Highlights
of Annual Report 1994 Summary
- The Handelsbanken Group's
profit for 1994 went up to SEK 4.1 billion.
- Loan losses
were down by 59% and bad debts by 42%.
- Return on
shareholders' equity after tax increased to 13.7%
- Capital
cover rose to 13.7% and tier 1 capital ratio to 9.3%
- Recommended dividend up to SEK 3.00 per share.
Sharp increase in profits
The Handelsbanken Group's
profit went up to SEK 4 107M (724) 1). This increase was
mainly due to a steep drop in loan losses.
Net interest income rose in spite of a
shrinking margin between lending and deposit rates. Total
lending volume fell slightly due to a continued drop in
foreign currency lending volume. On the other hand,
Swedish kronor lending volume started to rise during the
second half of the year. At year-end, it was 6% higher
than at the beginning of the year. The volume of bad
debts decreased, which had a favourable effect on net
interest income. International commission dropped sharply
while investment banking commission showed a
substantial increase. Other income included net operating
income of SEK 423M (310) from the Näckebro Property
Group.
Total expenses rose by 5%, because of
contractual salary increments and the expansion of the
Bank's Nordic operations.
The profit before loan losses fell by
8%.
1) Figure for comparison recalculated
due to changed accounting principle.
Loan losses down 59%
Loan losses fell by 59% to SEK
2 809M or 0.96% of lending (2.20).
Bad debts were down by 42% to SEK
4 761M or 1.9% of lending (3.1).
Collateral taken over
The Näckebro Group's
acquisition of properties has practically ceased. During
the year, Näckebro acquired property worth SEK 359M and
sold for SEK 187M. The book value of holdings at December
31, 1994 was SEK 6 862M. Direct yield was 7.3% in Sweden,
6.0% outside Sweden and 6.8% for the whole of Näckebro.
The Handelsbanken Group's holdings of
shares taken over to protect claims fell from SEK 2 191M
to SEK 700M. AB Handel och Industri's share holdings,
which are included in the above, dropped from SEK 1 394M
to SEK 486M.
Capital cover up to 13.7%
The Handelsbanken Group's
capital cover rose to 13.7% (12.6). Tier 1 capital ratio
was 9.3% (8.4).
Earnings and dividend per share
The operating profit per
ordinary share after standard national tax was SEK 12.41
(2.44). Net earnings per ordinary share were SEK 10.14
(4.00).
The Board recommends a dividend on the
ordinary shares, series A and B, of SEK 3.00 (2.00).
Dividend on the index shares which in accordance with the
Bank's Articles of Association follows the consumer price
index will be SEK 0.80 (0.75). In accordance with the
Articles of Association, dividend on the preference
shares will be SEK 0.45 for series A and SEK 0.60 for
series B shares.
The recommended dividend represents SEK
700.6M (469.7M).
Stockholm, February 21, 1995
Arne Mårtensson
President and Group Chief Executive
Key figures for the Group |
|
1994 |
1993 |
|
|
|
|
Return on equity after standard national tax (28% 1994, 30%
1993) |
13.7% |
2.8% |
Income/expenses
(I/E ratio) |
- before loan losses |
2.18 |
2.35 |
- after loan losses |
1.47 |
1.06 |
Operating profit per ordinary share, SEK 1) |
12.41 |
2.44 |
Net earnings per ordinary share, SEK
1) |
10.14 |
4.00 |
Dividend per ordinary share |
3.00 |
2.00 |
|
1) After full
conversion of convertible subordinated notes. |
The Bank's Annual Report will be sent to
shareholders in April. |
The interim report for the first quarter of 1995
will be published on April 25, 1995. |
The Annual General Meeting of Svenska
Handelsbanken will be held in Stockholm on
Wednesday, April 26, 1995. |
Profit and loss account |
Svenska Handelsbanken Group |
|
|
|
|
|
1994 |
1993*) |
change |
1993 according to previous accounting principle |
|
SEK M |
SEK M |
% |
SEK M |
|
|
|
|
|
|
Net interest income 1) |
9 273 |
9 028 |
+ 3 |
9 917 |
Commission |
2 561 |
2 830 |
-10 |
2 804 |
Other income |
937 |
1 237 |
-24 |
1 425 |
Total income |
12 771 |
13 095 |
-2 |
14 146 |
Personnel expenses |
3 001 |
2 846 |
+5 |
2 820 |
Other expenses |
2 854 |
2 724 |
+5 |
2 724 |
Total expenses |
5 855 |
5 570 |
+5 |
5 544 |
|
Result before loan losses |
6 916 |
7 525 |
-8 |
8 602 |
Loan losses |
2 809 |
6 801 |
-59 |
6 801 |
Net operating profit |
4 107 |
724 |
+467 |
1 801 |
Appropriations |
-1 319 |
+452 |
|
+452 |
Taxes |
-384 |
-247 |
|
-549 |
Net profit |
2 404 |
929 |
|
1 704 |
|
1) Interest income |
