Handelsbanken; Consensus Beat, Strong Credit Metrics

Handelsbanken (SHBA SS) 4Q23 results out which show very strong asset quality, are above consensus and see capital buffers maintained in FY24 (a time when many banks are running these down in favour of equity holders).

• Revenues were +12.8% y/y (1.7% better than consensus), expenses rose 4% (consensus was looking for only +1%) and credit losses were a real positive surprise at a tiny SEK52m (0.9bp of loans), barely one sixth of expectations. Even with a spike in the tax charge, this meant net profit +21% y/y and 7% ahead of consensus.
• In credit terms, non-performers were 24bp of loans, (from 23bp at Sep-23) against consensus of 33bp, which is very low in a European context. CET1 is 18.8% (from 19.4% at Sep-23 but includes dividend accrual) and total capital is 23.9%.
• There’s a special dividend which consensus didn’t foresee, so good news for equity holders (a definite trend this results season) and, positively for credit investors, the 2024 outlook is for CET1 buffers to be maintained at current levels (and the bank claims “highest credit rating globally”).

Conf call is 0800 London time, available at https://edge.media-server.com/mmc/p/yesofojj/