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Handelsbanken
Debt Investor Presentation
September 2016
Key highlights Handelsbanken
2
Leading bank in Sweden with major operations in Norway, Finland, Denmark and UK
Netherlands a new home market from 2013
Founded in Sweden in 1871, oldest quoted stock in Sweden
Conservative risk profile and conservative underwriting standards result in the lowest credit losses
among comparable peers - Loan loss ratio of 4bp in Jan-Jun 2016
Strong capitalisation – CET1 ratio of 23.0% at Q1 2016, total capital ratio was 28.9%
Balance sheet totally structured on own commercial grounds - No government guaranteed funding
nor use of any central bank liquidity facility
Liquidity reserves of more than SEK 800bn
Lowest funding cost of any bank in Europe
Above 12% ROE every year during the crisis – 13.7% in Jan-Jun 2016
Handelsbanken’s credit rating: AA-/AA/Aa2 from S&P/Fitch/Moody’s
High and stable profitability with high growth and low volatility
Without any need of support from central banks, government or shareholders
3
0
25
50
75
100
125
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Q213
Q313
Q413
Q114
Q214
Q314
Q414
Q115
Q215
Q315
Q415
Q116
Q216
Adjusted equity per share Accumulated dividends since 2008SEK / share
Dividends reinvested in ROE per quarter
CAGR = Compounded annual growth rate
Consistent business model for 44 years
4
Credit policy
Business control system
Funding
IT infrastructure
Centralised parts Decentralisation
No central marketing
The branch is the bank
No budget
No bonus
To have a higher ROE than a weighted average of comparable peers
This goal has been reached each and every year for 44 years
Customer
Goal
Handelsbanken’s concept
5
Long term focus
Focus on profitability – not volumes
Focus on the client – not the product
Relationship bank – not mass market
Trust and respect for individuals
Long term employee relations
Organic growth
Oktogonen
More satisfied
clients
Lower
costs + Higher
profitability
Responsible role in society
Responsible services and high availability
Low risk tolerance
Financial stability / no tax payer support
One of Sweden’s largest tax payers
Minimize environmental impacts
Credit policy
6
Credit
responsibility
Basic Guidelines
Credit responsibility at branch level
Customer and credit responsibility closely related
Each branch fully accountable internally for granting credits
If necessary, branch obtains support from regional head office and central
credit department
Assessment starts with borrower’s repayment capacity
Weak repayment capacity can never be offset by collateral or high margins
Quality requirements must never be neglected in favour of large volume
Credits must normally be adequately secured
Consistency in
credit policy
Same in all markets
Unchanged over business cycle
Total lending June 30 2016
7
Corporates: EUR 99bn
(SEK 932bn)
Households: EUR 107bn
(SEK 1 003bn)
74%
9%
6%3%
5% 1% 1%
Sweden Norway UK Finland
Denmark Netherlands Other
51%
16%
13%
9%
4% 2% 5%
Sweden Norway UK Finland
Denmark Netherlands Other
7072 73
7476
81
6869
58
66
74
68
50
55
60
65
70
75
80
85
Handelsbanken Sector average*
7274
7678
8284
66 66
7270
76
73
50
55
60
65
70
75
80
85
Handelsbanken Sector average*
More satisfied and loyal customers in all home markets
8
Customer satisfaction Private
Customer satisfaction Corporate
Source: SKI and EPSI 2015
* Average of Nordea, SEB and Swedbank in Sweden
Index Index
Handelsbanken in Sweden 2016
9
1
2
3
4
5
Handelsbanken SEB Danske Bank Swedbank Nordea
Source: Finansbarometern (www.eastbrooklab.se)
1
2
3
4
5
Handelsbanken SEB Danske Bank Swedbank Nordea
Corporate Bank
of the Year
SME Bank
of the Year
Rank Rank
Peer 1 Peer 2 Peer 3 Peer 4 Peer 1 Peer 2 Peer 3 Peer 4
Local presence makes a big difference
10
Smartphone, tablet & internet
Branch @
Other
Physical visit
Customer
86%(77%)
13%(21%)
1%(2%)
2015 (2013)
Necessities in a digitalised market
11
Technology
Internet
Mobile
Telephone
Product
Pricing
Hard to differentiate
Tablet
Card
Mortgage Securities trading,
fund management
Hygiene factors
Increased transparency
Easy to copy
Video
conference
The branch is the bank
12
Deeper relations and
more satisfied customers
Lower
credit losses Local decision power
The local
“branch”
Cost efficiency
Physical
meeting
point
Internet
Mobile
Telephone
Tablet
Social media
Card
Mortgage
Securities trading,
fund management
Etc.
