2010 Annual report Highlights of 2010 Ř 2SHUDWLQJSURƂWIRUFRQWLQXLQJRSHUDWLRQVLQFUHDVHGE\SHUFHQWWR6(.PLOOLRQ Ř 3URƂWDIWHUWD[IRUWRWDORSHUDWLRQVURVHE\SHUFHQWWR6(.PLOOLRQ and earnings per share increased to SEK 17.72 (16.44) Ř 5HWXUQRQHTXLW\IRUWRWDORSHUDWLRQVLQFUHDVHGWRSHUFHQW Ř ,QFRPHZHQWGRZQWR6(.PLOOLRQ DQGH[SHQVHVGHFUHDVHGWR 6(.PLOOLRQ Ř 1HWLQWHUHVWLQFRPHGHFUHDVHGE\SHUFHQWWR6(.PLOOLRQ Ř 1HWIHHDQGFRPPLVVLRQLQFRPHURVHE\SHUFHQWWR6(.PLOOLRQ Ř 7KHORDQORVVUDWLRIHOOWRSHUFHQW DQGORDQORVVHVZHUH6(.PLOOLRQ Ř 7LHUFDSLWDOLQFUHDVHGWR6(.ELOOLRQ DQGWKH7LHUUDWLRDFFRUGLQJWR%DVHO,, ZHQWXSWRSHUFHQW Ř 7KHERDUGSURSRVHVDGLYLGHQGRI6(.SHUVKDUH ANNUAL GENERAL MEETING (SHAREHOLDERS’ MEETING) To be entitled to take part in the meeting, shareholders whose shares Location: Grand Hotel’s Winter Garden, Royal entrance, are nominee-registered must also request a temporary entry in the re- Stallgatan 4, Stockholm gister of shareholders kept by Euroclear. Shareholders must notify the Time: Wednesday 23 March 2011, 10 a.m. nominee of this well before Thursday, 17 March 2011, when this entry must have been effected. Notice of attendance Shareholders wishing to attend the AGM must be entered in the register Dividend of shareholders kept by Euroclear Sweden AB (formerly VPC AB), by The board proposes that the record day for the dividend be Monday, 28 Thursday, 17 March 2011 at the latest. March 2011, which means that the Handelsbanken share will be traded ex-dividend on Thursday, 24 March 2011. If the meeting resolves in ac- Notice of attendance is to be made to the Board Office, Handelsbanken, cordance with the proposal, Euroclear expects to distribute the dividend Kungsträdgårdsgatan 2, SE-106 70 Stockholm, Sweden, telephone on Thursday 31 March 2011. +46 8 701 19 84, or online at www.handelsbanken.se/bolagsstamma by Thursday, 17 March 2011 at the latest. CORPORATE SOCIAL RESPONSIBILITY Handelsbanken has a vital role to play in society. It is important that the Bank takes civic responsibility in order to gain the confidence of its various stakeholder groups. This is also a condition for the Bank’s success and profitability in the long term. To facilitate matters for the various stakeholders with different perspectives, the annual presentation of the Bank’s operations has been divided into two publications. In the annual report, the main focus is on financial matters, with a summary on corporate social responsibility. The separate sustainability report to be published shortly describes the Bank’s work with corporate social responsibility in more detail. Read more about Handelsbanken’s activities relating to corporate social responsibility on the Bank’s website www.handelsbanken.se/csreng. Contents Page THE GROUP CHIEF EXECUTIVE’S COMMENTS Growth and returns 2 ADMINISTRATION REPORT Contents Administration report 7 Concept, goal and profitability 9 Goal fulfilment 2010 10 How we run Handelsbanken 12 Organisation and working methods 14 Review of operations 16 Five-year overview Group 19 Key figures per year 21 Quarterly performance 22 Business segment information 23 Branch office operations in Sweden 24 Branch office operations outside Sweden 26 Handelsbanken Capital Markets 33 The Handelsbanken share and shareholders 36 Corporate social responsibility 38 The environment 40 Employees 42 Corporate governance report 2010 44 Contents Corporate governance report 45 The board 60 Senior management 62 FINANCIAL REPORTS GROUP Contents Group 65 Income statement Group 66 Statement of comprehensive income Group 67 Balance sheet Group 68 Statement of changes in equity Group 69 Cash flow statement Group 70 Notes Group 71 FINANCIAL REPORTS PARENT COMPANY Contents Parent company 129 Income statement Parent company 130 Statement of comprehensive income Parent company 131 Balance sheet Parent company 132 Statement of changes in equity Parent company 133 Cash flow statement Parent company 134 Five-year overview Parent company 135 Notes Parent company 137 Recommended appropriation of profits 163 AUDIT REPORT Audit report 164 CONTACT US Branches and branch managers 165 Svenska Handelsbanken AB (publ) Corporate identity number: 502007-7862 Addresses 171 Registered office: Stockholm www.handelsbanken.com OTHER This Annual Report is also available in Swedish. Definitions and explanations 172 HANDELSBANKEN ■ ANNUAL REPORT 2010 1 THE GROUP CHIEF EXECUTIVE'S COMMENTS Growth and returns Ř Earnings per share in 2010 increased from SEK 16.44 to SEK 17.72. Ř Handelsbanken’s return on equity for total operations was 12.9 per cent. Operating profit for 2010 was SEK 14.8 billion. Ř Our Tier 1 capital grew by SEK 2.2 billion during the year. The capital base amounted to SEK 111 billion and the capital ratio according to Basel II increased to 20.9 per cent. Ř These results meant that for the 39th year running Handelsbanken achieved its corporate goal of a higher return on equity than the average for its competitors. Ř Over the past five years, Handelsbanken’s equity, including dividends paid and share buybacks, has grown by an average of 15 