95
NOTE P14 CONTINUED
Corporate
identity number
Registered
office
556197-2265
BGC Holding AB
556607-0933
Centralen för Elektroniska Korttransaktioner CEK AB
556362-0383
Book value
Number of
shares
Participating
interest %
2006
2005
Stockholm
1 100
21.9
0
0
Stockholm
25 382
25.4
4
4
Stockholm
370
37.0
0
0
556695-3567
Stockholm
8 000
20.0
4
-
556630-4928
Stockholm
12 735
28.3
19
15
Privatgirot AB
556302-4552
Stockholm
290
29.0
1
1
556137-5113
Stockholm
2 429
24.3
0
0
217
VPC AB
556112-8074
Stockholm
-
-
-
VPC Holding AB
556709-1763
Stockholm
443 700
24.8
217
-
245
237
Sub-total
Group companies
Participating
interest %
Book value
Corporate
identity number
Registered
office
Number of
shares
Handelsbanken Finans AB
556053-0841
Stockholm
1 550 000
100
145
145
Stadshypotek AB
556459-6715
Stockholm
162 000
100
26 870
26 870
Stadshypotek Bank AB
516401-9803
Stockholm
3 000 000
100
2006
2005
Swedish credit institutions
Sub-total
361
361
27 376
27 376
Foreign credit institutions
SH 2005 S.A
017277754
Warsaw
125
100
1
494
Handelsbanken Markets Securities, Inc
11-3257438
New York
1 000
100
23
23
Svenska Handelsbanken Delaware Inc., USA
13-3153272
Delaware
1 000
100
0
0
Svenska Handelsbanken S.A.
RCS Lux B-15992
Luxembourg
1 000 000
100
147
147
ZAO Svenska Handelsbanken
1057711005384
Moscow
1 500 000
100
Sub-total
453
415
624
1 079
5
Other Swedish companies
AB Handel och Industri
556013-5336
Stockholm
100 000
100
5
Fritidsvärden AB*
556192-4803
Göteborg
1 000
100
0
0
FV Fastighetsvärden AB
556043-2766
Stockholm
1 000
100
134
134
0
Förvaltnings AB Lejontrappan*
556481-1551
Göteborg
1 000
100
0
Handelsbanken Fondbolagsförvaltning AB
556070-0683
Stockholm
10 000
100
1
1
Handelsbanken Försäkring AB
516401-8326
Stockholm
1 500
100
300
300
1 538
Handelsbanken Liv Försäkrings AB
516401-8284
Stockholm
100 000
100
3 238
Handelsbanken Mezzanine Management AB
556679-2668
Stockholm
5 000
100
1
1
Handelsbanken Mezzanine Fond 1 KB
969710-3126
Stockholm
Participation
100
95
100
Handelsbanken Skadeförsäkrings AB
516401-6767
Stockholm
1 500
100
30
15
Siboelf Shipping AB*
556482-2525
Göteborg
1 000
100
0
0
SPP Fonder AB
556397-8922
Stockholm
1 000
100
51
51
SPP Livförsäkring AB
516401-8524
Stockholm
2 000
100
15 464
4 264
19 319
6 409
Sub-total
* Shares taken over to protect claim.
Other foreign companies
Ejendomsselskabet af 1. januar 2002 A/S
Registered
office
Number of
shares
Participating
interest %
2006
2005
392
38300512
Herning
2 460 000
100
393
Forva AS
945812141
Oslo
4 000 000
100
1
1
Rådstuplass 4 ASA
910508423
Bergen
40 000
100
146
146
SHB Verwaltungs- und Beteiligungsgesellschaft mbH
HRB 29714
Frankfurt
Participation
100
-
-
1932320
London
100
100
-
-
0055 97 705
Rotterdam
10 200
100
84
84
SIL (Nominees) Limited
Svenska Finans International BV
Svenska Property Nominees Limited
Svenska Re S.A.
Sub-total
Total
96
Book value
Corporate
identity number
2308524
London
100
100
-
-
RCS Lux B-32053
Luxembourg
19 999
99.99
35
35
659
658
47 978
35 522
NOTE P15 DERIVATIVE INSTRUMENTS
Nominal amount/maturity
Up to
1 year
Positive market values
> 1 year to
5 years
Over
5 years
Total
2006
Negative market values
Total
2005
2006
2005
2006
2005
2 644
Derivatives held for trading
Options
FRA/futures
Swaps
Other instruments
179 614
82 034
8 545
270 193
272 728
3 118
2 944
2 874
3 086 800
985 100
8 856
4 080 756
3 986 109
1 138
820
1 085
806
934 920
1 224 515
563 425
2 722 860
2 668 322
22 425
41 034
23 882
42 239
10 510
208
-
10 718
14 841
4
6
0
6
Options
33 204
2 183
-
35 387
50 775
89
439
98
365
Futures
1 109 219
12 238
405
1 121 862
1 354 674
13 196
17 270
17 834
12 639
170 209
162 158
23 293
355 660
269 470
4 594
2 651
5 115
3 689
Options
79 285
47 452
6 089
132 826
118 947
7 892
5 314
10 310
8 537
Futures
30 683
2 152
-
32 835
23 168
1 232
150
1 197
682
718
1 404
418
2 540
3 038
320
134
1 204
1 385
Swaps
Equity-related contracts
Swaps
Other instruments
Sub-total
32
-
-
32
449
328
13
16
24
365
29 346
749
30 460
15 440
1 574
598
1 612
979
5 635 559
2 548 790
611 780
8 796 129
8 777 961
55 910
71 373
65 227
73 995
Derivatives for fair value hedges
FRA/futures
3 500
6 300
-
9 800
8 100
6
4
3
5
Swaps
22 821
46 709
18 872
88 402
58 806
545
326
1 260
1 472
Other instruments
29 206
-
-
29 206
3 953
4
2
4
2
Options
45
-
-
45
-
0
-
-
-
Futures
71 092
15 344
-
86 436
76 032
658
1 141
1 183
1 028
-
Other instruments
Sub-total
345
48
-
393
-
1
-
-
182
-
-
182
-
-
-
0
-
127 191
68 401
18 872
214 464
146 891
1 214
1 473
2 450
2 507
1 677
6 611
3 223
11 511
10 942
147
17
42
222
1 677
6 611
3 223
11 511
10 942
147
17
42
222
5 764 427
2 623 802
633 875
9 022 104
8 935 794
57 271
72 863
67 719
76 724
2 878 349
2 992 847
2 973
5 412
1 776
5 693
Derivatives for cash flow hedges
Swaps
Sub-total
Total
Of which cleared
Currency breakdown of market values
SEK
166 787
15 754
268 692
105 342
USD
-120 028
223 253
-234 722
120 697
EUR
Others
33 307
-62 451
5 649
-91 711
-22 795
-103 693
28 100
-57 604
See Group Note 16 for a description of Hedge accounting.
97
NOTE P16 INTANGIBLE ASSETS
Goodwill on
the purchase
of net assets
Internally
developed
software
Total 2006
Total 2005
2 170
29
2 199
2 066
12
72
84
23
-104
-
-104
110
2 078
101
2 179
2 199
Accumulated amortisation and impairments at beginning of year
-280
-1
-281
-265
Amortisation for the year according to plan
-297
-2
-299
-1
Impairments for the year
-
-25
-25
-
23
-
23
-15
-554
-28
-582
-281
1 524
73
1 597
1 918
Cost of acquisition at beginning of year
Cost of acquisition of additional intangible assets
Cost of acquisition at close of year
Accumulated amortisation and impairments at end of year
Closing residual value
Amortisation
Amortisation is based on the expected useful life. At present, this means
that principally the following amortisation rates are applied:
Goodwill
20 years
Internally developed software
Other intangible assets
5 years
Individual testing
The useful life of goodwill on acquisition assets in the parent company is
assessed to have a life which is virtually without limit. The depreciation
period has been set at 20 years.
NOTE P17 PROPERT Y AND EQUIPMENT
Other property and equipment
Investment
property
1–4 years
depreciation
5–9 years
depreciation
10–19 years
depreciation
20+ years
depreciation
No
depreciation
Total 2006
Total 2005
Opening cost of acquisition
-
671
831
117
1 212
593
3 424
3 345
New acquisitions during the year
-
132
151
9
-
0
292
258
Capitalised new construction and rebuilding costs
during the year
-
-
-
-
66
-
66
40
Acquisition value of property and equipment sold
during the year
-
-192
-171
-4
-31
0
-398
-275
-
-12
-25
-2
-
0
-39
56
Total cost of acquisition
-
599
786
120
1 247
593
3 345
3 424
Accumulated depreciation at beginning of year
-
-510
-588
-56
-554
-1 708
-1 630
Accumulated depreciation on sold property and
equipment
-
187
166
4
32
389
271
Year’s impairment losses recognised in the income
statement
-
-
-
-
-10
-10
-5
Year’s depreciation
-
-128
-125
-11
-36
-300
-304
-
10
15
0
-
25
-40
Total accumulated depreciation
-
-441
-532
-63
-568
-1 604
-1 708
Book value of repossessed property for protection
of claims
-
-
-
-
0
Total collateral taken over
-
-
-
-
0
Residual value according to plan
-
679
593
1 741
1 716
Of which land
-
Tax assessment value for Swedish properties
-
158
254
Apart from owned equipment, the Bank also has at its disposal equipment under operating leases.
The residual value of leased equipment in the Bank was SEK 99m (117).
98
57
583
2 172
583
583
2 172
2 172
NOTE P18 OTHER ASSETS
Claims on investment banking settlements
2006
2005
14 866
3 481
Other
5 976
9 202
Total
20 842
12 683
NOTE P19 PREPAYMENTS AND ACCRUED INCOME
2006
2005
Accrued interest income
4 854
3 394
Other accrued income
1 171
464
Prepayments
Total
32
33
6 057
3 891
NOTE P20 DUE TO CREDIT INSTITUTIONS
2006
2005
Banks
44 146
30 753
23 793
10 160
Sub-total
67 939
40 913
240 951
217 401
Due in Swedish kronor
Due in foreign currency
Banks
44 222
53 562
Sub-total
285 173
270 963
Total
353 112
311 876
23 318
10 783
Over 5 years
Total
Of which repos
Payable on
demand
Within 3 >3 months to
months
1 year
>1 year to
5 years
2006
77 722
248 852
24 409
2 079
50
353 112
2005
49 079
234 285
25 766
2 645
101
311 876
2006
2005
Average volumes
Due to credit institutions in Swedish kronor
53 452
40 688
Due to credit institutions in foreign currency
350 047
286 595
Total
403 499
327 283
29 468
17 396
Of which repos
99
NOTE P21 DEPOSITS AND BORROWING FROM THE PUBLIC
2006
2005
412 664
376 947
2006
2005
Deposits in Swedish kronor
Households
101 636
87 484
Companies etc.
108 701
108 810
Sub-total
210 337
196 294
22 976
23 249
Deposits in foreign currency
Households
Companies etc.
104 870
97 955
Sub-total
127 846
121 204
Total
338 183
317 498
Payable on
demand
Within
3 months
>3 months
to 1 year
>1 year to
5 years
Over 5 years
Total
2006
315 551
13 321
1 401
701
7 209
338 183
2005
290 549
21 631
3 376
500
1 442
317 498
2006
2005
Deposits from the public in Swedish kronor
208 299
187 277
Deposits from the public in foreign currency
127 596
112 798
Total
335 895
300 075
2006
2005
Swedish kronor
36 457
21 012
Foreign currency
38 024
38 437
Total
74 481
59 449
5 777
2 853
Average volumes of deposits from the public
Of which repos
Payable on
demand
Within
3 months
>3 months
to 1 year
>1 year to
5 years
Over 5 years
Total
2006
2 473
64 040
6 814
793
361
74 481
2005
2 948
50 461
4 947
1 081
12
59 449
2006
2005
Borrowing from the public in Swedish kronor
35 916
26 775
Borrowing from the public in foreign currency
46 844
39 343
Total
82 760
66 118
7 558
3 931
Average volume of borrowing from the public
Of which repos
100
NOTE P22 ISSUED SECURITIES
2006
2005
Nominal amount
Book value
Book value
7 281
8 787
5 353
5 353
Certificates
Certificates in Swedish kronor
Of which
at amortised cost
for trading
Certificates in foreign currency
-
-
7 281
8 787
-
166 389
166 137
163 872
Of which
at amortised cost
121 548
121 296
144 918
12 955
12 947
18 954
for trading
31 886
31 894
-
173 670
174 924
169 225
29 081
25 647
18 151
at amortised cost
18 176
14 831
18 151
10 905
10 816
-
55 334
53 913
30 398
53 096
51 700
29 182
2 238
2 213
1 216
84 415
79 560
48 549
258 085
254 484
217 774
Sub-total
Bond loans
Bond loans in Swedish kronor
Of which
Bond loans in foreign currency
Of which
at amortised cost
Sub-total
Total
Remaining maturities carrying amount
Payable on
demand
Within
3 months
>3 months
to 1 year
>1 year to
5 years
>5 years
Total
2006
1 657
2005
-
132 064
70 008
48 644
2 111
254 484
94 779
101 592
20 606
797
217 774
2006
2005
Average volume of issued securities
Swedish kronor
34 566
26 463
Foreign currency
231 438
228 167
Turnover of own issued securities
2006
2005
Issued
SEK bn
872
1 019
Repurchased
153
109
Repaid
668
922
2006
2005
NOTE P23 OTHER TRADING LIABILITIES
Short positions at fair value
Shares
2 053
3 868
49 776
46 848
49 626
46 848
Of which
Other issuers
Own issued
Total
Remaining maturities short positions interest-bearing securities
Payable on
demand
Within
3 months
>3 months
to 1 year
>1 year to
5 years
150
-
51 829
50 716
>5 years
Total
2006
3
78
2 627
37 695
9 373
49 776
2005
-
2 037
5 735
31 910
7 166
46 848
2006
2005
Swedish kronor
41 014
22 674
Foreign currency
2 860
6 057
Average volumes of other trading liabilities
101
NOTE P24 TA XES
Deferred tax assets
Other
Offsetting against deferred tax liability
Total
2006
2005
-
57
46
48
2
10
-48
-115
-
-
2006
2005
252
219
148
144
30
-
Offsetting against deferred tax assets
-48
-115
Total
382
248
Net deferred tax liabilities
382
248
Recognised
directly in
equity
Closing
balance
252
Year’s change in deferred taxes
Recognised
Opening in the income
balance
statement
219
33
-57
87
96
7
30
103
Other
-10
10
-3
-3
Total
248
17
117
382
2006
2005
-3 449
-3 677
164
45
Tax expenses recognised in the income statement
Current tax
Tax expense for the year
Adjustment of tax attributable to previous years
Deferred tax
Changes in temporary differences
-17
228
-3 302
-3 404
28.0
28.0
Non-taxable dividend
-4.1
-0.2
Non-taxable income/non-deductible expenses
-0.0
-0.1
Tax relating to previous years
-0.3
-
23.6
27.7
Total
Nominal tax rate in Sweden, %
Deviations
Effective tax rate, %
NOTE P25 PROVISIONS
2006
2005
Opening balance
-
10
Provisions during the year
-
-
Utilisation
-
-
Other changes
-
-10
Closing balance
-
-
2006
2005
Liabilities on investment banking settlements
4 764
2 650
Other
8 518
6 472
Total
13 282
9 122
NOTE P26 OTHER LIABILITIES
102
NOTE P29 UNTA XED RESERVES
NOTE P27 ACCRUALS AND DEFERRED INCOME
2006
2005
Accrued interest expense
7 556
5 404
Other accrued expense
1 829
1 851
34
31
9 419
7 286
Deferred income
Total
2006
2005
Accumulated amortisation on goodwill
in excess of plan
1 183
1 397
Total
1 183
1 397
NOTE P30 SPECIFICATION OF CHANGES IN EQUIT Y
NOTE P28 SUBORDINATED LIABILITIES
Change in exchange differences
2006
2005
Subordinated loans in Swedish kronor
349
349
Subordinated loans in foreign currency
51 323
46 446
Total
51 672
46 795
Change in exchange differences in foreign branches
-261
-107
-22
Change in exchange differences in foreign branches
176
154
Average volumes
Subordinated loans in Swedish kronor
349
380
Subordinated loans in foreign currency
49 080
31 286
Specification of instruments available for sale
(amount after tax)
Unrealised market value at beginning of year
Specification,
subordinated loans
Issue/conv./final
paymt yr
Currency
Original
nominal
amount in
each
currency
Unrealised market value of associated holdings sold
during the year
Interest Outstanding
rate %
amount
Unrealised market value change value during the year
for remaining and new holdings
Unrealised market value at end of year
2006
2005
843
680
-327
-303
586
466
1 102
843
2006
2005
IN SWEDISH KRONOR
Other Swedish 7
349
Sub-total
349
IN FOREIGN CURRENCY
2005/2015 1
EUR
500
variable
4 517
2005/2017 2
EUR
700
variable
6 317
2005/perpetual 3
GBP
500
5.000
6 506
2005/perpetual 4
EUR
500
4.194
4 261
2006/2016 5
EUR
600
4.000
5 372
2006/2016 6
USD
800
variable
5 477
Other foreign 7
18 873
Sub-total
51 323
Total
1
2
3
4
5
6
7
51 672
interest due dates from 2010. Premature redemption requires the approval of the
Swedish Financial Supervisory Authority.
interest due dates from October 2012. Premature redemption requires the approval
of the Swedish Financial Supervisory Authority.