Target of higher ROE than peers reached for 44 years
13
-5
0
5
10
15
20
25
30Handelsbanken Other comparable banks*
Return on equity
Return on shareholder’s equity after tax (1973-2008: standard tax), adjusted for one-off items
* Comparable banks: weighted average for SEB, Nordea, Swedbank and since 2003 also Danske Bank and DNB
%
Return on equity per home market
14
Jan-Jun
2016
Handelsbanken UK 16%
Handelsbanken Norway 14%
Handelsbanken Sweden 13%
Handelsbanken Denmark 13%
Handelsbanken Finland 13%
Handelsbanken the Netherlands 9%
Handelsbanken Group 14%
Q2 results
15
Summary Q2
16
ROE increased to 14.2% (13.1)
Operating profit increased to SEK 5,277m (4,967)
EPS increased by 2% to SEK 2.19 (2.12)
Income increased by 2% adjusted for non-recurring items
Commission income increased by 5%
Staff costs fell by 1% adjusted for non-recurring items
The loan loss ratio amounted to 0.05% (0.04)
CET1 ratio increased to 23.0% (22.7) and the liquidity reserve exceeded SEK 800bn
Fitch upgraded the Bank’s long-term credit rating to AA, the highest rating among all peer banks
The profits relating to Visa Inc’s acquisition of Visa Europe is estimated at SEK 760m, of which SEK 615m
is accounted for in other comprehensive income
Income statement, Q2
17
SEK m
Q2
2016
Q1
2016 Change
Q2
2015 Change
Net interest income 6,808 6,795 0% 7,019 -3%
Net fee and commission income 2,280 2,170 5% 2,359 -3%
Net gains/losses on financial transactions 523 1,162 -55% 451 16%
Risk result - insurance 35 76 -54% 55 -36%
Other income 276 40 337 -18%
Total income 9,922 10,243 -3% 10,221 -3%
Staff costs -2,952 -3,668 -20% -3,149 -6%
Other expenses -1,465 -1,428 3% -1,458 0%
Total expenses -4,417 -5,096 -13% -4,607 -4%
Profit before loan losses 5,505 5,147 7% 5,614 -2%
Net loan losses -229 -187 22% -359 -36%
Gains/losses on disposal of property,
equipment and intangible assets
1 7 -86% 1 0%
Operating profit 5,277 4,967 6% 5,256 0%
Taxes -1,091 -929 17% -1,110 -2%
Net profit from discontinued operations 8 5 60% 27 -70%
Profit for the period 4,194 4,043 4% 4,173 1%
SEK 700m in provision
in Q1
SEK 827m realised
gains from sale of
shares in Q1 compared
with SEK 81m in Q2
4,762 4,837 4,966
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Q4 2015 Q1 2016 Q2 2016
Realised gains f rom divestments of AFS holdings and dividends
Underlying earnings
Staf f provision
Oktogonen
Operating profit
18
SEK m
Operating profit adjusted for non-recurring items
+3% +2%
1,550
1,600
1,650
1,700
1,750
1,800
1,850
1,900
1,950
2,000
Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216
Good volume growth in the Group
19
Loans to the public
Stable development of
the lending operation
SEK bn
-1.50%
-1.00%
-0.50%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
-750
-500
-250
0
250
500
750
1,000
1,250
1,500
Q4 2011
Q1 2012
Q22012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
NII f rom allocated capital NII f rom deposits
3M Stibor, average per quarter (rhs)
NII from deposits and allocated capital Handelsbanken Sweden
20
SEK m
SEK 7.1bn less