31 880 |
35 296 |
|
36 185 |
Interest expenses |
22 607 |
26 268 |
|
26 268 |
*)
Recalculated in accordance with the changed
accounting principles. |
Balance sheet |
Svenska Handelsbanken Group |
|
|
1993
according
to
previous
accounting |
|
1994 |
1993*) |
|
principle |
|
31 Dec |
31 Dec |
Change |
|
|
SEK M |
SEK M |
% |
SEK M |
|
|
|
|
|
|
Government securities and bonds |
60 721 |
63 239 |
-4 |
64 316 |
Lending |
255 963 |
263 569 |
-3 |
263 569 |
Banks |
48 101 |
30 884 |
+56 |
30 884 |
Other |
34 867 |
41 497 |
-16 |
41 497 |
Total assets |
399 652 |
399 189 |
+0 |
400 266 |
Funding |
151 951 |
164 773 |
-8 |
164 773 |
Deposits |
182 508 |
171 213 |
+7 |
171 213 |
Other liabilities |
30 097 |
31 043 |
-3 |
31 345 |
Subordinated loans |
12 325 |
11 358 |
+9 |
11 358 |
Shareholders' equity |
22 771 |
20 802 |
+9 |
21 577 |
Total liabilities and shareholders' equity |
399 652 |
399 189 |
+0 |
400 266 |
|
Lending
includes lending to the general public and
financial institutions other than banks as well
as leasing assets. |
The book value of the investment portfolio is the
same as its market value at year-end. A
write-down of SEK 1 217M has been made and this
is reported as an appropriation. |
*) Recalculated in accordance with the changed
accounting principles. |
Bad debts etc |
Svenska Handelsbanken Group |
1994 |
1993 |
|
SEK M |
SEK M |
|
|
|
|
Bad debts, gross |
9 832 |
15 080 |
(non-performing loans for which interest is not reported as income until payment is received + reduced rate loans with a provision for possible loan losses) |
Minus reserve for possible loan losses |
-5 071 |
-6 876 |
Bad debts, net |
4 761 |
8 204 |
Reduced rate loans without a provision for possible loan losses |
1 919 |
1 502 |
Total problem loans |
6 680 |
9 706 |
Bad debt reserve ratio |
51.6% |
45.6% |
Proportion of bad debts |
1.9% |
3.1% |
Non-performing loans for which interest is reported as income |
610 |
1 821 |
Collateral taken over: |
- Property |
6 956 |
7 005 |
- Shares |
700 |
2 191 |
|
Definitions
NON-PERFORMING LOANS
Loans where interest,
repayments or overdrafts have been due for payment for
more than 60 days.
BAD DEBTS
A non-performing loan, or a
loan where other circumstances lead to doubt concerning
its value and where the value of the collateral does not
cover the principal amount and the accrued interest by a
satisfactory margin.
REDUCED RATE LOANS
Loans for which the interest
rate has been reduced relative to market rates.
PROBLEM LOANS
The total of net bad debts and
reduced rate loans.
BAD DEBTS RESERVE RATIO
Reserve for possible loan
losses in relation to gross bad debts.
PROPORTION OF BAD DEBTS
Net bad debts in relation to
total lending to the general public, lending to financial
institutions (excl. banks) and leasing assets.
LOANS LOSS RATIO
Loan losses in relation to
balance brought forward for lending to the general
public, lending to financial institutions (excl. banks),
and leasing assets, property taken over and credit
guarantees.
Changed accounting principles
The Swedish Financial
Supervisory Authority has stated in a directive which is
to apply from January 1, 1995, that intra-Group bonds in
the investment portfolio must be eliminated in the
Consolidated Accounts, i.e. be reported net. For this
reason, the Bank has departed from the principle where
such bonds are reported gross in interim reports during
1994 and has returned to reporting them net as in
previous years. Furthermore, as from 1994, in accordance
with international practice, the difference which arises
on elimination between the book value of intra-Group
bonds and the book value of the corresponding liabilities
is entered as income/expense. This means that the impact
on earnings affects net interest income.
As from 1994, in accordance with the
directives of the Financial Supervisory Authority,
surpluses/deficits on acquired coupon instruments
included in the investment portfolio are distributed on a
straight-line basis until maturity. In previous years,
surpluses/ deficits were entered as income/expense on
sale/maturity. In accordance with Recommendation No. 5
from the Swedish Financial Accounting Standards Board,
the comparative figures for 1993 have been recalculated
on the basis of the new accounting principles. Certain
minor reclassifications have been made. The figures for
1993 have been revised accordingly.
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