Libor.
Euribor.
Fixed-term subordinated loan at fixed rate. Premature redemption may occur in the
Euribor.
Fixed-term subordinated loan with 3-month variable coupon linked to Libor. Premature redemption may occur in the case of changed tax regulations or on the interest
due dates from 2011. Premature redemption requires the approval of the Swedish
Financial Supervisory Authority.
Other subordinated loans which are not specified here are issued in the form of
fixed-term or perpetual subordinated loans.
Turnover of own shares
SEK bn
Issued
16.1
11.5
Repurchased
20.4
14.0
NOTE P31 COLL ATERAL PLEDGED FOR OWN DEBT
2006
2005
Government instruments and bonds
44 356
47 982
Repos
42 999
25 803
Shares
-
366
20 330
4 442
Cash
Securities loans
Total
14 293
726
121 978
79 319
NOTE P32 OTHER COLL ATERAL PLEDGED
2006
Cash funds
2005
783
233
Government instruments and bonds
2 778
3 994
Securities loans
1 836
1 759
Total
5 397
5 986
103
NOTE P33 COMMITMENTS, CONTINGENT LIABILITIES
AND ASSETS
2006
2005
Guarantees, loans
48 106
44 358
Guarantees, other
41 614
35 288
Irrevocable letters of credit
46 211
46 678
Own acceptances
201
Other
136
178
136 268
126 703
Total
201
Commitments and contingent liabilities and assets total SEK 136,268m (126,703). This
amount includes SEK 61m (49) relating to a number of civil actions which the parent
company is bringing in general courts of law. The largest individual amount in dispute
is SEK 30m (24). The Bank’s assessment is that the actions will essentially be settled
in its favour. None of the disputed amounts, nor any insurance compensation, has
been recognised in income.
The data for contingent liabilities is reported in nominal amounts and an assessed
expected value is included in the amount under ”Other” for the civil actions that the
parent company is bringing.
The parent company is currently pursuing a tax dispute. The total claim is approx.
SEK 20m, excluding interest, which in the case of a positive judgement would increase
the parent company’s income by the same amount.
NOTE P34 CONTINUED
The plan assets mainly comprise shares and interest-bearing securities with
the following market values on the balance sheet date.
Interest-bearing securities, etc.
Total
2006
2005
22 492
18 297
819
987
23 311
19 284
The plan assets include shares in Svenska Handelsbanken AB (publ) with a market
value of SEK 994m (946) on the balance sheet date 31 December 2006.
From the age of 65, a retirement pension is paid in accordance with the pension
agreement between the Employer’s Association of the Swedish Banking Institutions
(BAO) and Union of Finance Sector Employees and between BAO and SACO (the
Swedish Confederation of Professional Associations). The amount is 10% of the annual salary up to 7.5 price base amounts. A retirement pension of 65% is paid in the
interval between 7.5– 20 price base amounts.
In addition a commitment has been made which is part of the Bank’s profit-sharing
system Oktogonen (regarded in the Group as a non-defined benefit plan). Changes in
this commitment are included in Other increase in capital value.
The pension commitments are SEK 2,495m (2,787) in the Bank’s pension fund
(Pensionskassan SHB, försäkringsförening) and the market value of the assets is
SEK 9,786m (8,308). The surplus value in this pension fund is thus SEK 7,291m
(5,521).
NOTE P35 OTHER COMMITMENTS
NOTE P34 PENSION OBLIGATIONS
Pension obligations, plan assets and pension commitments are calculated in accordance with the Act on Safeguarding Pension Obligations and the Swedish Financial
Supervisory Authority’s regulations, and have developed as follows. The pension
obligations are entirely covered by assets in the pension foundations and are not
reported on the balance sheet.
2006
Other commitments
Total commitments regarding future payments
2005
Pension obligations
17 358
15 258
23 311
19 284
Surplus value (not reported)
-5 953
-4 026
2005
9 307
61
66
22 453
9 373
Credit commitments
156 618
137 985
130 781
124 031
Total other commitments
287 399
262 016
Total
309 852
271 389
2006
2005
2007
633
372
2008
471
266
2009
403
184
125
Pension costs
-527
-911
Interest expense
-281
-268
Yield
4 547
4 675
Cost of own retirement plans
3 739
3 496
-302
-207
-3 753
-3 934
-316
-645
2010
225
-14
-438
2011
174
84
2012
100
67
33
Insurance premiums
Costs covered by surpluses in specially designated assets/
increase of surplus in specially designated assets
Pension costs
Of which reported under appropriations
Contracted irrevocable future operating lease
charges distributed by the years they fall due
for payment.
2013
63
15 258
12 512
2014
39
26
Pension costs
527
911
2015
31
21
Interest expense
281
268
2016
20
13
2017
13
12
2018 and later
24
24
2 196
1 227
PENSION OBLIGATIONS
Opening balance
Pensions paid by the Bank
Other increase in capital value
Closing balance
-534
-438
1 826
2 005
17 358
15 258
19 284
14 609
4 547
4 675
PLAN ASSETS
Opening balance
Return
Funds paid from pension foundation
Closing balance
Percentage return on specially separated assets
104
2006
22 392
-520
-
23 311
19 284
20
24
Total
Other disclosures – Parent company
CAPITAL COVER
PARENT COMPANY
Capital base and capital requirement
SEK m
2006
2005
Tier 1 capital
48 366
48 893
Tier 2 capital, net
46 064
28 928
Total capital base
94 430
77 821
529 842
451 877
CAPITAL BASE
RISK-WEIGHTED AMOUNT
Credit risk
Market risks
Total
Capital ratio, %
48 526
45 581
578 368
497 458
16.3
15.6
Tier 1 ratio, %
8.4
9.8
Capital base
2006
2005
45 935
45 085
5 358
5 681
TIER 1 CAPITAL
Equity 1
Tier 1 capital contribution
Minority interest
-
Deducted items
Goodwill and other intangible assets
Revaluation
Deferred tax asset
Unrealised accumulated profit
-1 597
-1 918
-152
-159
-
-
-1 101
Adjustments in accordance with stability filter
Cash flow hedges
-77
204
48 366
48 893
Perpetual subordinated loans
20 838
13 421
Fixed-term subordinated loans after reduction
24 183
24 446
TIER 2 CAPITAL
Adjustment unrealised accumulated profit
Revaluation adjustment
1 108
152
159
46 281
38 026
Total
94 647
86 919
Less shareholdings in insurance companies and 5–50% in companies conducting banking business
Total tier 1 and tier 2 capital
Enlarged capital base
Total capital base
1
-217
-9 098
94 430
77 821
-
-
94 430
77 821
Tier 1 capital has been affected by the board’s proposed appropriations.
105
Balance sheet items
2006
2005
Risk-weighted
Investments
amount
Weighting
Investments
Risk-weighted
amount
0%
563 039
20%
42 079
8 416
43 306
8 661
50%
157 242
78 621
140 566
70 283
100%
352 927
352 927
291 032
291 032
1 115 287
439 964
896 638
369 976
Total
Off-balance-sheet items 2
421 734
2006
Weighting
Nominal
amount
2005
Recalculated Risk-weighted
amount
amount
Nominal
amount
Recalculated Risk-weighted
amount
amount
0%
150 561
47 668
174 315
45 190
20%
141 923
13 702
2 740
28 896
12 518
50%
428 478
3 343
1 672
91 573
5 959
2 979
100%
151 203
85 466
85 466
134 903
76 417
76 417
872 165
150 179
89 878
429 687
140 084
81 900
1 265 466
529 842
1 036 722
451 876
Total
Total credit risks
2 504
2
The nominal amounts for off-balance sheets item are recalculated using a factor which varies according to the credit risk in the commitments.
The recalculated amounts are subsequently allocated according to the same principles (group A–D) which apply for the balance sheet items.
Risk-weighted amount for market risks
2006
Specific
risk
Specific
risk
risk
amount
Interest rate risks
24 620
10 466
35 086
20 584
10 844
31 428
Equity price risks
815
764
1 579
791
612
1 403
Settlement risks
Counterparty risks and other risks
15
12
10 316
11 770
Exchange rate risks
1 530
968
Total market risks
48 526
45 581
578 368
497 457
Total risk-weighted amount for credit and market risks
See the Group for a description of the capital base, capital requirement and capital management.
106
2005
risk
amount
FINANCIAL REPORTS ■ NOTES PARENT COMPANY
CREDIT RISK EXPOSURE
PARENT COMPANY
2006
2005
Loans to the public
SEK m
571 960
495 442
338 037
312 391
130 781
124 031
Credit commitments
156 618
137 985
22 392
9 307
Other commitments
61
66
Guarantees, loans
48 106
44 358
Guarantees, other
41 614
35 288
Documentary credits
46 483
47 004
47 503
44 089
37 484
37 031
153 935
149 057
Total
24 243
19 386
1 619 217
1 455 435
LOANS TO THE PUBLIC, BY SECTOR
PARENT COMPANY
2006
2005
Lending before
provisions
Provisions
for probable
loan losses
Lending after
provisions
Lending after
provisions
Private individuals
134 425
-220
134 205
119 707
Property management
188 859
-447
188 412
161 455
4 398
-7
4 391
4 371
SEK m
of which ownership housing co-operatives
Corporate services
40 362
-71
40 291
37 160
Manufacturing
37 204
-242
36 962
35 222
Retail
34 097
-238
33 859
32 536
13 604
-22
13 582
15 390
Construction
8 152
-51
8 101
7 207
Municipalities
6 374
-
6 374
6 990
Agriculture, hunting and forestry
5 526
-6
5 520
5 513
4 449
-21
4 428
4 390
Insurance operations
10 539
0
10 539
4 413
Other sectors
89 872
-185
89 687
65 459
573 463
-1 503
571 960
495 442
Total loans to the public
LOANS TO THE PUBLIC, COLLATERAL
PARENT COMPANY
SEK m
Residential property
Agricultural property
2006
2005
157 242
134 631
4 865
1 816
Other property
72 939
66 572
Governments, municipalities and county councils
61 871
69 794
Floating charges on assets
17 767
21 283
Guarantees
17 890
13 318
Unsecured
133 210
112 060
Other collateral
106 176
75 968
Loans to the public
571 960
495 442
107
BAD DEBTS AND/OR NON-PERFORMING LOANS, BY SECTOR
PARENT COMPANY
SEK m
Nonperforming
loans which
are not
bad debts
Bad debts
Gross
Provisions
Net*
Of which
nonperforming
Private individuals
518
-220
298
288
171
Property management/corporate services
799
-518
281
89
113
Manufacturing
455
-242
213
58
17
Retail
335
-238
97
80
17
31
-22
9
9
4
Construction
60
-51
9
6
84
Other
Total
28
-21
7
5
0
257
-193
64
53
34
2 483
-1 505
978
588
440
BAD DEBTS AND/OR NON-PERFORMING LOANS, GEOGRAPHIC DISTRIBUTION
SEK m
Gross
Provisions
Net*
Of which
nonperforming
Nonperforming
loans which
are not bad
debts
Sweden
1 462
-919
543
374
224
Norway
136
-60
76
76
199
Finland
156
-31
125
106
0
Denmark
689
-462
227
25
17
PARENT COMPANY
Great Britain
Bad debts
33
-27
6
6
0
Rest of Europe
7
-6
1
1
0
North America
0
0
0
0
0
Asia
0
0
0
0
0
2 483
-1 505
978
588
440
Total
FAIR VALUE DISCLOSURES
PARENT COMPANY
2006
2005
Book
value
Adjustment
to fair value
338 037
-275
312 391
21
Loans to the public
571 960
3
495 442
895
191 419
-
186 088
3
Other assets
166 776
2 500
155 135
2 185
Total assets
1 268 192
2 228
1 149 056
3 104
-73
SEK m
Book
value
Adjustment
to fair value
ASSETS
LIABILITIES
353 112
22
311 876
412 664
-19
376 947
2
Issued securities
254 484
-262
217 774
517
Other liabilities
144 068
-
144 587
-
51 672
111
46 795
555
1 216 000
-148
1 097 979
1 001
Total liabilities
Total surplus/deficit
In accordance with the Swedish Financial Supervisory Authority’s directives (2006:16)
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 consumer 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 receivables and liabilities and also for receivables
and liabilities with a variable interest rate, the fair value is considered to be the same
as the book value. Receivables and liabilities with final maturity or date for next interest
rate fixing within 30 days are considered to be short-term.
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.
108
2 376
2 103
Items which are not traded on liquid markets, irrespective of whether they are
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, a surplus value occurs in the assets when margins decrease and a deficit 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 the 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.
Adjustment to fair value for 2005 has been made in accordance with the Financial
Supervisory Authority’s directives (2005:33).