annual NII
-0.5%
-0.4%
-0.3%
-0.2%
-0.1%
0.0%
0.1%
0.2%
0.3%
-250
-200
-150
-100
-50
0
50
100
150
Q413Q114Q214Q314Q414Q115Q215Q315Q415Q116Q216Q316Q416Q117Q217
Increased NII f rom higher lending volumes
Lower NII due to lower deposit margins in Sweden
Change in average Stibor per quarter (rhs)*
Falling short rates hide the underlying growth
21
SEK m
Change in NII contribution from the previous quarter
* Stibor expectations from Q3 2016 are based on the pricing of FRA contracts in the fixed income market
Source: Macrobond 31 Aug 2016
125
92
9
20
29
-20
0
20
40
60
80
100
120
140
2010 2011 2012 2013 2014 2015 Jan-Jun 2016
Handelsbanken
Bank 1
Bank 2
Bank 3
Bank 4
Largest institution for new savings in the Swedish fund market
22
Accumulated net inflows into Swedish mutual funds
SEK bn
SEK 5.5bn in net inflows
during the first half of 2016
on a flat market (+0.2)
Handelsbanken’s market
share of total outstanding
mutual fund volumes in
Sweden is 11%
Source: Moneymate. Mutual fund volumes include equity, mixed, hedge and fixed income funds. Competitor banks included are Danske Bank,
Nordea, SEB and Swedbank
Significantly lower loan losses
23
-1
0
1
2
3
4
5
6
7
8
9
10
11
1990
1991
1992
1993
1994
1995
1996
Handelsbanken
Swedish peer banks*
-0.1
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Jan
-Jun 2
016
Handelsbanken
Nordic peer banks**
* Gota bank (nationalised 1992), Nordea (Nordbanken [nationalised 1992]) and SEB. Swedbank included from 1995
** Danske Bank, DNB, Nordea, SEB, and Swedbank
% %
1990 – 1996 1997 – Q2 2016
0%
5%
10%
15%
20%
25%
30%
35%
40%
MP
S
Perm
an
en
t
Ban
co
Po
pola
re
BC
P
Lib
erb
an
k
Po
pula
r
Bo
I
Inte
sa
BP
M
UB
I
Un
icre
dit
Sabad
ell
Caiz
a
BP
I
BB
VA
KB
C
Ers
te
RB
S
San
tan
der
Cre
dem
EB
A s
am
ple
Ban
kin
ter
BN
P
SG
Llo
yds
Cré
dit A
gr.
CZ
Ban
k
Aare
al
Dan
ske
ING
No
rdea
HS
BC
Barc
lays
DN
B
SE
B
Sw
ed
ban
k
Han
dels
banke
n
Non-performing exposures Exposures with forbearance measures, performing
EBA 2015 transparency exercise
24
Source: EBA 2015 ”transparency exercise” based on data per Q2 2015
Non-performing exposures and performing exposures with
forebearance measures as % of lending
Financial stability
25
0
5
10
15
20
25
30
30 Jun 2016
CET1 ratio Tier 1 ratio Capital ratio
Capital ratios
%
25.5
28.9
23.0
Capital CRR/CRD IV, %
30 Jun
2016
31 Dec
2015 Change
Capital ratio, % 28.9 27.2 +1.7%-points
Tier 1 ratio, % 25.5 23.8 +1.7%-points
Common equity tier 1 ratio, % 23.0 21.2 +1.8%-points
Total own funds, SEK bn 137.1 128.5 +8.6
Common equity tier 1 capital, SEK bn 109.0 100.5 +8.5
Leverage ratio, % 3.9 4.4 -0.5%-points
Leverage ratio, excluding central bank
holdings, %4.9 4.9 0%-points
Liquidity
30 Jun
2016
LCR Total* 139%
LCR EUR* 181%
LCR USD* 121%
LCR according to the EU Commission's
delegated act146%
The Swedish FSA’s proposal regarding increased corporate risk
weights:
The Bank’s assessment is that the capital level fulfils the capital
requirements that will be the result of an average corporate risk weight of
30% and a maturity floor of 2½ years.
