Q2 2024 Svenska Handelsbanken AB Earnings Call Transcript
Key Points
- Svenska Handelsbanken AB (SVNLF) reported an improvement in ROE to 15.2% from 13.7% in the previous quarter.
- Operating profit increased by 3% to SEK8.5 billion, driven by income growth and cost reductions.
- The bank's CET1 ratio stood at 18.9%, which is 400 basis points above the regulatory requirement, indicating a strong financial position.
- Fee and commission income grew by 6%, reaching the second highest level historically, supported by the savings and mutual funds business.
- The bank maintained its high credit ratings, with Moody's raising the outlook from negative to stable, confirming its financial stability.
- The bank incurred a one-off cost of SEK300 million for redundancy payments as part of its efficiency initiatives.
- Volume growth remained subdued across all home markets, impacting overall business expansion.
- Expenses increased by 10% year-over-year, attributed to increased staffing and annual salary revisions.
- The Netherlands, the smallest home market, saw a drop in operating profit and an increase in the cost-to-income ratio from 53% to 55%.
- There is ongoing pressure on lending margins, particularly in the mortgage sector, due to fierce competition.
Good morning, everyone, and welcome to this presentation of Handelsbanken's results for the first half and second quarter of 2024. In the second quarter, we saw recovering earnings. The financial position remaining solid and high activity within the bank with execution efficiency-enhancing measures.
ROE improved to 15.2% from 13.7% in the previous quarter. Operating profit rose by 3% to SEK8.5 billion as income grew, costs dropped and another quarter with net credit loss recoveries. The cost-to-income ratio dropped to 41.5% from 42.2%. In short, a positive development on the key lines.
The financial position of the bank remains very healthy. The CET1 ratio was 18.9%, was 400 basis points above the regulatory requirement, which was in line with previous communication. As of April 1, a new organizational structure was implemented in the central and business supporting units. With the organizational changes, decentralization was enhanced and measures taken for increased efficiency and profitability going forward.
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