RELATED PARTY DISCLOSURES
PARENT COMPANY
SEK m
Lending
Subsidiaries
Others
Total
Derivatives with positive market value
Other assets
Subsidiaries
12
-
-
-
178 246
-1 074
177 172
4 070
-
Others
-
-
-
Total
4 700
-630
4 070
Subsidiaries
4 138
5 231
-1 093
-
-
-
Others
6
514
520
5 237
-579
4 658
188 154
-2 786
185 368
23
-11
12
6
514
520
188 183
-2 283
185 900
49 670
3 117
52 787
155
85
240
85
105
190
49 910
3 307
53 217
Subsidiaries
Subsidiaries
Others
Total
Subsidiaries
-
-
-
-
7
7
Others
674
102
776
Total
674
109
783
Subsidiaries
3 195
-661
2 534
-
-
-
Others
-
-
-
Total
3 195
-661
2 534
Subsidiaries
2 216
-873
1 343
1
-1
-
Others
-
-
-
2 217
-874
1 343
Total
Total liabilities
177 160
-11
-
Other liabilities
-1 063
23
-630
Total
Derivatives with negative market value
178 223
-
Others
Other financial liabilities
Closing balance
4 700
Deposits and borrowing
Increase/Decrease
Total
Total assets
Opening balance
Subsidiaries
55 081
1 583
56 664
156
91
247
Others
759
207
966
Total
55 996
1 881
57 877
Subsidiaries
Off-balance sheet
Derivatives nominal value
Guarantees
-4 438
-422
-4 860
-
-
-
Others
-
-
-
Total
-4 438
-422
-4 860
Subsidiaries
34 731
870
35 601
-
-
-
Others
-
-
-
34 731
870
35 601
Total
109
FINANCIAL REPORTS ■ FIVE-YEAR REVIEW PARENT COMPANY
RELATED-PART Y DISCLOSURES CONTINUED
SEK m
Interest income
Interest expense
Subsidiaries
4 467
3 700
1
1
Others
-
65
Total
4 468
3 766
Subsidiaries
2 387
-1 391
-6
-3
-11
-144
2 370
-1 538
Subsidiaries
569
316
185
201
6
167
760
684
Others
Total
Others
Total
2005
2006
Subsidiaries
Others
Total
-27
-11
-209
-235
-
-
-236
-246
-
Net gain/losses on
Subsidiaries
-
financial items
-
-
Others
-53
-14
Total
-53
-14
Subsidiaries
710
439
Other income
-
-
Others
2
60
712
499
-166
-141
Total
Other expenses
Subsidiaries
Total
-
-52
Others
-198
229
Total
-364
36
7 940
2 912
Subsidiaries
Others
Total
-29
-88
-254
363
7 657
3 187
The subsidiaries and associated companies are listed in Note P14. These companies perform various types of services linked to the financial markets. “Other” includes the pension
organisations: Svenska Handelsbankens Pensionsstiftelse, Svenska Handelsbankens Personalstiftelse and Pensionskassan SHB, försäkringsförening which use the Bank for
customary banking and accounting services. Shareholders’ contribution to associated companies and Group companies, see Note P14. Group contributions received, see Note
P14. Group contributions made, see Change in equity, Parent company page 86.
For 2005, “Other” in the income statement includes SPP Livförsäkring AB (SPP). Svenska Handelsbanken AB mainly performs IT-related services and asset management.
Handelsbanken Liv Försäkrings AB and SPP also have close cooperation.
RELATED-PARTY TRANSACTIONS WITH CEO, EVPS AND BOARD OF DIRECTORS
PARENT COMPANY
SEK m
2006
2005
Lending
85
98
2
2
2006
2005
16
10
0
0
Interest income
Deposits
Interest expense
For other transactions, see Note 5, Group, Terms and remuneration for senior management.
Credit is granted to closely-related persons after customary credit review. The interest rate is determined on normal commercial terms. However for employees of the Bank (not
members of the board ), the interest rate on credit up to SEK 1.5m is two percentage points lower than the equivalent interest rate for external customers. This benefit is taxable for
the employee and constitutes a basis for social security charges payable by the Bank. Credit to close family members is granted on normal commercial terms and is not included
in the accounts. In exceptional cases, if credit to a close family member is granted at the subsidised interest rate described above, this is reported as a taxable benefit for the
employee. For deposits, the interest rate for employees is the same as for external customers.
110
Five-year review – Parent company
Income statement
2006
2005
2004
2003
2002
Net interest income
9 134
8 599
8 469
12 213
10 925
Dividends received
3 362
815
716
600
500
5 831
5 246
4 518
4 015
4 011
-964
SEK m
2 220
2 582
2 053
-1 840
812
608
728
223
240
21 359
17 850
16 484
15 211
14 712
Staff costs
-7 186
-6 629
-6 284
-5 751
-5 742
Other administrative expenses
-3 695
-3 192
-2 891
-2 374
-2 726
Depreciation, amortisation and impairments of property, equipment and
intangible assets
-634
-310
-307
-441
-482
-11 515
-10 131
-9 482
-8 566
-8 950
9 844
7 719
7 002
6 645
5 762
-200
-160
-325
-791
-715
-
-
-
199
-759
Operating profit
9 644
7 559
6 677
6 053
4 288
Appropriations
4 365
4 712
18 077
4 040
4 371
Profit before taxes
14 009
12 271
24 754
10 093
8 659
Taxes
-3 302
-3 404
-6 746
-2 779
-2 207
Profit for the year
10 707
8 867
18 008
7 314
6 452
4 585
4 018
3 640
3 294
Loan losses, net
Impairment losses/reversals on financial non-current assets
Dividend for the year
5 074 *
* As proposed by the board
Balance sheet
SEK m
2006
2005
2004
2003
2002
Loans to the public
571 960
495 442
408 842
398 859
438 372
338 037
312 391
280 285
256 462
246 014
191 419
186 088
155 189
127 500
139 666
Assets
Other assets
166 776
155 135
162 223
183 696
208 387
Total assets
1 268 192
1 149 056
1 006 539
966 517
1 032 439
412 664
376 947
315 004
296 470
286 226
353 112
311 876
270 369
234 900
280 219
Issued securities
254 484
217 774
198 864
195 883
233 107
Liabilities and equity
Other liabilities
Untaxed reserves
51 672
46 795
25 182
26 734
26 560
144 068
144 587
147 822
161 183
159 180
1 183
1 397
1 149
13 121
11 473
51 009
49 680
48 149
38 226
35 674
1 268 192
1 149 056
1 006 539
966 517
1 032 439
121 978
79 319
79 720
69 395
73 077
5 397
5 986
3 791
5 984
19 932
Contingent liabilities
136 268
126 703
109 182
102 782
122 022
Pension obligations
-
-
-
-
-
Other commitments
309 852
271 389
252 595
6 061 784
6 754 119
Memorandum items
Collateral pledged for own debt
Other collateral pledged
111
FINANCIAL REPORTS ■ RECOMMENDATION FOR APPROPRIATION OF PROFITS
Recommendation for appropriation of
profits and statement from the board
In accordance with the balance sheet for Handelsbanken, profits totalling SEK 45,439m are at the disposal of the
annual general meeting.
The board recommends that the profits be distributed as follows:
Dividend per share paid to the shareholders SEK 8.00 (SEK 7.00 for 2005)
Balance carried forward
Total allocated
5,074
40,365
45,439
When assessing the amount of the company’s proposed dividend, account has been taken of the nature of operations,
their scope, consolidation requirement and risk-taking. Our assessment is that the above appropriation of profits is prudent
and well-adapted to the operations as a going concern.
Unrealised changes in value of assets and liabilities at fair value have had a net impact of SEK –4,542m on the
shareholders’ equity.
The capital base of the fi nancial corporate group exceeded the statutory capital requirement by SEK 13,154m at the year-end.
The surplus capital in the parent company was SEK 48,161m.
We hereby declare that to the best of our knowledge, this annual report has been prepared in accordance with sound accounting
practices for limited companies, that the information provided corresponds to the actual circumstances and that nothing of material
importance has been omitted which could affect the view of the company presented in the annual report.
STOCKHOLM 20 FEBRUARY 2007
Lars O Grönstedt
Chairman
Hans Larsson
Anders Nyrén
Pirkko Alitalo
Jon Fredrik Baksaas
Ulrika Boëthius
Tommy Bylund
Göran Ennerfelt
Sigrun Hjelmquist
Fredrik Lundberg
Sverker Martin-Löf
Bente Rathe
Pär Boman
President and
Group Chief Executive
112
Audit report
To the annual general meeting of the shareholders of Svenska Handelsbanken AB (publ)
Corporate identity number: 502007-7862
We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of
the board of directors and the chief executive of Svenska Handelsbanken AB (publ) for the year 2006. The company’s
annual accounts and consolidated accounts are included in the printed version of this document on pages 16–112.
We have not audited the corporate governance report on pages 118–123. The board of directors and the managing
director are responsible for these accounts and the administration of the company as well as for the application of
the Annual Accounts Act when preparing the annual accounts and the application of international fi nancial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act when preparing the consolidated accounts.
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 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 accounts. An
audit also includes assessing the accounting principles used and their application by the board of directors and the
chief executive and significant estimates made by the board of directors and the chief executive when preparing the
annual accounts and consolidated accounts as well as evaluating the overall presentation of information in the annual
accounts and the consolidated accounts. 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 chief executive. We also examined whether any board member or
the chief executive 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 opinions set out below.
The annual accounts have been prepared in accordance with the Annual Accounts Act for Credit Institutions and
Securities Companies, and give a true and fair view of the company’s fi nancial position and results of operations in
accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared
in accordance with international fi nancial reporting standards IFRSs as adopted by the EU and the Annual Accounts
Act for Credit Institutions and Securities Companies and give a true and fair view of the group’s fi nancial position
and results of operations. The statutory administration report is consistent with the other parts of the annual
accounts and the consolidated accounts.
We recommend to the annual general meeting of shareholders that the income statements 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 recommendation in the administration report, and that the members of the board and the chief executive be
discharged from liability for the fi nancial year.
STOCKHOLM 8 MARCH 2007
KPMG Bohlins AB
Ernst & Young AB
Thomas Thiel
Torsten Lyth
Authorised public accountant
Ulla Nordin Buisman
Appointed by the Swedish Financial Supervisory Authority
113
CORPORATE SOCIAL RESPONSIBILITY
Handelsbanken in the community
Handelsbanken makes a better contribution to society than other banks by having higher
productivity, that is, more satisfied customers combined with higher cost-effectiveness.
HANDELSBANKEN’S PURPOSE
By delivering fi nancial services, Handelsbanken, together with other
players in the fi nancial sector, fulfi ls an important function in society. The Bank’s purpose is to be a link between the different players
in society so that capital can be transferred from those who have a
surplus of liquid funds to those who need to borrow money. The
banking system also maintains a functioning and efficient payment
system. An efficient banking system is a condition for a modern,
functioning society.
The word economy means careful management of scarce resources. The company with the highest level of cost-effectiveness that
can also deliver the best products or services, so that it has the most
satisfied customers, has the highest productivity and thus makes the
best contribution to society.
In the banking sector, cost-effectiveness is usually measured as the
proportion of costs to income, the C/I ratio. Handelsbanken has
the lowest C/I ratio of the Nordic banks and also compares very favourably with other European banks. Handelsbanken had the most
satisfied customers in the Nordic region.
HANDELSBANKEN IN THE LOCAL COMMUNITY
Handelsbanken has a nationwide branch network in Sweden and
a large branch network in the other Nordic countries. High costeffectiveness allows Handelsbanken to retain a local presence and
thus continue to fulfi l an important function in local communities
including places where other banks have closed their local branches.
Handelsbanken is convinced that a local presence is necessary.
The basic concept of the Bank’s way of operating is that decisions
are made as close to the customer as possible, including granting
loans. In concrete terms, this means that loan applications are processed and – with few exceptions – decided by Handelsbanken’s local
branch. It is the local branch which has the best knowledge of the
customer’s circumstances. This work method gives Handelsbanken
close ties with the local community.
114
HANDELSBANKEN’S CONTRIBUTION TO THE
COMMUNITY
Handelsbanken is one of the largest tax payers in Sweden and for the
past few years has paid over SEK 4bn in tax every year.
As in all other issues at Handelsbanken, the local branch decides
whether the Bank should sponsor various cultural and community
projects. A guiding principle here is whether the project is perceived
as having a link to the Bank’s business operations. Since all customer
responsibility is decentralised to the local branches, there is usually
no reason for Handelsbanken to make central decisions on these
issues.
Over the years, Handelsbanken’s board has decided to allocate
funds to independent research foundations. These foundations are
named after Jan Wallander, Tom Hedelius and Tore Browaldh,
all previous group chief executives and chairmen of the board of
Handelsbanken. In 2006, these foundations made 113 grants (92)
totalling SEK 113m (88), representing resources greater than 250
full-time working years for research posts.
A responsible business approach – delivering better service than
other banks, at the same time as the Bank has lower costs – is necessary if Handelsbanken is to continue to have higher profitability
and thus make a larger fi nancial contribution to society than other
Nordic banks.
Environmental issues
In environmental terms, Handelsbanken’s policy is to promote long-term sustainable development by taking action to minimise the negative environmental impact by the Bank.
Environmental issues are a vital element in the Handelsbanken
Group’s operations, both in terms of the direct environmental impact of the Bank’s operations and any indirect impact. The latter includes environmental aspects of granting credits, offering savings in
mutual funds with an environmental or ethical profi le and offering
customers online and other electronic banking services.
The Folksam Index for corporate social responsibility reviews
all listed companies on the Stockholm stock exchange regarding
their preparedness to handle risks related to environmental impact.
Among the 35 companies reviewed in the fi nancial sector, Handelsbanken was awarded “Best in sector”.
Environmental responsibility and organisation
As in other areas at Handelsbanken, the responsibility for practical environmental issues is decentralised. All managers in the
Handelsbanken Group have the primary responsibility for environmental issues at their units and all employees have a responsibility
for the environment as part of their duties. For the Group as a
whole, internal environmental issues are co-ordinated by the central
administration department. The head of the central credit department is responsible for environmental issues related to granting
credits. Environmental issues are an integral part of the introduction
programme for new employees, and also of credit training courses.
Environmental policy
As far as technically and fi nancially possible, and to the extent that it
is compatible with the Bank’s undertakings, Handelsbanken aims to
promote long-term sustainable development. The Bank also aims to
take measures to minimise any negative impact on the environment.
Consistent and long-term improvements will generate benefits to the
environment as well as cost savings.
Handelsbanken has signed and complies with voluntary agreements, such as the ICC Business Charter for Sustainable Development and the United Nations Environmental Program Finance
(UNEP FI), “Banks and the environment”. UNEP FI is a statement
that economic development must be compatible with social welfare
and a sound environment.
DIRECT ENVIRONMENTAL IMPACT
Carbon dioxide (CO2) emissions is an area where the Bank’s operations have a direct impact on the environment. For several years, the
Bank has measured the carbon dioxide emissions generated by its
own operations. The Bank’s direct impact mainly derives from business travel and the use of heating and electricity.
Sweden is one of the few countries in the world where an increasing GDP is accompanied by diminished emissions of greenhouse
gases. Handelsbanken is part of that trend. Over the past few years,
the Bank’s earnings and business volumes have increased while its
carbon dioxide emissions have decreased.
In 2005, Handelsbanken’s carbon dioxide emissions fell by 20%.
The proportion of purchased electricity with the Good Environmental Choice mark was 42% and the average use of electricity at
the Swedish branches in 2005 was 133 kWh/m2 as compared to an
average value of 150 kWh/m2 for premises in Sweden (Energy indicators – 2005, Swedish Energy Agency).
Objectives and policy
The aim of Handelsbanken’s environmental work is to promote
long-term sustainable development. Action is taken to cause as little
negative impact on the environment as possible, by minimising energy use, choosing environment-friendly materials and products and
minimising residual products. The Bank has produced material with
the purpose of inspiring and motivating its employees to act in an
environmentally conscious way, so that environmental issues become
a natural part of their daily work.
Emissions CO2
tonnes
2005
2004
Electricity
3 886
5 762
Heating
1 719
2 474
Travel
2 693
2 577
Transport of goods
2 246
2 246
Other
Total
5
85
10 549
13 144
Information concerning emissions in 2006 is not yet available.
Electricity and heating refer to Handelsbanken’s Nordic operations.
Other refers to operations in Sweden.
115
Actions to reduce negative environmental impact
Handelsbanken makes continuous efforts to reduce environmental
impact. Here are some examples from 2006:
• The Bank launched an e-mailbox function as part of its online
services, where customers can receive information in electronic
form. Customers can cancel paper information online and instead
receive this electronically.
• Information to the same customer is put in the same envelope to
a greater extent, leading to fewer mail items.
• Movement detectors have been installed in the public areas at the
Tegeluddsvägen property so that the lights are extinguished when
there is nobody on the premises.
• Several cooling plants in the Bank’s premises were shut down and
these buildings were linked to district cooling facilities.