* According to the Swedish FSA’s definition
Stable return with stronger own funds
26
Common equity tier 1 ratio
* Basel II until 2012, CRD IV from 2013
Return on equity**
** ROE 2012 is adjusted for effects from recalculations of deferred taxes in 2012
12.6% 12.9%13.5%
13.1%13.9%
13.4% 13.5% 13.7%
0%
2%
4%
6%
8%
10%
12%
14%
16%
11.7%
13.8%
15.6%
17.9%
18.9%
20.4%21.2%
23.0%
10%
12%
14%
16%
18%
20%
22%
24%
Handelsbanken UK
27
Relationship bank
Selective
Local
presence
High
profitabtility
Profitability and customer focus, not volume focus
No bonus, no budgets
0.33% loan loss ratio at most during the years of the financial crisis (2010)
Geographically diversified lending
High-quality customer base
Strong asset
quality
Low market share means big growth potential
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
1 2 3 4 5 6 7 8 9 10
Average income per branch in the respective year of operation
Average cost per branch in the respective year of operation
UK
28
Operating profit in local currency increased by 9% compared to H1 2015
Net commission income rose by 29%
Average household deposit growth of 40%
The highest customer satisfaction according to EPSI
Income and expense trend in branches in the UK
Continued expansion and increased availability
~50% of branches
younger than 4 years
~50% of branches
older than 4 years
Year of operation*
GBP m per
branch
* Year 1 = first full calendar year
0.00
0.50
1.00
1.50
2.00
2.50
2008 2009 2010 2011 2012 2013 2014 2015 Jan-Jun 2016
Handelsbanken Peers*
Lower loan losses than peers in the UK
29
Average 2008 – 2016:
1/5 of the average loan losses for peers since 2008
%
Peers
Handelsbanken
0.9%
0.2%
* Average loan loss ratio for RBS, Lloyds, Barclays and HSBC Bank PLC
Source: SNL
Handelsbanken the Netherlands
30
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
3,000
Q215 Q216
+31%
Loans to the public
EUR m
Operating earnings up 77% versus H1 2015
Total lending increased by 28% and to households by 39%
C/I-ratio down 6.3%-units
No loan losses
The most satisfied customers according to EPSI
Optimix acquisition closed
Strong development of the business
Funding
31
Highest credit rating globally
32
Upgraded by Fitch to AA from AA- in May 2016
Highest rating in Europe by Fitch and Moody’s among all peer banks
Highest rating globally when combining Fitch, Moody’s and S&P’s ratings
Source: Macrobond, 30 Aug 2016
Fitch Moody's S&P
Handelsbanken AA Aa2 AA-
TD Bank AA- Aa1 AA-
United Overseas Bank AA- Aa1 AA-
Oversea-Chinese Banking Corp AA- Aa1 AA-
Royal Bank of Canada AA Aa3 AA-
HSBC Bank AA- Aa2 AA-
National Australia Bank AA- Aa2 AA-
Westpac AA- Aa2 AA-
Commonwealth Bank of Australia AA- Aa2 AA-
Australia and New Zealand Banking Group AA- Aa2 AA-
Rabobank AA- Aa2 A+
Nordea AA- Aa3 AA-
Swedbank AA- Aa3 AA-
DNB n.r. Aa2 A+
OP Group n.r. Aa3 AA-
SEB AA- Aa3 A+
Bank of Montreal AA- Aa3 A+
Scotiabank AA- Aa3 A+
Group funding strategy - Handelsbanken and Stadshypotek
33
CP
CD
X-notes
144A + 3(a)(2)
144A Covered
Deposits
EMTN
EMTCN
ECP
Deposits
CD
Private Placements
Covered Bonds
MTN
CP
Retail Deposits
Deposits
