Handelsbanken has taken control of the costs, which in the quarter were SEK 6,025 million compared to SEK 6,470 million. Clearly lower than the previous year and when I look around a bit, it seems to be clearly lower than analysts’ expectations. Michael Green took over as CEO a little over a year ago and during his time there have been clear improvements. Handelsbanken and CEO have reviewed costs and launched an action program. We can now see the consequences of this in the report.
The operating profit was SEK 8,136 million compared to SEK 8,267 million in the same quarter the year before. This is a strong performance where analysts had expected significantly lower results compared to the year before. I believe expectations for Handelsbanken specifically and the banking sector in general will be adjusted upwards.
Handelsbanken has a very strong financial position where for several years they have also adopted an extra cautious stance due to unrest in the world. In normal times, Handelsbanken has the highest credit rating of all banks in the world. They are always a reliable bank, but are now taking an extra cautious approach after the pandemic, war, etc. Some analysts expect Handelsbanken to drop that extra cautious stance and pay out an extra large dividend. There is still war and unrest, and we also now have the customs issue where we do not know how serious the consequences will be. Handelsbanken will probably continue with its extra cautious stance, that is my belief.
Even if a good dividend is expected next spring, Handelsbanken’s core tier 1 capital ratio is above the long-term target range of 1-3 percent above the authorities’ requirements. That is the extra cautious stance I mentioned above and I believe they will continue to do so. This cautious stance and strong financial position make Handelsbanken a first-class and very reliable bank. While other banks go to their knees when there is a storm, Handelsbanken is strong and can continue to offer financing solutions, etc. For example, Handelsbanken was strong during the financial crisis, while Swedbank and SEB were in deep crisis.
I own Handelsbanken and I like the cautious strategy. They don’t have the best total return of the Nordic banks but they are standing firm and ticking along decently over time.
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