Profit SEK 837 million - rights issue

Result and return on equity
The Handelsbanken Group's result for the first half of 1993 was a profit of SEK 837 million (-658).

Return on equity after 30% tax was 6.9% (-5.3%).

Earnings per share for the six-month period were SEK 3.76 (-2.78).

Earnings capacity even stronger
The result before loan losses increased by 34% to SEK 4 464 million (3 342).

Income rose by 19%.

Net interest income was up by 10%, mainly because of a shift in lending from foreign currency to Swedish kronor and higher net yield on the bond portfolio. However, the interest gap - the difference between deposit and lending rates for Swedish kronor - was almost half a percentage point lower at June 30 than at December 31, 1992.

Commission rose by 17%, particularly investment banking and international commission.

The increase in other income is mainly attributable to rental income in the Bank's property company Näckebro and share dividends from companies other than subsidiaries. Capital gains on bond sales from the investment portfolio were SEK 218 million (61).

Expenses increased by 2% mainly because expenses for operations outside Sweden are affected by the depreciation of the Swedish krona when converted to Swedish kronor. Personnel expenses fell by 1%. The number of employees was on average 7 025 which was 316 less than for the first half of 1992.

The income/expenses ratio before loan losses rose from 2.27 to 2.67.

Loan losses down
Loan losses fell by nearly 10% to SEK 3 627 million (4 000). These losses represent 2.6% of lending volume and are a reflection of the long recession and the still weak property market.

Collateral taken over
Handelsbanken's subsidiary Fastighets AB Näckebro took over property for a value of SEK 1.6 billion in order to protect the Bank's claims. As at June 30, the book value of the Group's property taken over was SEK 4.9 billion. When taken over, the properties are written down to a market value determined by external valuers. If this value is less than the value of the Bank's original collateral, the difference is reported as an actual loan loss.

In order to protect the Bank's claims, the subsidiary company AB Handel och Industri took over shares in some operating industrial and trading companies for SEK 1.4 billion.

Non-performing loans and loans with interest deferrals
The total volume of non-performing loans and loans with interest deferrals was more or less unchanged since the year-end - SEK 15.8 billion as against SEK 15.5 billion. Non-performing loans were SEK 11.2 billion (10.2 at year-end) and loans with interest deferrals SEK 4.6 billion (5.3 at year-end).

Capital cover
The Group's capital cover as at June 30 was 10.3% (10.1% at the end of 1992). In accordance with the Swedish Financial Supervisory Authority's directives, the profit for the first six months is not included in the capital base.

Rights issue SEK 2.7 billion
The Board of the Bank has decided - subject to approval by an extraordinary general meeting - to carry out a rights issue of ordinary shares totalling a maximum of SEK 2 650 million *) with pre-emption rights for existing shareholders. *) in the case of conversion of the Bank's convertible debenture loan 1988/1996 the issue amount may be a maximum of SEK 149 million higher.

Terms of issue
Two ordinary shares of series A and series B, respectively, give pre-emption right to subscribe for one new ordinary share of series A and series B, respectively, at a price of SEK 35 per share. To the extent that the holders of ordinary shares do not exercise this right, owners of preference shares have the pre-emption right to subscribe for the part of the remaining ordinary shares which corresponds to their part of the preference share capital.

Reasons for rights issue
Handelsbanken is one of the few Nordic banks which has been able to advance its positions during the financial crisis of the 1990s. The Bank's market shares in Sweden for both private and corporate customers have steadily grown. At the same time, operations in the other Scandinavian countries have been widely expanded. In Norway, Oslo Handelsbank was acquired in 1990, Stavanger Bank in 1991 and parts of Oslobanken's operations in 1993. Operations were started in Finland in 1991 and in Denmark in 1992. Today, Handelsbanken is the only Nordic bank with its own banking operations in all the Scandinavian countries. In 1992, Handelsbanken was also the first Swedish bank to acquire a life assurance company, RKA, the fifth largest in Sweden.