Private
Placements
Samurai
EMTN
EMTCN
A$ CB
Kangaroo
Covered
bonds
Access domestic and international markets
Actively developed debt investor relations
Diversify sources of funding in wholesale as widely as
possible
Maintain low interest rate risk level
Covered bonds – domestic and international issuance
Clear balance between senior unsecured and covered bonds
No use of any central bank facilities or government
guaranteed funding
No participation in ECB’s LTRO facilities
Long-term bond funding, January – June
34
Issues in Q2 include:
EUR 1.0bn, 6-year covered bonds
Long term bond issuance, SEK bn
Jan-Jun
2016
Jan-Jun
2015 Change
Senior bonds 27 2 25
Covered bonds 93 62 31
Subordinated loans 0 10 -10
Total 120 74 46
Non-encumbered assets, NEA 30 June 2016
35
SEK bn NEA
Accumulated coverage
ratio in % of unsecured
funding*
Cash with central banks and securities in the liquidity portfolio 739 80%
Mortgage loans 444 128%
Other household lending 191 149%
Property company lending lowest risk class (1-3) 258 177%
Other corporate lending lowest risk class (1-3) 162 194%
Loans to credit institutions lowest risk class (1-3) 42 199%
Other corporate lending 230 224%
Other assets 100 235%
Total non-encumbered assets (NEA) 2,166 235%
Encumbered assets without underlying liabilities** 61
Encumbered assets with underlying liabilities 804
Total assets, Group 3,031
* Issued short and long unsecured funding and due to credit institutions
** Over-collateralisation in cover pool (OC)
0
50
100
150
200
250
300
2010 2011 2012 2013 2014 2015
Maturing volume Excess funding
0
50
100
150
200
250
300
2016 2017 2018 2019 2020 2021 2022
Covered Senior Subordinated loans Extendible notes
Issued volumes and maturity profile 30 June 2016
36
SEK bn
Issued volumes Maturity profile
SEK bn
Issued volumes significantly exceed upcoming maturities
0
100
200
300
400
500
600
700
800
Unutilised issue amount covered bonds
Liquid bonds
Balances with banks, overnight
Cash and balances with central banks
Liquidity reserves 30 June 2016
37
Total Liquidity reserves, >SEK 800bn
International bond issues 2014/16
38
Issue Date Issuer Currency Amount (m) Coupon Maturity Deal type
Nov 3, 2014 Stadshypotek EUR 1,250 0.625% Nov 10, 2021 Covered bond
Feb 18, 2015 Svenska Handelsbanken USD 1,200 5.25% Mar 1, 2021 (call) Additional Tier1 (PNC6)
April 1, 2015 Stadshypotek USD 1,000 1.75% Apr 9, 2020 Covered bond
Aug 10, 2015 Stadshypotek GBP 300 3M £ + 28 bps Aug 17, 2018 Covered bond
Aug 27, 2015 Svenska Handelsbanken JPY 59,000 YOS + 1bp Sep 3, 2020 Senior unsecured
Aug 27, 2015 Svenska Handelsbanken JPY 4,600 YOS + 12bp Sep 3, 2025 Senior unsecured
Aug 27, 2015 Svenska Handelsbanken JPY 3,000 YL + 5bp Sep 3, 2020 Senior unsecured
Sep 25, 2015 Svenska Handelsbanken USD 1,250 2.40% Oct 1, 2020 Senior unsecured
Sep 25, 2015 Svenska Handelsbanken USD 250 3M $L + 93bp Oct 1, 2020 Senior unsecured
Nov 17, 2015 Stadshypotek EUR 1,250 0.375% Feb 24, 2021 Covered bond
Dec 7, 2015 Svenska Handelsbanken EUR 1,250 1.234% Dec 14, 2022 Senior unsecured
Jan 11, 2016 Svenska Handelsbanken GBP 250 2.375% Jan 18, 2022 Senior unsecured