• Heat recycling was installed in one of the Bank’s properties in
Stockholm.
• Waste separation at source is being gradually introduced in the
Bank’s units.
• When renovating the facades of the Bank’s premises in central
Stockholm (Arsenalsgatan and Blasieholmstorg), environmentallyfriendly methods and material were used.
• At the branches, the power installed in the machine rooms was
lowered from 3kW to 2kW which affected the need for cooling.
INDIRECT ENVIRONMENTAL IMPACT
Environmental issues associated with granting loans
The Bank can influence the environment in a broader perspective in
the application of its credit policy. In accordance with Handelsbanken’s
credit policy, environmental factors are taken into consideration
when assessing the customer’s repayment capacity. For lending commitments over SEK 1m and in the case of mortgages over SEK 4m,
a limit document is drawn up. For all customers with a credit limit,
an annual review and analysis is made in the form of a business evaluation. This includes an assessment of possible environmental risks
for each customer. This is particularly important when assessing the
repayment capacity of a customer engaged in environmentally hazardous activities or selling products that involve environmental or
health risks. The assessment may concern the required governmental
authorisations, adherence to the prescribed limits for emissions, and
116
that the products in question remain competitive after environmental and health risks have been taken into account. A large part of
Handelsbanken’s lending portfolio consists of mortgage loans. For
property-related credits, it is essential to take into account environmental factors pertaining to buildings or environmentally harmful
activities conducted in the building now or in the past. Environmental factors in the vicinity of the property are also considered.
It is always the customer who is responsible for how its own
operations are conducted, but repayment capacity and thus the
Bank’s credit risk is affected by the customer’s willingness or ability
to manage these risks.
Ethical and environmental mutual funds
The Handelsbanken Group offers the opportunity to save in mutual
funds with an ethical or environmental profi le. For several years,
the Bank’s range of funds has included the SPP Global Sustainability Share Index Fund. This fund invests in companies which, in
addition to fi nancial targets, also have social objectives and aim to
use natural resources in a long-term sustainable manner. In 2005,
the Bank started another fund with this focus. The Handelsbanken
Sweden Index Ethical Fund invests in companies which have been
examined on the basis of ethical criteria relating to the environment,
human rights and business ethics. The assets managed in the two
funds totalled SEK 3.3bn (2.3).
The Bank also offers a global environmental fund via an external
fund manager. This fund only invests in companies that are expected
to offer good returns and that also comply with special environmental criteria.
Environmental impact of purchases and projects
Environmental requirements are always made on suppliers when
the Bank procures goods and services. Environmental considerations are included in decisions on all investments and purchases.
Handelsbanken maintains an ongoing dialogue with its suppliers
to promote and develop environmental issues. When planning the
Bank’s buildings, premises and furnishings, environmental guidelines are applied and declarations of environmental and material
content are required. Materials and components must be long-life,
recyclable and low-energy.
Ethical standards and corporate
social responsibility
All operations at Handelsbanken must be characterised by high ethical standards.
ETHICAL GUIDELINES
Handelsbanken’s ethical guidelines state that operations must be characterised by high ethical standards. Employees must conduct themselves in a manner that upholds confidence in the Bank. The ethical
guidelines are ratified every year by the board of Handelsbanken.
A fundamental, 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 the
Swedish Financial Supervisory Authority and other authorities must
be observed when designing procedures and instructions.
Money laundering and economic crime
The Bank must not participate in transactions involving funds which
may be suspected of originating from criminal activities, or in transactions the implication of which the responsible employees do not
understand. Nor should the Bank participate in transactions which
can be perceived as assisting tax evasion. The appropriate managers
at Handelsbanken are responsible for keeping employees regularly informed of the content of legislation on combatting economic crime.
Handelsbanken applies laws and regulations in its work against
money laundering and particularly serious crime. The Bank has internal instructions for this purpose and all employees are regularly
trained in issues relating to money laundering and the financing of
particularly serious crime.
Customer relations
Financial advice must always be based on the customer’s needs, financial position and risk propensity. It is important that employees
ensure that customers understand the implications of the decisions
they make. The advice given aims to provide the customer with the
most suitable product from the Bank’s range, regardless of what is
best for the Bank in the short term. The Bank must not take advantage of its superior expertise and fi nancial position in relation to customers. Sound business practices, acting in a consistent manner and
fair treatment of customers are key concepts at the Bank. No type of
discrimination is allowed.
In some cases, for example securities trading, where the Bank is
acting on behalf of both customers and itself, a confl ict of interests
may arise. Operations must be oriented in such a way to avoid this
type of confl ict as far as possible.
The Bank as customer
Handelsbanken is a major purchaser of goods and services from both
Swedish and international suppliers. Ethical considerations are just
as important for the Bank in its role as customer as when it supplies
services and products. To avoid incurring obligations to customers
and suppliers, the Bank has rules regarding receiving and giving personal gifts and entertainment.
Conduct of employees
It is important that the Bank’s employees are not suspected of taking
improper advantage of knowledge about the fi nancial markets which
they obtain in the course of their work. All employees must be
familiar with the local insider trading laws and observe the Bank’s
own rules governing employees’ and closely-related persons’ 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 current legislation. Employees must not handle matters in which
they or a relative have a personal interest nor matters for companies
in which they or a relative have a material interest. Handelsbanken’s
employees must also refrain from transactions or other commitments
that may seriously jeopardise their own fi nancial position.
Employees must notify the Bank of assignments outside the Bank
and obtain approval. These rules also apply to secondary occupations
and posts in clubs, societies and the like. Remuneration for being a
member of a board on behalf of the Bank must be paid to the Bank.
Employees who are in doubt regarding the Bank’s ethical guidelines
and dealing with related issues must contact their immediate superior to discuss the correct action.
The success of Handelsbanken in the market derives from the trust
it enjoys from the public and authorities. The Bank’s work methods stem from a fundamental human outlook based on trust and
respect. All employees are clearly responsible for their actions professionally and in social and ethical issues. Therefore, it is important
that business decisions at the Bank can be justified also from a social
and ethical perspective.
Human rights
Handelsbanken endorses the principles set out in the UN Universal
Declaration of Human Rights. This means that the Bank strives to
support and respect the protection of international human rights
within the area which the Bank can influence. It also means that the
Bank endeavours to ensure that it is not involved in any breach of
human rights. When granting credits, the Bank takes account of its
customers’ attitudes to human rights.
Working conditions and union rights
Handelsbanken complies with the laws and agreements on working
hours in all countries where it has operations. In the Nordic countries, where 93% of the Bank’s employees work, Handelsbanken adheres to the collective bargaining agreements which regulate working hours, overtime, rest periods, breaks and holidays. All employees
in the Handelsbanken Group have the right to organise and join a
union. The Oktogonen profit-sharing foundation has a representative on the central board. The local boards of the regional banks
include employee representatives. 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. Handelsbanken’s
equal opportunity policy states that equal conditions shall apply
to men and women regarding personal development within the
Handelsbanken Group.
117
GOVERNANCE AND CONTROL
Corporate governance
Corporate governance is the term used to describe a set of regulations for management
and control of companies. Handelsbanken strictly applies the Swedish Code of Corporate
Governance.
Corporate governance is the term used to describe a set of regulations for management and control of companies. Handelsbanken
strictly applies the Swedish Code of Corporate Governance. This
corporate governance report, which comprises pages 118–123, has
not been examined by the Bank’s auditors.
INFORMATION ABOUT CORPORATE GOVERNANCE
The aim of the board’s information policy is to ensure that
stock market operators have access to fast, simultaneous,
correct, relevant and reliable information. The Bank’s website
(www.handelsbanken.se/ireng) includes all published information
provided to the stock market during the past three years.
The website also contains a section on corporate governance
issues, where the information in the corporate governance report
is continually updated.
ANNUAL GENERAL MEETINGS (SHAREHOLDERS’
MEETINGS)
Shareholders exercise their right to decide on matters relating to the
company at general meetings of shareholders. The annual general
meeting (AGM) appoints the board, the chairman of the board
and the auditors, and also decides on their fees. The annual general
meeting also decides on policies for salary and other remuneration
for the group chief executive and other members of the Bank’s
senior management.
Information in preparation for meetings as well as minutes of
annual general meetings can be viewed on the Bank’s website.
Notice of general meetings and all proposals for the meeting are
available on the website.
APPOINTMENT OF THE BOARD AND AUDITORS
The nomination committee is the AGM’s body for preparing the
meeting’s decisions relating to appointment issues. By decision of
the 2006 AGM, the four largest shareholders in voting terms each
appointed a representative who, together with the chairman, would
constitute the nomination committee until the next AGM appoints
a new nomination committee. The nomination committee consists
of Carl-Olof By (Industrivärden), Henrik Forssén (the Oktogonen
Foundation), Tomas Nicolin (Alecta), Lars Öhrstedt (AFA
Försäkring) and Lars O Grönstedt (chairman of the board of
Handelsbanken). Together, the members of the nomination
committee represent approximately 29% of the number of votes
for all shares in the Bank.
BOARD OF DIRECTORS
In advance of the AGM on 25 April 2006, the chairman of the
board, Arne Mårtensson had declined re-election. At the annual
general meeting, Pär Boman was elected to the board and the other
118
members were re-elected. The AGM elected Lars O Grönstedt as
chairman of the board. At the subsequent fi rst board meeting, Hans
Larsson and Anders Nyrén were appointed vice chairmen. At the
same time, the board appointed Pär Boman as president and group
chief executive after Lars O Grönstedt.
Size and independence
Handelsbanken’s board comprises 13 members who are elected
by the Annual General Meeting. No employee representatives are
elected. The employees are instead represented by two board members, elected by the AGM, who represent the Bank’s profit-sharing
foundation, Oktogonen.
The rule concerning confl icts of interest in credit matters means
that the board members cannot participate in credit decisions concerning companies where they have ownership interests or where
they are employed or are board members. The Bank’s board is therefore somewhat larger than is the case in other listed companies.
The Stockholm stock exchange’s listing requirements make
certain stipulations concerning the composition of the board. For
example, the majority of the members elected by the AGM must be
independent of the company and the management. At least two of
the board members must also be independent of the company’s major shareholders. Handelsbanken’s board fulfi ls these requirements.
Regarding the requirement that no more than one board member
is allowed to work in the senior management of the Bank, it may be
mentioned that the group chief executive is a member of the board.
The composition of the board also fulfi ls the requirements concerning independence as expressed in the Swedish corporate
governance code.
The fundamental work of the board
According to the Swedish Companies Act, the Board’s overall task
is to manage the company’s business on behalf of the owners. The
board of a universal bank such as Handelsbanken must also comply
with a large number of industrial regulations. Central among these
is the Swedish Banking and Financing Business Act (2004:297). In
addition, there is specific legislation for operations such as securities
and insurance. The industrial legislation is supplemented by regulations from Swedish Financial Supervisory Authority. Many of these
regulations include instructions directed at the board of the Bank.
Banking legislation requires the board to ensure that certain
general operating regulations on fi nancial strength, liquidity, risk
management, transparency and soundness are fulfi lled.
Financial strength and liquidity
A bank’s operations must be pursued in such a way that its ability
to fulfi l its obligations is not jeopardised. Risks are inherent in all
operations, but these risks must be adapted to the size of the buffer
capital. Similarly, sufficient liquidity is vital for the Bank to also fulfi l
its obligations in the short term, and not risk incurring temporary
payment problems. Good liquidity requires advanced liquidity planning and tight control of payment flows.
The specific implications of the regulations on fi nancial strength
and liquidity are set out in the more detailed provisions of other legislation. This include the regulations on capital adequacy. As of 1 February
2007, certain new capital adequacy regulations apply (Basel II), which
place a greater focus on the responsibility of the board for total capital
requirements and requirements for transparency.
Risk management – internal control
A bank must have systems adapted to its operations which enable it
to identify, measure, govern, internally report and have control over
the risks associated with its operations. In particular, the board must
ensure that the combination of different forms of risk such as credit
risks, market risks and operating risks does not jeopardise the Bank’s
ability to fulfi l its obligations. This requirement can only be met if
good internal control exists. Thus, good internal control is part of
the risk management and capital evaluation functions.
Risk control in terms of credit risks and operating risks is carried
out by the credit risk control unit at the Central Credit department.
Risk control in terms of other risks, such as market risks, liquidity
risks, insurance risks and business risks, is carried out by the financial risk control unit at Central Control and Accounting. The
responsibility for capital planning rests with the head of the capital
unit at Central Control and Accounting department. Reporting to
the head of Central Control and Accounting, the head of Treasury
has responsibility for group liquidity and funding.
The Bank applies strict methods for risk assessment and risk management to ensure that the risks to which it is exposed are managed
within the established framework. The outcome of the company’s
process for risk assessment and risk management is discussed annually by the board. Credit risks, operational risks, market risks and
liquidity risks are regularly presented to the board.
Financial reporting
Internal control for fi nancial reporting is based on the Bank’s own
control environment (organisation, decision paths, authority and responsibility) which is documented and communicated in governing
documents such as internal policies, guidelines, manuals and codes.
Examples of these are the division of work between on the one hand
the board, and on the other hand the group chief executive and the
other bodies which the board establishes, instructions for the right
to approve costs, and accounting and reporting instructions. The
risks which have been identified for fi nancial reporting are managed
via the Bank’s control structures which are documented in descriptions of processes and internal control.
The Bank has information and communication channels with the
aim of achieving completeness and correctness in its fi nancial reports, for example by means of making the governing documents for
fi nancial reporting available and known to the employees concerned.
The Bank follows up how the control structures are managed and
their efficiency. One of the tools for this is self-assessment tests. The
company’s information and communication channels are also followed up to ensure that they are appropriate for their purpose with
reference to the fi nancial reporting.
Internal auditing
The head of the Central Auditing department is appointed by the
board. The Central Auditing department has some seventy employees, a large number of whom have competence corresponding to
public authorised accountants. The Bank’s external auditors evaluate and perform quality control on the work of the internal audit
department. The internal auditing department’s assignment is based
on a policy for internal auditing operations established by the board.
Following a co-ordinated risk assessment, the audit work should be
planned so that it focuses on examining operations and procedures
which are of material importance and/or involve risks. The planned
auditing commitments are documented annually in an audit plan
which is established by the board’s audit committee on behalf of the
board. The result of internal audits, the actions to be taken and the
status of these, are continually reported to the audit committee.
Transparency
A bank’s operations must be organised and pursued in such a way
that the Bank’s structure, links with other companies and position
are visible. The overall responsibility for the transparency of the
institution’s fi nancial position and organisational structure rests
with the board. The more detailed implications of the requirement
for transparency are, for example, set out in the Swedish legislation
for annual accounts. The Bank’s accounts have been prepared in
accordance with international fi nancial reporting standards, IFRS,
as adopted by the EU. The amendments and restrictions pursuant
to the Swedish Annual Accounts Act for Credit Institutions and
Securities Companies (ÅRKL) and the implementation directives
issued by the Swedish Financial Supervisory Authority are also applied. The requirement for transparency also entails compliance with
stock exchange regulations such as the listing agreement and listing
requirements.
Soundness
In other respects, too, the operations of a credit institution must
be pursued in a sound manner. This means that the Bank must
maintain a level of quality in its operations, such that the confidence
of the market can be upheld. The areas affected by this include the
Bank’s conduct with respect to its customers.
Guidelines and instructions
The fundamental issues on the allocation of expertise among the
board, the committees of the board, the chairman, the group chief
executive and the internal auditing function are manifested in the
board’s work regulations and its instructions to the group chief executive. The set of instructions that is established every year at the
statutory meeting includes credit instructions for the Group, as well
as various policies relating to the management of the fi nancial risks
associated with the Group’s operations. Every year, the board sets
funding limits and assumes responsibility for the Bank’s base prospectus (i.e. prospectus responsibility). In addition, every year, the
board establishes a risk mandate relating to interest rate risks, liquidity risks and other risks.
