Q2 2025 Svenska Handelsbanken AB Earnings Call Transcript
Key Points
- Svenska Handelsbanken AB (SVNLF) reported a robust capital position with a CET1 ratio of 18.4%, which is 50 basis points above the long-term range target.
- The bank achieved net credit loss reversals for the sixth consecutive quarter, highlighting its low credit risk management.
- Expenses were down 4% year-on-year, demonstrating effective cost management despite general inflation and salary revisions.
- The bank's liquidity position is strong, with a liquidity reserve amounting to around one-fourth of the total balance sheet.
- In Sweden, which accounts for almost 80% of the group's earnings, the cost-to-income ratio was 32% in Q2, and profitability was above 16%.
- Net interest income (NII) declined by 6% compared to the previous quarter, primarily due to Central Bank rate cuts and FX impacts.
- Total income dropped by 8% in the second quarter, affected by temporary effects and market volatility.
- The cost-to-income ratio increased slightly to 44% in the quarter, up from the previous year.
- The bank's return on equity (ROE) remained unchanged at 13%, which some analysts consider low compared to peers.
- In the UK, the cost-to-income ratio is approaching levels seen when rates were near zero, indicating potential inefficiencies.
Good morning, everyone, and welcome to this presentation of Handelsbanken's results for the second quarter and the first six months of 2025. The second quarter showed an operating profit of SEK7.2 billion. The ROE was 13%, which was unchanged compared to the previous quarter. Income dropped compared to the first quarter this year. This was mainly due to a catch-up effect -- catch-up effects from Central Bank rate cuts seen in the previous quarter, which affected NII.
A touch lower asset management fee and commissions as the average asset assets under management were affected by lower average stock market indicates. Temporarily -- temporary effects on the NFT relating to valuation of instruments used to hedge risk, and not least affects from a significant strengthening of the Swedish krona, affecting mainly the NII.
Costs, on the other hand, remains stable at a materially lower level compared to a year ago, being down 4% on an underlying basis. Year on year, despite general inflation, also the annual salary
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