Feb 15, 2016 Stadshypotek EUR 1,250 0.375% Feb 22, 2023 Covered bond
Feb 24, 2016 Svenska Handelsbanken AUD 500 BBSW+150 Mar 2, 2021 Senior unsecured
Feb 24, 2016 Svenska Handelsbanken AUD 125 BBSW +156 Mar 2, 2026 Senior unsecured
Mar 23, 2016 Svenska Handelsbanken USD 250 3M $L + 115bp Mar 31, 2021 Senior unsecured
Mar 23, 2016 Svenska Handelsbanken USD 1,500 2.45% Mar 31, 2021 Senior unsecured
June 13, 2016 Stadshypotek EUR 1,000 0.05% June 20, 2022 Covered bond
International bond issues 2016
39
Issue Date Issuer Currency Amount (m) Coupon Maturity Deal type
Aug 30, 2016 Svenska Handelsbanken USD 1,000 1.875% Sep 7, 2021 Senior unsecured
Aug 30, 2016 Svenska Handelsbanken USD 1,000 1.50% Sep 6, 2019 Senior unsecured
Aug 30, 2016 Svenska Handelsbanken USD 500 3M $L + 49bp Sep 6, 2019 Senior unsecured
Stadshypotek and
the housing market
Stadshypotek – an overview
41
Founded in 1865
A wholly-owned subsidiary of Svenska Handelsbanken AB (publ) since 1997
Credit market company supervised by the Swedish Financial Supervisory Authority (”SFSA”)
Total loan portfolio of SEK 1 117bn (EUR 118bn) as of June 30, 2016
One of the two largest Swedish mortgage lenders with app. 25% of the market
Loan origination and service through Handelsbanken’s branch network and with
Handelsbanken’s credit policy, focusing on repayment capacity of borrower
Residential mortgages accounts for approximately 93%
Aaa rating by Moody’s for Stadshypotek covered bonds
Swedish cover pool
0%
5%
10%
15%
20%
25%
30%
0-10% 11-20% 21-30% 31-40% 41-50% 51-60% 61-70% 71-75%
Stadshypotek - Swedish cover pool 30 June 2016
43 Published on www.handelsbanken.se/ireng, section Debt investors/Cover pool data. Cover pool data refers to ”Assets utilized”
Low LTV reflects a seasoned loan portfolio
Prudent valuation
Floating rate (< 1 year fixing) 50%
Fixed rate (>1 year fixing) 50%
Interest index distribution
Outstanding issues of covered bonds (June 30 2016)
Issues in SEK SEK 429bn (EUR 45.5bn)
Issues in other currencies
(EUR, CHF, USD, AUD & GBP) SEK 135bn (EUR14.3bn)
Current available pool size
Assets utilized
SEK 885bn (EUR 93.8bn)
SEK 636 bn (EUR 67.4bn)
Asset types Loans secured by mortgages. Loans to
or guaranteed by public sector in
Sweden (state & municipalities)
Asset distribution 98.4% Residential, 1.6% Public, 0%
Agricultural, 0% Commercial
Geographical distribution Throughout Sweden with a concentration
to urban areas
Average loan size SEK 640,800 (EUR 68,000)
WA Max-LTV 51.1%
Weighted Mid-LTV 25.8%
Amortizing 58.1%
Share of loan volume past
due > 1 day
0,00%
Legal OC Yes, Min 2%,
Nominal OC
Pool type
13,6%
Dynamic, new pool daily
Loans originated by Handelsbanken’s branch network
LTV distribution
Assets in the Swedish cover pool – Q2 2016 vs Q4 2015
44
0%
10%
20%
30%
40%
50%
60%
70%
Single family houses Tenant owned apartments
Multi family houses Tenant owner associations
Public Forest & agriculture Commercial
Q2 2016
Q4 2015
Geographical distribution Swedish cover pool Q2 2016
45
42%
9% 5%
8%
12%
10%
14%
Greater Stockholm Greater Gothenburg Greater Malmoe South Sweden
