Handelsbanken: Weak NII, good costs, good LLPs. Again.

Research evidence excerpt

Handelsbanken: Weak NII, good costs, good LLPs. Again.

that in recent times SHB has surprised the market by reducing expenses 12/26E 10.94 11.01 1 11.47

further than what was expected. We cannot rule out that this could continue in the 12/27E 11.49 11.47 -0 11.83

near-term. However, we believe that continued positive surprises to costs offer limited 12/28E 11.57 11.53 -0 12.33

benefits to the narrative, which is evident considering there was a notable absence of

Johan Ekblom, CFAcost-focused questions in the earnings call. In previous quarters, management has

Analyst

repeatedly stated that centralised cost cutting programs are done - with little johan.ekblom@ubs.com

explanation of what is driving the continued outperformance. However, we note that IT +44-20-7568 3580

costs in Q2 were significantly down y/y in real terms. This is especially significant

Joshua Humphreysconsidering we are now in a more AI-focused than a year ago. With most banks

Associate Analyst

accelerating IT spending we see a risk that SHB will find themselves in a need to catch up joshua.humphreys@ubs.com

in the years to come. +44-20-7567 0385

Valuation: Trading at 12.1x 2027E EPS and 1.5x TNAV for a 12% ROTE

SHB shares continue to trade at a material premium to peers (11.2x) and at a slight

premium to its own historical levels on an absolute basis (albeit cheaper than history

relative to sector). We think, given the reduction in relative profitability, a discount to

historical levels is warranted.

Highlights (SKrm) 12/23 12/24 12/25 12/26E 12/27E 12/28E 12/29E 12/30E

Revenues 62,093 62,168 57,225 55,701 57,798 58,927 60,565 62,596

Pre-tax profit 36,325 35,020 30,465 29,598 29,890 30,037 30,701 31,754

Net earnings (reported) 29,111 27,454 23,728 22,703 22,715 22,828 23,340 24,151