The board’s working instructions state that the chairman should
assist the group chief executive in contacts with the Bank’s most
important relationships, particularly the main owners. The chairman
also has overall responsibility for ownership issues relating to shareholdings in the Bank’s pension foundation, pension fund and staff
foundation.
In the absence of the chairman, in order of seniority on the
board, the vice chairmen of the board must fulfi l the chairman’s
tasks and assist the chairman as decided by him. In other respects
there is no other division of work for the board than that which involves the committees.
The group chief executive also establishes a series of instructions
and policy documents, either in response to assignments from the
board, or to fulfi l regulatory requirements relating to the Bank’s
senior management specified by the Swedish Financial Supervisory
Authority.
The work of the board in 2006
During the year, the board held 12 ordinary general meetings
119
(including one telephone meeting) and one strategy meeting. It
discussed the economic situation and the Bank’s strategy at regular intervals. One of the regular items discussed is a report on the
Bank’s position compared to other Swedish and international banks.
Also, risk limits for interest rate risks and other categories of risk
were reviewed and followed up. In addition, the board was regularly
informed about operating risks. It also took decisions on matters of
borrowing, major credit-related matters, large investments and strategic issues.
During the year, the board held an internal training day which
included the Bank’s payment services.
In December, as a result of the new capital adequacy regulations,
the board established a new capital policy and fi nancial risk policy,
etc. for the Group. This capital policy sets out responsibilities and
guidelines for internal capital evaluation and capital planning. The
board also established a confidence level for the calculation of economic capital and a target for the Tier 1 ratio and other relevant
capital ratios, to apply from 1 February 2007. Responsibility for the
Bank’s liquidity and fi nancing is set out in a fi nancial policy, while
the fi nancial risk policy includes responsibilities and guidelines for
the independent risk control function. As of 2007, the Bank will
report more detailed information on capital adequacy and risk management.
The board’s work is evaluated in individual discussions between
the board members and the chairman of the board, supported by
a questionnaire which is answered individually by the members.
The results were compiled and discussed at the board meeting in
November. The chairman reported the results of the evaluation and
the board’s discussion to the nomination committee. The board also
met on one occasion to evaluate the work of the group chief executive without him being present.
Credit committee
The credit committee consists of the chairman of the board, the two
vice chairmen, the group chief executive and four other members.
The head of the central credit department is also a member of the
credit committee. The board’s credit committee met 11 times during the year.
The credit committee makes decisions on behalf of the board
regarding the majority of credit cases referred to the board for its
decision. It also prepares credit cases which, due to their special
importance, must be presented to the whole board. The rules regarding confl icts of interest in the Swedish Companies Act are carefully
observed and are the subject of special attention.
Remuneration committee
The board’s remuneration committee consists of the chairman of
the board and two other members, both of whom are independent
in relation to the company and its management. The committee met
three times during the year.
The task of the remuneration committee is to prepare proposals
to the board regarding adjustments to the salary and benefits of the
group chief executive. The committee also prepares proposals to the
board regarding adjustments to the salary and benefits of the head
of the Bank’s internal auditing department. This committee also
establishes the principles and overall policy for the salaries, benefits
and pensions of the executive vice presidents. The committee reports
annually on the results of its work to the board. It has also been
assigned to prepare the board’s proposal to the AGM regarding
remuneration principles and other employment terms for the Bank’s
senior management.
The audit committee/Work with accounting and audit issues
The audit committee consists of the chairman of the board, plus
two members who are independent of the company and its management. One of these members is also independent of the Bank’s major
shareholders. One of the independent members is the committee’s
chairman. The audit committee met three times during the year.
The board’s audit committee prepares the work of the board
to ensure compliance with the principles established for fi nancial
reporting and internal control. The committee normally performs
this by processing crucial accounting matters and material events
after the balance sheet date, and any other circumstances which may
affect the qualitative content of the fi nancial reports. The audit committee maintains regular contacts with the Bank’s external and internal auditors. In conjunction with the six-monthly fi nancial accounts,
the internal and external auditors are to inform about the risk analyses which have been performed, including co-ordination between
the internal and external auditors and observations made at their
summary audit of the six-monthly fi nancial report. In conjunction
with the full-year fi nancial accounts, the internal and external auditors are to inform about material uncertainties in reported values,
observations relating to internal control, compliance, irregularities
and observations made when auditing the full-year figures.
A written annual report of observations from the regular audits
and an examination of six-monthly and annual accounts is submitted
every year by the external auditors to the chairman of the board and
the group chief executive. In addition, the chairman of the external
auditors commented on these reports at separate meetings of the auditors and the chairman of the board and the group chief executive,
Handelsbanken’s board
Information about remuneration refers to the 12-month period between the 2006 and 2007 AGMs
Information about attendance refers to 2006
Nationality
Swedish
1 415 000
13/13
100%
Hans Larsson, vice chairman
Swedish
745 000
12/13
100%
Anders Nyrén, vice chairman
Swedish
745 000
13/13
100%
Finnish
440 000
12/13
100%
-
Pirkko Alitalo
Jon Fredrik Baksaas
Norwegian
365 000
8/13
Ulrika Boëthius
Swedish
-
13/13
-
Pär Boman, CEO
Swedish
-
13/13
100%
Tommy Bylund
Swedish
-
13/13
100%
Göran Ennerfelt
Swedish
555 000
10/13
82%
Sigrun Hjelmquist
Swedish
440 000
12/13
100%
Fredrik Lundberg
Swedish
365 000
13/13
-
Sverker Martin-Löf
Swedish
655 000
13/13
100%
Norwegian
655 000
11/13
100%
Bente Rathe
120
Remuneration (SEK) Attendance board meetings Attendance committee work
Lars O Grönstedt, chairman
respectively, and at an audit committee meeting. When the audit has
been completed, the head of internal auditing and the chairman of
the external group of auditors provide a verbal report of their observations to the board. The chairman of the external group of auditors
also meets the board once a year without the group chief executive
or other members of the Bank’s management being present. The
chairman of the external auditors also presents a report of the Bank’s
auditing to the annual general meeting of shareholders.
AUDITORS
The AGM appoints external auditors. Two auditing companies are
appointed, which in turn nominate authorised public accountants
who bear the main responsibility. The Swedish Financial Supervisory
Authority also appoints an auditor for the Bank. As stipulated by
law, the mandate period for the auditors appointed by the shareholders’ meeting is four years. At the 2004 annual general meeting,
KPMG Bohlins and Ernst & Young were appointed for the next
four years, that is until the AGM in 2008.
Bank auditors are not permitted to own shares in the Bank or
to be granted loans by the Bank. Handelsbanken aims to avoid
purchasing other consulting services from the companies which
are responsible for auditing the Bank. When procuring consulting
services from the companies which are responsible for auditing the
Bank, the auditing policy states that a special review must be made
in accordance with the Swedish Institute of Authorised Public
Accountants’(FAR) analysis model and the American SarbanesOxley Act.
KPMG Bohlins AB
This company was elected by the 2004 AGM for the period up to
and including the 2008 AGM. They have been chief auditors since
the 2000 AGM and since then the auditor in charge has been Thomas Thiel, authorised public accountant.
Ernst & Young AB
This company was elected by the 2004 AGM for the period up to
and including the 2008 AGM. They have been auditors since 1998
and since 2005, the chief auditor has been Torsten Lyth, authorised
public accountant.
Ulla-Britt Nordin Buisman (Öhrlings Pricewaterhouse Coopers
AB). Appointed by the Swedish Financial Supervisory Authority at
the 2004 AGM.
SENIOR MANAGEMENT
See page 124 for information about the senior management and the
shares they own in the company.
REMUNERATION
Neither the board members nor the Group management receive
variable remuneration such as bonuses. There are no existing equityrelated or equity price-related incentive programmes for the board
and the company management. Like all employees of the Bank, the
management and board members who are employees of the Bank
receive allocations made to the Bank’s profit-sharing system Oktogonen, when these are made.
Remuneration to the board
At the 2006 AGM, the board’s fees were set at SEK 6,380,000, of
which SEK 1,050,000 to the chairman. The board has allocated
the fees such that the vice chairmen receive SEK 555,000 each and
the other members, SEK 365,000 each. Members of the credit
committee receive another SEK 190,000 each, members of the remuneration committee SEK 75,000 each and members of the audit
committee SEK 100,000 each. Members who work in the Bank’s
operations receive no fee.
Remuneration principles for senior management
The 2006 AGM approved the following principles for remuneration
and other conditions of employment for the group chief executive
and senior managers who report directly to the group chief
executive and are members of the senior group management:
• The total remuneration shall be on market terms.
• Remuneration is paid only in the form of a fi xed salary and
customary benefits.
• Variable remuneration in the form of bonuses is not paid.
• The minimum retirement age is 60. However, the retirement age
for the group chief executive may be lower than this. Pension
benefits are defi ned-benefit.
• The period of notice on the part of the employee is six (6) months
and on the part of Handelsbanken, twelve (12) months. If the
Bank terminates the employment contract later than five years
after the person’s appointment as a member of the Bank’s
management, the period of notice is 24 months. In exceptional
cases, periods of notice may be shorter.
• No severance pay is paid.
• The senior managers in question are included in the Oktogonen
profit-sharing system on the same terms as all employees of the
Bank.
The senior management positions to which these principles apply
are the group chief executive and the senior managers who report
directly to the group chief executive and are members of the senior
group management.
Terms for senior management
The Bank has no agreements on severance pay. The group chief
executive, Pär Boman, has a retirement age of 58. His retirement
pension is 65% of his salary immediately before retirement. The
chairman of the board of the Bank and former 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 immediately before retirement, and from the age of 65 it is 65%. From the
date that Lars O Grönstedt was appointed as chairman of the board
his pension benefits accrue entirely in the Bank’s pension fund and
pension foundation. Further information about conditions and remuneration for senior management can be found in Note 5 on pages
55–57.
Loans to senior management
Loans to the board, chief executives, and executive vice presidents
total SEK 125m (122) for the Group and SEK 37m (57) for the
parent company.
121
The board
LARS O GRÖNSTEDT
chairman
HANS LARSSON
vice chairman
ANDERS NYRÉN
vice chairman
B.A. and Graduate in Business
Administration Stockholm, year of birth
1954. Member since 2001.
Chairman of the board’s remuneration
committee and credit committee.
Member of the board’s audit committee.
Other assignments: Director of
AB Industrivärden, Vice chairman of
Stockholm Chamber of Commerce.
Own shareholdings and those of
immediate family: 9,025, of which
8,425 indirectly via the Oktogonen profitsharing foundation.
B.A. Stockholm, year of birth 1942.
Member since 1990. Member of the
board’s credit committee.
Other assignments: Chairman of Nobia
AB, Biolight International AB, Attendo
Holding AB, CreVal Partners Fund 1 AB,
director of Holmen AB, Dynea Oy.
Own shareholdings and those
of immediate family: 18,600
Graduate in Business Administration
and MBA. President and group chief
executive of AB Industrivärden, Bromma,
year of birth 1954. Member since 2001.
Member of the board’s credit committee.
Telefonaktiebolaget L M Ericsson,
Ernströmgruppen AB, AB Industrivärden,
Sandvik AB, Skanska AB, Svenska
Cellulosa AB SCA, SSAB Svenskt
Stål AB and chairman of the Swedish
Association of Listed Companies and the
Association for Sound Practices in the
Securities Market.
PIRKKO ALITALO
JON FREDRIK BAKSAAS
ULRIKA BOËTHIUS
TOMMY BYLUND
Graduate in business administration,
Helsinki, year of birth 1949.
board’s remuneration committee.
Graduate in business administration
and MBA, President and group chief
executive of Telenor ASA, Sandvika, year
of birth 1954. Member since 2003.
Other assignments: Director of Aker
ASA, Det Norske Veritas (council).
immediate family: 0
Sciences programme Upper Secondary
School, Bank employee, Stockholm,
Other assignments: Vice chairperson
of Swedish Union of Financial Sector
Employees.
of immediate family: 2,897, of which
2,897 indirectly via the Oktogonen profitsharing foundation.
Upper Secondary School, Bank Vice
President, Ljusdal, year of birth 1959.
Other assignments: Chairman of
Oktogonen Foundation.
10,868 indirectly via the Oktogonen
profit-sharing foundation.
Lagercrantz Group AB.
122
PÄR BOMAN
Engineering and Business/Economics
degree, Stockholm, year of birth 1961.
Other assignments: Director of the
Swedish Bankers’ Assocation.
2,927 indirectly via the Oktogonen
profit-sharing foundation.
GÖRAN ENNERFELT
SIGRUN HJELMQUIST
FREDRIK LUNDBERG
SVERKER MARTIN-LÖF
B.A. and Graduate in business
administration, President and group chief
executive of Axel Johnson Gruppen
AB, Upplands Väsby, year of birth 1940.
Other assignments: Chairman of Axfood
AB, director of Spirent plc.
Graduate engineer and Licentiate of
Technology. Chairperson and Partner
of Sight Executive Group AB, Djursholm,
Member of the board’s remuneration
committee.
Sandvik AB, IBS AB, E.ON Sverige AB
(previously Sydkraft AB),
RAE Systems Inc.
Graduate Engineer and Graduate in
business administration, Honorary
Doctor of Economics and Honorary
Doctor of Engineering. President
and group chief executive of L E
Lundbergföretagen AB, Djursholm,
year of birth 1951.
Member since 2002.
Holmen AB, Cardo AB, Hufvudstaden
AB, Director of L E Lundbergföretagen
AB, NCC AB, AB Industrivärden,
Sandvik AB.
of immediate family: 1,849,500
Doctor of Engineering in Technology
in Paper and Chemical Pulping,
Stockholm, year of birth 1943.
Member since 2002. Chairman of the
board’s audit committee, Member of the
Svenska Cellulosa AB SCA,
Skanska AB, SSAB Svenskt Stål AB,
Vice chairman of Telefonaktiebolaget
LM Ericsson, AB Industrivärden.
Handelsbanken’s board of directors
Refers to the 12-month period between the 2006 and 2007 AGMs
Nationality
Independent * Remuneration
Lars O Grönstedt, chairman
Swedish
1 415 000
Hans Larsson, vice chairman
Swedish
745 000
Anders Nyrén, vice chairman
Swedish
Pär Boman, CEO
Swedish
Pirkko Alitalo
Finnish
Jon Fredrik Baksaas
Norwegian
•
•
•
Credit
committee
Remuneration
committee
Audit
committee
chairman
member
chairman
member
745 000
member
-
member
440 000
member
365 000
Ulrika Boëthius
Swedish
-
Tommy Bylund
Swedish
-
member
BENTE RATHE
Göran Ennerfelt
Swedish
555 000
member
Graduate in business administration
and MBA, Trondheim, year of birth
1954. Member since 2004. Member of
the board’s credit committee and audit
committee.
Other assignments: Chairman of Petoro
AS and Enviro Energi ASA, Director of
Kongsberg Automotive ASA, Powel ASA.
Sigrun Hjelmquist
Swedish
•
440 000
Fredrik Lundberg
Swedish
365 000
655 000
member
chairman
655 000
member
member
Sverker Martin-Löf
Swedish
•
•
Bente Rathe
Norwegian
•
member
• This member is to be regarded as independent in relation to the company and its management.
•
This member is to be regarded as independent in relation to the company and its management
and also to major shareholders in the company.
*
As defined in the Swedish Corporate Governance Code.
