FINANCIALS: Handelsbanken: Conf Call Guidance On Capital Helpful To Spreads

Handelsbanken (SHBASS: A2/A/AA) conf call was broadly positive, especially with guidance that capital levels would continue to be maintained at relatively high levels throughout this year. We now only have Danske left to report amongst the larger Nordic banks (on 19-Jul).

• Top line growth: we feel the relief in the equity market today is about improved revenue performance and mgmt mentioned both improved deposit mix, alongside some lowered funding costs around AT1 and T2 capital. These are helpful and, whilst an earnings upgrade is likely here, the lack for forward guidance could limit this. At least we see estimate cuts ending now.
• Capital: mgmt continues to run with 400bp above Swedish regulatory minima (SREP) and it was explicit that it would not revisit that buffer until reporting 4Q24 results (early in 2025). So, this should be a further underpinning to spreads, we feel.
• Asset quality: interestingly, there was barely a mention of asset quality either in the prepared remarks, nor the questioning. It would appear that, with macro outlooks improving and rates falling, the market is much more relaxed.