'sappetite for the U.K. remains as strong as ever despite the economic surrounding , its CFO said July 15, afterthe Swedish bank's British unit reported the highest return on equity of all itsdivisions in the first half of 2016.
"Thereis, of course, no change whatsoever in the long-term view of our U.K. operation,and we are as enthusiastic as we have ever been about long-term prospects [in thecountry]," Ulf Riese told analysts during a call after the release of Handelsbanken'ssecond-quarter results.
Groupprofit attributable to shareholders for the period rose slightly to 4.19 billionSwedish kronor, or 2.15 kronor per share, compared to 4.17 billion kronor, or 2.14kronor per share, in the year-ago period. This was mainly due to capital gains of81 million kronor from the saleof the lender's shares in Visa Europe, which helped push net gains on financialtransactions up to 523 million kronor from 451 million kronor a year earlier.
By contrast,second-quarter net interest income fell year over year to 6.81 billion kronor from7.02 billion kronor, while net fee and commission income also dropped, coming inat 2.28 billion kronor compared to 2.36 billion kronor in the year-ago period.
But netloan losses decreased to 229 million kronor from 359 million kronor in the secondquarter of 2015. The British unit's loan-loss ratio for the period stood at 0.05%,an improvement on the first-quarter figure of 0.08%, which, in turn, had been "considerablylower" than the average loan-loss ratio of Royal Bank of Scotland Group Plc, HSBC Holdings Plc, HSBCHoldings Plc and LloydsBanking Group Plc, Riese said.
Withregard to the uncertainty after the U.K.'s decision to leave the EU, the CFO highlightedthat during crises, Handelsbanken's loan-loss ratio has generally been superiorto the average ratio of its peers. He added that, at this stage, it is difficultto anticipate the company's future pricing policy in response to Brexit.
Riesealso played down the possible impact on Handelsbanken if the Bank of England lowers the interest rate or credit volumesin the U.K. decline, saying the bank had coped well with negative interest ratesin its home market, while its business model, which focuses on "top of thesegment corporate and private client," means that "we are not dependenton the loan demand in the [U.K.]."
The Britishunit's ROE stood at 16% in the first half of 2016, compared with 14% at HandelsbankenNorway, the next best performer, and 9% at the Dutch division, which reported thelowest figure. ROE for total operations stood at 14.2% in the second quarter, comparedto 14.5% a year ago.
For thefirst half, Handelsbanken's attributable profit rose year over year to 8.24 billionkronor from 8.08 billion kronor. The bank's common equity Tier 1 ratio under CRDIV stood at 23.0% at June-end, compared to 22.7% at the end of March and 21.2% at2015-end.
As of July 14, US$1 was equivalentto 8.49 Swedish kronor.