123
Senior management
President and group chief executive
PÄR BOMAN year of birth 1961
Employed: 1991
Shareholding: 3,627, of which 2,927 indirectly*
Executive vice presidents at
central head office
BJÖRN BÖRJESSON year of birth 1951
Head of Handelsbanken International
Employed: 1981
MIKAEL ERICSON year of birth 1960
Head of Handelsbanken Capital Markets
Employed: 1993
ANDERS H JOHANSSON year of birth 1955
Head of IT
Employed: 1999
Shareholding: 764, of which 764 indirectly*
PATRIK HERTSBERG year of birth 1963
Head of Handelsbanken Asset Management
Employed: 1994
OLLE LINDSTRAND year of birth 1949
Head of Credit Department
Employed: 1985
ANNA RAMBERG year of birth 1952
Head of Human Resources
Employed: 1971
ULF RIESE year of birth 1959
Head of Control and Accounting
Employed: 1983
HÅKAN SANDBERG year of birth 1948
Employed: 1969
Shareholding: 25,715 of which 25,206 indirectly*
Executive vice presidents
at the regional banks
Chief executives at the subsidiaries
PER BECKMAN year of birth 1962
Head of Northern Norrland
Employed: 1993
MICHAEL ZELL year of birth 1950
Head of Handelsbanken Liv and SPP
Employed: 1978
Call options equivalent to 10,000 shares
RAINER LAWNICZAK year of birth 1958
Head of Southern Norrland
Employed: 1982
YONNIE BERGQVIST year of birth 1961
Head of Handelsbanken Finans
Employed: 1979
LARS KAHNLUND year of birth 1954
Head of Stockholm City
Employed: 1975
FRANK VANG-JENSEN year of birth 1967
Head of Stadshypotek
Employed: 1998
Shareholding: 1,232, of which 932 indirectly*
THOMMY MOSSINGER year of birth 1951
Head of Central Sweden
Employed: 1982
ANDERS OHLNER year of birth 1955
Head of Eastern Sweden
Employed: 1985
M JOHAN WIDERBERG year of birth 1949
Head of Western Sweden
Employed: 1972
CLAES NORLÉN year of birth 1955
Head of Southern Sweden
Employed: 1978
MAGNUS UGGLA year of birth 1952
Head of Great Britain
Employed: 1983
ANDERS BOUVIN year of birth 1958
Head of Denmark
Employed: 1985
PETRI HATAKKA year of birth 1962
Head of Finland
Employed: 1990
INGA-LILL NICOLIN year of birth 1950
Head of Norway
Employed: 1986
Others at central head office
KATARINA BERNER FRÖSDAL year of birth 1956
Head of Infrastructure
Employed: 1979
JAN HÄGGSTRÖM year of birth 1949
Head of Handelsbanken Markets Research
Employed: 1988
ELISA SAARINEN year of birth 1963
Head of Corporate Communications
Employed: 1995
Changes during the year
Pär Boman, previously head of Handelsbanken
Markets, was appointed president and group chief
executive.
Ulf Riese, previously head of Handelsbanken Asset
Management, was appointed head of Central Control
and Accounting.
Mikael Ericson, previously head of Handelsbanken
Capital Markets, was appointed executive vice
president and head of Handelsbanken Capital
Markets.
Rainer Lawniczak was appointed executive vice
president and head of Regional Bank Southern
Norrland.
Björn Börjesson, executive vice president, previously
head of Handelsbanken Markets, was appointed
head of Handelsbanken International.
Katarina Berner Frösdal was appointed head of
Infrastructure.
In February 2007, Patrik Hertsberg was appointed
executive vice president and head of Handelsbanken
Asset Management.
* Indirect holding of shares in Handelsbanken via the Oktogonen profit-sharing foundation.
124
Branches and branch managers
NORTHERN NORRLAND
SOUTHERN NORRLAND
Skutskär
Tom Wallin
Branch
Branch manager
Branch
Branch manager
Skärplinge
Stefan Holmquist
Arvidsjaur
Hans Albert Lindgren
Alfta
Dan Silvroth
Skönsberg
Urban Strömbom
Backe
Berit Bölander
Arbrå
Pär Lindh
Stora Tuna
Catrine Stenback
Bjurholm
Vacant
Avesta
Pia Källarbo
Storvik
Helene Hedin
Bjästa
Mats Hållberg
Bergby
Ylva Wallén Svensson
Strömsund
Lars-Erik Olsén
Björna
Margareta Persson
Bergsjö
Ulrika Sjöström
Sundsvall
Owe Sundin
Boden
Eva Rångevall
Bispgården
Lars-Göran Fahlén
Sveg
Gunilla Bäckius
Bredbyn
Mats Ågren
Bjursås
Anders Rapp
Svenstavik
Bengt Adolfsson
Bureå
Helen Bergwall
Björbo
Gerd Kosjanow
Säter
Ingela Hedberg
Burträsk
Catharina Johansson Björk
Bollnäs
Irene Hörberg
Söderhamn
Kerstin Nordstrand
Byske
Sören Markström
Borlänge
Katarina Rülcker
Sörberge
Bertil Sjöstrand
Domsjö
Roland Wennerberg
Bräcke
Tomas Wallström
Tierp
Mats Hansson
Dorotea
Anna-Karin Öhnerud
Delsbo
Joakim Frithiof
Timrå
Johanna Lundberg
Gammelstad
Eva-Britt Lindström
Edsbyn
Anders Lundin
Torsåker
Kerstin Persson
Gällivare
Lars Beyron
Fagersta
Lars Annerman
Vansbro
Fredrik Hallqvist
Haparanda
Roger Keisu
Falun
Anders Forsgren
Västanfors
Mikael Johansson
Holmsund
Stenebo, Marina
Fränsta
Lars Gustafsson
Ånge
Stefan Mattsson
Hoting
Marianne Rullander
Furudal
Bengteric Andersson
Åre
Hans Pernelind
Husum
Thomas Kassman
Föllinge
Anette Nilsson
Östersund
Petter Dahlin
Härnösand
Johan Grahn
Gagnef
Kerstin Berg Lindgren
Östervåla
Ove Johannesson
Jokkmokk
Kent Aidanpää
Gnarp
Niclas Södergren
Junsele
Annica Olofsson
Grangärde
Maria Jonasson
STOCKHOLM CITY
Kalix
Gunnar Sandqvist
Grängesberg
Eva Ludvigsson
Branch
Kiruna
Vacant
Gällö
Tomas Wallström
Danderyd
Kramfors
Lars Norlinder
Gävle City
Svante Larsson
Djursholm
Leif Jadvi
Lugnvik
Tommy Sjölund
Hammarstrand
Lars-Göran Fahlén
Mörby centrum
Fredrik Christofferson
Luleå Storgatan
Jan Persson
Hammerdal
Örjan Olsson
Luleå Örnäset
Lisbeth Aidanpää
Heby
Åsa Olsson
Centrum
Mia Hiljebäck
Lycksele
Henrik Johansson
Hede
Thomas Ohlsson
Larsberg
Vacant
Lövånger
Kjell-Ove Löfgren
Hedemora
Håkan Arvidsson
Näset
Evalena Holmqvist
Malå
Ann-Charlotte Renström
Hedesunda
Susanne Persson
Sigtuna
Nordingrå
Tommy Sjölund
Hudiksvall
Thony Nylund
Arlanda
Lars Åsgårdh
Nordmaling
Ivan Forsgren
Insjön
Clas Bond
Märsta
Ann Lilja
Norsjö
Greger Holmström
Järpen
Henrik Lindqvist
Stora gatan
Katarina Fridén
Näsåker
Jan-Åke Sjömäling
Järvsö
Ove Larsson
Pajala
Per-Anders Juntti
Kilafors
Sten Morin
Centrum
Fredrik Andersson
Piteå
Stefan Uddström
Kopparberg
Lena Ragnarsson Vöks
Rotebro
Yvonne Orre
Ramsele
Vacant
Krokom
Ulf Hellström
Robertsfors
Jenny Berglund
Kvissleby
Per Pettersson
Centrum
Per Eldestrand
Råneå
Ellinor Eriksson
Leksand
Anders Ekström
Frösunda
Ulf Eliasson
Skellefteå
Göran Olsson
Liden
Inger Nordström
Vreten
Klas Bornälv
Sollefteå
Thomas Rönnberg
Lima
Lena Eggens
Sorsele
Hans Albert Lindgren
Lit
Mikael Hansson
Birger Jarlsgatan
Jörgen Nielsen
Storuman
Peter Persson
Ljusdal
Tommy Bylund
Frihamnen
Richard Nordgård
Trehörningsjö
Gunilla Näslund
Ljusne
Catarina Bengtsson
Gamla Stan
Linda Kyrkander
Ullånger
Tommy Sjölund
Ludvika
Mats Johansson
Gustav Adolfs Torg Bo Kaijser
Umeå
Branch manager
Lidingö
Sollentuna
Solna
Stockholm
Malung
Åsa Björlin
Humlegården
Jörgen Larson
City
Peter Hansi
Matfors
Johan Billström
Karlaplan
Magnus Ericson
Umeå Teg
Catrine Danielsson
Mockfjärd
Håkan Eriksson
Karlavägen
Per Andersson
Umeå Västra
Vacant
Mora
Henrik Ragnarsson
Kista
Thomas von Schéele
Vilhelmina
Roland Wennerberg
Mörsil
Astrid Larsson Lindh
Kungsträdgården
Åsa Öhlund
Vindeln
Alexander Bagrov
Norberg
Leif Magnusson
Norrmalmstorg
Jan Ringblom
Vännäs
Ann-Christine Söderberg Rånman
Ockelbo
Karin Eriksson
Norrtull
Helena Ericsson
Ånäset
Eva Nordenstam
Offerdal
Jörgen Nordqvist
Odengatan
Carl-Magnus Gustafsson
Åsele
Anna-Karin Öhnerud
Orsa
Bengteric Andersson
Odenplan
Joakim Becker
Älvsbyn
Britt-Marie Stenvall
Rättvik
Martin Sellberg
S:t Eriksplan
Mats Byrstedt
Örnsköldsvik
Helena Johansson
Sala
Peter Gustavsson
Stockholm Sergel
Göran Lönnstad
Överkalix
Maria Fältmark
Sandviken
Sven-Erik Larsson
Strandvägen
Bengt Bohman
Övertorneå
Håkan Funck
Skinnskatteberg
Andreas Byrén
Stureplan
Mikael Westerback
125
BRANCHES AND BRANCH MANAGERS
Sveavägen
Malin Bergström
Salem
Catharina Persson
Tessinparken
Peder Wiberg
Saltsjö Boo
Hans Ek
City
Gert Lundmark
Upplandsgatan
Lisbeth Andersson
Skanstull
Per Anders Tranberg
Tornby
Anders Hallros
Vanadisplan
Richard Johnson
Skultuna
Lars-Åke Pettersson
Mjölby
Patrik Rosengren
Vasagatan
Maria Hellberg
Skärholmen
Kenneth Wadling
Motala
Michael Minnered
Värtavägen
Björn Åhlander
Sköndal
Vacant
Mönsterås
Karin Mattsson
Östermalmstorg
Anders Danielsson
Spånga
Anders Nygren
Mörbylånga
Marianne Wigforss
Östra Station
Thomas Anttila
Stuvsta
Mats Nordling
Mörlunda
Börje Samuelsson
Carina Idberg
Södertälje
Peter Almström
Norrköping
Sundbyberg
Täby
Trosa
Maria Westerfalk
Drottninggatan
Åke Stenberg
Täby Centrum
Johan Lurén
Trångsund
Malin Berglund
Eneby
Mats Borgsjö
Näsby Park
Mats Kivilä
Tullinge
Vacant
Hageby
Lars Blomqvist
Upplands Väsby
Urban Wolters
Tyresö
Lars Holm
Nybro
Manfred Sass
Vallentuna
Fredrik Enander
Ulvsunda
Karin Enestad
Nyköping
Eva Wahlberg
Vaxholm
Anneli Sönmez
Uppsala
Nässjö
Mats Andersson
Åkersberga
Sune Werkell
CENTRAL SWEDEN
126
Linköping
City
Jörgen Ericsson
Oskarshamn
Ingvar Persson
Eriksberg
Lars Olsson
Slite
Catarina Bylund
Industriomr
Baruch Grauman
Strängnäs
Wilhelm Trahn
Luthagen
Lars Sandberg
Sävsjö
Jonas Flink
Branch
Branch manager
Alviks Torg
Johan Lindblom
Vällingby
Thomas Wedholm
Söderköping
Michael Rimstedt
Arboga
Ulla-Karin Aufrecht
Värmdö
Per Anwret
Tingsryd
Ingela Nilsson
Blackeberg
Susanne Signell
Västerhaninge
Jenny Lööw
Torsås
Stefan Pålsson
Brommaplan
Peter Lindh
Västermalm
Lena Wennerberg
Tranås
Jens Fransson
Bålsta
Joakim Kihlgren
Västerås
Vaggeryd
Jörgen Bruhn
Dalarö
Maud Lyckenius
City
Kent Johansson
Vetlanda
Olle Hagström
Ekerö
Jesper Hellström
Emausgatan
Cecilia Hallqvist
Vimmerby
Hans Will
Enköping
Ulla Reuterskiöld
Köpingsvägen
Lena Nilsson
Virserum
Maria Bjarnehäll
Farsta
Rickard Svallfors
Stora Gatan
Håkan Jansson
Visby
Fellingsbro
Ingrid Persson
Årsta
Vacant
Adelsgatan
Madeleine Gottfridsson-Endrell
Finnerödja
Olle Jonsson
Älvsjö
Birgitta Billström
Öster
Stefan Lövkvist
Fjugesta
Anders Hedvall
Örebro
Vislanda
Johan Isaksson
Fleminggatan
Jan Larsson
Stortorget
Kenneth Wallin
Värnamo
Lars-Eric Ericsson
Fridhemsplan
Niklas Hedblom
Ekersgatan
Christer Larsson
Västervik
Michael Skännestig
Frövi
Mikael Jansson
Våghustorget
Bengt Gunnarson
Växjö
Mikael Jismark
Globen
Hans Widmark
Ösmo
Renée Andersson
Ålem
Susann Svenzén
Gnesta
Mårten Larsson
Österbybruk
Christer Lindgren
Åseda
Peter Holmberg
Götgatsbacken
Anders Lindegren
Östhammar
Christer Lindgren
Åtvidaberg
Erik Torbrand
Hallsberg
Yvonne Bülow
Hallstavik
Roland Ericson
EASTERN SWEDEN
Hallunda
Per Molin
Branch
Branch manager
Branch
Branch manager
Hammarby
Marion Ulander
Alvesta
Thorwald Burman
Alingsås
Peter Romedahl
Haninge
Mikael Wenngren
Anderstorp
Pernilla Åkestrand
Arvika
Göran Eriksson
Hornsberg
Anki Lenksjö
Bankeryd
Thomas Landén
Bollebygd
Eva-Lotta Duneskog
Hornsgatan
Mats Eriksson
Borensberg
Birgitta Östergren
Borås
Huddinge
Kjell Andersson
Borgholm
Conny Johansson
Hulta
Thomas Strömberg
Hägersten
Susanne Norman-Taube
Eksjö
Karin Jönsson
Norrby
Thomas Bogsjö
Hässelby
Marie Lindström
Emmaboda
Sven-Erik Karlsson
Viared
Thomas Bogsjö
Högalid
Pernilla Eldestrand
Eskilstuna
Stora Torget
Janne Pehrsson
Högdalen
Jörgen Nilsson
Fristadstorget
Jonas Elfridsson
Falkenberg
Michael Sterne
Jakobsberg
Marie Cedergren
Östermalm
Bo Vallin
Falköping
Magnus Kvarnmarker
Järna
Laila Jansson
Finspång
Dag Kinnerud
Filipstad
Peter Bergkvist
Knivsta
Agneta Nygården
Flen
Lotta Peppas
Fristad
Gunilla Lööf
Kolbäck
Eva Klang
Fårösund
Leif Närström
Färjelanda
Gunilla Andersson
Kumla
Thomas Ljungberg
Färjestaden
Jan Pilemyr
Gällstad
Kenneth Thörnqvist
Kungsholmstorg
