Svenska Handelsbanken AB (publ)

Good morning and a warm welcome to the Handelsbanken interim report for Q3 2022. We're going to begin by hearing from Carina Åkerström, our CO. There's a live broadcast of this presentation. You'll find the link on handelsbanken.com under investor relations. For English-speaking listeners, the presentation will be interpreted simultaneously and you will find and can choose English as a language in the menu to follow in English. After the presentation, we're going to have a short break followed by an open Q&A session in English. And you will find the information on how to connect to this session under Investor Relations, the same section on the website. Carina, please go ahead. Thank you very much, Louise. And once again, a warm welcome to all of you and good morning. It's time to present the Q3 results for Handelsbanken. I'm going to begin just as I usually do by a short summary of the first nine months of 2022. This is a good performance. It's stable and in line with expectations. For the first nine months, just as... Under the second quarter, we saw the highest numbers so far in the history of the bank. Volumes are up. Revenue is up. And we also see that we continue to gain market shares in our savings business. Expenses are under control. CI ratio is going in the right direction. It's dropping. And the quality of our lending portfolio remains very good. And we have an excellent capital situation. We've made a transfer of Handelsbanken over the past while in order to ensure that we are well equipped to meet an uncertain world around us. Starting with a look at Q3. We see a CAI ratio, which for the first time ever, in fact, for as far back as we can go, is below 40%, 39.7. We have a profitability of 13.2 ROE. Results are up by as much as 39%. The main driver of this is an excellent development in our net interest income, which, of course, is continually driven by excellent lending and volume growth. We see that we're keeping track of our fees and commissions, a stable situation, and expenses are under control, down by 1%. Credit losses remains very low, and we see during the quarter... Net recoveries, so all in all operating profit up by 39%, revenue by 17% and expenses down by 1%. Moving on to have a look at the first nine months of the year. We see a CI ratio of 43.9% and 12.2% in ROE. Results up by 12%, income by 12%, adjusted by 7%. And we have the cost situation well under control and once ongoing credit losses, which are net recoveries. So this is clearly a quarter, which for an accumulated nine months shows an excellent development. Moving on to look at... the overall situation in the past three years. We see that since 2020, we've seen an income growth, as we would like to see, and expenses under control of having, in fact, reduced during this period, and the CI ratio is dropping exactly as we expected it to. Let's have a look at lending, the lending situation. Lending in our home markets, first of all, looking at lending to the public, there's a continued stable growth. We see some slowdown, not least in the mortgages market, but in Sweden, the mortgage market situation is stable. We're at 5%, but we also see that there's an adaptation of behaviours. People are paying back on their mortgages. On the corporate segment and lending, For several quarters now, we've seen an excellent development, and we're up by as much as 12%, in fact. It's a well-balanced lending, which is both related to property and non-property lending. Looking at Sweden, for example, we see an excellent growth, 11%, which means that Sweden continues to move up its position in the area of corporate lending. In green... And sustainable financing, we're moving up from relatively small volumes, but we see a continual development with extensive demand from many of our customers. Let's go back and have a look at the net interest income development in the period January through to September. We see an increase by as much as 15%. And if we look at what this is due to, it's driven by an excellent volume development, also, of course, in an environment where margins, of course, have a positive impact on the NII, but high level of activity and a contribution based on a growth in volume makes for an excellent situation. Let's have a look at the net fee and commission income development next. As I mentioned, the income is holding up well. It remains at a A nice, stable level, down somewhat over the first nine months of the year, but holding up well. And if we look at the savings-related fees and commission, they're holding up very well and corresponds to almost 70% of our income. Dropping somewhat, but in a market with falling stock exchanges to the tune of 30%, this remains very stable. And as the world opened up gradually, we've also seen a stable increase of the payment-related commissions, and we see nice development for the first nine months. Let's then have a look at our expenses accumulated for January through to September. They were up by 5% committed last year, adjusted by 2%, and we see that development expenses, as we had indicated, would go up by 3%, and underlying costs up by 2%. It's IT development and development in our business activities which are the drivers for this increase, as we've mentioned, and we've very intentionally been speeding up the pace over the past period. It's increasing where we want it to increase, and underlying costs are impacted as we implement the efficiency improvements and we see the results of them. Let's pause for a moment, take one step back a few years. Over the past three years, we have stabilized the bank. One step at a time, we have moved the market position of the bank from one location to another position. We are strengthening our position in the market. We know where we want to be, we know what we need to do, and we know how to do it. For several quarters in a row, we've seen strong increase in lending volume, good additional income in savings, and our UK activities are now again contributing to the profitability of the bank and our growth. For several quarters now, we've seen how we've gradually and steadily grown our IT cost, and we are now at a high level of expense. And because the bank has repositioned itself over the last few years where we've implemented all the results and the potential we see in all our home markets, the bank in the future, as we move forward, will maintain a high pace of IT development. And we do this, of course, because other costs items are under control. But it makes perfect sense based on our current positioning, the adjustment we have made and the plans to continue along these same lines.