It has been possible to accomplish all this and retain capital cover at a high level. However, the fact that the demand for credits has been small in the whole of Scandinavia has been a favourable factor. This will change when we start to come out of the recession and the demand for credits is expected to rise sharply. As a result of the Nordic organisation which it has built up, Handelsbanken is well-equipped to handle a strong expansion in credits.

During the next few years, the rights issue will enable the Handelsbanken Group to satisfy all sound credit proposals appearing on the Nordic market and thereby to advance its positions even more. It also creates freedom of action for any further acquisitions.

The issue increases the Group's capital cover from 10.3% at June 30, 1993 to 12%. This is the first rights issue for ordinary shares which Handelsbanken has made since 1966.

Dividend
In the light of information currently available, the Board considers that, already for 1993, the Bank will resume paying some dividend on ordinary shares.

Stockholm, August 24, 1993

Arne Mårtensson
President and Group Chief Executive

Key figures for the Group
	January - june
	1993	1992
Return on equity	6.9%	- 5.3%
Efficiency, I/E ratio
- before loan losses	2.67	2.28
- after loan losses	1.13	0.91
Earnings per share 1)
- Jan - June, SEK	3.76	-2.78
- last twelve months, SEK	3.08	2.53
1) Before extraordinary items, after 30% standard national tax and after full conversion of convertible notes.

Profit and loss account
	January - June
	1993	1992	Change
	SEK m	SEK m	%
Net interest income	5 031	4 591	+ 10
Commission	1 337	1 142	+ 17
Other income	767	240	+ 220
Total operating income	7 135	5 973	+ 19
Personnel expenses	1 336	1 350	- 1
Other expenses	1 335	1 281	+ 4
Total expenses	2 671	2 631	+ 2
Profit before loan losses	4 464	3 342	+ 34
Loan losses	3 627	4 000	- 9
Net operating profit/loss	837	- 658	-
When determining the comparative figures for 1992, loan losses have been calculated as half those for the whole year. Other items have been adjusted to equal the total of the figures for the first four months and half of the figures for the second four-month period.
No allocation was made to the profit-sharing foundation Oktogonen in 1992. For this reason, the preliminary allocation made in interim reports for 1992 has been reversed.

Balance Sheet
Svenska Handelsbanken Group	30 June	31 Dec
	1993	1992	Change
	SEK m	SEK m	%
Government securities and bonds	47 226	41 917	+ 13
Lending	278 843	283 372	- 2
Financial institutions	36 137	34 925	+ 3
Other	37 182	32 996	+ 13
Total assets	399 388	393 210	+ 2
Funding	172 124	170 860	+ 1
Deposits	162 270	160 476	+ 1
Other liabilities	36 250	33 251	+ 9
Subordinated loans	10 988	11 550	- 5
Shareholders' equity	17 756	17 073	+ 4
Total liabilities and shareholders' equity	399 388	393 210	+ 2
Lending includes lending to the public and financial institutions other than banks, and leasing assets. Any adjustments in the value of the investment portfolio and other allocations are only included in the accounts for the whole of 1993. Shareholders' equity for 1993 includes 70% of the reported operating profit.

Profit and loss account
Svenska Handelsbanken	January - June
	1993	1992	Change
	SEK m	SEK m	%
Net interest income	4 279	3 870	+ 11
Commission	1 259	1 028	+ 22
Other income	574	228	+ 152
Total operating income	6 112	5 126	+ 19
Personnel expenses	1 146	1 174	- 2
Other expenses	1 168	1 103	+ 6
Total expenses	2 314	2 277	+ 2
Profit before loan losses	3 798	2 849	+ 33
Loan losses	3 281	3 542	- 7
Net operating profit/loss	517	- 693	-

Auditor's Report
I have carried out a summary examination of this interim report. A summary examination is not to be compared to a full audit. There is nothing to indicate that the interim report does not fulfil the requirements of the Swedish Banking Operations Act.

Stockholm, August 24, 1993

Sigvard Heurlin
Authorised Public Accountant

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