West Sweden North Sweden East Sweden
Norwegian cover pool
0%
5%
10%
15%
20%
25%
0-10% 10-20% 20-30% 30-40% 40-50% 50-60% 60-70% 70-75%
Stadshypotek – Norwegian cover pool 30 June 2016
47
Published on www.handelsbanken.se/ireng, section Debt investors/Cover pool data. Cover pool data refers to ”Assets utilized”
Low LTV reflects a seasoned loan portfolio
Floating rate (< 1 year fixing) 99.9%
Fixed rate (>1 year fixing) 0.1%
Issues in NOK NOK 27bn
Current available pool size
Assets utilized
NOK 68.1bn
NOK 29.4bn
Asset types Loans secured by mortgages
Asset distribution 100% Residential, 0% Agricultural, 0%
Commercial, 0% Public
Geographical distribution Throughout Norway with a concentration
to urban areas
Average loan size NOK 3,603,500
WA Max-LTV (ASCB) 53.8%
Weighted Mid-LTV 27.6%
Amortizing 63.2%
Share of loan volume past
due > 1 day
0.00%
Legal O/C
Nominal O/C
2%
9.1%
Pool type Dynamic, new pool daily
Loans originated by Handelsbanken’s branch network
Interest index distribution
Outstanding issues of covered bonds (June 30 2016)
LTV distribution
Geographical distribution Norwegian cover pool Q2 2016
48
57%
3%
30%
5% 5%0%
Östlandet Sörlandet Vestlandet
Tröndelag Nordnorge Outside Norway
Assets in the Norwegian cover pool – Q2 2016 vs Q4 2014
49
0%
10%
20%
30%
40%
50%
60%
70%
80%
Single family houses
Tenant owned apartments
Multi family houses
Tenant owner associations
Public Forest & agriculture
Commercial
Q2 2016
Q4 2014
Finnish cover pool
Stadshypotek – Finnish cover pool – Provisional pool
51
Provisional (P) Rating Moody’s (P) Aaa
Predominantly Floating rate 97.2%
Interest index distribution
Provisional pool - Issue of covered bonds
Issue in EUR EUR 1,550 mio
Current available assets
Provisional pool
Assets utilized
EUR 5bn
EUR 1,643 mio
Asset types Loans secured by mortgages
Asset distribution 98.2% Residential ,0% Agricultural,
0% Commercial, 1.8% Public
Geographical distribution Throughout Finland with a
concentration to urban areas
Average loan size EUR 77,200
WA Max-LTV (ASCB) 53.1%
Weighted Mid-LTV 25.9%
Amortizing 97.9%
Share of loan volume past
due > 1 day
0.00%
Legal O/C
Nominal O/C
Yes, 2%
6 %
Pool type Dynamic, new pool daily
Loans originated by Handelsbanken’s branch network
LTV distribution
0%
5%
10%
15%
20%
25%
30%
35%
Comparison of Stadshypotek’s cover pools used for EUR bond issuance
52
Structure and Legal Aspects of the Finnish Cover Pool
Multiple Cover Pools:
The Finnish cover pool will only back certain specified series of covered bonds and those covered bonds will not have
recourse to any other cover pools established by Stadshypotek. Because the assets are located outside Sweden, it is
possible that the Finnish cover pool could be subject to competing claims from Stadshypotek's creditors in Finland.
However, the issuer has obtained a legal opinion from Finnish counsel which confirms that the Finnish courts would
recognize the inclusion of Finnish mortgage loans in the cover pool and further, that Stadshypotek would not be
subject to separate insolvency proceedings in Finland.