Göran Almberg
Gislaved
Jörgen Asp
Göteborg
Kungsängen
Maria Wedholm
Hemse
Magnus Gardell
Almedal
Anders Gross
Kungsör
Niklas Johansson
Hultsfred
Monica Carlenskog
Avenyn
Olle Eksell
Kärrtorp
Anders Hagman
Huskvarna
Hans Färemo
Backa-Ringön
Christina Hjälte
Köping
Peter Fällman
Högsby
Anne-Helene Markström
City
Jan Wergeland
Lindesberg
Larry Andersson
Jönköping
Claes Ericson
Eriksberg
Anders Hjälte
Marieberg
Karin Lundqvist
Kalmar
Frölunda
Tommy Häggström
Marievik
Tomas Ejnar
Kvarnholmen
Mikael Fredriksson
Första Långgatan
Knut Pokorny
Nacka
Susanne Danielsson
Kalmar Berga
Markus Hagström
Gårda
Mats Berntsson
Norrtälje
Bo Schotte
Katrineholm
Göran Bjerke
Hisings Kärra
Anna Ekstrand
Nynäshamn
Stefan Zettergren
Klintehamn
Lars Cramér
Hjällbo
Christian Pennert
Pålsboda
Helene Wiberg
Lammhult/Rörvik
Per-Olof Lenegård
Högsbo
Annette Bertilsson
Renstiernas G
Katarina Alf
Landsbro
Kent Lind
Kortedala
Jan Gottberg
Rimbo
Tina Nylén
Landala
Michael Åhman
WESTERN SWEDEN
Lilla Bommen
Katarina Helgen
Karlskrona
Jan Erik Dahl
Kolding
Majorna
Marie Jakobsson
Kivik
Andreas Jeppsson
Copenhagen:
Marieholm
Britt-Marie Linse
Klippan
Lena Johansson
Odinsgatan
Christian Sjöberg
Knislinge
Ingela Ström
Frederiksberg
Henrik Bengtsson
Sisjön
Assar Larsson
Kristianstad
Mikael Rubin
Østerbro
Carsten Heger
Torslanda
Veronica Wallin
Kävlinge
Göran Camitz
Køge
Brian Arnvig
Volvo
Eva Hasselström
Laholm
Lars Andersson
Lemvig
Lars Balle Olsen
Örgryte
Ingemar Rask
Landskrona
Annila Hansson
Odense
Tom Skjellerup
Övre Husargatan
Jan Sahlin
Ljungby
Thomas Eldh
Park Allé
Henrik Eg
Hagfors
Pär Skogfeldt
Ljungbyhed
Eva Aurell
Roskilde
Boje Nielsen
Herrljunga
Acting – Gunnar Jönsson
Lomma
Mona Persson
Sdr. Felding
Kristian Hansen
Hjo
Lena Karlsson
Lund
Sdr. Omme
Bent Egdal
Karlskoga
Charlotte Schreck-Pettersson
Karlstad
City
Jesper Andersen
Lars Moesgaard
City
Nils-Erik Persson
Silkeborg
Carsten Hjortflod
Ideon
John Persson
Struer
Poul Bakkegaard
Staffan Werner
Sunds
Anders Frederiksen
Vejle
Peter Sørensen
Stora Torget
Peter Andersson
Markaryd
Våxnäs
Fredrik Ekenberg
Malmö
Kristinehamn
Mats-Ove Mattsson
Amiralsgatan
Per-Ove Kamlund
Viborg
Arnth Stougaard
Kungsbacka
Mats Rollof
City
Göran Johnsson
Videbæk
John Nyby
Kungälv
Anette Pettersson
Dalaplan
Jens Isaksson
Vildbjerg
Henrik Kristiansen
Landvetter
Claes Ahlström
Fosie
Dag Sundewall
Aalborg
Ole Dahl Nielsen
Lerum
Camilla Sjöberg
Fridhem
Gunnar Holmqvist
Århus
Jan Arup
Lidköping
Anders Stigson
Köpenh.vägen
Maria Zanichelli
Lilla Edet
Jan-Olof Strand
Limhamn
Bengt Rosendahl
FINLAND
Mariestad
Kerstin Waller
Lundavägen
Bengt Nyquist
Branch
Mellerud
Cecilia Blom
Triangeln
Ulf Dahlqvist
Espoo
Mölndal
Martin Henriksson
Värnhem
Roger Håkansson
Leppävaara
Tuija Nuutinen
Mölnlycke
Ann Sundvisson
Olofström
Katarina Ring
Tapiola
Pekka Ursin
Nödinge
Lena Gillholm
Osby
Jonas Skyman
Partille
Liselott Mattson
Ronneby
Carl-Gustaf Larsson
Pasila
Sirpa Pensas
Skara
Martin Drebin
Simrishamn
Lennart Jirback
Dianapuisto
Mirjam Sarkki
Skövde
Niklas Standar
Sjöbo
Thomas Johansson
Esplanadi
Tiina Roschier
Sollebrunn
Hans-Göran Nilsson
Skanör
Christer Nilsson
Hakaniemi
Leif Grönlund
Stenungsund
Mats Ingemarsson
Skurup
Håkan Lennartsson
Kamppi
Nina Arkilahti
Sunne
Pär Olsson
Staffanstorp
Olle Svensson
Munkkivuori
Reima Jokela
Surte
Christian Nielsen
Svedala
Gert Nilsson
Itäkeskus
Hannu Oksanen
Svenljunga
Bengt Larsson
Sölvesborg
Helen Olofsson
Hämeenlinna
Jutta Ruuskanen-Tähtinen
Säffle
Elisabeth Korp
Sösdala
Karin Eriksson
Hyvinkää
Mervi Karsikas
Tibro
Marianne Bergman
Tomelilla
Bengt-Göran Grenander
Imatra
Pekka Lankinen
Tidaholm
Lena Lundh
Trelleborg
Marie Brunstam
Joensuu
Juha Saastamoinen
Torsby
Morgan Smegärd
Tyringe
Yvonne Liljeqvist
Jyväskylä
Tauno Virkki
Tranemo
Lars Nydén
Veberöd
Hans-Åke Mårtensson
Kerava
Kimmo Heiskanen
Trollhättan
Thomas Eriksson
Vellinge
Tomas Wall
Kokkola
Sören Björkgård
Uddevalla
Stefan Widlund
Vittsjö
Catharina Munkberg
Kouvola
Jorma Qvick
Ulricehamn
Kenneth Olofsson
Vollsjö
Bonnie Cederquist
Kuopio
Seppo Tujunen
Vara
Joakim Carlsson
Ystad
Jan-Olof Petersson
Lahti
Tarmo Kallio
Varberg
Jan Bogsjö
Åhus
Thomas Hansson
Lappeenranta
Acting - Martti Mäkelä
Vårgårda
Anna-Karin Heljegård
Älmhult
Fredrik Roghner
Mikkeli
Jouko Kervinen
Vänersborg
Mats Johansson
Ängelholm
Kenneth Persson
Oulu
Jari Murtoperä
Åmål
Bo Larson
Pietersaari
Anders Norrena
Årjäng
Peter Johansson
DENMARK
Pori
Esa Yli-Sipilä
Älvängen
Peter Kornesjö
Branch
Branch manager
Raisio
Juha Vasanen
Amager
Claes Peulecke
Rauma
Erkki Nissilä
Aulum
Helle Bjerre
Rovaniemi
Pekka Pistokoski
Ballerup
Fin Mortensen
Salo
Juho Huovinen
SOUTHERN
SWEDEN
Branch manager
Helsinki
Branch
Branch manager
Brande
Benny Larsen
Seinäjoki
Esa Alkio
Arlöv
Jonas Sjöberg
Esbjerg
Morten Andersen
Tallinn, Estonia
Harri Tuohimaa
Broby
Peter Andersson
Fredericia
Jens Christian Jørgensen
Tampere
Båstad
Joakim Holm
Give
Niels Peder Nielsen
Kauppakatu
Tarja Suvisalmi
Eslöv
Dag Olsson
Hammerum
Børge Thomsen
Kyttälä
Ilkka Pehkonen
Halmstad
Tony Bringevall
Herning
Helsingborg
City
Tornio
Pirkko Lääkkölä
Niels Viggo Malle
Turku
Markku Ropponen
Norr
Per Franklin
Fredhøj
Bruno Hansen
Tammisaari
Marika Lindholm
Stortorget
Göran Pelvén
Holstebro
Claus Gade
Vaasa
Yngve Svens
Söderport
Sven Rosenkvist
Horsens
Jann Due
Vantaa
Hässleholm
Ola Tyrberg
Ikast
Morten Smith
Tikkurila
Jaakko Hara
Höganäs
Magnus Landbring
Karup
Gitte Nielsen
Myyrmäki
Stephan Björkell
Höllviken
Göran Fredriksson
Kgs. Lyngby
Knud Jacobsen
Höör
Annika Johansson
Kibæk
Preben Staal
Karlshamn
Per Bjerstedt
127
GREAT BRITAIN
NORWAY
Branch
Branch manager
Branch
Branch manager
Arendal
Per Olav Nærestad
Birmingham
Patrick Hanlon
Asker
Turid Williksen
Bournemouth
Tracey Davidson
Bristol
Tim Wilkinson
Bergen
Fana
Arvid Føleide
Cambridge
Richard Waters
Flesland
Gunnar Røsland
Cardiff
Rick Spencer
Fyllingsdalen
Mette Skauge
Chelmsford
Justin Grainger
Minde
Erik Ramsdal
Guildford
Neil Truman
Sentrum
Arild Andersen
Hull
Pete Sumners
Strandgaten
Åse Fluge Nordgreen
Leeds
Andy Copsey
Vest
Christian Ravnå
Leicester
Sean Martin
Åsane
Tore Svein Nese
Liverpool
Sean Mcgurren
Drammen
Kirsti Jensås
London
Simon Silvester
Fredrikstad
Tove Anita R Torp
Maidstone
Jonathan Watson
Halden
Roar Elsness
Manchester
Simon Raine
Hamar
Hans Skjelbreid
Newcastle
Kevin Pattison
Haugesund
Knut Børge Lunde
Norwich
John Harper
Kolbotn
Geir Anders Sundnes
Nottingham
Colin Kirk
Kristiansand
Arild Andresen
Oxford
David Woodhead
Larvik
Hans Jørgen Ormar
Plymouth
Paul Wilmot
Lillestrøm
Line Thams Blikstad
Reading
Roy Arbon
Lysaker
Jørgen Misvær
Sheffield
Mike Harrison
Molde
Kolbjørn Heggdal
Slough
John Parker
Moss
Jan Fredrik Fogth
Southampton
Jeremy Tollworthy
Stoke-on-trent
Michael Smith
Oslo
Fyrstikktorget
Glenn Steinbø
Swindon
Trevor Harrison
Kirkegaten
Harald Søreide
Wolverhampton
Mike Priddy
Majorstuen
Ronny Myreng
Nydalen
Torstein Haugland
Olav Vs Gate
Knut Berge
UNITS OUTSIDE THE NORDIC COUNTRIES
AND GREAT BRITAIN
Skøyen
Sven Ove Oksvik
Unit
Head of unit
Sandefjord
Ingelise Schliekelmann
Amsterdam
Brian Herring
Sandnes
Anette Wathne
Luxembourg
Göran Högvall
Sandvika
Cecilie Tvedt
Hong Kong
Göran Stille
Sarpsborg
Espen Lerkerød
Singapore
Jan Djerf
Ski
Hanne Fjellheim
Shanghai
Johan Andrén
Skien
Jan Egil Hafredal
Germany
Holger Namér
Sotra
Lisbeth Turøy
Stavanger
Mattias Metzger
Hamburg
Vacant
Sentrum
Hroar Gudbrandsen
New York
Mikael Green
Straen
Terje Lind
Poland
Mikael Sörensen
Tromsø
Bjørn Andreassen
Trondheim
Gdansk
Beata Suchocka
Poznan
Jaroslaw Ladziak
Heimdal
Bente E Dahl
Warsaw
Marzena Malek
Søndregt
Ola Grøtte
Paris
Peter Einarsson
Jan Erik Skjolden
Russia
Raimo Valo
Jan Petter Larsen
Moscow
Svante Anderback
St. Petersburg
Markku Vasari
Vienna
Carl-Christian
Prinz Zu Solms-Lich
Mumbai
John Ödmann
Tønsberg
Ålesund
128
Frankfurt
Definitions and explanations
General definitions
Explanation of insurance terms
ADJUSTED SHAREHOLDERS’ EQUITY PER SHARE. Shareholders’ equity
at the end of the period is adjusted by surplus/deficit values on financial assets
classified to be held to maturity and reduced by the equity effect of cash flow
hedges and the minority share of shareholders’ equity. Adjusted equity is then
divided by the number of outstanding ordinary shares at the end of the period.
AVAILABLE SOLVENCY MARGIN. Mainly comprising equity and any
subordinated loans.
BAD DEBTS. Loans where payments will probably not be met according to
the conditions of the contract. A loan is not a bad debt if there is collateral
which covers the principal amount, interest and penalties for late payments by
a satisfactory margin.
BAD DEBT RESERVE RATIO. Provision for probable loan 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 fixed-term subordinated loans with some reduction when the residual
maturity is less than five years. These loans must not exceed 50% of tier 1
capital. With 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 total of tier 1 and tier 2 capital
is reduced by the book value of holdings in insurance operations and certain
financial operations. 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.
C/I RATIO. Total expenses in relation to total income.
CAPITAL RATIO. Capital ratio or capital adequacy is the capital base in
relation to risk-weighted volume. The capital ratio must be at least 8%.
BONUS RATE. The interest rate, before fees and taxes, at which the
insurance capital (the insured party’s savings) earn interest. This is the most
important component when calculating the allocated bonus. This normally only
applies at companies run on mutual principles. See Yield rate.
COLLECTIVE CONSOLIDATION RATIO. The market value of the insurance
company’s assets in relation to the insurance commitments.
EXPENSE RATIO. Operating expenses in relation to premiums written.
GUARANTEED RATE. The interest rate, before fees and taxes, which is used
to calculate the guaranteed funds.
PREMIUMS WRITTEN. Mainly the total of premiums paid in during the year.
REQUIRED SOLVENCY MARGIN. Consists mainly of the sum of
4% of the life insurance provisions, 1% of the unit-linked commitments, 1% of
conditional bonuses and 0.1–0.3% of mortality risks.
SOLVENCY RATIO. Available solvency margin in relation to required solvency
margin. The ratio, which should be at least 1, shows the company’s ability to
meet its commitments.
TOTAL RETURN. Mainly the sum of changes in value and return on the
investment assets.
YIELD RATE. The interest rate, before fees and taxes, at which the insurance
capital (the insured party’s savings) earn interest. This is the most important
component when calculating the conditional bonus. This normally only applies
in profit-distributing life insurance companies. See Bonus rate.
DIVIDEND YIELD. Dividend per share divided by the share price at year-end.
EARNINGS PER SHARE. The profit/loss for the year divided by the average
number of outstanding shares. Where applicable, the dilution effect is taken
into account.
Narva. Printing: EkotryckRedners Photos: Peter Hoelstad Photos of board: Bengt Wanselius
LOAN LOSS RATIO. Loan losses and changes in value of repossessed
property as a percentage of the opening balance for loans to the public,
loans to credit institutions (excluding banks), repossessed property and credit
guarantees.