Then to our asset quality, we continue to have a stable asset quality. We have a high quality in our credit portfolio. We have... basically no credit losses just as expected and that the credit losses of the bank have been lower than our competitors we've talked about that many times before credit loss ratio is pretty much at zero has been so over the last few years and what has been put in reserves since 2019 has exclusively been about building general reserves linked to the pandemic a covid but also the uncertainties around us. And those unutilized general reserves are around 600 million, and that is what they are. We have good customers with good cash flows, and the good credit quality that we have in our portfolio is based on a well-established risk policy. We lend money to good customers with good cash flows. We do not select assets. sectors that is important and to a large extent the lending is also pledged of course we have also looked at our portfolio with the commercial properties and we see at this we look at this in different ways we do stress tests we look at this on an annual basis and with the increased interest rates well we can see that the quality is still good and there is no reason to take action and i feel no concern whatsoever looking at the portfolio in general in all our home markets we have a loan to value that is below 50 and when testing the commercial portfolio We can see that we have an interest rate of resilience. We can manage interest rates levels going up to 7, 8 percent, which means that we are well positioned. We have good customers and we will face the world around us together. And then if we look at our home markets. All home markets show nice growth, as has already been said over the last nine months and quarters. Norway continues to grow its business with nice HICCI ratios and continues to take market share in Norway. We have a lot of potential. in private business and we imagine that that is well we will be forging ahead and developing in the future also to meet that customer group in norway then looking at the netherlands we have seen over several quarters that we have a positive development with the growing business growing volumes and key ratios also tell us that we have a stability and improvements then Looking at Sweden and the UK more in detail, we have a couple of good strengths. The Swedish activities have been moving, and we have made some changes to the positioning in the market. We go from strength to strength, from quarter to quarter. And we continue to have a nice growth in household lending. I've already mentioned that it's stable at 5%. And we see that corporate lending is growing with 11%. And in total growth, the... 7% accumulated nine months. And a very nice rate. And the key ratios continue to show strong numbers. Over the quarter in Sweden, we have seen profitability of 17% on the CI ratio. That, as a matter of fact, is below 30%. So we have a very stable situation, which is very gratifying. Then looking at the activities in the UK, I have to say that this is where we see the major changes. change in trends over the year income is up costs are down and our key ratios the ci ratio is falling and we end up with below 60 and operating profit is up of course and as you can see in the slide up 1%. And this means that underlying in the UK, we see nice lending growth. And in addition, in the UK, just as in Sweden, we see changes in behaviors, not least households, where one amortizes using savings to reduce debt. But we have underlying growth also in the corporate side, and we have stepped out of some exposures, but we have a positive underlying growth also in the UK. We have A capital position, that is good, nice, which means that we have the capacity to support our customers and at the same time grow our business. CET1 ratio, 19% compared to regulatory requirements, 14.1%. And then if we're to summarize the first nine months, just as I've said, this is a turbulent market with a lot of security, but we're strong. We're well equipped and well positioned. And that was also what we said yesterday. Q2, as a matter of fact. We have good results. We have a growing bank, good volume growth for households and companies alike. And we have margins that are recovering. And NII is also contributing in this quarter in a very nice way. Fee and commission income stable, costs under control, credit losses continue to be low. So all in all, we're well positioned for continued growth and improvement profit in the bank. And last but not least, throughout this journey, we have seen that we have had customers with us in all our home markets. We have a customer satisfaction that is above the average for our sector. And in Sweden, this year, the Swedish Activities has also been named the Business Bank of the Year. And for year 11, we now have Handelsbanken being the small business bank. of the year. Well, I'll stop there. Thank you, Carina. And then we'll have a short break. And then we'll have Peter Grave, Investor Relations, with a Q&A session. And that will be held in English and instructions on how to ask questions. You'll find that under Investor Relations, handelsbanken.com. Welcome in a few moments. Thank you. . . you . . you

Hello everyone and welcome back. Before entering into the Q&A session, our CFO, Carl Ceder Sjöld, will make some opening remarks.