Finnish Cover Pool – Provisional Pool Swedish Cover Pool
Issuer: Stadshypotek AB (publ)
Parent: Svenska Handelsbanken AB (publ)
Covered Bond Type: Mortgage Covered Bonds
Applicable Covered Bond Law:
Sweden
Covered Bond Issuance Act (SFS 2003:1223, as amended)
SFSA regulations and guidelines regarding covered bonds (FFFS 2013:1)
Originators: Svenska Handelsbanken AB
Servicers: Svenska Handelsbanken AB
Monitoring of Cover Pool: Independent inspector appointed by the SFSA
Covered Bonds Summary
Rating (Moody's): Provisional Aaa Aaa
Currency of Covered Bonds: EUR SEK, EUR, GBP, USD, AUD, CHF
ECB Eligible: Yes Yes
CBPP3 Eligible: No No
Documentation: Stadshypotek AB €20,000,000,000 Euro Medium Term Covered Note Programme dated 26 November 2015 and
relevant Supplements
Principal Payment Type: Hard/Soft bullet
Secured Creditors: Rank Pari Passu with Covered Bond holders
Collateral Summary
Main Asset Location: Finland (100%) Sweden (100%)
Eligible Cover Pool Assets: (i) Mortgage loans backed by residential, agricultural or commercial properties, (ii) public sector loans and (iii)
substitute assets
Main Collateral Type in Cover Pool: Residential mortgage loans backed by single-family housing and tenant owner rights
LTV Limits: 75% for residential mortgage loans, 70% for agricultural loans and 60% for commercial mortgages
LTV (weighted average): 53.1% 51.1%
Available Assets: EUR 5bn SEK 885bn
Utilized Assets: EUR 1.643bn SEK 635bn
Legal OC: 2% 2%
Nominal OC: 6% 13.6%
Stress Tests: The NPV cover test prescribed by the Swedish covered bond law and the related requirement to apply interest rate
and currency stresses to the cover pool
Stadshypotek AB
Wholly-owned subsidiary of
Svenska Handelsbanken AB
Swedish
Pool
Note: Swedish Cover Pool data as of 30 June 2016; Finnish Cover Pool (Provisional Pool) data as of 1 September 2015
Norwegian
Pool
Finnish
Pool
1
Currency of covered bond issuance:
Multi-currency NOK only EUR only
Assets in the Finnish test cover pool
53
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Geographical distribution Finnish test cover pool
54
* Details next slide
40%
7% 5% 6%
3% 4%
9%
4%
4%
18% Uusimaa
South-West Finland
Pirkanmaa
Päijät-Häme
South Karelia
Central Finland
Ostrobothnia
North Ostrobothnia
Lapland
Other (10 regions)
Regions in Finland
55
”Other” in previous slide (18% of total)
Satakunta
Kanta-Häme
Kymenlaakso
South Savo
North Savo
North Karelia
Central Finland
South Ostrobothnia
Central Ostrobothnia
North Ostrobothnia
Kainuu
Contacts
56
Investor Relations
Lars Höglund, Head of Debt IR
Tel: + 46 8 701 5170 , [email protected]
Mikael Hallåker, Head of IR
Tel: + 46 8 701 2995, [email protected]
Lars Kenneth Dahlqvist, IR
Tel: + 46 8 701 1018, [email protected]
Peter Grabe, IR
Tel: + 46 8 701 1167, [email protected]
Disclaimer
57
Certain statements made in this presentation are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance, express or implied, by the forward looking statements. Factors that might cause forward looking statements to differ materially from actual results include, among other things, regulatory and economic factors. Handelsbanken Group assumes no responsibility to update any of the forward looking statements contained herein.
No representation or warranty, express or implied, is made or given by or on behalf of Handelsbanken Group or its directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation. None of Handelsbanken Group or any of its directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith.
This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Handelsbanken Group, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision.