NON-PERFORMING LOANS. Loans where interest, repayments or
overdrafts have been due for payment for more than 60 days.
P/E RATIO. The share price at year-end divided by earnings per share.
PROPORTION OF BAD DEBTS. Bad debts (net) in relation to total loans to
the public and credit institutions (excluding banks).
RETURN ON EQUITY. Profit for the year in relation to average shareholders’
equity excluding the equity impact of financial assets classified as available
for sale, and cash flow hedges. An adjustment is also made for a weighted
average of rights issues, dividends and repurchase of own shares.
RETURN ON TOTAL ASSETS. Operating profit 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%.
129
ALFTA ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA SKY CITY ARLÖV ARVIDSJAUR ARVIKAAVESTA BACKE BANKERYD BERGBY BERGSJÖ BJURHOLM BJURSÅS
HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖPING KALIX KALMAR: BERGA K VARNHOLMEN KARLSHAMN KARLSKOGA KARLSKRONA
KARLSTAD: VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPANKNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS KRISTIANSTAD KRISTINEHAMNKROKOM
KUMLA KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA LANDVETTER LEKSAND LERUM LIDEN
LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ:
STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ: AMIRALSGATAN CITY DALAPLAN FOSIE FRIDHEM KÖPENHAMNSVÄGEN LIMHAMN LUNDAVÄGEN TRIANGELN VÄRNHEM
MALUNG MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLNDAL MÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA
MÖRLUNDA MÖRSIL NACKA: FORUM NACKA NORBERG NORDINGRÅ NORDMALING NORRKÖPING: DROTTNINGGATAN ENEBY CENTRUM HAGEBY CENTRUM NORRTÄLJE NORSJÖ NYBRO
NYKÖPING NYNÄSHAMN NÄSBY PARK NÄSSJÖ NÄSÅKER NÖDINGE OCKELBO OFFERDAL OLOFSTRÖM ORSA OSBY OSKARSHAMN PAJALA PARTILLE PITEÅ PÅLSBODA RAMSELE RIMBO
ROBERTSFORS RONNEBY ROTEBRO RÅNEÅ RÄTTVIK RÖRVIK SALA SALEM SALTSJÖ-BOO SANDVIKEN SIGTUNA SIMRISHAMN SJÖBO SKANÖR SKARA SKELLEFTEÅ SKINNSKATTEBERG
SKULTUNA SKURUP SKUTSKÄR SKÄRHOLMEN SKÄRPLINGE SKÖNDAL SKÖNSBERG SKÖVDE SLITE SOLLEBRUNN SOLLEFTEÅ SOLLENTUNA CENTRUM SOLNA SORSELE SPÅNGA
STAFFANSTORP STENUNGSUND STOCKHOLM: BIRGER JARLSGATAN FLEMINGGATAN FRIDHEMSPLAN FRIHAMNEN GAMLA STAN GUSTAV ADOLFS TORG GÖTGATSBACKEN HORNSBERG
HORNSGATAN HUMLEGÅRDEN HÖGALID KARLAPLAN KARLAVÄGEN KUNGSHOLMSTORG KUNGSTRÄDGÅRDEN MARIEBERG NORRMALMSTORG NORRTULL ODENGATAN ODENPLAN
RENSTIERNAS GATA S:T ERIKSPLAN SERGEL SKANSTULL STRANDVÄGEN STUREPLAN SVEAVÄGEN TESSINPARKEN UPPLANDSGATAN VANADISPLAN VÄRTAVÄGEN VÄSTERMALM
ÖSTERMALMSTORG ÖSTRA STATION STORA TUNA STORUMAN STORVIK STRÄNGNÄS STRÖMSUND STUVSTA SUNDBYBERG SUNDSVALL SUNNE SURTE SVEDALA SVEG SVENLJUNGA
SVENSTAVIK SÄFFLE SÄTER SÄVSJÖ SÖDERHAMN SÖDERKÖPING SÖDERTÄLJE SÖLVESBORG SÖRBERGE SÖSDALA TIBRO TIDAHOLM TIERP TIMRÅ TINGSRYD TOMELILLA TORSBY TORSÅKER
TORSÅS TRANEMO TRANÅS TREHÖRNINGSJÖ TRELLEBORG TROLLHÄTTAN TROSA TRÅNGSUND TULLINGE TYRESÖ TYRINGE TÄBY CENTRUM UDDEVALLA ULLÅNGER ULRICEHAMN
ULVSUNDA UMEÅ: CITY TEG VÄSTRA UPPLANDS VÄSBY UPPSALA: CITY ERIKSBERG INDUSTRIOMRÅDE LUTHAGEN VADSTENA VAGGERYD VALLENTUNA VANSBRO VARA VARBERG VASAGATAN
VAXHOLM VEBERÖD VELLINGE VETLANDA VILHELMINA VIMMERBY VINDELN VIRSERUM VISBY: ADELSGATAN ÖSTER VISLANDA VITTSJÖ VOLLSJÖ VRETEN VÅRGÅRDA VÄLLINGBY
VÄNERSBORG VÄNNÄS VÄRMDÖ VÄRNAMO VÄSTANFORS VÄSTERHANINGE VÄSTERVIK VÄSTERÅS: CITY EMAUSGATAN KÖPINGSVÄGEN STORA GATAN VÄXJÖ YSTAD ÅHUS ÅKERSBERGA
ÅLEM ÅMÅL ÅNGE ÅNÄSET ÅRE ÅRJÄNG ÅRSTA ÅSEDA ÅSELE ÅTVIDABERG ÄLMHULT ÄLVSBYN ÄLVSJÖ ÄLVÄNGEN ÄNGELHOLM ÖREBRO: EKERSGATAN STORTORGET VÅGHUSTORGET
ÖRNSKÖLDSVIK ÖSMO ÖSTERBYBRUK ÖSTERSUND ÖSTERVÅLA ÖSTHAMMAR ÖVERKALIX ÖVERTORNEÅ ALFTA ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA
SKY CITY ARLÖV ARVIDSJAUR ARVIKA AVESTA BACKE BANKERYD BERGBY BERGSJÖ BJURHOLM BJURSÅS BJÄSTA BJÖRBO BJÖRNA BLACKEBERG BODEN BO LLE BYGD BOLLNÄS
BORENSBERG BORGHOLM BORLÄNGE BORÅS: HULTA NORRBY STORA TORGET VIARED BREDBYN BROBY BROMMAPLAN BRÄCKE BUREÅ BURTRÄSK BYSKE BÅLSTA BÅSTA DALARÖ DELSBO
LINKÖPING: CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ:
MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLNDAL MÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACKA: FORUM NACKA ALFTA
ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA SKY CITY ARLÖV ARVIDSJAUR ARVIKAAVESTA BACKE BANKERYD BERGBY BERGSJÖ BJURHOLM BJURSÅS
HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖPING KALIX KALMAR: BERGA KVARNHOLMEN KARLSHAMN KARLSKOGA KARLSKRONA
KARLSTAD: VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPAN KNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS KRISTIANSTAD KRISTINEHAMN KROKOM
KUMLA KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA LANDVETTER LEKSAND LERUM LIDEN
LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING: CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ:
STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ: AMIRALSGATAN CITY DALAPLAN FOSIE FRIDHEM KÖPENHAMNSVÄGEN LIMHAMN LUNDAVÄGEN TRIANGELN
VÄRNHEM MALUNG MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLNDAL MÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM
MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACKA: FORUM NACKA NORBERG NORDINGRÅ NORDMALING NORRKÖPING: DROTTNINGGATAN ENEBY CENTRUM HAGEBY CENTRUM NORRTÄLJE
NORSJÖ NYBRO NYKÖPING NYNÄSHAMN NÄSBY PARK NÄSSJÖ NÄSÅKER NÖDINGE OCKELBO OFFERDAL OLOFSTRÖM ORSA OSBY OSKARSHAMN PAJALA PARTILLE PITEÅ PÅLSBODA
RAMSELE RIMBO ROBERTSFORS RONNEBY ROTEBRO RÅNEÅ RÄTTVIK RÖRVIK SALA SALEM SALTSJÖ-BOO SANDVIKEN SIGTUNA SIMRISHAMN SJÖBO SKANÖR SKARA SKELLEFTEÅ
SKINNSKATTEBERG SKULTUNA SKURUP SKUTSKÄR SKÄRHOLMEN SKÄRPLINGE SKÖNDAL SKÖNSBERG SKÖVDE SLITE SOLLEBRUNN SOLLEFTEÅ SOLLENTUNA CENTRUM SOLNA SORSELE
SPÅNGA STAFFANSTORP STENUNGSUND STOCKHOLM: BIRGER JARLSGATAN FLEMINGGATAN FRIDHEMSPLAN FRIHAMNEN GAMLA STAN GUSTAV ADOLFS TORG GÖTGATSBACKEN
HORNSBERG HORNSGATAN HUMLEGÅRDEN HÖGALID KARLAPLAN KARLAVÄGEN KUNGSHOLMSTORG KUNGSTRÄDGÅRDEN MARIEBERG NORRMALMSTORG NORRTULL ODENGATAN
ODENPLAN RENSTIERNAS GATA S:T ERIKSPLAN SERGEL SKANSTULL STRANDVÄGEN STUREPLAN SVEAVÄGEN TESSINPARKEN UPPLANDSGATAN VANADISPLAN VÄRTAVÄGEN VÄSTERMALM
ÖSTERMALMSTORG ÖSTRA STATION STORA TUNA STORUMAN STORVIK STRÄNGNÄS STRÖMSUND STUVSTA SUNDBYBERG SUNDSVALL SUNNE SURTE SVEDALA SVEG SVENLJUNGA
SVENSTAVIK SÄFFLE SÄTER SÄVSJÖ SÖDERHAMN SÖDERKÖPING SÖDERTÄLJE SÖLVESBORG SÖRBERGE SÖSDALA TIBRO TIDAHOLM TIERP TIMRÅ TINGSRYD TOMELILLA TORSBY TORSÅKER
TORSÅS TRANEMO TRANÅS TREHÖRNINGSJÖ TRELLEBORG TROLLHÄTTAN TROSA TRÅNGSUND TULLINGE TYRESÖ TYRINGE TÄBY CENTRUM UDDEVALLA ULLÅNGER ULRICEHAMN
ULVSUNDA UMEÅ: CITY TEG VÄSTRA UPPLANDS VÄSBY UPPSALA: CITY ERIKSBERG INDUSTRIOMRÅDE LUTHAGEN VADSTENA VAGGERYD VALLENTUNA VANSBRO VARA VARBERG VASAGATAN
VAXHOLM VEBERÖD VELLINGE VETLANDA VILHELMINA VIMMERBY VINDELN VIRSERUM VISBY: ADELSGATAN ÖSTER VISLANDA VITTSJÖ VOLLSJÖ VRETEN VÅRGÅRDA VÄLLINGBY
VÄNERSBORG VÄNNÄS VÄRMDÖ VÄRNAMO VÄSTANFORS VÄSTERHANINGE VÄSTERVIK VÄSTERÅS: CITY EMAUSGATAN KÖPINGSVÄGEN STORA GATAN VÄXJÖ YSTAD ÅHUS ÅKERSBERGA
ÅLEM ÅMÅL ÅNGE ÅNÄSET ÅRE ÅRJÄNG ÅRSTA ÅSEDA ÅSELE ÅTVIDABERG ÄLMHULT ÄLVSBYN ÄLVSJÖ ÄLVÄNGEN ÄNGELHOLM ÖREBRO: EKERSGATAN STORTORGET VÅGHUSTORGET
ÖRNSKÖLDSVIK ÖSMO ÖSTERBYBRUK ÖSTERSUND ÖSTERVÅLA ÖSTHAMMAR ÖVERKALIX ÖVERTORNEÅ ALFTA ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA
SKY CITY ARLÖV ARVIDSJAUR ARVIKA AVESTA BACKE BANKERYD BERGBY BERGSJÖ BJURHOLM BJURSÅS BJÄSTA BJÖRBO BJÖRNA BLACKEBERG BODEN BO LLE BYGD BOLLNÄS
BORENSBERG BORGHOLM BORLÄNGE BORÅS: HULTA NORRBY STORA TORGET VIARED BREDBYN BROBY BROMMAPLAN BRÄCKE BUREÅ BURTRÄSK BYSKE BÅLSTA BÅSTA DALARÖ DELSBO
LINKÖPING: CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ:
MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLNDAL MÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACKA: FORUM NACKA ALFTA
ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA SKY CITY ARLÖV ARVIDSJAUR ARVIKAAVESTA BACKE BANKERYD BERGBY BERGSJÖ BJURHOLM BJURSÅS
ÖSTERMALM ESLÖV FAGERSTA FALKENBERG FALKÖPING FALUN FARSTACENTRUM FELLINGSBRO FILIPSTAD FINNERÖDJA FINSPÅNG FJUGESTA FLEN FRISTAD FRÄNSTA FRÖSUNDA FRÖVI
FURUDAL FÅRÖSUND FÄRGELANDA FÄRJESTADEN FÖLLINGE GAGNEF GAMMELSTADGISLAVED GLOBEN GNARP GNESTA GRANGÄRDE GRÄNGESBERG GÄLLIVARE GÄLLSTAD GNESTA
GRANGÄRDE GRÄNGESBERG GÄLLIVARE GÄLLSTAD GÄLLÖ GÄVLE CITY GÖTEBORG: ALMEDAL AVENYN BACKA RINGÖN CITY ERIKSBERG FRÖLUNDA FÖRSTA LÅNGGATAN GÅRDA HISINGS
www.handelsbanken.com +46 8 701 10 00 SE-106 70 Stockholm
KÄRRA HJÄLLBO HÖGSBO KORTEDALA LANDALA LILLA BOMMEN MAJORNA MARIEHOLM ODINSGATAN SISJÖN TORSLANDA VOLVO PVB ÖRGRYTE ÖVRE HUSARGATAN HAGFORS HALLSBERG
HALLSTAVIK HALLUNDA TORG HALMSTAD HAMMARBY HAMMARSTRAND HAMMERDAL HANINGE CENTRUM HAPARANDA HEBY HEDE HEDEMORA HEDESUNDA HELSINGBORG: NORR
STORTORGET SÖDERPORT HEMSE HERRLJUNGA HJO HOLMSUND HOTING HUDDINGE CENTRUM HUDIKSVALL HULTSFRED HUSKVARNA HUSUM HÄGERSTEN HÄRNÖSAND HÄSSELBY GÅRD
HÄSSLEHOLM HÖGANÄS HÖGDALEN HÖGSBY HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖPING KALIX KALMAR: BERGA KVARNHOLMEN
KARLSHAMN KARLSKOGA KARLSKRONA KARLSTAD: VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPAN KNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS
KRISTIANSTAD KRISTINEHAMN KROKOM KUMLA KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA
LANDVETTER LEKSAND LERUM LIDEN LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING: CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL
LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ: AMIRALSGATAN CITY DALAPLAN FOSIE FRIDHEM KÖPENHAMNSVÄGEN
LIMHAMN LUNDAVÄGEN TRIANGELN VÄRNHEM MALUNG MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLND
MÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACK A : FORUM NACK A NORBERG NORDINGRÅ NORDMALING NORRKÖPING: DROTTNINGGATAN

annual report 2006 handelsbanken has 615 branches worldwide

Transcription

Similar documents

1st Floor, Unit 3, Bocam Park 1st Floor, Unit 3, Bocam Park

Kulturskolan - Hylte kommun

Interim Report January – June 2009

workshop - Psychology of Vision

print pricelist 2015

King

pricelist

HNSA thanks Ed Zajkowski for his generous loan of the original

Rate card SvD Perfect Guide