per cent per year. During the same five-year period, total dividends were SEK 27.4 billion. Ř There has not been a single quarter during the past five years when return on equity – after loan losses and tax – has fallen below 12 per cent. Handelsbanken has not issued any new shares during the same period. Ř Last year, Handelsbanken once again had the most satisfied customers in the Nordic region. In Great Britain, the Bank’s lead over its closest competitors was even greater. Ř Demand for credit slowed during the year, particularly from corporate customers. However, the number of credit commitments issued rose. Savings business also performed significantly better than in previous years. Ř In 2010, 21 branches were opened in Great Britain and a third regional bank with its head office in Birmingham was established as of 1 January 2011. Throughout 2010, the unrest on capital markets continued, with In many parts of the world, governments and public authorities several countries in the eurozone experiencing such significant are involved in extensive programmes aimed at rebuilding and imbalances in government finances that the members of the reorganising their financial systems in one way or another. One monetary union were forced to take extensive joint support ac- example of these initiatives is the work to develop new interna- tion. Despite very resolute efforts from the European Central tional regulations for banks – Basel III. In the past year, a great Bank (ECB) and others, the average credit insurance cost for the deal has become clearer – but the implementation process is banking sector was on several occasions on a par with or higher lengthy and the effects are therefore still difficult to assess. than the levels noted immediately after the Lehman crash in However, the combination of new regulations and a financial autumn 2008. crisis has already created bottlenecks, an example being the in- There is reason to assume that the debt crisis which several creasing shortage of long-term capital. Western economies are currently struggling with will affect the In the past year, Handelsbanken has therefore continued to financial markets for a long time to come. strengthen its finances and maintain a relatively high liquidity 2 HANDELSBANKEN ■ ANNUAL REPORT 2010 THE GROUP CHIEF EXECUTIVE'S COMMENTS position. We still have very good access to long-term funding This is why new demands are increasingly being made on these and in 2010, we developed our funding opportunities in areas new meeting places. Customers want the freedom to choose the such as Asia and the US. point of contact that best suits their needs on a particular occa- The cost of our funding is among the lowest of all the major sion – preferably without restrictions as to the type of business banks in the West, a consequence of our good rating and stable they can do, regardless of whether their point of contact is one finances, and the Bank’s balance sheet is structured entirely on of our branches, online or on an iPad. commercial terms, without any support from the government or central banks. OUR HOME MARKETS Our method of running a bank – our business model – has DEVELOPMENTS IN 2010 proved to be strong and robust even when the external condi- Over the past year, we have continued to expand our range of tions for running a bank have not been that good. In the past products and our branch network. Developments in asset manage- few years, we have grown, both in terms of the number of ment and growth in Great Britain are worthy of special mention. branches we operate and in terms of market share. The Bank’s operating profit for 2010 increased by 8 per cent We now have nationwide branch networks in all five of our to SEK 14,770 million (13,727). home markets: Sweden, Great Britain, Denmark, Norway and So far during the financial crisis, in each individual quarter, Finland. Handelsbanken has reported a return on equity of more than In these markets, we are continually striving to establish a 12 per cent after loan losses and tax. presence in locations where we do not currently have a branch. Equity grew by SEK 5.3 billion during the year to SEK 88.4 In Great Britain, the future potential for establishing new billion after the paid dividend of SEK 4,988 million. branches is deemed to be particularly promising. Over the past five years, equity, including dividends paid and repurchases, has grown by an average of 15 per cent per year. GREATER DECENTRALISATION Handelsbanken has not issued any new shares during the same Handelsbanken has grown during the year, not just in terms of period. During this five-year period, the total amount of divi- the number of branches, but also in its customer offering, where dend paid was SEK 27.4 billion. both products and availability have expanded. The largest owners in the Bank are its associated investment As we grow, however, there is a risk that decision paths become company, Industrivärden, which was founded by Handelsbanken longer, despite our commitment to a flat organisation.